Colorado State Treasurer Walker Stapleton has a message for Democratic Colorado State Senator Michael Johnston as Johnston formulates his school funding reform measure – include PERA reform. Word on the street is that any proposal brought forth by Johnston will include tax increases under the guise of funding in-classroom education. Stapleton wants to ensure that meaningful reform will include PERA reform so that lawmakers like Johnston are not tempted to backfill PERA’s massive unfunded liabilities with money raised in the name of the children. In short, Stapleton wants to ensure that reforms made to improve education actually make it into the classroom. From his press release:
Colorado’s PERA has roughly a $26 billion unfunded liability, money that it owes to current and future retirees but does not currently have in its bank account. Treasurer Stapleton expressed concerns that responsible education finance reform must include PERA reform, in order to ensure funds are directed into the classroom and do not go to backfill PERA’s unfunded liabilities.
As the Peak has previously reported here, here, and here, PERA has some outsized liabilities, and Stapleton has sounded the alarm time and time again that the return expectations were not in line with current market realities. He explains:
“[the contribution amount] is based on an average return assumption of 8 percent that most economists and political leaders from both sides of the aisle do not believe is achievable. If the 8 percent is not achieved, PERA would reach another unsustainable shortfall and could easily ask for additional contributions, taking more money out of the classroom. Before revamping our school funding we owe it to taxpayers, parents and especially our children to take an honest look at how PERA effects school budgets across Colorado.”
PERA’s looming liabilities are a real problem for the state moving forward, but will Johnston have the guts to address pension reform as part of a holistic look at school budgets?