Education, PERA

Colorado PERA bailout punishes students, teachers and taxpayers

As Colorado lawmakers consider an overhaul of the way the state funds K-12 education, more people are noticing that schools are increasingly forced to pay for the past rather than invest in the future.

Our public schools must take money out of the classroom in order to pay for investment losses and unaffordable promises that have created a $25 billion shortfall in the Public Employees Retirement Association (PERA).

In August 2012, Adams 12 School District teachers protested a 2 percent salary reduction enacted explicitly to offset the rising cost of PERA’s bailout plan. For 2012-13, Adams 12 will pay $190 million in salaries, plus $36 million for PERA and Medicaid.

In 2010-11, Colorado Springs School District 11 paid $21 million to PERA, according to the Colorado Springs Independent. Those payments, combined with funding reductions by the state legislature, led the district to close schools and make cuts that affected everything from textbooks to class size to suspending pay increases.

District 11 chief financial officer Glenn Gustafson told the Independent: “To improve student achievement, it’s more important than ever to attract qualified and talented teachers. But we’re shifting a disproportionate amount of compensation to retirement benefits and health care.”

For 2011-12, my hometown Burlington School District RE-6J, with just 738 pupils, faced a $300,000 budget deficit — half of that amount caused by the cost of PERA’s bailout. For 2012-13, the district decreased salaries by $54,399, but the mandatory PERA contribution increased by $38,594.

Many rank-and-file PERA members simply want a reliable retirement. However, lobbying groups and lawsuits purporting to represent PERA members are obviously more concerned with preserving current benefits than the finances of younger workers now and at retirement.

Responsibility for ensuring a sustainable benefit structure rests with the PERA Board of Trustees and, ultimately, with state legislators and the governor. To continue to promise benefits that are unaffordable and unsustainable is simply unconscionable.

In 2013, the cost of the PERA bailout — not including standard employee and employer contributions — in just the School Division is an estimated $244 million, or $299 for each of the 817,221 students funded by the School Finance Act. In a classroom off 20, that’s nearly $6,000 that cannot be spent to make students smarter or pay good teachers better.

This cost will increase by another 56 percent by 2018 — to an estimated $9,340 per classroom — and continue for at least 35 years, when today’s first-graders will have children who are old enough to drive.

Do PERA pensioners really believe that keeping every last cent of their benefits is worth taking nearly $10,000 away from their grandchildren’s classrooms?

Parents must wonder: What can possibly justify penalizing two full generations of students for a mess created long before their lives began?

For young teachers, the PERA bailout plan leads to a vicious cycle. A teacher who starts work today will soon see his or her wages and benefits suppressed by 10 percent per year to pay for the bailout. Adding insult to injury, lower salaries result in lower retirement benefits.

School boards, too, are caught in a vice because some 80 percent of their district budgets pay for salaries and benefits. No other line item is large enough to produce the savings necessary to pay for the tremendous cost of the PERA bailout.

Likewise, the PERA bailout is crowding other priorities out of the state budget. When fully implemented in 2018, it will cost more than the general fund expenditure for any department except for the four largest — Education, Corrections, Health Care Policy and Financing, and Human Services, based on the most current data available.

If we truly value our future, then we really should ask if it’s wise to shortchange schools for the next 35 years in order to pay for past mistakes.

Mark Hillman served as Colorado State Treasurer and a member of PERA’s board of trustees.  This op-ed originally appeared in the Denver Post.



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