COLORADO SPRINGS — The governing board that manages the public pensions of 566,000 Coloradans on Friday endorsed a sweeping package of financial reforms that would cut retirement benefits and require public employees and taxpayers to contribute significantly more in the coming decades to bring the plan’s finances back from the brink.
The effort represents the second major reform attempt for the Colorado Public Employees’ Retirement Association, or PERA, after a prior wave of austerity measures following the Great Recession fell short.
Today, the pension is just 58.1 percent funded, down from 64.7 percent in 2010. At current projections, it would take 78 years to pay off the pension’s $32.2 billion unfunded liability.
The board’s recommendation sets the stage for what’s sure to be a bitter fight at the politically split state legislature next year — in an election year, to boot.
Specifics vary from division to division, but for public school teachers, whose pension fund is in the most financial peril, the changes look like this:
Retirees would see less money in their paychecks, because annual cost-of-living raises will be capped at a maximum of 1.5 percent instead of the current 2 percent.
Current school employees would have to contribute 11 percent of their salaries to the pension, a 3-percentage-point increase from today, phased in over 6 years.
Taxpayers would contribute 22.15 percent, an increase of 2 percentage points, phased in over 4 years. For school districts, that amounts to an extra $86 million a year once the increases are fully phased in. For the state government division, the second largest pension fund, it adds up to $54 million in additional pension costs.
Friday’s board vote came at the tail-end of a 3-day planning retreat at the Garden of the Gods Resort, a private country club overlooking the picturesque park in Colorado Springs.
This story is developing and will be updated.