Court: Colorado Pension System Can Cut COLAs

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The Colorado Supreme Court ruled Monday that Colorado’s largest pension fund could legally scale back cost-of-living adjustments.

In 2010, the Colorado Public Employee’s Retirement Association (CPERA) cut annual COLA increases from 3.5 percent to 2 percent. Retirees took the cuts to court, alleging breach of contract. But the ruling today sided with the pension system, and so the COLA cuts will remain.

From the Denver Post:

The Colorado Supreme Court on Monday ruled that the Colorado Public Employee’s Retirement Association can adjust the cost-of-living increases that current retirees under the state’s largest pension plan receive.

“We hold that the PERA legislation providing for cost of living adjustments does not establish any contract between PERA and its members entitling them to the perpetual receipt of the specific COLA formula in place on the date each became eligible for retirement or on the date each actually retires,” the Colorado Supreme Court stated in its ruling.

Cost-of-living formulas were first implemented in 1969 and have been adjusted several times over the years, with a 3.5 percent fixed rate set back in 2000 after stock markets had several years of big gains.

Concerns that the pension plan was severely underfunded triggered 2010 legislation that capped annual cost-of-living increases at 2 percent unless the pension’s investment suffered a loss the prior year.

In that case, the increase adjust at the actual inflation rate, up to 2 percent.

Retirees sued, arguing that PERA had a contractual obligation to provide the increases in place at the time they retired for the remainder of their lives.

A district court judged ruled against the retirees in Justus v. State, but the Colorado Court of Appeals overturned that decision.

Colorado Attorney General John Suthers, who office argued the case for the state, said he was pleased with the decision.

“The law in question was an important part of ensuring that PERA remains there for state retirees long into the future. As we argued to the Court, upholding the law helps protect both current and future retirees, and the state’s taxpayers,” he said in a statement.

PERA manages over $40 billion in assets and has over 400,000 members.

 

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2 Responses to “Court: Colorado Pension System Can Cut COLAs”

  1. Al Moncrief says:

    COLORADO SUPREME COURT: COLORADO PUBLIC SECTOR WORKERS EXCHANGE LABOR FOR COMPENSATION THAT WILL BE DETERMINED BY THEIR EMPLOYERS AFTER THE EMPLOYERS HAVE BENEFITED.

    This case, Justus v. State, never went to trial. There was no discovery. The Colorado Supreme Court did not bother to examine the existing evidence available even without discovery. The Supreme Court ignored its own “cardinal principle” that any ambiguities in Colorado public pension statutes shall be decided in favor of the public employee. The Colorado Supreme Court has ruled that the Colorado PERA COLA benefit is a “gratuity,” in violation of the anti-gratuity clause of the Colorado Constitution. The Supreme Court argues against the existence of the PERA COLA contract due to a lack of “durational” language in statute. But, it should be noted that the PERA “base benefit” itself has no such “durational” language.

    Colorado PERA members will now essentially work each day for whatever compensation their employers decide to grant them after the fact. This is the outcome that was sought by Colorado public sector unions.

    In effect, the Colorado Supreme Court has decided that in Colorado, contracts are meaningless. This case should be brought before the U.S. Supreme Court.

    Some of the evidence ignored by the Colorado Judiciary in this case, Colorado PERA officials acknowledge the existence of the COLA contract:

    December 16, 2009

    Colorado PERA officials in written testimony to the Joint Budget Committee: “The General Assembly cannot decrease the COLA (absent actuarial necessity) because it is part of the contractual obligations that accrue under a pension plan protected under the Colorado Constitution Article II, Section 11 and the United States Constitution Article 1, Section 10 for vested contractual rights.”

    http://www.kentlambert.com/Files/PERA_JBC_Hearing_Responses-12-16-2009_Final.pdf

    Rob Gray, a Colorado PERA representative, testifying to the Legislature’s House Finance Committee in regard to the “automatic” PERA COLA benefit under consideration [in House Bill 93-1324]: “The PERA Board does support this bill.” “We felt like it is something that is good pension policy . . . that it makes sense . . . THAT IT IS MAKING PERMANENT CHANGES, and also that it does help employers which is one of the goals of the bill.” Rob Gray states that the proposed COLA “adds predictability for current and future retirees, people looking at leaving might look at this and say now I know how my future increases are going to be determined . . .”

    Rob Gray characterizes the “automatic” PERA COLA benefit as a Colorado PERA LIABILITY: “when a change in benefits is added, like this bill, it extends out the period for paying off that unfunded liability.” If you listen to the recording of this meeting, you will also hear a member of the House Finance Committee refer to the Colorado PERA COLA provision under consideration as a pension benefit that is “guaranteed,” “now and in the future.” [Note that the contracted PERA COLA benefit adopted by the committee was in later years improved by the Colorado General Assembly to flat 3.5 percent level, constitutionally permissible as this “improvement” did not impair PERA pension contracts.])

    See:

    THE TOP TEN: DAMNING EVIDENCE IN THE COLORADO PERA RETIREE LAWSUIT, JUSTUS v. STATE.

    http://coloradopols.com/diary/44622/the-top-ten-damning-evidence-in-the-colorado-pera-retiree-lawsuit-justus-v-state

    See:

    SHOULD COLORADO SUPREME COURT JUSTICE WILLIAM HOOD RECUSE HIMSELF IN THE COLORADO PERA PENSION COLA LAWSUIT?

    http://coloradopols.com/diary/58201/should-colorado-supreme-court-justice-william-hood-recuse-himself-in-the-colorado-pera-pension-cola-lawsuit

    Visit saveperacola.com or ColoradoPols.com for the complete record of events and
    evidence available in the case, Justus v. State.

  2. Al Moncrief says:

    See the article: “THE COLORADO SUPREME COURT: POLITICIANS IN BLACK ROBES” at ColoradoPols.com.

    http://coloradopols.com/diary/64487/the-colorado-supreme-court-politicians-in-black-robes-as-it-turns-out

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