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Colorado Treasurer Candidates Differ On Pension Reform

Reforming Colorado’s largest pension plan, the Public Employees Retirement Association (PERA), is one of the looming issues in the state’s upcoming Treasurer election. And the candidates have very different takes on the situation.

Betsy Markey (D) is a former congresswoman who says she’ll fight for financial transparency but isn’t making pensions a central issue of her campaign. From the Durango Herald:

Markey is not overly concerned [about PERA], pointing out that legislative steps have been taken to put PERA on a sustainable path. She said the PERA board voted to lower the anticipated rate of return from 8 to 7.5 percent.

“When you’re looking into the future, the PERA board itself expects to close that unfunded liability gap within the next 30 years,” Markey said. “And they don’t expect that there will be a time in the next 30 years where they will ever not be able to fully meet their obligations to retirees.”

Incumbent Walker Stapleton (R), meanwhile, has made pension reform one of the central issues of his campaign and tenure as Treasurer. Still, he admits the state’s unfunded pension liabilities grew under his watch.

Walker responded to Markey’s position on pensions:

Stapleton said Markey’s position suggests an “alarming lack of knowledge for public-finance issues.

“PERA’s liability has only grown since I’ve been in office.” Stapleton said.

He added: “She said that PERA was fine, and I’m obsessed with it. … But she would also lower the rate of return for PERA? You can’t be for lowering the rate of return and not for additional work to be done.”

[…]

Stapleton has found himself at odds with the state employees’ union and those who manage retirement benefits.

He filed a lawsuit seeking to open the books of the Public Employees’ Retirement Association fund, and he has repeatedly fought to lower the projected rate of return on investments. He has also advocated for lowering cost-of-living raises and increasing the retirement age.

As of 2012, Colorado’s PERA was 63 percent funded and was shouldering $23 billion of unfunded liabilities.

Phoenix Politicians Weigh In On Pension Reform Measure

The Arizona Republic runs a great column every week where they ask a dozen major political players in Phoenix a question regarding an important issue.

This week, pensions were the issue. Specifically Proposition 487, which would shift new hires into a 401(k)-style system as opposed to a defined benefit plan.

There has been much debate over whether the law would impact police and firefighters, who are supposed to be shielded from the law.

Here’s what some Phoenix politicians had to say about the ballot measure, from the Arizona Republic:

We asked: Do you think Prop. 487 will impact the retirement benefits of current or future police officers and firefighters? Why or why not?

“Whatever the long-term impact of the proposition, it’s likely that if it’s passed, it will take years in court to clarify its true intent. The losers will be Phoenix taxpayers, who will bear the costs of a prolonged legal debate.”

— Thelda Williams,District 1, northwest Phoenix

“No. I don’t believe that ‘preamble’ is an accurate term given voters will support or oppose the measure in its entirety, including this language from Page 1 in the ‘preamble:’ ‘This Act is not intended to affect individuals who are members of, or are eligible to join, any other public retirement system in the State of Arizona such as the Public Safety Employees’ Retirement System.’ While I understand those in the system are unhappy with this initiative, the alternative is to do nothing. That is not acceptable. Inaction by the council led to this citizen action in the first place.”

— Jim Waring,vice mayor (District 2), northeast Phoenix

“Prop. 487, as written, impacts the retirement benefits of current and future public-safety personnel and does not exclude these employees as stated in the preamble. According to city analysis, Section 2.2 (C) runs counter to the current Public Safety Personnel Retirement Plan that is required by state statute for current and future public-safety employees. Therefore, future contributions to this plan would not be warranted and current public-safety employees would have these benefits frozen. Prop. 487 also prevents contributions to additional plans such as the Medical Expense Reimbursement Plan, Post Employment Health Plan and Fire Employee Benefit Trust.”

— Michael Nowakowski,District 7, southwest Phoenix and parts of downtown

“Prop. 487 will absolutely impact police and firefighters. The only section of the measure that would have the force of law makes no special exemptions for public safety — whether that was the intent of who wrote it or not. Prop. 487 is the wrong reform. It is poorly written and will have devastating effects on taxpayers, police officers and firefighters alike. These brave men and women work every day to make sure that we are safe, and we owe it to them to protect their retirement. I urge Phoenix residents to vote no on Prop. 487.”

— Daniel Valenzuela,District 5, Maryvale and west Phoenix

“The proponents of Prop. 487 did a sloppy job drafting this initiative. Prop. 487’s backers claim any harm to public-safety personnel was a careless mistake. However, this doesn’t square away with what proponents are actually trying to put in our city charter. Prop. 487 amends our charter with poorly-written language that would cost millions, making it harder for us to fund infrastructure improvements. The best-case scenario for first responders under Prop. 487 is that their status will be in jeopardy, potentially for years, as the fate of their benefits is determined by the courts following expensive litigation.”

— Kate Gallego, District 8, southwest Phoenix and parts of downtown

“Voters can fix the broken pension system, saving $500 million, by voting yes on Prop. 487. The government unions have waged an all-out campaign of disinformation to stop pension reform. Prop. 487 does not impact public safety because: 1. Public-safety pensions are administered by the state, not the city. 2. State law doesn’t allow participants in PSPRS to opt out. 3. The initiative clearly states that it does notaffect public-safety personnel. Escalating pension costs means fewer services, less police and more taxes and fees. Prop. 487 brings financial accountability. Don’t believe the disinformation the government unions are propagating.”

— Sal DiCiccio, District 6, Ahwatukee and east Phoenix

“Fellow Phoenix residents, I call it the way I see it. Prop. 487 is confusing and poorly written. If it passes, it could end up in court with the potential for millions of dollars going to legal fees, instead of supporting vital programs and services for our community. In addition, Prop. 487 could have detrimental consequences for our public-safety personnel and other city employees. Specifically, Prop. 487 could end defined-benefit pensions for Phoenix police officers and firefighters, making the women and men of public safety the only public-safety personnel in Arizona who could not earn a defined-benefit pension. Our police officers and firefighters work hard to keep our community safe, and we as a community should protect our public safety personnel’s retirement. This proposition is not the way to reform our city’s pension plan.”

— Laura Pastor,District 4, central and parts of west Phoenix

“Yes. Prop. 487 will hurt our current police officers and fire fighters, and could even end death and disability benefits for our first responders. It is one of the many reasons why I oppose this initiative. The plain language prevents the City from making contributions to the state public safety pension system. Those behind the effort have not had this intent, but this initiative was so poorly written – so badly constructed – that it will have devastating consequences for Phoenix. On top of that, it will cost taxpayers $350 million. It’s the wrong reform, and we can’t afford it.”

— Greg Stanton, mayor

Money has flooded into Phoenix in recent weeks to fund both opponents and proponents of the law. But the source of much of that money is shrouded in secrecy, as Pension360 wrote on Monday.

Quebec Stays Course on Pension Reforms In Face of Mounting Protests

Protestors are flooding Montréal streets in opposition of Quebec’s Bill 3, a measure that would freeze COLAs for retirees and increase employee contributions.

But the government isn’t willing to reverse course on their plan to lower the costs of the province’s pension system. Bill 3 is expected to pass within a month. From the Montreal Gazette:

The provincial government won’t budge on the proposed reform of municipal pension plans, Municipal Affairs Minister Pierre Moreau said Tuesday, three days after the largest protest yet against Bill 3 was held in Montreal.

“We are not in a bargaining situation,” he said. “The government and experts have said, in a report that was welcomed by everyone in the National Assembly, that there was an urgency to act to save those pensions. That’s what we’ve done.”

The minister said the government is done consulting interested parties, including union leaders, retiree representatives and the Union des municipalités du Québec, and has moved on to drafting the bill. Union leaders called the hearings a “farce.”

[…]

The government won’t necessarily wait for actuarial reports on the health of the pension plans to be published next month before passing the bill, Moreau added.

“Having the numbers doesn’t change anything,” he said. “It doesn’t change anything for the pensions that are totally under-financed.

“For example, even if I don’t know your weight, if you’re overweight I know you’re in precarious health.”

Bill 3 is part of a larger austerity plan to cut government costs and pay down a deficit of nearly $4 billion.

Oregon’s Governor Speaks On Future of Pension Reforms

The Oregonian is running an interesting column in the weeks leading up to the Nov. 4 election for state governor. The column is called “Tough Questions”, and it gives readers a chance to ask questions to the two candidates, incumbent Gov. Kitzhaber and his challenger, Republican Rep. Dennis Richardson.

Today, a reader asked the governor a question related to the pension reforms enacted by the state last year.

Here’s the exchange, from the Oregonian:

Reader: The court decision on the 2013 PERS changes is expected by the 2015 Legislature. You’ve said that you’re done with PERS reforms. Does that mean that if the Court strikes down all or some of the PERS changes, you will not revisit the changes that were rejected previously? If so, then what budget items do you plan on cutting to make up for the extra PERS costs.

Gov. Kitzhaber: The 2013 PERS reform, along with pension fund earnings, reduced the system’s unfunded liability from $16.3 billion at the end of 2011 to $8.1 billion at the end of 2013. As a result of these changes we are already succeeding in controlling costs and today public employers are investing more in programs and services and school districts have begun hiring back teachers, reducing class size and restoring a full school year.

The reforms adopted are fair, progressive and legally defensible. We believe the State will prevail in court. With PERS off the table, we need to harness the same bipartisan support to make targeted investments in third grade reading, science and technology education and other key programs.

In a poll on the Oregonian website, 72 percent of readers said they though Kitzhaber dodged the question with his answer. But 28 percent of readers thought he answered the question fully.

Quinn: No Plan “B” On Pension Reform

Most experts agree that Illinois’ pension reform law, passed in December, currently stands on shaky ground after a July ruling from the Illinois Supreme Court extended constitutional protection to retiree health premiums.

But Illinois Gov. Pat Quinn isn’t ready to write off the law just yet. In recent interviews, he’s also been steadfast that he’s not ready to start drawing up a backup plan, either.

From the Associated Press:

Gov. Pat Quinn argued Friday that it makes no sense to develop a contingency plan.

The Chicago Democrat, who “fervently” believes the plan is constitutional, said in an Associated Press interview that he’d like to get feedback from the courts before proceeding despite Illinois’ urgent financial difficulties.

“You don’t exactly help your position before the court if you say, ‘Well I’ve got a plan b out here, maybe you could take that instead,’ and it’s not even passed by the Legislature,” Quinn said. “That’s a very bad strategic position …”

Quinn’s comments come as he faces a tough re-election challenge from Republican businessman Bruce Rauner (ROW-nur). He opposes the law Quinn signed in 2013.

After years of debate, lawmakers approved a plan that cuts benefits for most employees and retirees aimed reducing the state’s massive unfunded liability.

Unions sued over the law, saying it violates the Illinois Constitution.

But in a separate case on retiree health care, the Illinois Supreme Court in July ruled a law requiring retirees to pay more for health insurance was unconstitutional. The decision centered on the constitution’s strong protections for retirement benefits.

Quinn has drawn criticism for the lack of backup preparations. Last week, a columnist for the Chicago Tribune wrote:

Gov. Pat Quinn says he doesn’t need a “Plan B” to address the problem because he believes the Illinois Supreme Court will uphold the pension reform law he signed in December.

[…]

Quinn’s faith in the Illinois Supreme Court is farfetched. In July, the court issued a thumping 6-1 ruling striking down a previous legislative effort to cut health care subsidies to state retirees and employing language that seemed to serve as a funeral oration for the pension reform law.

Addressing the state’s “but we can’t afford to provide the benefits we promised!” argument, the majority wrote that the unequivocal pension protection clause in the Illinois Constitution “was aimed at protecting the right to receive the promised retirement benefits, not the adequacy of the funding to pay for them.”

Even if Quinn genuinely has hope that the court will gymnastically OK the pending law nevertheless, he still owes it to us to reveal what he proposes to do when — I mean if — those hopes are dashed.

As Pension360 has covered, pensions are becoming a bigger part of the race for Illinois governor in light of the July court ruling that opened the door for reworked reform measures.

Rhode Island Gov. Candidate Allan Fung Is A Pension Reformer, Too

By now, everyone knows about Gina Raimondo’s track record on pensions. Despite the controversy surrounding her 2011 reform efforts and subsequent investment strategies, she made pensions a central facet of her campaign for governor.

Her Republican opponent, Allan Fung, is now taking up a similar strategy. Fung, currently the Mayor of Cranston, has this week begun touting his own record of pension reform. From Public Sector Inc:

Like Raimondo, Fung, who served on a reform panel that helped craft the 2011 state pension changes, has been an ardent backer of trimming pensions to make them more affordable. The difference is that the media hasn’t seemed to consider that such an unusual story for a Republican politician. Raimondo, by contrast, has benefited from a barrage of stories hailing her as a Democrat willing to take on public employees and their unions.

[…]

Cranston’s current employees participate in the state’s retirement system, so the city had a stake in the state-engineered reforms. But Cranston fire and police retirees and those workers who were hired before July 1, 1995 participate in a separate city-directed plan that was deeply in debt . Although the plan has just 483 members, the vast majority of which were already retired, the plan was so expensive that it cost the city $22.3 million to support this year, amounting to 20 percent of the city’s operating budget, excluding its school system.

Earlier this year Fung struck a deal with the majority of plan members to suspend cost of living adjustments and to cap any future COLA’s at 3 percent. The deal is expected to save Cranston about $6 million a year for a plan that was so expensive that the city began winding it down in 1995. When Fung took office in 2008 the pension system had just 15 percent of the assets on hand necessary to pay its current liabilities, and Fung warned beneficiaries that a day could come when the fund went bankrupt. Now the system is on track to be fully funded, but it will take two decades.

Cranston is also saving money because Fung struck a deal to place new city employees in a 401(k) style defined contribution plan.

A side note: this election will be a historic one for Rhode Island no matter who wins. Raimondo is vying to become the first woman governor in the state’s history. Fung, meanwhile, would be the first Asian elected to that office.

Photo credit: “Mayor Allan Fung visits Providence” by Office of Mr. Fung. Licensed under Creative Commons Attribution 3.0 via Wikimedia Commons

Pennsylvania Lawmakers Return From Break, But Pension Reform Remains On Backburner

Pennsylvania lawmakers returned to the capitol this week to convene for the fall legislative session. While they were out, Gov. Tom Corbett traveled around the state and continued to try to drum up public support for pension reform and his re-election.

But the pension reform bill currently in the House seems unlikely to go anywhere; lawmakers now have other bills on their mind. Reported by the Pittsburgh Post-Gazette:

Legislators returning today to the Capitol are expected to take up several bills during their month-long stint before the election, but there is little sign yet that the pension overhaul promoted by Gov. Tom Corbett will be among those headed to his desk.

House Republicans’ efforts to pass the legislation remaking retirement benefits for future state and public school workers consumed significant energy in the lead-up to the signing of the state budget in July. Mr. Corbett urged legislators to send him the bill, which would limit the defined pension benefit while adding a 401(k)-style plan, but with Democrats opposed, Republicans in the House were unable to rally enough votes from their own ranks.

The Republican governor embarked on a statewide tour to emphasize the costs of the existing systems, while House Republicans say they met to discuss pensions throughout the summer.

“We’re still within striking distance,” Steve Miskin, a spokesman for House Majority Leader Mike Turzai, R-Marshall, said last week.

If the bill were to clear the House, it would face another hurdle in the Senate, where members instead approved a bill to move elected officials from the traditional pensions systems to 401(k)-style defined contribution plans.

The bills that are taking precedence over pension reform include a proposal to increase taxes on cigarettes and legislation surrounding ride-sharing programs such as Uber and Lyft.

Democrats are also working on raising the state’s minimum wage and securing more education funding.

Photo: Chesapeake Bay Program via Flickr CC License

Illinois Gov. Quinn Accuses Challenger Bruce Rauner Of Paying Off Lawmakers To Vote Against Pension Reform Bill

Things got heated on Tuesday when Illinois Gov. Pat Quinn and challenger Bruce Rauner met for a face-to-face debate in front of the Chicago Tribune editorial board.

[Watch the full video here.]

The session lasted 80 minutes but arguably the most interesting point came when Quinn dropped an intriguing allegation: that Bruce Rauner had offered to pay off lawmakers to vote against the pension reform bill passed by Illinois last December. From the Chicago Tribune:

Quinn said that in December, during the heat of negotiations over a measure to drastically change public employee pension benefits, House Republican leader Jim Durkin told him that Rauner was offering campaign cash to GOP lawmakers to vote against the bill.

Rauner acknowledged working against the pension bill, which Quinn signed into law, but denied the governor’s allegation. Durkin aides referred calls to the state Republican Party, which did not directly address Quinn’s allegation in an emailed statement.

Bruce Rauner has proposed a plan to freeze the pensions of all current state employees and switch them into a 401(k)-style plan.

But Rauner has softened his stance in recent days, perhaps because he doesn’t want to alienate voters in what’s shaping out to be a close race.

During a public appearance Wednesday, Rauner said the following, according to WUIS:

“I’m a believer that we need to protect the pensions for the police officers, and give them a special retirement beyond what’s standardly done in other pensions.”

He didn’t clarify exactly what he meant by the statement.

Photo by Chris Eaves via Flickr CC License

Pennsylvania Gov. Corbett, Trailing in Polls, Says He Will “Force Action” on Pension Reform

There’s less than two months until Pennsylvania residents will decide who becomes their next governor, and incumbent Tom Corbett finds himself trailing in polls by 15 points to Democratic challenger Tom Wolf.

Pension reform has been a central facet of Corbett’s campaign, and he doubled down on that stance Wednesday when he said he would “force action” on pension reform if he is re-elected. From the Philadelphia Inquirer:

“If I don’t get reelected for four more years, there will be nothing done about this, because Mr. [Tom] Wolf says there is not a pension problem,” Corbett said.

If he wins a second term, Corbett said, he would call a special session of the legislature early next year to force action on pensions, including for municipal workers. He said Scranton is distressed because of unaffordable pension obligations and predicted some school districts in Pennsylvania will come “doggone close to bankruptcy” without a solution.

Pension360 has previously covered polling data suggesting Pennsylvania voters are much less engaged on pension issues than they are on other topics, such as education. Corbett acknowledged as much on Wednesday in a chat with the Philadelphia Inquirer’s editorial board:

In the governor’s view, he is hurting politically because he has taken on issues “no one else will touch.” He mentioned his efforts to cut future pension costs, to end the system of state-controlled liquor stores, and to privatize management of the state lottery. The legislature, controlled by fellow Republicans, has stymied Corbett on all three priorities.

“If I had been looking toward reelection, do you think I would have taken on pensions, when all it does is get everyone upset?” Corbett asked. He added that he hoped voters would give him credit for trying.

Tom Wolf does not support Tom Corbett’s pension reform plan. In a statement Wednesday night, a Wolf spokesman characterized Corbett’s plan as “kicking the can down the road”.

Video: Pension Reform in Alaska, by Sen. Hollis French

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The 2014 Council of State Governments Conference was held last month, but video of the presentations has just started to surface.

There were a handful of presentations on public pension topics. One such presentation

focused on pension reform in Alaska. The talk was given by Alaskan Senator Hollis French.

The video description reads:

Shortfalls in state-run retirement systems continue to grow, and in the 2012 fiscal year, the gap between promises to state workers and funding in the accounts reached $915 billion. Unfunded pension obligations can have significant implications for a state’s fiscal stability, including lower credit ratings, increased borrowing costs and the diversion of state resources away from other spending priorities like infrastructure and education.

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