Conversation about PERA’s long-term financial health ongoing

Colorado PERA announced a 7.3 percent investment return, according to its 2016 Comprehensive Annual Financial Report (CAFR) released last week. The total fund—the combined assets of all five PERA member divisions—has now matched or outperformed the policy benchmark set by the PERA Board of Trustees for the one-, three-, five-, and 10-year time periods, net of fees. The long-term investment return for 35 years is 9.8 percent, gross of fees. (For more information on the Board’s responsibilities, including how it oversees PERA’s investment program, see this PERA on the Issues post.)

Those who have been following along with this year’s PERAtour effort are likely aware that the PERA Board and staff are currently soliciting feedback from PERA members, retirees, employers, and the general public on ways to help reduce PERA’s overall risk profile going forward. In 2016, the PERA Board lowered the long-term investment return assumption to 7.25 percent from 7.5 percent, reflecting their expectations for future market performance. Additionally, the Board conducted an experience study which showed that PERA members are living longer—meaning that PERA must pay benefits for a longer period of time than previously expected. The numbers reported in this year’s CAFR reflect these changes.

PERA is required by statute to undergo an annual financial audit overseen by the Office of the State Auditor, and conducted by an external audit firm. On June 22, 2017, the external auditor, CliftonLarsonAllen, reported to the PERA Board’s Audit Committee that they anticipate an unmodified “clean” opinion that the financial statements are presented fairly, in all material respects, for the seventh straight year.

In addition to the annual financial audit, the CAFR has consistently been recognized by the Government Financial Officers Association (GFOA) for excellence in the area of governmental accounting and financial reporting. PERA’s CAFR received this recognition for the 31st straight year in 2016. PERA’s annual CAFR is a wealth of vital information regarding the fund, including details on financial, investment, actuarial, and statistical facts. Below is an infographic highlighting some of the important pieces of information that can be found within the report.