To briefly summarize the reasons why the PERA Board sought legislation in 2018 that would adjust benefits and increase contributions:

• Full funding in 30 years complies with Colorado statute and the PERA Board’s policy.
• Full funding in 30 years gives PERA the ability to withstand inevitable future market shocks.
• Full funding in 30 years matches the employment pattern of Colorado’s public employees better, thus ensuring intergenerational equity.
• Full funding in 30 years strengthens the State’s credit rating.

Although the changes included in SB 200 are difficult, they were necessary to ensure the long-term retirement security of PERA members. Some of the positive outcomes of SB 200 are below.

Reducing liabilities.
With the changes in SB 200 and the 2017 investment return, PERA’s liabilities were reduced by $3.4 billion. This is a significant amount that reflects the sharing of responsibilities for righting the system among current and future members (who will pay more, will potentially have to work longer, and will have to wait at least three years before becoming eligible for an annual increase), retirees (who will have no annual increases in 2018 and 2019 and then a 1.5 percent cap), employers (who will contribute more), and the State of Colorado’s payment of the direct distribution.

Improving PERA’s funded status.
The funded ratio is a measure of funds available today compared to current and future payable benefits and is expressed as a percentage. PERA’s funded status also increased as a result of SB 200 and 2017 investment returns, going from 58 percent at the end of 2016 to 61 percent at the end of 2017.

Accelerating the time to reach full funding.
The time to reach full funding in each division is now within a 30-year time frame. By shortening the time it will take to reach full funding, the trust funds are better able to withstand inevitable fluctuations in the financial markets.

Division	Projected Period of Time to Reach Full Funding Prior to SB 200	Projected Period of Time to Reach Full Funding Post SB 200
State	58 years	27 years
School	78 years	30 years
Local Government	55 years	15 years
Judicial	54 years	15 years
Denver Public Schools (DPS)	56 years	17 years

SB 200 changes positively recognized by S&P.
One of the primary reasons cited for needing to pass SB 200 this year was the possible negative effect PERA’s unfunded liability could have on the State’s credit rating. Last fall, the Standard & Poor’s (S&P’s) credit rating agency issued a warning that a potential downgrade to Colorado’s credit rating could occur, due in part to the State’s long record of underpaying its share of the PERA fund costs. After the enactment of SB 200, S&P Global Ratings revised the outlook to stable from negative.

SB 200 is in line with PERA’s mission.
The actions taken by the PERA Board, the General Assembly and Governor, alongside PERA’s membership and stakeholders are notable and fulfill a commitment to promote the long-term financial security of the PERA membership while maintaining the stability of the fund.

For more information, see The Positive Impact of SB 200 fact sheet.