Retirement insights from a Colorado PERA perspective

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It was a sprint to the finish line as lawmakers finished their work on hundreds of bills in the final days of the 2023 legislative session.



Colorado’s first regular session of the 74th General Assembly ended on May 8, 2023. Over the course of 120 days, legislators took up seven bills affecting Colorado PERA. Here’s a brief summary of the three that passed and are awaiting the signature of Gov. Polis to become law.



<a href="https://leg.colorado.gov/bills/sb23-016" target="_blank" rel="noreferrer noopener">Senate Bill 23-016</a> includes multiple provisions that are meant to reduce greenhouse gas emissions in the state. The PERA-related provision in the bill requires a description of climate-related investment risks, impacts, and strategies to be included as part of PERA’s annual <a href="https://www.copera.org/investment-stewardship" target="_blank" rel="noreferrer noopener">Investment Stewardship Report</a>.



<a href="https://leg.colorado.gov/bills/sb23-056" target="_blank" rel="noreferrer noopener">Senate Bill 23-056</a> requires the state to make an additional payment to PERA in the amount of the remaining balance of the <a href="https://leg.colorado.gov/bills/sb21-228" target="_blank" rel="noreferrer noopener">PERA Payment Cash Fund</a>, plus $10 million in General Fund, which results in a total payment of approximately $14.5 million. This payment is intended to recompense PERA for the cancellation of a previously scheduled July 1, 2020, direct distribution of $225 million, in addition to the compensatory payment provided in <a href="https://leg.colorado.gov/bills/hb22-1029" target="_blank" rel="noreferrer noopener">previous legislation</a>.



<a href="https://leg.colorado.gov/bills/sb23-163" target="_blank" rel="noreferrer noopener">Senate Bill 23-163</a> modifies the definition of “State Trooper” to include wildlife officers and parks and recreation officers hired on or after January 1, 2011, by Colorado Parks and Wildlife in the Department of Natural Resources. It applies the State Trooper contribution rate and benefits to eligible employees and their employers effective July 1, 2023. Those individuals who qualify under this definition in state statute are commonly referred to as “safety officers” for the purposes of PERA benefits in our materials.



Four other bills affecting PERA were introduced but did not pass. 



PERA will continue to engage with lawmakers during the interim period between legislative sessions. That oversight process includes meeting with legislative panels on the Legislative Audit Committee, Pension Review Commission and Subcommittee, and the Joint Budget Committee. These are opportunities for PERA to provide updates on its policies, financial condition, administration of the association, and answer questions from lawmakers.

Colorado Legislators Pass Three PERA-Related Bills During 2023 Legislative Session

Editor&#8217;s note: Gov. Jared Polis signed this bill into law on June 7, 2022.



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With just hours left in the legislative session, Colorado lawmakers gave final approval to a bill that will make up the state’s missed 2020 payment of $225 million to PERA.



The bill, <a href="https://leg.colorado.gov/bills/hb22-1029" target="_blank" rel="noreferrer noopener">HB22-1029</a>, now heads to Gov. Jared Polis for his signature.



Lawmakers&nbsp;<a href="https://peraontheissues.com/pera-related-legislation-sent-to-governor/" target="_blank" rel="noreferrer noopener">enacted legislation</a>&nbsp;to forego the $225 million direct distribution payment to PERA in 2020 during the early stages of the COVID-19 pandemic, when the General Assembly cut billions of dollars from the state budget. The state automatically resumed payments in 2021 — additional legislation would be required for the state to forego any future payments — but did not make up 2020’s payment.



Pending the governor’s signature on the bill, PERA will receive $380 million from the state. That amounts to a restoration of the missed $225 million direct distribution plus a prepayment of a portion of future direct distributions to PERA.



PERA will also receive 2022’s direct distribution of $225 million on July 1.



The $380 million will come from a cash fund the legislature <a href="https://peraontheissues.com/2021-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">set up in 2021</a>&nbsp;solely for future payments to PERA.



The bill was one of four PERA-related bills that lawmakers passed this session. For details on the other bills, vist <a href="https://www.copera.org/pera-on-the-issues" target="_blank" rel="noreferrer noopener">PERA on the Issues</a>.

Colorado Lawmakers Pass Bill Making Up $225M Payment to PERA

Update (May 11, 2022): This bill has passed. 



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A bill that would make up the state’s missed 2020 payment of $225 million to PERA has begun making its way through the state legislature.



The Pension Review Commission, a legislative interim committee that is charged to study and develop proposed legislation concerning pension plans in the state, <a href="https://peraontheissues.com/legislative-committee-seeks-to-make-up-missed-225m-payment-to-pera/" target="_blank" rel="noreferrer noopener">made a recommendation</a> for this bill to be introduced in the 2022 legislative session. It was introduced early in the session, but did not move forward until the state budget had been finalized.



The House Finance Committee on Monday voted 9-1 to move the bill, <a href="https://leg.colorado.gov/bills/hb22-1029" target="_blank" rel="noreferrer noopener">HB22-1029</a>, forward to the House Appropriations Committee for further consideration.



Lawmakers&nbsp;<a href="https://peraontheissues.com/pera-related-legislation-sent-to-governor/" target="_blank" rel="noreferrer noopener">enacted legislation</a> to forego the $225 million payment to PERA in 2020 during the early stages of the COVID-19 pandemic, when the General Assembly cut billions of dollars from the state budget. The state automatically resumed payments in 2021 — additional legislation would be required for the state to forego any future payments — but did not make up 2020’s payment.



HB22-1029 calls for the state to make a payment totaling $303.57 million — $225 million plus estimated investment gains, had the money been invested — on July 1, 2022.



The bill originally called for the payment to come from the state’s general fund until the actual funding source had been identified. The bill’s sponsors added an amendment to instead use money from a cash fund the state <a href="https://peraontheissues.com/2021-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">set up in 2021</a> solely for future payments to PERA. That fund currently has a balance of $380 million, which legislative staff has <a href="https://coloradosun.com/2022/02/09/pera-investment-cash-fund-pay-back/" target="_blank" rel="noreferrer noopener">recommended distributing to PERA</a> sooner rather than later.



The House Appropriations Committee is expected to consider HB22-1029 later this week and if approved, it will head to the House floor for discussion and vote before moving to the Senate. PERA On The Issues will continue to monitor legislative activity on this bill.



The $225 million direct distribution to PERA is part of a package of reforms enacted under Senate Bill 200 in 2018 and is meant to put PERA on a path to full funding.&nbsp;Also included in Senate Bill 200 was the&nbsp;Automatic Adjustment Provision, which will trigger increases in employee and employer contributions to PERA and reductions to annual increases for benefit recipients in July 2022.



Bill sponsor Rep. Shannon Bird referenced Senate Bill 200 and the state’s commitment to PERA when urging her fellow committee members to vote in favor of the bill.



“Our economy has rebounded and economic activity in Colorado is now exceeding even pre-pandemic levels,” Bird said. “In light of our greatly improved financial position, we now have the opportunity to make things right and hold ourselves accountable for our responsibilities under Senate Bill 200. Because when we suspended our payment in 2020, PERA lost $225 million and it also lost all investment returns those dollars would have brought in.”



The legislature has until May 11 to finish its work on any pending legislation and adjourn the current session.



For the latest on this and other PERA-related bills, <a href="https://peraontheissues.com/2022-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">visit PERA on the Issues</a>.

Bill to Make Up Missed $225M Payment to PERA Moving Through Legislature

Editor’s note: On Monday, Nov. 15, the Legislative Council voted to approve the bill, clearing the way for it to be introduced during the regular legislative session, which is set to begin on Jan. 12. PERA On The Issues will continue to monitor the bill and will provide updates regarding its status during the session.



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The Colorado General Assembly’s Pension Review Commission on Tuesday voted to recommend a bill for the 2022 legislative session that would make up the legislature’s missed $225 million direct distribution payment to PERA from July 2020.



Lawmakers <a href="https://peraontheissues.com/pera-related-legislation-sent-to-governor/" target="_blank" rel="noreferrer noopener">enacted legislation</a> to forego the annual $225 million payment to PERA during the height of the COVID-19 pandemic, when the General Assembly cut billions of dollars from the state budget. The state resumed payments in July 2021 but did not make up 2020’s payment.



The Pension Review Commission’s draft calls for the state to make a payment totaling $303.57 million — $225 million plus estimated investment gains, had the money been invested — on July 1, 2022.



Lawmakers recommended using money from the state’s general fund to make the payment, though committee members also suggested using money from a new cash fund the legislature established during the <a href="https://peraontheissues.com/2021-proposed-legislation-status/" target="_blank" rel="noreferrer noopener">2021 legislative session</a>. That fund, which currently has a balance of $380 million, is meant specifically for future payments to PERA.



The draft bill will head next to the Legislative Council before it could be introduced in the 2022 legislative session.



The $225 million direct distribution to PERA is part of a package of reforms enacted under Senate Bill 200 in 2018 and is meant to help PERA pay down its unfunded liability. Also included in Senate Bill 200 was the Automatic Adjustment Provision, which will trigger increases in employee and employer contributions to PERA and reductions to annual increases for benefit recipients in July 2022.

Legislative Committee Seeks to Make Up Missed $225M Payment to PERA

Gov. Jared Polis included PERA&#8217;s direct distribution in his 2021 state budget proposal.



The state legislature passed a bill in 2020 suspending the $225 million payment for one year due to historic revenue shortfalls and consequential budget cuts. PERA On The Issues has covered the 2020 suspension in depth in <a href="https://peraontheissues.com/legislative-update-an-uncertain-path-ahead/" target="_blank" rel="noreferrer noopener">previous</a> <a href="https://content.copera.org/polis-budget-plan-includes-pera-direct-distribution/" target="_blank" rel="noreferrer noopener">articles</a>.



It&#8217;s up to the state legislature to ultimately create and pass a budget, but the governor&#8217;s budget proposal helps get the budget conversation underway.



Direct Distribution – a Summary



The landmark SB 18-200 included a number of changes that work in concert to bring PERA to full funding. The <a href="https://peraontheissues.com/direct-distribution-of-225-million-helps-return-pera-to-full-funding/" target="_blank" rel="noreferrer noopener">direct distribution</a> was one of these changes. In short, it is a $225 million annual payment from the state. Every dollar goes toward paying off PERA’s unfunded liability.



This payment was more than a commitment of budget writers in 2018. The direct distribution was written into statute, to occur every year until all unfunded actuarial accrued liabilities from all divisions of PERA are eliminated.



2020 Crisis



The global pandemic led to a precipitous drop in state revenue. Billions of dollars of expected income vanished. The Joint Budget Committee (JBC), the bipartisan group of senators and representatives who write the state budget, faced an unenviable task: reducing or eliminating a <a href="https://peraontheissues.com/legislative-update-an-uncertain-path-ahead/" target="_blank" rel="noreferrer noopener">large number</a> of previously budgeted items in order to balance the budget. The direct distribution was one of many emergency cuts.



2021 Budget Process



We won’t know what next year’s budget will look like for a while. Typically, the JBC releases their budget in late March or early April. However the process of creating the budget takes months.



The governor’s budget plan is one of the first waypoints of this process. While the governor does not write the budget, he can signal priorities via this plan. Restoring the direct distribution is a key part of <a href="https://www.colorado.gov/governor/news/3376-governor-polis-releases-state-budget-proposal" target="_blank" rel="noreferrer noopener">his proposal</a>, which he released on November 2. Next Steps



The status of the direct distribution won’t be official until the state legislature passes a budget next year. However, learning about the priorities of everyone involved in the budget process, like the governor, can bring some focus to an otherwise hazy picture.



Another opportunity to gain clarity is when the state releases its revenue forecasts periodically. Revenue forecasts supply JBC members with crucial information about how much money they can expect to work with. 



Remember, these forecasts are estimates and can change over time. But they are important in setting expectations as the JBC does their work.



“The September revenue forecast painted a slightly less grim picture of the state’s revenue situation as the economy continues to rebound,” said Michael Steppat, PERA’s Public and Government Relations Manager. “But all eyes will be on the upcoming December forecast as state and local leaders ponder the best response to currently surging COVID cases across the state.”



PERA On The Issues will continue following the budgeting process and post updates as they occur.







Editor&#8217;s note: this story was updated on 11/11 for clarity.

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Colorado Legislators Pass Three PERA-Related Bills During 2023 Legislative Session

Colorado Lawmakers Pass Bill Making Up $225M Payment to PERA

Bill to Make Up Missed $225M Payment to PERA Moving Through Legislature

Legislative Committee Seeks to Make Up Missed $225M Payment to PERA

Polis Budget Plan Includes PERA Direct Distribution

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