Bitter Pill

Teachers union opposes 401(k)-like provision in Colorado pension overhaul bill

PHOTO: Denver Post file

Colorado lawmakers Wednesday unveiled one of the most anticipated bills of the session – an overhaul of the public employee pension system in which most public school teachers participate – and the teachers union immediately raised alarms about a central provision.

Along with increasing employee contributions, cutting benefits for retirees, and raising the retirement age, the bill calls for the creation of a defined-contribution option within the Public Employees’ Retirement Association, similar to the 401(k)s available to many private sector employees, for workers hired after Jan. 1, 2020.

“The alarming provisions in this bill to expand a defined-contribution or 401(k)-style plan do absolutely nothing to achieve the goal of fully funding PERA in 30 years,” Colorado Education Association President Kerrie Dallman said in press release. “A drastic overhaul to PERA with political ornaments like defined-contribution are only being driven by well-funded, out-of-state interests such as the Koch Brothers and the Arnold Foundation. Our legislature needs to ignore the outside voices and instead focus on solutions informed by reliable data.”

The bill, whose sponsors include state Sen. Jack Tate, a Centennial Republican, and House Majority Leader K.C. Becker, a Boulder Democrat, also calls for:

  • Employee contributions to increase by 3 percentage points over the next two years
  • Taxpayer contributions to increase by 2 percentage points during the same period
  • Annual cost-of-living raises for retirees to go down to 1.25 percent from the current 2 percent
  • An increase in the retirement age, not just for new employees but also for current employees who are 46 or younger
  • The creation of a legislative oversight committee
  • A fail-safe mechanism to allow automatic adjustments of benefits and contributions if necessary for the financial stability of the fund

As The Denver Post’s Brian Eason reports, Republicans consider the creation of a defined-contribution plan to be the necessary sugar that allows them to swallow the bitter pill of increased taxpayer contributions. But this proposal as introduced doesn’t have the votes to get out of the Democratic-controlled House, which means the final version will look different – if we get a PERA bill at all out of a divided legislature in an election year.

Ushering the bill through a split legislature in an election year will be tricky, and there’s something in the bill for each side of the pension debate to hate. The defined contribution provision, coupled with the steeper cuts to benefits backed by Hickenlooper, will likely draw significant opposition from public-sector unions and Democratic lawmakers. The plan also increases government contributions, an idea that (Gov. John) Hickenlooper, (Treasurer Walker) Stapleton, and many conservative lawmakers oppose.

Dallman stressed that the teachers union understands that shoring up PERA’s solvency will require “shared sacrifice.” What that means in practical terms is that increased employee contributions and reductions in cost-of-living increases for retirees are negotiable and very much on the table.

But the union considers the 401(k)-like plan unacceptable. Dallman tied the issue to the difficulty many districts have in hiring enough teachers in certain subject areas and in certain parts of the state. PERA’s defined retirement benefits, so rare now in the private sector, help teachers tolerate low wages and sometimes challenging working conditions.

“Educators who teach our children for a long career have earned a stable income that affords them a good quality of life in their retirement years,” Dallman said. “The defined benefits of PERA allows retirees to remain solid, dependable contributors in their local economies in all market conditions, and demonstrates Colorado’s dignity and respect for public employees who continue to make our state a great place to live, work and raise a family.”

Past proposals to create defined-contribution plans have been expensive, the Post reports, because the system needs money from current employees to pay retirees. This bill tries to avoid that problem by requiring public agencies to backfill some of the lost contributions of non-participating employees.

PERA, which replaces Social Security for public school teachers and many other public sector workers, has roughly 566,000 members statewide. The program has only 58 percent of the necessary assets to pay its retirement obligations, with an unfunded liability between $32 billion and $50 billion.

Earlier this year, Eason looked at how the program ended up in trouble less than a decade after it was supposedly fixed the last time.

Correction: An earlier version of this story described PERA’s unfunded liability in the millions. It’s in the billions.

Keep Out

What’s wrong with auditing all of Colorado’s education programs? Everything, lawmakers said.

Students at DSST: College View Middle School work on a reading assignment during an English Language Development class (Photo By Andy Cross / The Denver Post).

State Rep. Jon Becker pitched the idea as basic good governance. The state auditor’s office examines all sorts of state programs, but it never looks at education, the second largest expenditure in Colorado’s budget and a sector that touches the lives of hundreds of thousands of children. So let the auditor take a good, long look and report back to the legislature on which programs are working and which aren’t.

The State Board of Education hated this idea. So did Democrats. And Republicans. The House Education Committee voted 12-0 this week to reject Becker’s bill, which would have required a systematic review of all educational programs enacted by the legislature and in place for at least six years. Even an amendment that would have put the state board in the driver’s seat couldn’t save it.

As he made his case, Becker, a Republican from Fort Morgan in northeastern Colorado, was careful not to name any specific law he would like to see changed.

“I don’t want people to say, ‘Oh, he’s coming after my ox,’” he told the House Education Committee this week. “I know how this works. And that’s not the intent of this bill. It’s to look at all programs.”

But members of the committee weren’t buying it.

State Rep. Alec Garnett, a Denver Democrat, pressed school board members who testified in favor of the bill to name a law or program they were particularly excited to “shed some light on.” If there’s a law that’s a problem, he asked, wouldn’t it make more sense to drill down just on that law?

They tried to demur.

“I feel like you’re trying to get us to say, we really want you to go after 191 or we really want you to go after charter schools,” said Cathy Kipp, a school board member in the Poudre School District who also serves on the board of the Colorado Association of School Boards. “That’s not what this is about.”

Kipp said committee members seemed to be “scared that if their pet programs get looked at, they’ll be eliminated. Why be scared? Shouldn’t we want these programs to be looked at?”

But proponents’ own testimony seemed to suggest some potential targets, including Senate Bill 191, Colorado’s landmark teacher effectiveness law.

As Carrie Warren-Gully, president of the school boards association, argued for the benefits of an independent evaluation of education programs, she offered up an example: The schedules of administrators who have to evaluate dozens of teachers under the law are more complicated than “a flight plan at DIA,” and districts have to hire additional administrators just to manage evaluations, cutting into the resources available for students, she said.

The debate reflected ongoing tensions between the state and school districts over Colorado’s complex system for evaluating schools and teachers and holding them accountable for student achievement. The systematic review bill was supported by the Colorado Association of School Boards, the Colorado Association of School Executives, and the Colorado Rural Schools Alliance.

Lawmakers repeatedly told school officials that if they have problems with particular parts of existing legislation, they should come to them for help and will surely find allies.

Exasperated school officials responded by pointing to the past failure of legislation that would have tweaked aspects of evaluations or assessments — but the frustration was mutual.

“Just because people don’t agree with one specific approach doesn’t mean people aren’t willing to come to the table,” said committee chair Brittany Pettersen, a Lakewood Democrat.

There were other concerns, including the possibility that this type of expansive evaluation would prove expensive and create yet another bureaucracy.

“When have we ever grown government to shrink it?” asked state Rep. Paul Lundeen, a Monument Republican. “There’s a paradox here.”

And state Rep. James Wilson, a Salida Republican who is also a former teacher and school superintendent, questioned whether the auditor’s office has the expertise to review education programs. He also asked what standard would be applied to evaluate programs that are implemented differently in more than 170 school districts across the state.

“If it’s effective more often than not, will they keep it?” Wilson asked. “If it doesn’t work in a third of them, it’s gone?”

State Board of Education members had similar questions when they decided earlier this year that this bill was a bad idea. Many of Colorado’s education laws don’t have clear measures of success against which their performance can be evaluated.

The READ Act, for example, stresses the importance of every child learning to read well in early elementary school and outlines the steps that schools have to take to measure reading ability and provide interventions to help students who are falling behind their peers.

But how many children need to improve their reading and by how much for the READ Act to be deemed effective or efficient? That’s not outlined in the legislation.

Proponents of the bill said outside evaluators could identify best practices and spread them to other districts, but state board members said they already monitor all of these programs on an ongoing basis and already produce thousands of pages of reports on each of these programs that go to the legislature every year. In short, they say they’re on the case.

“The state board, I can assure you, are very devoted and intent to make sure that we follow, monitor, and watch the progress of any programs that go through our department and make sure they’re enacted in the best way possible within the schools,” board member Jane Goff said.

safe bet

Disputed money in Colorado education budget will go to school safety measures

DENVER, CO--JUNE 167TH 2009--The Colorado State Capitol Wednesday afternoon. THE DENVER POST/ANDY CROSS

Colorado lawmakers will take $7 million in “extra” education money they’ve been wrangling over and put it toward bills that improve school safety.

The money isn’t officially designated for a specific bill, but $7 million happens to be the amount of money that state Sen. Don Coram, a Montrose Republican, has requested in a bill that would provide grants to schools that want to buy radio technology that allows them to communicate more directly with emergency responders. Speaker of the House Crisanta Duran, a Denver Democrat, is a co-sponsor of the bill.

At a Senate Education Committee hearing last month, administrators from rural school districts that already use the hand-held radios said they would be an immense help in a school shooting, but they also get daily use for more mundane problems, like dealing with broken-down buses and irate parents.

The bill calls for the Department of Public Safety to make $7 million in annual grants available to schools for five years. Grant recipients would be able to use the money to provide training in how to communicate effectively with first responders in an emergency, to update school crisis management plans, and to make improvements in their communications systems.

The bill doesn’t identify a specific funding source. The compromise reached late last week allows the money to go toward a range of school safety needs, not just the radio technology bill.

Republicans in the Senate and Democrats in the House had been fighting over how to adjust the 2017-18 appropriation for K-12 education after roughly 900 fewer students enrolled in Colorado schools than had been forecast.

Democrats had wanted to keep total spending the same and give schools a little bit extra per student. Republicans wanted to keep per-pupil spending the same and put the extra money into the general fund.

The debate over an amount that represents less than one-tenth of 1 percent of the state’s $6.6 billion education budget was symbolic of the larger budget debate hanging over this legislative session.

State Rep. Brittany Pettersen, the Lakewood Democrat who chairs the House Education Committee, had pushed for more money to go to schools, but she said this week that the deal is a reasonable compromise.

“It keeps the money in schools and supports schools in ways that they’re really struggling,” she said.

The state Senate and House have both signed off on the compromise proposal, which comes as the Joint Budget Committee prepares to discuss the 2018-19 education budget.