Colorado Gov. Bill Owens: We must reform PERA

In his annual State of the State address, Colorado Gov. Bill Owens spoke about the need to make changes to the retirement system for state employees.

"One of the biggest challenges facing us this session is reforming the Colorado Public Employees’ Retirement Association-or PERA. With current unfunded liabilities of more than $11 billion, PERA will simply not be able to fulfill its future obligations unless we make changes now.

We must tackle this problem this year. I appreciate Treasurer Hillman’s strong leadership on this issue, and I look forward to finding a solution that’s fair-both to state employees as well as to Colorado taxpayers.

Almost everyone agrees that reform is necessary, and most largely agree on what those reforms should look like.

First, we do need to restructure PERA’s board, which the Rocky Mountain News described as "unwieldy," with no representation from the "tax paying public." The Pueblo Chieftain also has called for a reorganized board "with independent trustees who have no skin in the game."

Clearly, the new board should include members who are not part of the pension plan, and who have some investment experience.

I support an 11-member board comprised of five people elected by PERA members and four appointed by the Governor and confirmed by the Senate, with the State Auditor and Treasurer completing the board.

Second, we need to modernize our pension system to reduce current and future unfunded liabilities. This will require a separate tier for newly-hired employees that is stable, sustainable, and less expensive to the taxpayer. This reform will significantly reduce the future burden on government while at the same time attracting quality workers to state government.

We also need to take the politically tough step of examining benefit levels for our current employees. We can help make the system more sustainable by changing the age at which retirees receive full benefits and-if necessary-reducing benefits in the "out" years for those furthest from retirement. These changes should not affect those closest to retirement, but could be phased in for those who have years to go.

And I believe that before any change in benefits can occur, the Legislature should be required to obtain an independent actuarial review to determine the impact of the change.

Finally, we should expand the defined contribution plan to give workers more freedom over their money and reduce future unfunded liabilities."