Who Is In Charge

PERA plan: “Work longer, pay more, receive less”

There was no good news in a 90-minute legislative discussion Thursday afternoon on the financial future of the Public Employees’ Retirement Association.

The PERA board has proposed a sweeping and complex plan designed to bring the recession-battered pension plan to solvency within 30 years. Board members and executives met with members of the Joint Budget Committee to answer questions on the plan.

Summing up the effects of the proposal on civil servants and retirees, PERA Executive Director Meredith Williams said, “So, essentially they’ll work longer, pay more and receive less.”

Public Employees' Retirement Association headquarters in Denver.
Public Employees' Retirement Association headquarters in Denver.

The rescue plan wouldn’t increase employee payroll deductions but would increase employer contributions – including from funds that otherwise would go for salary increases – and, for some workers, would raise the retirement age and reduce the salary base on which a pension is calculated.

The most controversial part of the plan, at least based on the volume of e-mail flowing into legislators’ in-boxes, is a proposal to reduce most retirees’ annual cost-of-living increases from 3.5 percent to 2 percent. It’s estimated that the current COLA would provide a third of the pension benefits over the retirement of a worker who retired in 2008.

The future of PERA – and the cost of fixing it – is of high interest to the Colorado education community. Of PERA’s 190,684 active members, 118,547 are in the school division, which includes all districts in the state except Denver. (DPS employees and retirees will enter the system Jan. 1 as a separate division.) Some 44,806 people receive benefits from the school division. Thousands of higher education employees also belong to PERA, as part of the state division.

Its investments hollowed out by the recession, PERA’s net assets available for benefits dropped from $43.1 billion at the end of 2007 to $30.8 billion at the end of 2008, a loss of more than 25 percent. The system pays about $3.1 billion in benefits a year and receives about $1.7 billion in contributions from covered employees and their employers. PERA overall is about 70 percent funded.

“Certainly these are scary times,” Williams said. “Right now we’re projected to run out of money during the lifetime of most of our members.” Despite the pain imposed by the plan, Wilson said, “It’s cheaper, more cost effective and less painful to act now.”

Some 20 percent of the money needed for the plan would come from employer and employee contributions and the rest from benefit cuts.

Thursday’s discussion was detailed and technical at times; here are some highlights.

They can’t take my COLA!

PERA officials believe retirees’ cost-of-living increases can be reduced because of legal precedent that allows doing so in times of “actuarial necessity” – legalese for the plan will go broke without changes being made.

“We believe the COLA can be modified” based on actuarial necessity, said Greg Smith, PERA chief operating officer and general counsel. “We believe that actuarial necessity exists today. … It is critical that we be able to modify the retiree COLA.” Without doing that, Smith said it would take an “extraordinary amount” of contributions for the plan to achieve solvency.

Many retirees have complained to legislators and others that they were told by human relations staff and in paperwork that the 3.5 percent COLA was guaranteed, so changing it would amount to breaking a contract.

“No matter what an employer hands out, if it doesn’t match the law, it’s not binding,”
Smith said.

Will it all end up in court?

Asked if PERA expects any changes approved by the legislature to end up in court, Smith said, “There is some speculation that it will end up in the courts. … It’s reasonable to expect litigation.”

Whom can we blame?

While neither PERA officials nor current legislators explicitly pointed fingers, there seemed to be general agreement that legislation passed in 2000 helped contribute to the current problem, During the height of the tech boom, 1999 and 2000 were the only two years that PERA has been fully funded in its 78-year history.

In 2000 lawmakers responded by effectively reducing contributions and raising benefits. “That’s kind of where it started,” Williams said.

But when asked if today’s problems could have been avoided if the legislature hadn’t been so generous in 2000, Williams said, “I think not,” saying that the economic crash in 2008 was just too big.

In 2004 and 2006 the legislature did increase contributions and tighten benefits for new employees, but Williams said lawmakers couldn’t go further then because  “We did not have an actuarial necessity. We could not make that legal case. Today we can.”

Don’t wait for the next bull market

Some lawmakers have asked – hopefully – if PERA could rescue itself by more aggressive investment strategies or be rescued by another market boom.

“That would be like going to Black Hawk and doubling down with the rent money,” said Susan Murphy of Denver, one of three PERA trustees who, by law, are neither members of nor beneficiaries of the pension system.

“That was our Plan B,” quipped Rep. Jack Pommer, D-Boulder and JBC chair.

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Who Is In Charge

Indianapolis Public Schools board gives superintendent Ferebee raise, bonus

PHOTO: Dylan Peers McCoy
Lewis Ferebee

Indianapolis Public Schools Superintendent Lewis Ferebee is getting a $4,701 raise and a bonus of $28,000.

The board voted unanimously to approve both. The raise is a 2.24 percent salary increase. It is retroactive to July 1, 2017. Ferebee’s total pay this year, including the bonus, retirement contributions and a stipend for a car, will be $286,769. Even though the bonus was paid this year, it is based on his performance last school year.

The board approved a new contract Tuesday that includes a raise for teachers.

The bonus is 80 percent of the total — $35,000 — he could have received under his contract. It is based on goals agreed to by the superintendent and the board.

These are performance criteria used to determine the superintendent’s bonus are below:

Student recruitment

How common is it for districts to share student contact info with charter schools? Here’s what we know.

PHOTO: Laura Faith Kebede
Staff members of Green Dot Public Schools canvass a neighborhood near Kirby Middle School in the summer of 2016 before reopening the Memphis school as a charter.

As charter schools emerge alongside local school districts across the nation, student addresses have become a key turf war.

Charter schools have succeeded in filling their classes with and without access to student contact information. But their operators frequently argue that they have a right to such information, which they say is vital to their recruitment efforts and gives families equal access to different schools in their area.

Disputes are underway right now in at least two places: In Tennessee, school boards in Nashville and Memphis are defying a new state law that requires districts to hand over such information to charters that request it. A New York City parent recently filed a formal complaint accusing the city of sharing her information improperly with local charter schools.

How do other cities handle the issue? According to officials from a range of school districts, some share student information freely with charters while others guard it fiercely.

Some districts explicitly do not share student information with charter schools. This includes Detroit, where the schools chief is waging an open war with the charter sector for students; Washington, D.C., where the two school sectors coexist more peacefully; and Los Angeles.

Others have clear rules for student information sharing. Denver, for example, set parameters for what information the district will hand over to charter schools in a formal collaboration agreement — one that Memphis officials frequently cite as a model for one they are creating. Baltimore and Boston also share information, although Boston gives out only some of the personal details that district schools can access.

At least one city has carved out a compromise. In New York City, a third-party company provides mass mailings for charter schools, using contact information provided by the school district. Charter schools do not actually see that information and cannot use it for other purposes — although the provision hasn’t eliminated parent concerns about student privacy and fair recruitment practices there.

In Tennessee, the fight by the state’s two largest districts over the issue is nearing a boiling point. The state education department has already asked a judge to intervene in Nashville and is mulling whether to add the Memphis district to the court filing after the school board there voted to defy the state’s order to share information last month. Nashville’s court hearing is Nov. 28.

The conflict feels high-stakes to some. In Memphis, both local and state districts struggle with enrolling enough students. Most schools in the state-run Achievement School District have lost enrollment this year, and the local district, Shelby County Schools, saw a slight increase in enrollment this year after years of freefall.

Still, some charter leaders wonder why schools can’t get along without the information. One Memphis charter operator said his school fills its classes through word of mouth, Facebook ads, and signs in surrounding neighborhoods.

“We’re fully enrolled just through that,” said the leader, who spoke on condition of anonymity to protect his relationship with the state and local districts. “It’s a non-argument for me.”

A spokeswoman for Green Dot Public Schools, the state-managed charter school whose request for student information started the legal fight in Memphis, said schools in the Achievement School District should receive student contact information because they are supposed to serve students within specific neighborhood boundaries.

“At the end of the day, parents should have the information they need to go to their neighborhood school,” said the spokeswoman, Cynara Lilly. “They deserve to know it’s open.”