Colorado Springs News, Sports & Business

Gazette Premium Content PERA gets good audit, but problems persist

By Megan Schrader Published: July 16, 2013

The state's $43 billion retirement fund for state, municipal and school employees received a clean audit for the second straight year in a row as its unfunded liability begins to be paid down.

The Public Employees' retirement Association presented its annual audit to the Legislative Audit Committee Tuesday, outlining the financial outlook of the system.

"Many of us in this room are PERA employees, and I do really want to thank the PERA board and the work that they do to keep it solvent," said Sen. Lois Tochtrop, D-Thornton. "We see a lot of audits here and when you look and see no material audits for two years in a row, they are really working hard. So thank you for protecting our money."

But the funds still face some uncertainty.

The gap between what the fund will owe to present and future retirees and what it is currently making in revenue is about $23 billion.

But reforms to the system - decreasing future retirement benefits, while increase member and employer contributions - will help offset that unfunded liability. For most sub-groups of employees the liability will be paid off in less than 40 years. The exception the retirement fund for the judicial branch employees which will be 94 percent funded in 53 years according to forecasts.

The outlook was also helped by 12.9 percent gains on investments during 2012 which increased the fund's assets by almost $3 billion.

Also discussed during the audit hearing is the impact the withdrawal of Memorial Health Systems in Colorado Springs from the retirement system could have on the fund for local government employees.

When the Colorado Springs decided to privatize the hospital, the existing retirees and current employees who had accrued retirement benefits with the system remained as a liability for the fund.

PERA is involved in a lawsuit over whether the Colorado Springs must pay off that liability which is estimated to be between $200 million and $250 million.

"A negative outcome of that lawsuit would potentially or likely require the existing employers of the public employee trust fund to absorb the balance," said David Eberly, a partner with KPMG the firm that audited PERA.

Eberly said the potential loss of those funds are not accounted for in the outlook projecting that the local government employees' fund could be paid off in 40 years.

Contact Megan Schrader

719-286-0644

Twitter: @CapitolSchrader

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