State Treasurer Walker Stapleton said Wednesday that Colorado's public pensions are in deep trouble unless elected officials get unfunded liabilities under control.
"Taxpayers have done their part already, and that no more taxpayer money should be used to bail out PERA," Stapleton told reporters on a conference call.
He said ignoring a $32 billion problem facing the Public Employee Retirement Association resulted in Standard & Poor issuing a negative outlook for Colorado in November. He worries the next step will be a credit-rating downgrade, which would have a domino effect on the state's financial stability.
"I'm disappointed with PERA's proposal - I was the only person who voted against it on the board - and the governor's proposal as well because I think both of them engage in incrementalism," Stapleton said, "rather than lasting reforms to solve this lasting unfunded liability."
The public retirement system in Colorado requires saving, he said, and "we're using the wrong math to solve the problem."
Stapleton blames PERA, unions and labor bosses for insisting that the legislature solved the problem in 2010 and that no other reforms are necessary.
"It's been a complete and utter lie," Stapleton said. "I don't know if it was on purpose, but it's something that needs to be asked. They either lied to 560,000-plus public workers or they're so egregiously wrong that they should be fired."
Stapleton also went on the offense against PERA bosses, saying taxpayer dollars should not be supporting their inflated salaries.
"Under the PERA proposal, the taxpayers are picking up $9 billion of the burden; under the Governor's proposal, they're picking up $3 billion," he said. "I don't think they should be picking up any more of the burden. I think that we need to base all reforms on a realistic rate of return."
Stapleton puts that figure at 5 percent to 5.5 percent based on the Government Accounting Standards Board's set rate of return.
Colorado PERA and pension systems across the country have found themselves in the red because of unrealistic expectations on investment performance, he said, citing Illinois as a prime example of financial failure, with an unfunded liability now at a staggering $250 billion. Illinois may become the nation's first state to have its credit rating downgraded to junk status, he said.
Stapleton hopes the legislature recognizes the urgency of the situation and works to pass reforms in the upcoming session, despite a political divide that doesn't bode well.
"I don't want to tip my hand but I have had ongoing discussions with a number of senators," he said. "Last year, we ran a bill with Sen. (Tim) Neville, which said no more taxpayer funded contributions, period, and (Colorado's Public Employee Pension System CEO) Greg Smith showed up and said it was premature."
Stapleton's plan would remove the burden from school contributions to the system, which he says could increase by 4 percent under the current plan. By 2018, many state agencies and schools will be contributing nearly 21 percent of their total payroll to PERA, a payout he calls unacceptable.
Salary spiking, putting real expectations on retirement age, and making sure cost of living adjustments (COLAs) never outpace inflation are all part of the conversation he feels has to happen.
"I'm happy to work with PERA and the governor, but I want to work on real reforms, not incremental reforms ."
PERA did not immediately return calls for comment.