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Gazette Premium Content State treasurer saves us from bad investment

The Gazette editorial Published: November 26, 2013

State Treasurer Walker Stapleton lives in a world of numbers, math and economic principles. Numbers speak truth, which is not what some other politicians want. So they've tried to marginalize Stapleton as a man out of step. Their only problem doubles as Stapleton's greatest asset: Truth surfaces. Quickly, sometimes.

Stapleton was the state's chief crusader against Amendment 66, a massive tax increase rejected by more than 65 percent of Colorado voters. He repeatedly warned against investing $1 billion a year into education without a solution to the crisis looming for Colorado's Public Employees Retirement Association (PERA), which includes teachers. Stapleton didn't see a way government could stop Amendment 66 from bailing out PERA, an outdated, underfunded, defined-benefit retirement program based on unrealistic dividend hopes.

A Grand Junction Sentinel editorial titled "The PERA fiction on Amendment 66" tried to diminish Stapleton's concerns as an obsession, saying he "has made criticism of PERA his raison d'etre (fancy for 'reason to exist') as state treasurer."

State Sen. Mike Johnston, a Denver Democrat and chief architect of 66, countered Stapleton by saying "PERA is a totally separate issue from Amendment 66." Sure, much like one can view the abrupt cancellation of health insurance as something totally separate from health care reform.

Fact is, some of the money collected and distributed by state government winds up under control of local school boards that are required by state law to increase payments to PERA. It's part of Senate bill 1, passed in 2010 as an effort to keep the pension's financial troubles at bay. That reality led tax supporters, including Johnston and Gov. John Hickenlooper, to concede that school officials could use the tax increase to backfill PERA.

That was vindication No. 1 for Stapleton. Vindication No. 2 was the trouncing of Amendment 66. Stapleton had the facts; voters knew it.

Vindication No. 3 came Nov. 15, when PERA's Board of Trustees voted in a manner that effectively validates Stapleton's warnings about inflated expectations. Sad as PERA's future looks, it's a view through rose-colored glasses. The board had long assumed an average future return of 8 percent, but finally chose to lower the expectation to 7.5 percent. It's still too high, but a nod in the direction of reality.

Vindication No. 4 came last week, when Hickenlooper filed a brief with the Colorado Supreme Court that supports Stapleton's lawsuit against PERA. As a member of PERA's Board of Trustees, Stapleton wants non-identifying information about benefits of the top 20 percent of beneficiaries. Fellow board members have refused his request In his brief to the court, Hickenlooper did the right thing by insisting PERA trustees need "ability to access information and execute the high fiduciary standard required of them by statute." It's called basic transparency.

By guarding money of constituents, the state treasurer and PERA trustee did his job. Politicians wanted $1 billion a year, so Stapleton performed the due diligence expected of any financial adviser. Just as a lender or investor would look at an applicant's full financial picture, Stapleton scrutinized state government's finances. He found massive liability and determined the state bureaucracy was in no condition to receive $1 billion a year on a wink and a smile.

To invest so much into a mess would be the large-scale version of granting home-improvement funds to someone with no means of making future mortgage or insurance payments. It's doubtful the money would go for kitchen renovation while the household's financial foundation crumbles.

Voters understood Stapleton and agreed with his concern. Others in the political establishment are seeing the light. Now, let's fix the pension with meaningful and truthful strategies that don't pretend it's all about the children.

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