Colorado's Public Employees' Retirement Association (PERA) is $20 billion in debt. If that's not staggering enough, the amount grows each year the pension's investment portfolio fails to achieve the assumed and overly optimistic 8 percent return.
It is a crisis that threatens the welfare of every Coloradan, especially kids. We're not far behind California, where pensions are forcing towns, counties and even large cities into bankruptcy.
Nothing is to prevent a continued escalation in the amount school districts pay to fund teacher pensions. Without a mechanism to stop more "education" dollars from funding pensions, there is no incentive to bring pension programs in line with modern-day retirement plans or to protect taxpayers. As the debt grows and more retirees live on PERA benefits, we can expect more of our education money to fund retirements rather than books, classrooms and teachers. It's a sinkhole.
We can only give thanks for one state employee who has connected the dots and blown the whistle on an upcoming scam. State Treasurer and former businessman Walker Stapleton - a financial genius with an MBA from Harvard and a graduate degree from London School of Economics - sees the upcoming tax proposal as a fraud on voters.
After a destructive legislative session, politicians want voters to approve a $1 billion-plus tax increase in the fall. Don't worry, they tell us, it's for the children. The money will fund their educations.
If that were true, the proposal could have merit. A well-educated populace causes more economic development, prosperity and a greater quality of life.
But it may not be true. The ballot measure is part of an education finance bill the governor signed into law last month. Stapleton brought his concerns to sponsors and other proponents of the bill, as legislators debated it, and explained how we cannot successfully earmark new revenues for the classroom unless the bill specifically prevents using the money to backfill growing PERA obligations. They smiled, nodded and said they'd get back to him. No one called. As a result, the bill became a law that does nothing to ensure the proposed new taxes will pay for education.
There may be a reason for that. Perhaps the true intent of the proposal is precisely to help fund public pensions, rather than teachers, classrooms and students.
Regardless of intent, we can almost guarantee the new taxes would pour money into the state's pension abyss. They're selling us the Brooklyn Bridge.
The ability of politicians to misallocate education money was protected when the Colorado Supreme Court ruled 4-2 last week to overturn a district court decision in Lobato v. State. The court ruled against plaintiffs, who contend schools are chronically underfunded. The ruling favors business as usual, and in the past decade, we've twice seen state politicians in the legislature increase what school districts pay into PERA.
More money for education could help Colorado teachers, children and our state's future economy. But that will require an honest tax proposal that protects the money from backfilling a failing pension system in need of major reforms.
Support education, but don't be fooled. Stapleton is right, and we thank him. The tax proposal is nothing other than an effort to continue letting PERA spiral out of control at a cost to public schools and most Coloradans.