Legislative Report
May 5, 2006

Senate Bill 06-235 - Public Employees’ Retirement Benefit Plans. The House Finance Committee passed Senate Bill 06-235 - Public Employees’ Retirement Benefit Plans – on May 2. Yesterday, the full House of Representatives approved SB 235 on Second Reading. The House adopted two technical amendments and considered several others offered on the floor.

This afternoon, the House adopted an amendment offered by Rep. Bernie Buescher on Third Reading that would allow all new employees who work for a higher education PERA employer, whether in a state classified position or in a faculty position, to elect whether to join the PERA DB plan, the PERA DC plan, the State’s DC plan, or an ORP (if offered by the higher ed institution where the employee works). An ORP is a DC plan.

Expansion of the DC option has been a goal for Governor Owens for some time, and the House was concerned that without the amendment concerning higher ed, the Governor might veto the bill and call for a special session.

The option would apply to all new employees hired at higher education employers on or after January 1, 2008. An option to select a DB or DC plan already applies to non-higher ed state employees hired on or after January 1, 2006. The option to choose between retirement plans would not apply to new hires who have been an active participant in either PERA or a DC plan within the past 12 months; those new hires must continue in their existing plan.

The House then approved the bill as amended, 65-0. SB 06-235 now will go back to the Senate for consideration of the House amendments. If the Senate concurs with the amendments, the bill will be sent to the Governor.

On Second Reading on May 4, the House adopted an amendment by the sponsor, Rep. Rosemary Marshall, which would provide that whenever any division of PERA reaches an amortization period of 30 years of less, the PERA Board would conduct an actuarial study to assess the AED and the Supplemental AED, and the Board could make an appropriate recommendation to the Legislature. The PERA Board had voted previously to support this amendment, if offered.

Rep. Ted Harvey (Highlands Ranch) offered an amendment to reduce the size of the PERA Board to 11 members, with 5 elected by PERA members and retirees, 5 appointed by the Governor, and the State Treasurer. Rep. Marshall offered a substitute amendment, which was adopted by the House in lieu of Harvey’s amendment. The amendment which was adopted provides for a 15-member Board, with 11 elected by PERA members and retirees, 3 appointed by the Governor, and the State Treasurer. Of the 11 elected by the members and retirees, 4 would be from the School Division, 3 from the State Division, 1 from the Local Government Division, 1 from the Judicial Division, and 2 from PERA retirees.

The House rejected Rep. Harvey’s proposed amendment to provide that for new hires beginning in 2007, that HAS be based on the highest 5 years. Under SB 235 as passed by the House, new hires will continue to have a 3-year HAS and a 2.5 percent of HAS benefit formula for each year of service.

As passed by the House, projections indicate that SB 06-235 would reduce the amortization period for the unfunded liability in the State and School Division to 17 years by 2034. With no legislation, the amortization period is projected to still be infinite for that division in 2034.

Ballot Initiative #106:  A Title Setting hearing for Initiative #106 was held at the Secretary of State’s Office on May 3. The Title-Setting Board voted 2-1 to approve the Initiative as a “single-subject” at that meeting, and PERA is reviewing the Board’s action.

Legislative Information Center Will Have Updates

PERA’s Web site (www.copera.org) makes it easy for you to find the new “Legislative Information Center.”  This will continue to be the best place for you to stay current on legislative news and information affecting PERA.  A revision to the summary of SB 235, reflecting the House amendments, will be posted shortly to the Web site.