Colorado Editorial Roundup
The Denver Post, July 9, on reforms to Colorado’s public employee retirement system:
Colorado’s state employee pension fund traveled a rollicking market in 2018 to a low point in December, finishing the year with a negative 3.5% return on its investments woefully short of the 7.25% target.
But, believe it or not, there is good news to be found in the depressing annual report the pension released last month: Senate Bill 18-200 is working as intended to soften the blow that the $1.8 billion loss would strike to the Public Employee Retirement Association’s actuarial soundness.
“It is working as intended, but it does have some serious ramifications for our membership,” said Ron Baker, executive director of PERA.
The unfunded liability of the pension — the gap between what folks at PERA estimate they’ll owe retirees in the future and the money PERA will have to pay them with — did still grow. It grew despite reforms put in place in 2018 that pledged $225 million payment of taxpayer money every year to the funds and increased employee and employer contributions.
However, the pension funds are still all on track to be fully funded in at least 34 years, thanks to automatic adjustment provisions in SB 200.
In the past when the pension fund suffered a bad year, there was nothing that could be done to immediately respond to the changing financial landscape.
The 2018 bill changed all that, for the better. And not only is it working, but it strikes a good balance, responding to a down year without exacting crushing payments to make up for short-term losses that, in this case, PERA has likely already rebounded from given the market improvements since December 2018. For the record, PERA performed slightly better than its internal benchmarks but worse than the BNY Mellon metric for 97 public pension funds that recorded a return of negative 3%.
We had our qualms with Senate Bill 18-200. The Denver Post editorial board advocated for taxpayers to be held harmless (we thought that quarter of a billion dollars would be better spent on education or roads) and instead reduce the annual cost of living increase to existing retirees to zero for many years.
Lawmakers, a truly bipartisan combination of Democrats and Republicans, disagreed.
But we must give credit where credit is due. Lawmakers did include a provision in the bill that required PERA to respond to negative market conditions by increasing employee and employer contributions and reducing the annual cost of living increase for retirees. So, as of July 1, 2020, employees in the state, school and judicial divisions will start paying 10% into their retirement pensions, which is 0.5% increase over what workers would pay in a good year. Employers in the school division will be paying 0.5% more too, bringing their total contribution to 20.9% of each employee’s salary. Retirees will see a 0.25% cut in their annual cost of living increases, which will bring it to 1.25% instead of 1.5%.
We know that’s not easy on current employees who already are disproportionately paying for the retirements of their predecessors, and we know retirees were expecting much richer cost of living increases based on what they were promised. Let’s all remember, however, that the end goal is to create a financially sustainable pension that can be here for future employees and retirees. With any luck, we can get there without taxpayers having to spend more on the public employee pension than $225 million a year.
Daily Camera, July 7, on Boulder taxes:
Boulder might be full of affluent folks, but the City Council does not enjoy overabundant funds.
The municipal budget faced a $4 million gap last year, and things are still tight. This year’s budget imposed reductions in city services and a net reduction in city staff.
The strain is not the sort that clever managers can paper over. Just ask administrators at the local library. The Boulder Public Library system has been underfunded ever since services were cut in 2002 during an economic downturn. The library is still operating on funding levels from 17 years ago, even as demand for its services has increased.
The latest sign of stress came to light earlier this month during a City Council discussion about open space. Open Space and Mountain Parks department officials say the city’s trails system faces roughly $40 million in deferred maintenance. This includes both routine work and major repairs. And it gets worse. The open space department had already been bracing for major budgetary challenges. A 0.11 cent portion of the local sales tax was shunted from open space to the city’s general fund in January, and a second, 0.15 cent portion that benefited open space will go to the transportation department starting next January. This means the open space department will have to absorb a roughly 30% drop in revenue.
During the recent open space discussion, interim Open Space Director Dan Burke identified what he described as the department’s guiding theme: “Taking care of what we have.”
The city should apply this approach across all its operations.
The sales tax rate in the city — 8.845% — is high among Front Range communities, and Boulderites are subject to other taxes peculiar to them. These include the Climate Action Plan tax, charged to electricity customers to fund climate change mitigation, and the utility occupation tax, which has raised many millions of dollars for the city’s tenuous effort to create an electric utility. The local sales tax rate includes the Community, Culture and Safety tax, which funds certain facilities and infrastructure, and when people buy sugary drinks in Boulder they pay an extra tax that supports healthy lifestyles. Boulder officials have recently discussed the imposition of more taxes and fees — these include a fee for Boulder-registered cars, a tax on natural gas, a tax on second homes, a tax to fund affordable housing, a tax to form a library district and a new open space tax.
City officials have been discussing new ways to make transportation infrastructure more accommodating for walkers and bikers. That’s great. But already on the books under transportation is an annual $22.7 million in unmet essential services needs — those are annual costs — and $20.8 million in capital expenditures. How did the city fall behind? Part of the reason is that a portion of the local sales tax that’s dedicated to transportation is not keeping up with inflation. What was the proposed solution? A fee and a tax.
The city has laudable ambitions and values, many of which the Camera editorial board has endorsed. The board recently, for example, called for a robust response at the national, state and local level to climate change. This costs money. The editorial board recently endorsed the creation of a Boulder library district, which would involve a new property tax. And features like Boulder’s system of open space trails make the city stand out as a uniquely desirable place to live. Indeed, Boulder voters have proved uncommonly willing to tax themselves for all kinds of commendable ends.
But city officials risk taking this community posture for granted, especially given the funding shortages that plague core city functions. Sometimes a funding shortfall represents a need that arises naturally from growth or greater demands. Other times it represents a failure to align resources with responsibilities. When government officials too often cite the former, taxpayers will begin to assume the latter.
During a recent City Council discussion about a proposed new transportation maintenance fee, some council members acknowledged that an ever-increasing financial burden on Boulderites is unsustainable. “It’s death by a thousand cuts,” said Councilwoman Mary Young. New streams of municipal revenue cannot be ruled out when they’re necessary or when Boulder voters signal approval. But if officials previously have proposed by instinct new fees and taxes to fund municipal operations, current budget realities serve to caution that if officials want to retain the trust of constituents they first must do a better job prioritizing and managing functions and assets.
A good start would be to adopt the maxim to which the open space department now adheres: Take care of what you’ve got.
Craig Press, July 5, on a raise for teachers at the Moffat County School District:
Last month, teachers at the Moffat County School District got a pleasant surprise. They got a raise from a starting salary of $32,960 to $37,500. It’s not a lot. But it’s something they’ve needed for a very long time.
The raise came after several years of no additional money for teachers in our rural town. Craig isn’t the only one struggling to pay teachers a salary that will not only attract quality instructors to more rural settings but keep them here long enough to build a life, maybe even a family.
The Denver Post reported Colorado is experiencing a serious teacher shortage, which is also a national trend that seems to be getting worse. Some 3,000 new teachers are needed in Colorado classrooms while the number of graduates from programs that train teachers in Colorado has declined by 24.4% over the past few years. Factor in a third of the teachers in Colorado are 55 or older, close to retirement, and we’ve got a real impending crisis on our hands.
The state of Colorado stepped up and recently allocated some $300,000 in extra funding for programs designed to help rural communities like Craig. Moffat County School District Board of Education members have taken notice and are giving the state some credit for allowing them to give Craig teachers a raise.
“Part of the reason we were able to do that is that the state of Colorado stepped up and funded schools at a higher level than they have in the past,” said Baxter moments before passing the teacher raise at the board’s June 20 meeting.
Jobeth Tupa also lauded their success at passing a teacher raise for Craig teachers.
“I think that’s a pretty remarkable thing we’ve been able to do for our teachers — without raising their health care costs and without doing some other things,” Tupa said.
Members of our school board deserve credit for their decision to give teachers more money. It is our hope the school board doesn’t stop there and continues their propensity for teacher raises to bring our salaries more in line with state averages for teachers in Colorado. The addition of a new generation of teachers seeking Craig’s rural, outdoor lifestyle would be worth the extra cost for teacher salaries.
Good teachers who can relate to our kids can help our children be better lifelong learners. It will make our young adults more valuable in our local workforce when they’re ready to leave the nest for that first job and their own apartment. And it will make them better Americans who go on to inspire the next generation of kids — just as a teacher in rural Craig inspired them.