So, you have a pension fund, and every year, money is stolen from it. But the fund goes almost far enough so that everyone gets his promised benefits – teachers, police officers, firefighters, street-cleaners. Hardly high-salary workers, who are getting benefit packages that are hard to live off. But someone can see, the money is running down, will someday run out. Time for “reform.”
Does reform punish or prevent chicanery by legislators and administrators who know public employee pensions are consistently being under-funded, and let it go on? It does not.
Does reform include discipline or dismissal of those responsible for a second major source of the pension fund shortfall, a failure of state investments to produce returns that even match the national average? Nope, and the enormous fees being paid to advisors whose picks include too many duds can’t be reformed because they’re an established “cost of doing business.”
So how can you fix a failing system? “Screw the people it’s meant to serve” seems to be the answer in the State of Colorado.
The Legislature in Denver has fashioned what they like to call PERA Reform. PERA is the Public Employees’ Retirement Association and reform is rebalancing the books on the backs of present and future members of the system and beneficiaries in retirement.
Reform in Denver is upping employee contributions and cutting and capping their cost of living adjustments, and skipping the next 2 years’ COLAs for current retirees and delaying them for 3 years for new recipients.
Before they voted, Senators heard testimony from a 62 year old retiree who supplements her pension from 32 years as a public school teacher by working at Target. The trims to her cost of living adjustment told her, she said, “I’d better start preparing for poverty.” The Senate approved the benefit cuts anyway.
But they did respond when our guest today, investigative reporter David Sirota, forcefully injected into the pension reform debate the issue of investment management fees that were not only remarkably high, were not only producing below average results, but, by law, the crucial details of the investment deals were kept secret.
The response, Sirota has reported, is language that allows, although it doesn’t require pension officials to tell state legislators about investments they’ve made with public money. But that’s only when the lawmakers are in confidential executive sessions. And these discreet disclosures are only possible if PERA hasn’t already signed a contract guaranteeing the investment manager the cover of secrecy.
Of course, compared to the completely hidden world of PERA’s public-money investments, the new language does represent a kind of “reform.”
DAVID SIROTA is an award-winning journalist and bestselling author living in Denver, Colorado. His work appears regularly on cable television networks and in 2013, his book Back to Our Future became the basis for the National Geographic Channel’s major miniseries on the 1980s. Sirota is a two-time winner of the Best In Business Award award from the Society for American Business Editors and Writers. In 2014, Sirota won Ithaca College’s Izzy Award for Journalism, was a finalist for UCLA’s Gerald R. Loeb Award for financial journalism, and was a finalist for Syracuse University’s Mirror Award for Journalism. That year, the Denver Business Journal listed Sirota as one of the most influential Coloradans in the social media sphere.
From 2014-2018, Sirota was the Senior Editor for Investigations at The International Business Times. The New York Times has credited his Wall Street reporting for showing “that secrecy can hide high fees, low returns, excess risk and the identity of politically connected dealmakers.”