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State pension agency contends it doesn’t use taxpayer money

By   /   March 1, 2016  /   News  /   No Comments

Photo Courtesy Flickr.com

MONEY MAGIC: Despite taxpayers contributing nearly 20 percent of an employee’s salary to a pension, the state pension agency says it uses no tax money.

When do state taxes magically turn into non-tax dollars? According to the Colorado Public Employee Retirement Association, it’s as soon as the cash hits the PERA trust fund.

PERA spokeswoman Katie Kaufmanis argued that while government salaries and benefits are mostly funded with tax money, they are a benefit paid to employees for the work they provide. Once that benefit goes to the PERA trust fund, it’s not tax money.

“PERA is not a state agency and therefore no general fund public tax dollars are used,” she wrote in an email response to questions about PERA lobbying expenses. “The dollars used are PERA trust fund dollars which are not public money. The PERA trust dollars are compensation earned by the members and are for the sole benefit of the members and beneficiaries of PERA to whom the PERA Board of Trustees owe a fiduciary duty.”

RELATED: State lobbyists, PR people earn big bucks.

A follow-up conversation about this issue became even more surreal as Kaufmanis argued the change happens only once the dollars come to PERA.

“We have to agree to disagree that it’s taxpayer money,” she said. “Once it comes here, it’s in the trust fund.”

Though she then slipped up talking about the money.

Photo Courtesy General Assembly website

PENSION PROBLEM : State Sen. Owen Hill, R-Colorado Springs, wasn’t called the contention that taxpayers aren’t funding state retirements “disingenuous.”

“We believe that [paying for lobbyists] is a prudent use of taxpayer — I mean members’ — dollars,” she said.

True, some portion of the $47 billion trust fund used to pay government employees generous retirement benefits – benefits rarely offered to private-sector workers — isn’t tax money but investment earnings on the tax money in the trust fund.

State Sen. Owen Hill, R-Colorado Springs, who has proposed legislation to reform the retirement organization, said taxpayers contribute about 20 percent of a state employee’s salary to PERA on top of paying the salary.

“It’s taxpayer money from a tax-subsidized entity, and to suggest otherwise is straight up disingenuous,” Hill said after Watchdog.org told him of Kaufmanis’s statements.

Kaufmanis said PERA’s operations are funded by a fee on investments. The fee is about .1 percent for administration and .4 percent for investment expenses, which Kaufmanis noted is competitive with low-cost mutual funds.

Those operations include a salary for the executive director of as much as $512,000 if the board gives him his full 30 percent bonuses, according to the contract reviewed by Watchdog.org. His base salary is $394,000.

There is also a provision to pay him nearly $33,000 for each year he has headed the pension association as a retention bonus.

Hill said PERA spends a lot of tax dollars both on salaries for its staff and benefits for retirees.

“It’s to the tune of hundreds of million of dollars a year,” he said.

And if there’s a problem, no one at PERA is looking out for taxpayers. Kaufmanis said PERA’s fiduciary responsibility is to the employees and retirees, who she notes also pay taxes.

When asked if PERA has any fiduciary duty to taxpayers, Kaufmanis was clear: “No,” she said.


Arthur was formerly the bureau chief for Colorado Watchdog.