Who Is In Charge

PERA bill goes to governor

The House Tuesday voted 36-29 to pass Senate Bill 10-001, the plan to restore the Public Employees’ Retirement Association to solvency over the next 30 years.

Public Employees' Retirement Association headquarters in Denver.

Because there were no House amendments to the Senate-passed version, the bill (text) now goes to Gov. Bill Ritter for signature.

Passage of the measure removes one big item from the legislature’s 2010 checklist. (A second major item also was checked off Tuesday with final House approval of some key tax bills. See bottom of this story.)

Although some Republicans argued long and hard against the PERA bill, the measure survived intact after a crucial set of amendments were added in a Senate committee, changes designed to gain the support of organized employee groups. The bill was pushed by the bipartisan team of Senate President Brandon Shaffer, D-Boulder, and Senate Minority Leader Josh Penry, R-Grand Junction.

Legislative leaders worked to pass the bill before March 1 in order to avoid the cost of a 3.5 percent retiree benefit increase scheduled to go into effect on that date.

A major element of the rescue plan is reduction of that 3.5 percent annual boost to 0 percent for the coming year and to 2 percent thereafter. In the future, certain conditions will have to be met for the 2 percent figure to change.

While employee and retiree organizations backed the bill, many individual retirees are unhappy with measure, arguing that 3.5 percent is a contractual right and can’t be changed. PERA officials believe the change is legal because of “actuarial necessity,” meaning that the financial condition of the system is so serious that major changes are allowed to make PERA actuarially sound.

The plan will not work financially without the reduction of retiree benefits, according to PERA.

Interestingly, in a year when the state is scraping for every dollar of tax revenue, the 0 percent requirement this year will reduce state income tax collections by $3 million, according to legislative fiscal analysts.

Some observers expect a retiree lawsuit on the 3.5 percent question.

Other provisions of the bill change employer and employee contributions, set new rules for working retirees, change calculations for determining the amount of retirement benefits, impose new rules on employees who leave the system before retirement and increase age and service requirements for some employees.

The bill imposes new increases in employer and employee contributions on top of already-scheduled hikes. By 2016, school districts will have to contribute 14.65 percent of payroll to PERA. Employees will have to pony up 13.5 percent by 2018. (The employee contribution is determined by a formula that takes 8 percent from individual employee paychecks – the current rate – and then additional money from district funds that supposedly would otherwise have been used for employee salaries. The 8 percent direct deduction won’t change under the plan.)

The comparable figures for the DPS Division of PERA are 18.25 percent for employers and a combined 13.5 percent for employees. (The system has separate Schools and DPS divisions because DPS was added to the system only this year.)

Its investments hollowed out by the recession, PERA’s net assets available for benefits dropped from $43.1 billion at the end of 2007 to $30.8 billion at the end of 2008, a loss of more than 25 percent. The system pays about $3.1 billion in benefits a year and receives about $1.7 billion in contributions from covered employees and their employers. PERA overall is about 70 percent funded.

The system has 190,684 active members, 81,248 benefit recipients and 143,619 inactive members (people with eligibility but no longer working in PERA-covered jobs.)

While often thought of as the state pension system, PERA membership is dominated by employees of schools and colleges. Of PERA’s 190,684 active members, 118,547 are in the school division. Some 44,806 people receive benefits from the school division.

In 2008 employers paid more than $430 million into the school division trust fund while employees contributed about $304 million. There were about $1.4 billion in benefit payments. Because of the hit taken in PERA’s investments, in 2008 the net assets of the school division trust fund dropped from about $23 billion at the beginning of that year to about $16 billion at year’s end.

The state division includes employees of 28 colleges, universities and other education agencies, with 11,679 members (about 20 percent) accounted for just by the University of Colorado, Colorado State, Metro State and Front Range Community College. Some higher ed employees have access to other retirement plans.

While PERA investments reportedly rebounded somewhat in 2009, system officials repeatedly have told legislators that investment income alone can’t return PERA to solvency.

PERA website with links to more information

Tax bills also ready for Ritter

Another big milestone was passed Tuesday when the House agreed to Senate amendments and repassed eight bills that will eliminate certain tax exemptions.

The measures, House Bills 10-1189-1195 and 1199, are projected to raise about $148 million in revenue for the battered state treasury.

The measures are backed by education groups because they believe cuts to state support of K-12 education will be deeper without the additional revenue. Even with the additional money, schools are facing cuts of at least $350 million in 2010-11.

The proposal of greatest interest to the public probably is House Bill 10-1191, which would eliminate a sales tax exemption on some soft drinks and candy.

Debate over the tax package has been partisan, ideological and very prolonged in committee rooms and on the floors of the House and Senate. Democrats have argued that the bills are a modest imposition on business to help maintain state services.

Minority Republicans believe that raising taxes is the wrong thing to do in tough economic times and also is unconstitutional. (Democrats are relying on a 2009 Colorado Supreme Court decision about the Taxpayer’s Bill of Rights as the legal justification for changing the tax policies without voter approval.)

In addition to soda and candy, the measures change tax exemptions for direct mail advertising materials, energy used in industry, software, some online sales, food containers and pesticides.

Legislative leaders also pushed for March 1 passage of the tax package so that some revenue would be available to help balance the 2009-10 budget.

Use the Education Bill Tracker for links to bill texts and status information.

Raise your voice

Memphis, what do you want in your next school superintendent?

PHOTO: Kyle Kurlick for Chalkbeat

Tennessee’s largest school district needs a permanent leader. What kind of superintendent do you think Shelby County Schools should be looking for?

Now is the chance to raise your voice. The school board is in the thick of finalizing a national search and is taking bids from search firms. Board members say they want a leader to replace former superintendent Dorsey Hopson in place within 18 months. They have also said they want community input in the process, though board members haven’t specified what that will look like. In the interim, career Memphis educator Joris Ray is at the helm.

Let us know what you think is most important in the next superintendent.  Select responses will be published.

Asking the candidates

How to win over Northwest Side voters: Chicago aldermen candidates hone in on high school plans

PHOTO: Cassie Walker Burke / Chalkbeat Chicago
An audience member holds up a green sign showing support at a forum for Northwest side aldermanic candidates. The forum was sponsored by the Logan Square Neighborhood Association.

The residents filing into the auditorium of Sharon Christa McAuliffe Elementary School Friday wanted to know a few key things from the eager aldermanic candidates who were trying to win their vote.

People wanted to know which candidates would build up their shrinking open-enrollment high schools and attract more students to them.

They also wanted specifics on how the aldermen, if elected, would coax developers to build affordable housing units big enough for families, since in neighborhoods such as Logan Square and Hermosa, single young adults have moved in, rents have gone up, and some families have been pushed out.

As a result, some school enrollments have dropped.

Organized by the Logan Square Neighborhood Association, Friday’s event brought together candidates from six of the city’s most competitive aldermanic races. Thirteen candidates filled the stage, including some incumbents, such as Aldermen Proco “Joe” Moreno (1st  Ward), Carlos Ramirez-Rosa (35th Ward), and Milly Santiago (31st Ward).

They faced tough questions — drafted by community members and drawn at random from a hat — about bolstering high school enrollment, recruiting more small businesses, and paving the way for more affordable housing.

When the audience members agreed with their positions, they waved green cards, with pictures of meaty tacos. When they heard something they didn’t like, they held up red cards, with pictures of fake tacos.

Red cards weren’t raised much. But the green cards filled the air when candidates shared ideas for increasing the pull of area open-enrollment high schools by expanding dual-language programs and the rigorous International Baccalaureate curriculum.

Related: Can a program designed for British diplomats fix Chicago schools? 

“We want our schools to be dual language so people of color can keep their roots alive and keep their connections with their families,” said Rossana Rodriguez, a mother of a Chicago Public Schools’ preschooler and one of challengers to incumbent Deb Mell in the city’s 33rd Ward.  

Mell didn’t appear at the forum, but another candidate vying for that seat did: Katie Sieracki, who helps run a small business. Sieracki said she’d improve schools by building a stronger feeder system between the area’s elementary schools, which are mostly K-8, and the high schools.

“We need to build bridges between our local elementary schools and our high schools, getting buy-in from new parents in kindergarten to third grade, when parents are most engaged in their children’s education,” she said.

Sieracki said she’d also work to design an apprenticeship program that connects area high schools with small businesses.

Green cards also filled the air when candidates pledged to reroute tax dollars that are typically used for developer incentives for school improvement instead.

At the end of the forum, organizers asked the 13 candidates to pledge to vote against new tax increment financing plans unless that money went to schools. All 13 candidates verbally agreed.

Aldermen have limited authority over schools, but each of Chicago’s 50 ward representatives receives a $1.32 million annual slush fund that be used for ward improvements, such as playgrounds, and also can be directed to education needs. And “aldermanic privilege,” a longtime concept in Chicago, lets representatives give the thumbs up or down to developments like new charters or affordable housing units, which can affect school enrollment.

Related: 7 questions to ask your aldermanic candidates about schools

Aldermen can use their position to forge partnerships with organizations and companies that can provide extra support and investment to local schools.

A January poll showed that education was among the top three concerns of voters in Chicago’s municipal election. Several candidates for mayor have recently tried to position themselves as the best candidate for schools in TV ads.