Joint Committee Committee on Joint Finance (01/24/2013)

Final
STAFF SUMMARY OF MEETING

COMMITTEE ON JOINT FINANCE

Date:	01/24/2013	ATTENDANCE

Time:	10:04 AM to 12:08 PM	DelGrosso	X
		Foote	X
Place:	LSB A	Grantham	X
		Hill	X
This Meeting was called to order by		Jahn	X
	Senator Johnston	Joshi	X
		Kagan	*
This Report was prepared by		Kerr	*
	Kori Donaldson	Labuda	X
		May	X
		Melton	X
		Pabon	X
		Priola	X
		Saine	X
		Swalm	X
		Wilson	X
		Court	X
		Johnston	X
		X = Present, E = Excused, A = Absent, * = Present after roll call

Bills Addressed:		Action Taken:
Discussion with Joint Budget Committee Presentation from OSPB Presentation from PERA		Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only Witness Testimony and/or Committee Discussion Only

10:05 AM -- Discussion with Joint Budget Committee

The committee was called to order. A quorum was present. Senator Johnston discussed the order of business for the day. Representative Crisanta Duran, Joint Budget Committee (JBC), gave an overview of the FY 2013-14 budget requests for the Departments of Revenue and Treasury, and the Public Employee's Retirement Fund (PERA). Representative Duran walked the committee through parts of the JBC FY 2013-14 Staff Budget Briefing Summary related to these agencies. The briefing summary is available on the JBC website.

10:15 AM

Representative Duran responded to a question from the committee about the timing of a final resolution for a lawsuit involving PERA. She explained that the case has been referred back to the district court. Senator Pat Steadman, chair, JBC, provided additional information about this topic. Representative Duran next responded to a question about various cost saving measures implemented by the departments. In response to a question about the potential for the state to collect sales tax on Internet sales, Senator Steadman said the JBC has not considered this issue. Discussion continued about COVERColorado, and about the sunset of the program. Representative Cheri Gerou, JBC, provided additional information about the transition of COVERColorado to the new healthcare exchange. Representative Duran responded to additional questions about the PERA rate of return and said the existing 8 percent rate is acceptable.

10:27 AM

Representative Gerou spoke about recent legislative changes to PERA actuarial rates. Committee discussion continued on the sustainability of PERA benefits for retirees. Senator Kent Lambert, JBC, spoke about the potential impact of adopting Government Accounting Standards Board (GASB) rules for PERA investments.

10:35 AM -- Presentation from the Governor's Office of State Planning and Budgeting (OSPB)

Mr. Henry Sobanet, Director, and Mr. Erick Scheminske, Deputy Director, Governor's Office of State Planning and Budgeting (OSPB), presented an update on the state's budget and the role of the OSPB in state government. Committee members received a copy of the presentation (Attachment A). Mr. Sobanet made some introductory remarks. Mr. Sobanet began walking the committee through Attachment A and discussed the best way to project employment and revenue. He said the Colorado economy is growing faster than the national economy. Mr. Sobanet responded to a question from the committee about the possibility of a future recession. Discussion ensued on this topic. Mr. Sobanet continued his presentation with a discussion of changes in personal income and job growth (page 4 of Attachment A).

13JtFin0124AttachA.pdf

10:46 AM

Mr. Sobanet continued walking the committee through Attachment A. He also responded to a question from the committee about the portion of General Fund revenue that comes from capital gains. Mr. Sobanet continued his presentation on page 6 of Attachment A. He next gave an overview of and addressed questions about the Governor's FY 2013-14 budget request (pages 7 and 8 of Attachment A). Mr. Sobanet responded to additional questions about funding for K-12 education, the potential availability of federal estate taxes, the expected stability of the tax base, the March economic forecast, and increasing the state's statutory reserve.

11:00 AM

Mr. Sobanet responded to a question about page 4 of Attachment A and the relative growth of personal income and capital gains. He next turned to page 9 of Attachment A and discussed the Lean Office within the OSPB. He said more than 2,200 state employees have been trained in lean principles. He explained the cost savings that have been realized through efficiencies identified through the lean process. Mr. Sobanet concluded his presentation with a discussion of the goals of his office. He addressed questions about the cost savings realized for parole hearings through the lean process, and about economic models used to estimate job creation.

11:13 AM -- Presentation from Public Employee's Retirement Association (PERA)

Mr. Greg Smith, Executive Director, and Ms. Jennifer Paquette, both representing Colorado Public Employee's Retirement Association (PERA), presented information about the organization, including the benefits paid to retirees. Committee members received a copy of the presentation (Attachment B). Mr. Smith began walking the committee through Attachment B. In response to a question from the committee, Mr. Smith provided clarification about whether the cash amount paid to PERA retirees includes health care costs. Mr. Smith next discussed the provisions of Senate Bill 10-001, which modified contributions to and benefits paid from PERA. He provided greater detail about various types of benefit contributions to PERA, including amortization equalization disbursements (AEDs), which are a type of employer contribution, and supplemental amortization equalization disbursements (SAEDs), which are a type of employee contribution.

13JtFin0124AttachB.pdf

11:25 AM

Discussion continued about the provisions of SB 10-001. Mr. Smith addressed additional questions about the defined employee contribution rate for various school districts and SAEDs, the ratio of employee contributions to the amount of benefits paid (page 3 of Attachment B), and the amount of the PERA unfunded liability at the end of 2011 as compared to the end of 2012.

11:39 AM

In response to a question, Mr. Smith said the average payout per retiree is $2,980 per month. Discussion ensued on the topic of the total amount of benefits paid to retirees. Mr. Smith said PERA's current unfunded liability is about $25 billion. Senator Johnston and Mr. Smith clarified that this amount is the net amount payable to all current and future retirees. Mr. Smith said nothing can accelerate the due date of these liabilities. Discussion continued on the topic of the PERA unfunded liability. Discussion returned to the defined contribution rates and increases applied to various types of benefit contributions, including SAEDs and AEDs.

11:49 AM

In response to a question, Mr. Smith provided additional clarification about the calculation of PERA's unfunded liability. Discussion continued on this topic. Mr. Smith directed the committee to page 8 of Attachment B and discussed PERA's anticipated long-term investment performance. Mr. Smith responded to additional questions about PERA's anticipated rate of return, and its financial reporting for 2012.

12:02 PM

Mr. Smith returned to his presentation of the information included in Attachment B, beginning on page 10. Ms. Paquette and Mr. Smith responded to questions about the anticipated rate of return for various investments and the associated risk of certain investments types.

12:08 PM

The committee adjourned.

09:18 AM -- Senate Bill 13-999

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BILL:	Presentation from PERA
TIME:	09:19:38 AM
MOVED:	Saine
MOTION:	Amendment L 999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION:


BILL:	Presentation from PERA
TIME:	09:21:58 AM
MOVED:
MOTION:	Amendment L 999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION:


BILL:	Presentation from PERA
TIME:	09:21:48 AM
MOVED:
MOTION:	Amendment L 999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION:


BILL:	Presentation from PERA
TIME:	09:20:46 AM
MOVED:	DelGrosso
MOTION:	Moved and an amendment to Amendment L 999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION:


BILL:	Presentation from PERA
TIME:	09:20:00 AM
MOVED:	Jahn
MOTION:	Amendment to Amendment 999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	Presentation from PERA
TIME:	09:22:13 AM
MOVED:
MOTION:	The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION:


BILL:	Presentation from PERA
TIME:	09:22:41 AM
MOVED:	Foote
MOTION:	Amendment 1111 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION:


BILL:	Presentation from PERA
TIME:	09:23:32 AM
MOVED:	May
MOTION:	Amendment 9999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	Presentation from PERA
TIME:	09:23:48 AM
MOVED:	Jahn
MOTION:	Moved amendment to Amendment 9999 The motion passed without objection.
SECONDED:
		VOTE
	DelGrosso
	Foote
	Grantham
	Hill
	Jahn
	Joshi
	Kagan
	Kerr
	Labuda
	May
	Melton
	Pabon
	Priola
	Saine
	Swalm
	Wilson
	Court
	Johnston

YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection