Bill Summary for Bill Number SB12-149

Date: 03/13/2012

Final
BILL SUMMARY for SB12-149

SENATE COMMITTEE ON FINANCE

Votes: View-->	Action Taken:
Moved to refer Senate Bill 12-149 to the Committee	PASS

02:20 PM -- Senate Bill 12-149

Senator Johnston called the committee back to order. Senator Steadman, prime sponsor, presented Senate Bill 12-149 concerning allowing local government pension plan boards to make modifications to defined benefit plans. Senator Steadman stated that the bill impacts defined benefit plans in five counties in Colorado: Adams County, Arapahoe County, El Paso County, Pueblo County, and Weld County. He explained that the bill seeks to get rid of the unfunded liabilities in the defined benefit pension plans in these counties and allows the pension boards to shore up the long term solvency of the plans. He concluded his opening remarks by stating the the bill is about retirement security and enabling local governments to make decisions for themselves as to how to secure their pension funds. Senator King asked Senator Steadman if the bill requires these counties to have a certain assumed rate of return.

02:30 PM

Committee discussion ensued about differences between the statutory requirements of the Public Employees' Retirement Association of Colorado (PERA) and local defined benefits plans. Senator King talked about the issues that arise when there are no upper-end limits on employee and employer contributions.

02:33 PM -- Ms. Vicki Johnson, an attorney representing the Adams County Retirement Plan, spoke in support of the bill. Ms. Johnson explained the difference between defined benefit plans and defined contribution plans, and stated that this bill does not impact counties with PERA, defined contribution plans, or home-rule cities. She stated that currently, pension boards have a very limited number of options to increase the solvency of a plan, and this bill provides an additional tool for these boards to help secure plans that are in jeopardy. She concluded by stating that the bill will not affect benefits that are already accrued and vested, nor those benefits of retired members.

02:45 PM

Ms. Johnson continued her testimony and further explained the rationale behind including certain sub-sections of the bill.

02:52 PM -- Ms. Pamela Mathisen, representing the Adams County Retirement Plan, spoke in support of the bill. She talked about the history of the Adams County Retirement Plan and explained some problems the plan is currently facing. She distributed a handout (Attachment C). Ms. Mathisen talked about some details of the Adams County Plan, including employer and employee contribution rates, tiered benefits structure, vesting requirements, and benefits calculations. She concluded by stating that none of the other counties that are impacted by the bill are opposed to the changes made by the legislation.

03:00 PM -- Mr. Robert Feis, Chairman of the Adams County Retirement Plan Board of Directors, spoke in support of the bill. He explained the changes that board has made to the plan as a result of the current and past economic climate in Colorado. Senator Johnston asked Mr. Feis to explain why the Adams County plan is under-funded compared to other county plans in the state.

03:11 PM -- Ms. Leslie Thompson, an actuarial consultant for Adams County, spoke in support of the bill. She explained that in order for a plan to be sustainable, 70-80 percent of its funding should come from investments and 20 percent should come from employee and employer contributions.

03:16 PM -- Mr. Michael McIntosh, member of the Adams County Retirement Plan Board of Directors, spoke in support of the board. He discussed why the Adams County plan is currently under-funded.

03:23 PM -- Mr. Erik Hansen, Adams County Commissioner, spoke in support of the bill. He talked about the need to avoid reducing benefits for current retirees.

03:26 PM -- Mr. Frank Weddig, former state senator and former Arapahoe County Commissioner, spoke in support of the bill.

03:29 PM -- Mr. John MacPherson, a member of the Colorado Coalition for Retirement Security, spoke in opposition to the bill. He stated that there is no need for the bill because it gives boards legal immunity for actions they are already legally able to take. He stated that the bill does not give these counties any additional tools to manage their retirement plans.

03:33 PM -- Ms. Cindy Birley, an attorney representing the Adams County Retirement Plan, spoke in support of the bill. She summarized the testimony that was given by previous witnesses and discussed some case law that was used in developing the language of the bill.

03:43 PM

Ms. Birley continued her testimony. Senator King asked Ms. Birley about the unfunded liabilities of the other counties that would be impacted by this bill. She answered by reiterating that none of these other counties oppose the legislation.

03:54 PM

Senator Guzman asked Ms. Birley if this legislation would impose any new requirements or restrictions on the other counties affected by the bill. Ms. Birley answered that making changes to a county plan by its board is voluntary and not required. Senator Johnston asked Ms. Birley to confirm the three classes of rights that exist in the defined benefits plans.

04:05 PM

Committee discussion ensued regarding case law that is applicable to the bill.

04:16 PM

Senator Johnston spoke about his concerns with the bill and brought up the possibility of including a repeal date of one year. Public testimony was closed.

04:23 PM

Senator Steadman gave closing remarks and stated that this bill is about retirement security and dealing with future liabilities in a responsible way.


BILL:	SB12-149
TIME:	04:29:01 PM
MOVED:	King K.
MOTION:	Moved to refer Senate Bill 12-149 to the Committee of the Whole. The motion passed on a vote of 6-1.
SECONDED:
		VOTE
	Brophy	Yes
	Guzman	Yes
	Jahn	Yes
	King K.	Yes
	Scheffel	Yes
	Giron	Yes
	Johnston	No

YES: 6 NO: 1 EXC: 0 ABS: 0 FINAL ACTION: PASS

04:29 PM

The committee adjourned.