Bill Summary for Bill Number SB09-282

Date: 04/14/2009

Final
BILL SUMMARY for SB09-282

SENATE COMMITTEE ON FINANCE

Votes: View-->	Action Taken:
Adopt Amendment L.001 (Attachment A). The motion Adopt Amendment L.003 (Attachment B). The motion Adopt Amendment L.004 (Attachment C). The motion Adopt Amendment L.005, as amended by the Sandoval Moved to amend L.005. There was committee discuss Refer Senate Bill 09-282, as amended, to the Commi	Pass Without Objection FAIL FAIL Pass Without Objection Pass Without Objection PASS

02:21 PM -- Senate Bill 09-282

Senator Sandoval and Senator Spence co-prime sponsors, presented Senate Bill 09-282 which merges the assets, liabilities, and obligations of the Denver Public School Retirement System (DPSRS) into the Public Employees' Retirement Association (PERA) as of January 1, 2010. Senator Sandoval explained that out of 178 school districts in Colorado, the Denver Public School (DPS) district is the only school district that is not included in PERA. She provided the committee with background information about previous bills that were considered by the General Assembly to merge these retirement plans. She stated that Senate Bill 09-282 would create a separate system within PERA for DPSRS as well as a division for the health care benefits. In addition, DPS would be given an ex-officio position on PERA's board. She explained that the bill sets the employer and employee contribution rates, and establishes other benefit provisions.

Members of the committee received copies of Amendment L.001 (Attachment A), Amendment L.003 (Attachment B) and Amendment L.004 (Attachment C).

02:28 PM

Senator Spence began by expressing her thoughts about the portability of retirement plans. She explained that DPS is now separate from all other school districts in Colorado, and the years that a teacher spends teaching in DPS do not count towards retirement if the teacher moves to another district. She also expressed her concerns about the impact of the current retirement rules on school leaders in the DPS district.

02:34 PM

The bill sponsors began addressing questions from the committee. Senator Spence responded to questions about the possibility of a portable retirement plan without merging the plans together. She stated that she did not know of a another way to address this issue. Senator Spence also responded to questions about the contribution rates and the potential taxpayer liability of additional beneficiaries.

The following persons testified on the bill:

02:41 PM -- Mr. Dan Daly, representing the Colorado Education Association, testified in support of the bill. He explained that the association supports the legislation because it increases portability between different school districts in the state. He also stated the bill represents a deal brokered between the major parties affected by the merger.

02:43 PM -- Ms. Kim Ursetta, representing the Denver Classroom Teachers Association (DCTA), testified in support of the bill. She provided background information about DPS's school enrollment and funding ratio. She stated the bill would also help employees gain access to more competitive health care insurance rates.

02:46 PM -- Mr. Rich Wenning, representing the Colorado Department of Education, testified in support of the bill. He stated the bill increases portability for teachers and creates a level playing field. Mr. Wenning responded to questions about state mandates, and he said the bill would create a free flow of human capital in the state. Discussion ensued about years of service requirements and retirement benefits.

02:53 PM -- Mr. Meredith Williams, representing Colorado PERA, testified in support of the bill. He distributed a copy of a letter from Mark Anderson, Chair of the Colorado PERA Board of Trustees (Attachment D). Mr. Williams provided background information about the letter and the Board's views. He said the Board recognizes the General Assembly's authority to set contribution levels, and that the Board is concerned that the current funding levels for DPSRS are not adequate. He explained that while the Board supports the merger, it does not support the funding provisions in the bill. Mr. Williams responded to questions from the committee about the funding for DPSRS and other teacher retirement plans in PERA. Discussion ensued about these funding issues, and Mr. Williams explained that PERA school division employees have access to more benefits than DPS employees.

03:05 PM

Mr. Williams continued testifying, explaining that the bill would create a new PERA health care trust fund for DPS employees. Mr. Williams continued responding to questions from the committee about the solvency of DPS's retirement plans and the funding mechanisms in the bill. The committee discussed these issues, including questions about the liabilities of the DPS and PERA school division retirement plans.

03:13 PM

Discussion continued about the liability of the bonds held by the DPS retirement plan.

03:19 PM

Mr. Williams continued, responding to questions about recent audits of PERA's assets. He provided background information about how the annual audit is conducted by the Colorado Office of the State Auditor. Discussion ensued about the PERA Board's views on the funding provisions.

03:28 PM

Mr. Williams responded to questions about the contribution rates for the retirement plans. He stated that the PERA Board is committed to presenting a proposal to the General Assembly that addresses retirement benefit issues for Colorado PERA. He also addressed questions about portability, merging with PERA, and potential unfunded liabilities.

03:38 PM

Mr. Williams discussed employee and employer contributions, as well as unfunded liabilities. Discussion and questions ensued about whether PERA is classified as a political subdivision of the state or an instrumentality of the state. The members of the committee also asked Mr. Williams about the ratio of current employees to retirees in each of the retirement plans.

The following persons also testified on the bill:

03:45 PM -- Mr. Norman Ruggles, representing DPSRS, testified in support of the bill. He provided background about DPSRS and the reasons for the Board's support of the bill, including reasons of portability, health care insurance issues, and inclusion of hourly employees. Mr. Ruggles further discussed the provisions in the bill related to funding of DPS's retirement plans. He also explained that DPSRS has not yet completed its final actuarial analysis for 2008, and discussed the most recent evaluations from 2007 and the funding levels for the DPS retirement plan. He responded to questions from the committee about potential contingent liabilities of the proposed bill.

03:57 PM

Mr. Ruggles continued discussing the costs of administering the plan and the funding levels of the DPS retirement plan. He concluded by stating that the Board has studied the issues and supports the legislation. Mr. Ruggles responded to further questions from the committee about the benefits of belonging to the PERA retirement system. Discussion ensued about unfunded liabilities of DPSRS.

04:11 PM -- Mr. Tom Boasberg, Superintendent, Denver Public Schools, testified in support of the bill. He stated that DPS would support potential amendments to the bill that state the responsibilities for the debt is the obligation of DPS and not the state, and that Colorado would have no contingent liabilities. Mr. Boasberg distributed a document about the proposed merger of DPSRS and PERA to the committee (Attachment E). He provided background information about DPS's costs per student, wages, and retirement benefits. He also provided information about the ratio between employees and retirees, and discussed the inclusion of hourly employees to the plan.

04:28 PM

Mr. Boasberg responded to questions from the committee about retirement plan portability and PERA. Discussion ensued about portability, teacher retirement plans in other states, and debt obligations.

04:38 PM

Mr. Boasberg continued testifying to the committee and responded to questions about DPS's debt obligations. The committee discussed DPS's levels of funding, salaries and benefits for teachers, and employer contributions for employee pensions.

04:48 PM

Discussion continued about the debt obligations of DPS. Mr. Boasberg also responded to questions about unfunded liabilities for the DPS retirement plan. Mr. Boasberg stated that DPS would like to be part of the larger conversation about addressing pension benefits moving forward. He also responded to questions from the committee about whether DPSRS benefits would be reduced by the proposed merger.

04:59 PM

Mr. Boasberg closed by providing information to the committee about DPS's current enrollment growth rate of students. He also responded to questions from the committee about portability and the reasons for pursuing the legislation.

The following persons also testified on the bill:

05:04 PM -- Ms. Koren Holden, representing the DPSRS, was available to answer the committee's questions.

05:05 PM -- Mr. John MacPherson, representing himself, testified on the bill. He provided background information about a pension portability plan study that was earlier conducted, and stated that it concluded a merger would be unmanageable.

05:08 PM -- Ms. Amy Grant, DPSRS Board of Trustees, testified in support of the bill. Ms. Grant responded to questions from the committee about the bill potential liabilities.

05:10 PM -- Ms. Cary Kennedy, Colorado State Treasurer, testified in support of the bill. She expressed her thoughts about the issue of subsidizing either retirement plan in a proposed merger. Ms. Kennedy explained that bringing these two systems together has been discussed for over ten years and these efforts have not been successful. She also said if DPSRS is left as an individual plan, separate changes for that plan may be necessary in the future, and an opportunity may be lost to bring the two retirement systems together. Ms. Kennedy responded to questions from the committee about the PERA Board's opposition to the funding provisions in the bill.

05:20 PM

Ms. Kennedy continued discussing the timing of when to bring the DPS system into PERA's plan. She also responded to questions about the management of the current pension systems and retirement benefits. Discussion ensued about solvency issues.

05:23 PM

Senator Hudak closed public testimony. The committee recessed.

05:41 PM

The committee reconvened. Senator Sandoval and Senator Spence, prime sponsors, returned to the table to discuss the bill with the committee. They provided their thoughts about why the merger should move forward.

Members also received a copy of Amendment L.005 (Attachment F).


BILL:	SB09-282
TIME:	05:46:55 PM
MOVED:	Sandoval
MOTION:	Adopt Amendment L.001 (Attachment A). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-282
TIME:	05:47:31 PM
MOVED:	Brophy
MOTION:	Adopt Amendment L.004 (Attachment C). The motion failed 3-4.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	No
	Isgar	No
	King K.	Yes
	Scheffel	Yes
	Hudak	No
	Sandoval	No

Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB09-282
TIME:	05:50:44 PM
MOVED:	Brophy
MOTION:	Adopt Amendment L.003 (Attachment B). The motion failed 3-4.
SECONDED:
		VOTE
	Brophy	Yes
	Heath	No
	Isgar	No
	King K.	Yes
	Scheffel	Yes
	Hudak	No
	Sandoval	No

Not Final YES: 3 NO: 4 EXC: 0 ABS: 0 FINAL ACTION: FAIL


BILL:	SB09-282
TIME:	06:00:01 PM
MOVED:	King K.
MOTION:	Adopt Amendment L.005, as amended by the Sandoval amendment [see next vote sheet] (Attachment F). The motion passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-282
TIME:	06:06:38 PM
MOVED:	Sandoval
MOTION:	Moved to amend L.005. There was committee discussion. The amendment to L.005 (Attachment G) passed without objection.
SECONDED:
		VOTE
	Brophy
	Heath
	Isgar
	King K.
	Scheffel
	Hudak
	Sandoval

Not Final YES: 0 NO: 0 EXC: 0 ABS: 0 FINAL ACTION: Pass Without Objection


BILL:	SB09-282
TIME:	06:10:01 PM
MOVED:	Sandoval
MOTION:	Refer Senate Bill 09-282, as amended, to the Committee of the Whole. The motion passed 6-1.
SECONDED:
		VOTE
	Brophy	No
	Heath	Yes
	Isgar	Yes
	King K.	Yes
	Scheffel	Yes
	Hudak	Yes
	Sandoval	Yes

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

06:10 PM

The committee adjourned.