Liddick: Enough PERA secrecy
October 3, 2011
Let’s say you’re a trustee for the Glominoid Corporation’s pension fund, which has hundreds of thousands of members and annual expenditures of $2.5 billion, funding more than 70,000 retirees. You know for a fact that the fund is seriously undercapitalized, and suspect the top few percent of recipients are gaming the system to receive benefits far out of proportion to their contributions. Your predecessor shares your concerns. But when you ask the rest of the board to open the fund’s books, you discover they are not at all willing to share. What do you conclude from this reticence, and as a trustee, what do you do to discharge your legal obligations?
Exactly. You do what you must to protect the interests of those in whose name you act, even if it means taking the corporation to court.
So when State Treasurer Walker Stapleton, a constitutionally -mandated trustee for the Colorado Public Employees’ Retirement Association, asked to see the books, why did the request create controversy, instead of the PERA Board’s refusal to comply? Would people object so strenuously if “Enron” was substituted for “Glominoid?” Color me dubious.
There’s little doubt PERA needs some going-over. At present, it’s only about 69 percent funded, and won’t be fully so until 2030 – assuming an 8 percent annual growth rate every year until then. Maybe this was one of the reasons behind Mr. Stapleton’s request: discovering whether the financial planner guaranteeing that ROI was Warren Buffett or Bernie Madoff. I wouldn’t mind knowing either: Anyone who could get that performance in this market is worth hiring.
PERA is also a significant part of the budget in Colorado’s school districts. By 2018, about 20 percent of every district’s budget will be devoted to this pension system, putting further pressure on already-underfunded schools. And with most of Colorado’s educators and other public employees paying into PERA instead of Social Security, the results of a deficiency would be serious indeed, both for retirees who would have to do with much less, and for the state’s taxpayers, who would eventually have to fund the shortfall.
These facts argue for giving the treasurer access to anything he might want. Confidence in the system is important when dealing with such a vital part of the state’s economy, and when members of the PERA board refuse to allow a trustee access to financial information, confidence is not what they create. Rather the opposite, especially given their reasons for denial.
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A lawyer for the 16-member board argues that PERA’s financial information is basically none of Mr. Stapleton’s business, but a glance at the Treasurer’s Office mission statement shows this to be hogwash. As the constitutional guardian of Colorado’s public funds, “It is the Treasury’s duty to manage and account for the citizen’s tax dollars from the time they are received until the time they are disbursed.” Among other things.
Hide-the-figures partisans also claim it would be “prohibitively expensive” to provide the data. If this it true, what does it say of an organization that provides benefits based on salary averages? Perhaps PERA ought to stop using an abacus and quill pens, and update to systems less prone to human error in calculations. On the other hand, if this is a red herring what is the board trying to hide with claims of inefficiency?
Another argument is that sharing the information with Mr. Stapleton would somehow result in a breach of confidentiality. This is the most insulting of responses, since it presumes the state treasurer would violate both his oath of office and his fiduciary obligations as a trustee in the interest of … what, exactly? They who argue a political motive are actually the ones trying to politicize a perfectly legitimate request from an official whose mandate requires him to ascertain that the people’s funds are being used in a responsible manner. It is they, not he, whose behavior and motives need to be questioned.
The PERA board’s position and actions in this instance are both troubling and expensive. Their refusal to provide information which is entirely in the public domain in other states creates doubt both about their calculations of the fund’s solvency, and about their stewardship of their public trust. That they require the taxpayers of Colorado to fund a lawsuit to compel them to provide this information further illustrates their contempt for the general public, and for the laws of the state.
When the treasurer has the information he requested, one can only hope that it is subjected to microscopic analysis. This situation reeks of malfeasance and dissembling, which only the sanitizing sunshine of public scrutiny will dispel.
Well done, Mr. Stapleton. Well done.
Summit County resident Morgan Liddick pens a Tuesday column. E-mail him at email@example.com.