There is increased interest on these pages in pensions, which is a positive development on a serious and complicated long-term problem. What is more difficult is the financial climate in which school systems and other entities will now be addressing this issue.
DPS is trying to merge its pension system with PERA, which covers all Colorado state and local government employees. That merger — which was never going to be easy, now looks increasingly difficult, according to this article in the Denver Post:
The largest pension fund for state and local employees lost $10 billion in market value through mid-October, raising the specter of higher contribution rates or lower benefits in coming years if markets don’t improve rapidly.
Colorado PERA, which covers 413,000 paying members and retirees, saw the market value of its investments plummet from $41 billion at the beginning of the year to $31 billion on Oct. 15. That drop was not as severe as overall market indicators, but comes on top of a long-term underfunding problem that the Public Employees Retirement Association had hoped to make up through investment gains.
This DPS administration has approached its pension conundrum chiefly by an attempt to attach DPS to the greater PERA system; this does not so much solve the issue as much as make it part of an even bigger problem with a longer timeline, but it is a lot more forthright approach than we’ve seen before and has merit as an initial step. The pension problem in DPS has been lurking for some time, and the fall of the financial markets makes the failure of previous administrations on this issue during prosperous times an even greater error.
*Shortly after I wrote this post, the DP took down the article, which is unusual. The comments on the article remain on DP’s website. Stay tuned…
**Update: I understand that the initial article was taken down as it contained numerous errors, and this link is to the new article which, interesting, now uses the paragraph I excerpted from the middle as its new lede. The broader story remains — pension investments are down significantly, putting additional strain on underfunded programs and further jeopardizing the DPSRS and PERA merger.