The Colorado PERA Board of Trustees convened for its final regular meeting of 2024 on Friday, November 15.
Below are summaries of some of the key actions the Board took during the meeting. You may also view a recorded livestream of the meeting.
PERA operating budget
Following a budget workshop during which PERA executives briefed the Board on the need for a larger budget to cover important technology upgrades, the Board approved PERA’s 2025 operating budget of $132 million. The 19.6% increase over 2024’s budget includes costs associated with a multi-year project to modernize the core technology systems necessary to administer benefits as well as other critical needs.
Read more about PERA’s 2025 budget.
Strategic planning update
For months now, the Board, PERA staff, and consultants have been working together to develop PERA’s next three-year strategic plan. That process has involved stakeholder research, identifying areas of strength and opportunity, and solidifying long-term priorities and goals for the organization.
From here, work will continue on crafting the plan, with a draft expected to be ready for Board review in January. Once approved, it will be up to staff to begin implementing the plan and fulfilling its strategic vision.
Member contribution interest rate
Every PERA Defined Benefit Plan account accrues interest, compounded annually. If a PERA member leaves PERA-covered employment and requests a refund of their account, they receive their contributions, the interest earned on that balance, and any applicable employer match. If that member keeps their account with PERA, the balance will continue to accrue interest and the member has multiple options upon reaching retirement eligibility, including choosing a lifetime monthly benefit.
The Board is responsible for setting the interest rate every year; it currently stands at 3 percent. The Board’s policy evaluates the interest rate as a component of members’ overall retirement benefit. After discussing the issue, Trustees voted to keep the interest rate at 3 percent for 2025.
Trustee appointment and Board officer election
The Board held elections to name a new Chair and Vice Chair, as terms for current Chair Marcus Pennell and Vice Chair Taylor McLemore are set to expire. Current Vice Chair Taylor McLemore was elected Chair, and the Hon. Rebecca R. Freyre was elected Vice Chair. Outgoing Chair Marcus Pennell served the limit of two terms as Chair and was ineligible for reelection.
Both McLemore and Freyre will serve two-year terms.
In addition to electing new officers, the Board appointed Dr. Louis Fletcher to fill a School Division seat vacated by Trustee Scott Smith in September. Fletcher had the second-highest number of votes in the 2024 election for that seat, and will serve until the next election in 2025.
READ MORE: PERA Board Elects New Chair, Vice Chair
Denver Public Schools “true-up” discussion
When legislation was passed to merge Denver Public Schools Retirement System into Colorado PERA in 2010, it included a provision that aims to equalize the ratio of unfunded actuarial accrued liability over payroll of the DPS Division and the School Division in 30 years. Every five years, PERA conducts an analysis of those ratios and whether adjustments to the DPS Division employer contribution rate would be needed to stay on track.
The results show that a reduction in the DPS Division’s employer contribution rate would be necessary to equalize this ratio in 2039, but the PERA Board has previously taken a formal stance in opposition to the defunding provisions—such as the 5-year “true-up”—that were included in the merger legislation, and more recently has opposed any legislation seeking to reduce contributions pursuant to the Board’s funding policy.
Additionally, a reduction in employer contributions from the DPS Division could increase the possibility of triggering the Automatic Adjustment Provision in future years, which could increase contributions in other divisions and further decrease the Annual Increase retirees receive on their retirement benefit.
Upcoming legislative session
Director of Public & Government Affairs Michael Steppat and Chief Executive Officer/Executive Director Andrew Roth provided the Trustees with an update on interim legislative activity and PERA-related bills that could be introduced in the upcoming 2025 legislative session.
The Pension Review Commission, which is responsible for recommending legislation pertaining to PERA and the Fire and Police Pension Association of Colorado, drafted two bills for the 2025 session.
The first, known as Bill A, is similar to a bill from last session that would provide a temporary tax credit for PERA retirees to reduce the impact of inflation. The second draft, Bill B, pertains to PERA studies and reporting and aims to lay out in statute some of the work the PERA Board already does on a regular basis and modify the cadence of those reports.
READ MORE: State Lawmakers Pursuing Two PERA-Related Bills in 2025
Actuarial experience study
In order to accurately estimate PERA’s financial status and how much money is needed to provide benefits now and into the future, we use a set of predictions, known as actuarial assumptions, that undergo regular review and updates as needed. Those assumptions include economic factors like inflation, investment returns and payroll growth, as well as demographic assumptions such as when people retire and how long they’ll live.
The process of reviewing those assumptions is known as an actuarial experience study, so called because the study involves comparing PERA’s assumptions with the actual experience over a set time period. The last experience study took place in 2020. While nobody can predict the future perfectly, regularly performing experience studies ensures our estimates of current and future benefit obligations are as accurate as possible.
The current experience study will look at the period between January 1, 2020 and December 31, 2023. This is an important period because it will show the effects of the COVID-19 pandemic, such as higher mortality and earlier retirements.
Over the coming months, PERA staff will continue working with actuarial consultants to conduct the study, after which the consultants may recommend changes to some assumptions. If the Board adopts any recommended changes, we’ll be sure to provide an update on what that might mean for PERA’s finances.
2025 Board election
The Board’s final action item was approving the calendar for next year’s Board election.
There will be five seats up for election in 2025: Three active member seats in the School Division, one active member seat in the State Division (excluding higher-education employers), and one retiree seat (School, Local Government, and Judicial Divisions only). Candidacy will open in early January, with the election taking place in May.
New in 2025, members and retirees will have the added option of being able to cast their votes via the Colorado PERA mobile app or on copera.org, in addition to the option to vote by mail.
The Board’s next regularly scheduled meeting will take place on January 17, 2025.
