We’re more than halfway through the 2026 legislative session, which kicked off in mid-January and will continue until mid-May. So far, state lawmakers have introduced nearly 500 bills that could become law.
For an update on this session’s legislative activity, we checked in with Michael Steppat, PERA’s Director of Public and Government Affairs. Throughout the session, Steppat, along with PERA executives, meets with legislators, educates them on and discusses PERA-related issues and policy, and testifies at bill hearings.
Can you start by updating us on PERA-related bills that have been introduced so far?
As of mid-March, legislators have introduced four PERA-related bills, one of which is still making its way through the General Assembly.
House Bill 1026 would make changes to PERA provisions related to purchasing service credit and expand access to the PERAPlus 401(k) and 457 plans. Under current state law, qualified PERA members can purchase service credit based on previous periods of employment, and this bill would allow for limited purchases based on periods of unemployment, such as taking time off to raise a child or care for a loved one. It would also require all PERA-affiliated employers to offer the PERAPlus 401(k) and 457 plans, in both pre-tax and Roth options, to their employees.
Many employers already offer these plans to their employees, which have competitive advantages compared to others available in the marketplace. The bill does not mandate that employees participate in them, and it allows employers to continue offering any other existing plans if they choose. That bill has passed the House and is now under consideration in the Senate.
House Bill 1146 would allow approved facility schools to apply for affiliation with PERA to provide retirement benefits to their employees. These are schools serving students whose needs aren’t being met in a regular classroom. That bill has passed.
House Bill 1027, which would allow executive directors of boards of cooperative services (BOCES) to return to work after retiring for unlimited amounts of time without facing a reduction in their PERA benefits, has passed. That bill was signed into law by Governor Polis on March 12.
MORE INFO: 2026 Proposed PERA-Related Legislation Status
Let’s talk about the State budget. As lawmakers work to cut spending and balance the budget, they’ve been discussing the potential privatization of Pinnacol Assurance. Can you explain more about that and why PERA is part of the conversation?
Pinnacol Assurance is a quasi-public entity that provides workers’ compensation coverage, serves as the State’s “insurer of last resort,” and is an affiliated employer in the State Division of PERA. The Governor’s Office has proposed to convert it to a private company and to use the proceeds of the State’s interest in Pinnacol for other priorities to help alleviate the budget shortfall. Pinnacol also wants to privatize so it can modernize and serve the needs of its customers, which may include expanding its business outside of Colorado, something it’s currently prohibited from doing.
The privatization of Pinnacol has been a point of discussion in many recent legislative sessions, and the reason PERA comes into play is because Pinnacol’s employees are public employees and therefore PERA members. If Pinnacol were to become a private entity, its employees could no longer be PERA members, and they and Pinnacol could no longer contribute to the Defined Benefit Plan, and so there would be a requirement for Pinnacol to disaffiliate from PERA.
That kind of conversion has financial implications for PERA, since those employees would still be entitled to the retirement benefits they’d earned prior to disaffiliation and given the current unfunded liability of PERA, there is a cost to disaffiliate. Under state law, any employer who disaffiliates from PERA must pay for its share of that unfunded liability. PERA’s actuaries calculate the cost of disaffiliation based on current law, which means using a 5.25% discount rate—PERA’s actuarial investment assumption rate (currently at 7.25%) minus 200 basis points, or 2%—to account for the inherent risks and ensure PERA has the assets to pay the earned benefits over time without that liability shifting to the rest of the State Division fund.
The potential conversion of Pinnacol to a private entity has also been the topic of ballot measures filed recently for the upcoming November election. We’ll continue to monitor this issue and ensure that if privatization moves forward, it won’t have any negative financial effect on PERA.
Are there other aspects of the budget process that might affect PERA?
The Joint Budget Committee is nearing the finish line when it comes to producing the State budget for the next fiscal year. The budget bill, known as the long bill, will be introduced later this month, and there will be a handful of companion bills that relate to the State budget.
The JBC is tasked with cutting hundreds of millions of dollars to produce a balanced budget, which is required by law, as the costs of providing certain governmental services has been increasing faster than what the State is allowed to keep and spend each year. That’s no easy task, and they’ve had to juggle many competing priorities throughout the process.
PERA doesn’t rely on the State budget for the administration or operating costs of the plan, but we always monitor the budget-writing process to watch for any potential impacts. Any changes to PERA contributions—either the State’s annual $225 million direct distribution to PERA or the State’s contributions as a PERA employer—would require separate legislation to go through the regular legislative process and be signed into law by the Governor.
The Governor had included in his budget proposal a temporary 1% reduction in the State’s contributions to PERA as an employer, but the Joint Budget Committee denied that request earlier in the session. We’re grateful that the Legislature remains committed to making consistent contributions to fund public employees’ retirement benefits.
READ MORE: Joint Budget Committee Rejects Proposal to Reduce PERA Contributions
What other legislative issues can we expect to come up between now and the end of the session?
We’re currently working with legislators on a companion bill to the long bill that we think will put PERA on even stronger footing as we make progress toward our funding goal.
PERA’s actuaries conducted a study into some potential changes that could reduce the likelihood of triggering the Automatic Adjustment Provision (AAP) that took effect with Senate Bill 200 in 2018. The AAP automatically adjusts member and employer contributions, the State’s direct distribution, and retiree annual increases based on our funding progress.
We know those adjustments can be really challenging for our members and retirees, so the bill will include two proposals that are meant to make adjustments less likely in the near future—without jeopardizing our progress toward reaching full funding by 2048.
Those proposals include providing PERA flexibility to allocate the State’s annual $225 million direct distribution to whichever division trust funds would help minimize the likelihood of triggering automatic adjustments and redirecting a portion of employers’ health care trust fund contributions to instead help pay off pension liabilities. The health care trust fund is closer to full funding than the pension trust funds, so we want to make sure those contributions are going where they’re needed most and benefit the largest number of retirees.
It’s also likely that the Legislature will consider a bill suspending certain interim committee activities like they did last session, in order to save money in between sessions.
For the latest updates throughout the session, be sure to subscribe to the biweekly PERA On The Issues newsletter.
