Most of you who are receiving this are members of Colorado PERA, either in the active school division or in the retiree school division. Both divisions have Board of Trustee seats up for election this month and I want to encourage everyone to vote. You can vote now by logging into your PERA account online or through the PERA app on your mobile device. Ballots were also mailed out today if you prefer to wait for the paper ballot. This is the link you click on to vote if you login to your PERA account.
Voting is easy and only takes a couple of minutes. If you don’t see the link to vote when you login to the PERA website or the app, contact PERA.
You can vote in the active school division election if you are currently working for a public school and are not yet receiving any pension benefit from PERA. There are three seats up for election and there are six candidates. I don’t know five of them but, for what it’s worth, I can highly recommend Marcus Pennell. Here is the link for the candidate questionnaires (pdf) so you can read more about them.
You can vote in the school retiree division election if you have retired from PERA and are receiving a pension benefit. This includes folks who have returned to work for a school (including working a transition year and substitute teaching). As long as you are receiving your pension benefit from PERA, you can vote in this election. There is one seat up for election and there are eight candidates. You might notice that my name is one of those eight. The odds of me winning with eight candidates are slim, but you never know, so consider casting your vote for me. Here is the link for the candidate questionnaires (pdf) so you can read more about them.
(Note: The questionnaire that PERA has candidates fill out is very limited in terms of questions and total character count. If you’re interested, at the bottom of this email I’ve included my responses to the questionnaire that CEA sent out, which gives you much more information.)
I strongly encourage you to vote (even if it’s not for me). Historically, PERA Board elections have had very low turnout. And, like any election, the more people who vote the more representative the outcome is. I would also encourage you to send this along to other PERA members (either active or retired) and to encourage them to vote as well. It’s up to you, of course, whether you include the part about voting for me :-).
Thank you for your time,
Karl
My Answers to CEA’s Questionnaire
What do you view as the major issues and/or challenges facing the PERA Board and what are your ideas for addressing them?
The most significant challenges facing the PERA Board include continuing on the path to being fully funded, the Legacy Modernization Project, meeting the needs of members through enhanced education around both PERA benefits as well as financial literacy more generally, and working with the Colorado General Assembly to continue to provide the best benefits we can for PERA members.
While these are challenges, they are also opportunities. If elected to the Board, I would work with fellow Board members and PERA staff to explore ways to expand PERA’s educational offerings to members about their PERA benefits and financial literacy. I would also work on ways to better educate the members of Colorado’s General Assembly, as PERA is a complicated plan and most members of the General Assembly are new enough that they don’t have an in-depth understanding of the issues and the opportunities. I would also support staff as they work to complete the Legacy Modernization Project.
How should PERA interact with the legislature?
I’m unclear on whether this question is asking how PERA staff should interact with the legislature or the PERA Board, so I will address both.
The PERA Staff should continue to do what they’ve always done, which is to provide accurate, timely, and helpful information to the state legislature to inform their decisions around any legislation related to PERA. This should include being proactive when necessary if and when it appears as though the legislature may not be asking the correct questions.
The PERA Board should interact in two ways. As they have been doing, they should weigh in on any proposed legislation that affects PERA. For legislation that the PERA Board feels strongly about, they should take either a support, oppose or amend position, and provide some reasoning to go along with the position. (If they don’t feel strongly, they can also take a neutral position.)
The PERA Board historically has taken a pretty reactive approach in regards to the state legislature. When the legislature brings legislation forward, the Board reacts. I would like the Board to at least explore taking a more proactive approach as well. In the last several decades, the only time I can recall that the Board took a proactive action was in 2010 when they submitted their ideas to the legislature for the legislation that eventually became SB 10-001. There are several issues that are or soon will be impacting PERA members (AAP, AI, AED/SAED, PERACare, etc.) that I believe the PERA Board could take a more active role working with the legislature than they currently do. This is something that would need to be done carefully and in a nuanced fashion, but I think there is room for improvement that could positively impact all stakeholders.
What changes would you like to see made in the PERA retirement system or its administration?
I would like to see PERA be much more proactive around educating members about both PERA benefits and financial literacy. Many Colorado educators are not fully aware of their PERA benefits and how that should impact almost all of their other financial decisions. Financial planning for people with a defined benefit looks very different than it does for those who don’t have one, and PERA is uniquely positioned and trusted to provide that education. I also think PERA needs to be more “aggressive” in marketing their 401k and 457b plans to PERA members, as most school districts offer inferior 403b plans with much higher fees (see this post).
I also have many ideas around improving certain aspects of PERA benefits (purchasing service credit, the 401k and 457b plans, the 90-day disability application limit, PERACare, etc.), although some of these ideas probably cross over the line of a PERA Board member providing a high-level oversight role, but I’m happy to share those ideas with anyone who is interested :-).
What is your position on employees returning to work after retirement?
I fully support employees being able to return to PERA-covered work after retirement, and PERA employers being able to hire those employees. The concern is the potential impact on PERA’s funded status. Any return-to-work provisions that encourage an earlier retirement than would’ve happened otherwise have a negative impact on PERA’s funded status. Similarly, if retired employees and employers were not required to make PERA contributions, it would also have a negative impact. So the state legislature needs to make sure that any adjustments they make to the return-to-work provisions (or really any legislation related to PERA) includes the appropriate funding to keep PERA “whole”.
PERA is currently a defined-benefit (DB) program for vested School and DPS Division employees. Under this program, an employee receives a set monthly amount upon retirement for the rest of their life. Other PERA Divisions offer employees a defined-contribution (DC) program, where the employer sets certain contributions to the employees account during employment with no guaranteed retirement benefit, instead of a DB program. Would you support or oppose legislation opening School and DPS Division employees to a defined-contribution (DC) benefit? Please explain why you would support or oppose?
While I am not anti-DC and think it makes sense to offer that option in other divisions where employees may only work for a few years, I would oppose it in the School and DPS divisions. PERA’s DB Plan is a huge benefit to attract and retain public school employees, and we want to encourage those folks to make a career in public education. Experienced public school employees benefit our students and communities, and a defined benefit plan encourages them to stay. In addition, a defined benefit plan (alongside PERA’s excellent defined contribution 401k and 457b plans) provides a much higher level of retirement security than a defined contribution plan alone, as illustrated by the state-mandated GRS study in 2014 as well as many other independent investigations (see NASRA, NIRS, NCPERS, etc.).
Should PERA continue to oppose mandatory participation by public employees in Social Security? Yes, No, or Other:
Other: In general my answer is yes, although this is not an area that is in the purview of a PERA Board member. We provide oversight of PERA and are not involved in policy decisions or legislation regarding Social Security.
PERA has a health insurance program – PERACare. What concerns and/or suggestions do you have regarding this program?
PERACare is a hugely important benefit, especially in this time when the Affordable Care Act is possibly in danger of being radically changed or repealed. I do have a couple of concerns/suggestions.
The first is affordability. As you know, health insurance costs continue to escalate (usually at a pace higher than inflation). This is a problem for all PERA members, but even more so for retirees. Employers pick up much of the increase in health insurance premiums for active members (at least for self-coverage), and active members usually see their wages increase each year to help offset the increase in their portion of the premiums. But the subsidy for PERACare for retirees is fixed, it’s not adjusted for inflation, so they bear the full brunt of any increases in premiums. And with the current Annual Increase being only 1% (beginning in the third year after retirement), they don’t have any “wage increase” to help offset the cost. This is an area that I think the PERA Board should explore and conceivably explore ways that the subsidy can be indexed to inflation.
Second, while I think PERA generally does a great job with member education, I feel like they could improve their education for retirees around health insurance. Specifically, I think PERA could expand their education to spend more time helping members understand their choices other than PERACare and giving them the knowledge and tools to make an educated decision. For example, right now (as long as the ACA subsidies are still in place), most pre-Medicare PERA retirees would be better off getting their health insurance through the ACA marketplace than through PERACare (see this blog post). In addition, once PERA retirees turn 65 I would like to see more education around the choice between traditional Medicare and PERA’s Medicare Advantage plans, and helping members pick the plan that best meets their needs.
How would you work with CEA on PERA issues affecting our members? If elected, how will you communicate with school division members?
I believe in transparency and openness. I would be available through the usual channel of the shared PERA Board Member email address, but would also be willing to attend meetings of any stakeholder group (CEA, CSPERA, Secure PERA, etc.) to hear their issues and concerns. It’s important to keep in mind that as a single Board member I do not make policy or speak for the entire Board or for PERA, but I would carefully listen, provide any clarifying comments that I can, and then take those issues and concerns back to the entire Board. As a fiduciary, I would not be able to answer questions regarding individual member accounts or give personal advice to members.
What is your plan to address current and future retirees’ cost of living changes?
As I mentioned above, one area to address is the fixed subsidy for PERACare and exploring ways we might be able to index that to inflation.
The other huge issue, of course, is the Annual Increase. Someone who retired in 2018 has already seen the purchasing power of their PERA pension decrease by over 30% (see this blog post). Similar to the health insurance premium issue, retirees (unlike active members) don’t have any way to keep up with inflation. This is likely to get worse with future triggers of the AAP (a decent chance it will happen as soon as July 1, 2027, lowering the AI to 0.75%). This is an area that I think the PERA Board could perhaps be more proactive with the legislature, using the modeler to run various scenarios that might provide a path to enhancing the AI without dramatically impacting PERA’s funded status, and then sharing that information with the Pension Review Subcommittee.
For example, since I’m not a current Board member I couldn’t ask for this, but I did suggest they run a modeler scenario that included
1) Indexing the annual direct distribution to inflation (assume 2.5% or 3%),
2) With an assumed rate of return of 7.4% (AON’s current Capital Market Assumption for PERA’s portfolio is 7.56%, and that’s with no alpha),
3) With part of the HCTF contributions redirected to pay off UAAL as demonstrated during a recent Board Meeting (0.32% for all divisions except DPS, with DPS at 0.82%), and
4) Increasing the Annual Increase to 1.25%.
I don’t know if that particular combination would work or not, but the modeler would give us an idea and then we could adjust from there.
Do you support or oppose keeping a clear majority of the PERA Board of Trustees elected by PERA members and retirees and not appointed by the Governor? Please explain why you support or oppose.
Support. It’s critical that PERA members have elected representation and that Board members have “skin in the game”. I believe the Trustees appointed by the Governor (as well as the State Treasurer) bring valuable experience, expertise, and perspective to the Board, but they should not be the majority.
Please list any relevant work or volunteer experience that may enhance your performance as a PERA Trustee.
While I was a teacher I served on my district’s (Littleton Public Schools) benefits and negotiations teams and helped lead education sessions around benefits for my staff members.
I served on the PERA Board of Trustees (Active School Division Seat, with CEA’s endorsement :-), from 2014-2017, stepping down when I retired in 2017. The following year I worked a transition year, so could not attend Board meetings, but since then I have attended all 34 regular Board meetings (mostly virtually once they started streaming). I did this because I find it interesting, so that I can help other PERA members better understand their PERA benefits and any changes that are coming along, and because I thought I might eventually run for the retiree seat. PERA is a complex pension plan, and it takes a good two years as a Board member until you really get your head around the various aspects of PERA. By continuing to attend the open sessions of the Board meetings, I was able to stay abreast of the complex issues surrounding administering PERA benefits.
I also served on the Colorado Pension Study Group in 2017-18 at the request of Greg Smith (then Executive Director of PERA), which was organized by the Denver Metro Chamber of Commerce. This was a varied group of folks looking at pension reforms and, frankly, didn’t end up accomplishing much of anything.
Since retiring, I have spent my time helping Colorado educators learn more about personal finance. This includes teaching a Personal Financial Literacy class for Colorado educators through CEA COpilot from 2021 to the present. This class has been well received and had quite the waiting list, so I’ve even recruited two additional instructors so that we can offer it to more participants. I’ve also presented at the CEA Summer Leadership conference, write a financial blog primarily for educators, answer questions in multiple financial Facebook groups for educators, and have written books for educators in all 50 states, the District of Columbia, St. Paul Public Schools, Chicago Public Schools and New York City Public Schools (focusing on financial literacy and their specific pension plan different teacher pension plans. I also recently started a podcast as another avenue to help educate folks.
Fisch Financial 