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In a bid to help school districts cope with the growing statewide teacher shortage, Colorado lawmakers are considering letting more retired educators, bus drivers and other school employees come back to work for longer.
But barring changes to the legislation, the bipartisan proposal could add as much as $200 million to the Colorado Public Employees’ Retirement Association’s unfunded debts — a long-term cost that would ultimately be borne by school districts and the teachers they employ.
Today, PERA retirees can go back to work for a public sector agency for 110 days a year while still drawing their full pension benefits. But school districts are a special case. Each district can also hire 10 retirees to work up to 140 days a year. That’s shy of a full school year, but K-12 officials say it still helps address staffing needs.
House Bill 1044, which advanced to the chamber floor this week, would give schools one more retiree slot for every 10,000 students in their district. That would allow an extra 440 retirees to work 140 days a year in districts across the state.
The bill also would loosen the rules for when districts can hire retired teachers for longer than 110 days. Currently, school districts must show a “critical shortage of qualified instructors.” Under the bill, they would only have to demonstrate a “need.”
“We’re very excited about this,” said Rep. Eliza Hamrick, D-Centennial, one of the measure’s lead sponsors. “It’s going to help. It’s not the whole solution, but it’s going to help get teachers in classrooms without teachers — and bus drivers and other types of support personnel for schools.”
At a committee hearing this week, Drew Adams, the director of human resources for Adams County School District 14, told lawmakers that school officials would prefer to hire teachers fresh out of college. There just aren’t enough of them.
“Without (retirees), quite frankly, we would not be able to operate as a successful school district,” Adams said.
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MORE: The financial toll on PERA is somewhat counterintuitive.
When a PERA retiree goes back to work for the public sector, it can actually be a net positive for the pension’s finances. The teacher and their employer must make contributions to the pension, but the retiree doesn’t receive increased benefits for time worked after their initial retirement.
Here’s the problem: PERA officials say it provides an incentive for people to retire earlier than they otherwise would have. In those cases, it ends up costing PERA more money, because the earlier retirement outweighs the benefit of the retiree returning to the workforce and resuming their contributions to the pension.
Consider a teacher who retires after 30 years. They could begin drawing pension payments worth 75% of their average salary, then return to work part-time to earn more money on top of that. In effect, they would make more money as a retired part-time teacher than they were earning when they worked full time.
Bill sponsors said they worked carefully with the pension and school leaders to open up hiring without doing long-term harm to PERA as it tries to climb out of a $26 billion hole.
“PERA is near and dear to my heart and I’m very, very focused on making sure we’re on the path to (fully) funding PERA,” said Hamrick, who chairs the legislature’s Pension Review Subcommittee. “I wouldn’t have pushed this bill out if I was concerned about that.”
PERA’s board of directors so far isn’t opposing the bill — but it is pushing for lawmakers to amend it to mitigate the cost to the pension.
One challenge policymakers face: No one knows for sure how many teachers will take advantage of the new rules and begin drawing retirement benefits sooner.
If 15% of eligible members retire two years earlier due to the proposal, it would add $108 million to PERA’s unfunded debt, according to a study by Segal, PERA’s actuarial consultant. That’s a small enough change that PERA’s school division would still be on track to full funding within 24 years.
If 30% decide to retire early, it would cost the pension $198 million — and it would take PERA a year longer to reach full funding.
The pension’s staff is working on a proposal for how lawmakers could address the financial impact. One option is increasing contribution rates to cover the anticipated costs; the state could also cover the potential cost through an upfront payment to the pension.
YOU HEARD IT HERE
Rodriguez told reporters that serving as majority leader has expanded his Capitol universe, “and that’s a lot for me to adjust to.” He said with more bills being introduced more people are coming to him for advice and assistance.
“I’ve been on the phone a little bit later each evening,” he said.
MORE: Rodriguez declined to take a position on the so-called construction defects bill introduced this week in the Senate. But, he said, given his consumer focus in the past, “I obviously have some concerns.”
A few years ago, Rodriguez attempted to expand the statute of limitations homeowners have to sue their builders to 10 years from six.
Senate President Steve Fenberg, D-Boulder, also declined to take a position on the measure. He said he hadn’t studied the bill and that he isn’t well immersed in the topic.
“I don’t know what the prospects would be in the House,” he said, “but I think there’s a chance.”
THE NARRATIVE
Lawmakers look to bolster health care providers
Medicaid providers look like early winners of this year’s state budget discussions, with Colorado lawmakers pushing to increase spending by nearly twice as much as what Gov. Jared Polis had proposed.
The Joint Budget Committee late last month gave preliminary approval to a 2.5% increase to Medicaid reimbursement rates for next year, a $96 million increase in general fund spending over the current budget, compared to the $47 million Polis had requested.
The increase would apply to next year’s budget, which begins July 1. But it’s not guaranteed to make it into the state’s final spending plan. Lawmakers won’t know how much money they have for the 2024-25 fiscal year budget until new revenue forecasts come out next month.
Citing financial constraints, Polis had proposed a 1% increase for Medicaid providers overseen by the Department of Health Care Policy and Financing, and 2% for other Medicaid providers.
Lawmakers say the increase is needed to help keep health care services flowing amid widespread staffing shortages in the industry. Over the past decade, the state’s provider rate increases have lagged well behind inflation, according to JBC documents.
The 2.5% bump is still less than the 3% across-the-board increase state employees are due to receive this year, on top of other raises as the state implements a new pay plan.
Meanwhile, the Colorado House of Representatives this week approved a $5 million general fund increase for autism treatment after a number of autism centers shut their doors in recent years, citing insufficient state funding.
The midyear budget change would take effect this month and bring the reimbursement rate for such therapies in line with the recommendations of the Medicaid Provider Rate Review Advisory Committee. The Polis administration had asked for less.
That measure now moves to the Senate, along with another $81 million in midyear general fund budget additions for the 2023-24 fiscal year.
The administration won’t walk away empty-handed. The largest item on the list is $58 million Polis requested to reduce the waitlist for mental health treatment among people deemed incompetent to stand trial.
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THE POLITICAL TICKER
ELECTION BALLOT MEASURES: The state Title Board on Wednesday rejected nine ballot measures aimed at overhauling Colorado’s elections. They would have made Colorado’s primaries open, with candidates from all parties running against each other. The top four vote-getters would have advanced to a ranked-choice general election under the proposals. The measures, previously approved by the Title Board, were being heard on appeal by opponents. Curtis Hubbard, a spokesman for proponents of the measures, including Kent Thiry, the wealthy former CEO of Denver-based dialysis giant DaVita, said they are now pursuing initiatives that would be statutory rather than constitutional. “Election reforms that expand voter choice will be on the ballot in November, no matter how loudly the party insiders protest,” Hubbard said in an email. Three other proposals dealing with signature gathering, vacancy committees and reporting election results remain alive.
RUSSIA: Former U.S. Sen. Cory Gardner, a Colorado Republican, wrote a column in The Kyiv Independent saying that President Joe Biden should declare Russia a terrorist state for its actions in Ukraine.
DEMOCRATS: U.S. Sen. Cory Booker of New Jersey will headline the Obama Gala, the Colorado Democratic Party’s annual Denver fundraiser. The March 23 event will include a daylong “Demfest” featuring elected officials, candidates and activists.
JOINT BUDGET COMMITTEE: State Rep. Rick Taggart, R-Grand Junction, has been serving as a substitute on the Joint Budget Committee while Rep. Rod Bockenfeld, R-Watkins, undergoes cancer treatment. A news release from the House GOP said Taggart will continue on the JBC until Bockenfeld’s health allows him to return.
GOP FUNDRAISER: The Colorado GOP is one of four state Republican parties that recently formed a joint fundraising committee. It also includes the Delaware, Georgia and Kansas parties. Joint fundraising committees allow donors to write a single check that is divided among multiple recipients.
STORY: Colorado’s unused $8M in rental assistance funding could have been spent in a week, officials say
9NEWS: GOP election officials slam Republican support for “disgraced” Tina Peters
COLORADO PUBLIC RADIO: Trump eligibility case has brought new pressures and threats to Colorado’s election workers
COLORADO POLITICS: Republican congressional candidate Gabe Evans wins endorsement from House Speaker Mike Johnson
THIS WEEK’S PODCAST: $8 million in unspent rental assistance leaves Colorado lawmakers livid
THE BIGGER PICTURE
Corrections & Clarifications
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