SubscribePERA, fiscally unsound, elects to stay the course
By coincidence, Colorado PERA has appointed a new executive director the same week that the investment research firm Morningstar Inc. concluded that Colorado is one of 21 states whose public pension systems aren’t fiscally sound.
As Governing magazine reported, “An alarming number of funds face a steep uphill climb in fully funding their plans. The report found 21 states’ aggregate funded ratios fell below 70 percent, which Morningstar considers the threshold for ‘fiscally sound’ systems. Illinois (43.4 percent), Kentucky (50.5 percent) and Connecticut (53.4 percent) registered the lowest funding levels of all examined.”
Morningstar said PERA was 57.7 percent funded in 2011, although the fine print reveals the firm is referring to PERA’s state division fund. Nevertheless, PERA’s largest fund, for schools, is only marginally better, according to Morningstar, at 60.2 percent.
PERA’s new executive director is Greg Smith, who had served as interim director for the past few months. Notably, Smith has been among PERA executives who have repeatedly downplay concerns about the pension system’s long-term solvency, maintaining that reforms enacted by the legislature a few years ago will take care of the problem – and never mind that such assurances depend in part on an assumed rate of return for PERA’s investments of a seemingly unrealistic 8 percent.
In other words, Smith’s appointment indicates that there is likely to be little change in direction at PERA for the time being. All remains well, you see, even with funded levels that seem to alarm Morningstar.
