Report: Colorado schools, cities have $10 billion in hidden pension liability
By Arthur Kane | Watchdog.org
Colorado’s schools and governments have about $10 billion in hidden pension and health-care benefit liability, a “sinkhole” that could cost many individual taxpayers $10,000 or more to fill, a report from the Chicago-based nonprofit Truth in Accounting found.
Sheila A. Weinberg, TIA founder and CEO, said the Colorado Public Employees Retirement Association hasn’t collected enough from school districts and local governments to cover retirement costs for all the local employees.
DIGGING DEEPER: Truth In Accounting founder Sheila Weinberg said governments are leaving taxpayers with billions in pension liability.
“It is pushed off year after year until these plans don’t have enough money to pay for retirees,” she said. “They’re either going to have to raise taxes or cut benefits.”
PERA, in a written statement, said governments have always paid PERA the amount set by the General Assembly, but the association hasn’t yet “quantified” how much pension liability individuals governments and school districts may have.
“PERA is sustainable and is able to meet the obligations to members, retirees and taxpayers,” the statement said.
TIA surveyed 63 local governments in Colorado with a property tax assessed value exceeding $1 billion and found that 20 — including all 13 school districts — have significant unreported retirement liabilities.
“While most of these local governments appear to have positive financial positions, 20 have financial holes,” the report said. “The financial holes represent bills the local governments have accumulated beyond available assets.”
The district with the largest per-taxpayer liability is the Platte Valley RE-7 School District, with each taxpayer on the hook for $12,159 to pay for all accrued employee retirement expenses. Adams-Arapahoe 28J is second with $9,866, according to the report.
An individual taxpayer will likely bear the burden of several taxing districts depending on where he or she lives and owns property.
For example, a Denver taxpayer’s burden includes $2,389 for city employees, $7,467 for Denver Public Schools, $174 for the Regional Transportation District and $3,500 for state employees.
Weinberg said much of this hidden liability will come to the forefront after next year because the Governmental Accounting Standards Board has put in rules that unfunded pension liabilities be noted on government books. But a lot of that debt has already accrued.
The PERA statement said the organization is working to implement the rule, but staff has been unable to duplicate TIA’s figures.
“The publication notes that the information was taken from PERA’s actuarial reports, but we are unable to duplicate the calculation,” the statement said.
Weinberg said TIA took the proportion of a municipality’s or school district’s overall contributions to determine liability.
Platte Valley superintendent Glenn McClain issued a statement saying the district will not know the exact state of their pension funding until the new accounting requirements are implemented.
“The Public Employee Retirement Association (PERA) has not provided the numbers and calculations for the school district to use at this time,” the statement said. “Platte Valley School District finances are sound and financial statements are compliant with all current GASB statements and Colorado State Statues as they apply to local governments.”
Adams-Arapahoe school officials issued a statement disputing there is a problem and said the district isn’t hiding any liability as it’s following current accounting rules.
“APS has met all GASB standards that were in effect,” the statement said. “The new standards became effective this fiscal year, and we will meet them.”
Weinberg said the hidden pension liability has allowed local politicians to increase their popularity by spending money on high-profile projects while ignoring the retirement burden.
“A lot of times politicians want to spend money on other things, like putting money into the schools, instead of contributing to PERA,” she said.