Colo. Districts See Red Over Pension-Fund Demand
Colorado school districts are hopping mad over an aggressive effort by the state retirement fund to recover millions of dollars in unpaid pension contributions, some stemming from more than two decades ago.
The Public Employees' Retirement Association of Colorado, the pension fund covering state and local government employees, re~~cently demanded payment of back contributions from an estimated 15 school districts, and it has taken at least two districts to court.
The agency, known as PERA, cites a state law that makes public employers liable for pension contributions and interest if they fail to cover employees adequately.
School districts are upset because they say the demands cover part-time or temporary employees whom the districts believed were not covered by the system. And they argue that the retirement agency is wrong to make demands covering employees from as far back as the 1970's. PERA's tough stance makes even the Internal Revenue Service look amiable, they say.
"There appears to be no statute of limitations" on the back contributions, said Phil Fox, the associate director of the Colorado Association of School Executives. "Hell, even the I.R.S. has a statute of limitations."
Bus Driver's Case
PERA notified the Steamboat Springs district last year that it owes $430,000 for five employees from the 1970's. That figure is nearly 5 percent of the district's annual budget of $9.3 million, said Cyndy Simms, the superintendent.
Ms. Simms said the conflict arose last year when a longtime Steamboat Springs school-bus driver asked PERA about her retirement options.
The agency determined that the district had failed to make pension contributions for a brief period in 1974 when the driver was a part-time employee. Ms. Simms said district officials at the time must have interpreted the pension-eligibility rules differently than PERA.
The back share of the employer and employee contributions for the bus driver would be $26,000, Ms. Simms said. But that sum increases quickly when a 12.75 percent interest penalty, compounded annually, is added.
PERA determined that the district owed back contributions and interest for five workers, leading to the $430,000 bill.
The retirement fund, Ms. Simms said, "is ignoring the fact that school districts in Colorado have tight budgets."
"PERA should recognize that it should be supporting the institutions that hire people to work with children," she added
PERA has filed suit against two districts in suburban Denver, demanding $600,000 from the Brighton district and $750,000 from the Jefferson County district, the state's largest district.
"We are contesting it," said Kay Pride, a spokeswoman for the Jefferson County district.
"Some of these occurrences are more than 20 years old," she said. "In most businesses, you don't audit back that far. It's our feeling there ought to have been some sort of reasonable time limit to make claims."
But PERA officials respond that state law clearly makes employers responsible for the back contributions and that the retirement fund has no authority to negotiate settlements for lesser amounts.
"We cannot forgive the contributions," said Don Schaefer, the communications director of PERA. "The law doesn't allow us to say, 'Oh, sorry.' That is not fulfulling our fiduciary responsibility. We could be taken to court ourselves."
Some 145,000 public employees contribute to the $14.2 billionretirement fund, Mr. Schaefer said. Every school district inthe state is a member except for Denver, which has its own re~tirement fund.
The retirement fund saves school districts money, Mr. Schaefer said, by making sure that all members of the plan contribute all they should.
But school district officials and lobbyists criticize the lengths to which the agency is going to recover funds.
Mr. Fox of the school administrators' group said PERA has demanded back payments from the University of Colorado and Colorado State University for students who worked briefly in summer jobs at the institutions, even though the students will likely never become beneficiaries of the pension plan.
"I find it unconscionable," Mr. Fox said of the agency's attitude about the back payments of the universities and school districts. "PERA's hubris is simply out of control."
Ms. Simms of the Steamboat Springs district said that PERA has told the retiring bus driver that her monthly benefits will be as much as $600 less if the district does not agree to pay for the back contributions.
"They are using this employee to force us to take a position that will have a very negative impact on our finances," Ms. Simms said.
School districts plan to ask the state legislature to pass a statute of limitations on back contributions.
"There are a bunch of us trying to seek some legislation," Mr. Fox said. "PERA self-righteously says the law is the law, and it doesn't allow them to negotiate. That's just heifer dust."