Wednesday, July 21, 2010
Last week, as part of discussions related to DPS’ 2010/2011 budget, DPS Chief Operating Officer David Suppes sent the board of education a spreadsheet that details DPS’ expected payments to the Colorado PERA system for the next 28 years. The spreadsheet was prepared by Brett Fuhrman, DPS’ former Chief Financial Officer. (Brett left just recently to work at a school in
.) Fuhrman put the spreadsheet together for who knows what reason, but he provided it when Jeannie Kaplan and Andrea Merida asked for documentation of what DPS was paying to PERA. Boston
To say the least, the spreadsheet is illuminating. It shows the percent of payroll that DPS should be paying to the pension system, the actual anticipated payroll for the next 28 years, the deduction DPS is taking for servicing its pension related debt (more on this to come), and what DPS will actually pay through 2038, when its pension debt is paid off.
For example, in 2010, DPS should pay 17.45% of its payroll to PERA. DPS’ payroll in 2010/2011 is anticipated to be $491,749,509. Therefore, DPS should be paying just under $43 million for the last six months of 2010. Instead? DPS has budgeted to pay $6.9 million in this time frame. At the same time, DPS’ employees will pay $19.7 million into the pension.
Any sane person would ask, how can this be? The answer isn’t simple. (Is it ever?)
The legislation governing the merger between DPS’ retirement system and the
state retirement system allows DPS to take an 8.5% deduction based on loans taken to fund the pension. On these, DPS owes $750 million, 8.5% of which is $63.75 million. This is the amount DPS can deduct from its PERA contributions each year. Colorado
How this mess came to be is a long story that I will not go into here. However, the fact that this is DPS’ planned contribution for 2010, a contribution rate that holds steady into 2015, has caused great concern on the PERA board of directors as well as with former members of the board of the DPS retirement system.
According to actuaries at PERA, DPS may never be able to fund its pension fully by 2040, as required by a bill passed in the
state senate last year. In fact, doing the math using the numbers in DPS’ spreadsheet shows that, at its current rate of contribution and the $386 million funding shortfall as of December 2009, DPS will build a $1 billion liability by 2015. Colorado
That’s right: $1,000,000,000. In just 5 years. And DPS will have to pay that back using taxpayer money.
at 7:34 AM
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