In an effort to shore up PERA, the state’s pension system, the Legislature passed SB18-200 late on May 9, the last day of the session.
CU has more than 8,600 PERA employees.
“Over the entirety of the session, we worked strategically with leadership in both chambers as well as our bill sponsors, Sens. Tate and Priola and Majority Leader Becker and Pabon, on this critical bill,” wrote Tanya Kelly-Bowry, vice president of government relations, in a post-session communication.
Following is a summary of the major provisions of SB 200:
- Employees will contribute an additional 2 percent of their pay to PERA (the original PERA proposal recommended a 3 percent increase). The increase will be phased in over three years as follows:
- .75 percent, starting July 1, 2019
- .75 percent, starting July 1, 2020
- .5 percent, starting July 1, 2021
- Employers will contribute an additional .25 percent of payroll to PERA. The increase will start on July 1, 2019 (the original PERA proposal recommended a 2 percent increase).
- The state will directly appropriate $225 million a year to PERA for 30 years beginning July 1, 2018 (the original PERA proposal did not include any direct state allocation).
- Current retirees will receive no cost-of-living-adjustment (COLA) for two years. Future retirees will not receive a COLA for their first three years of retirement (the original PERA proposal recommended this change).
- After the COLA suspension mentioned above, retirees will receive a 1.5 percent annual COLA (the original PERA proposal recommended this change).
- New hires will be eligible for retirement at age 64. The increase in age provision only applies to new hires starting Jan. 1, 2020. The current law provision that also allows employees, including new hires, to retire after 35 years of service did not change.
- The average annual salary calculation for new employees and employees not vested by Jan. 1, 2020, will be a five-year average (AHS) instead of a three-year average.
- A defined contribution benefit option will become available to all state division and local division employees. The only state division employees who don’t already have this option are classified staff at higher education institutions (the original PERA proposal did not include this provision).
- In the event revenues to PERA come in significantly above or below projections, the bill includes provisions that will automatically adjust employee and employer contributions and the COLA to ensure future solvency (the original PERA proposal recommended this change).
The bill, which has been sent to the governor, was passed by the House on a 34-29 vote; the Senate passed the bill 24-11 vote. As a bipartisan effort, there were 22 Republicans in the House and 18 in the Senate that supported the bill, and 12 Democrats in the House and five in the Senate who voted for the bill.
Questions? Please contact the Office of Government Relations.