Colorado lawmakers are moving forward with a proposal to sell billions of dollars worth of bonds with the goal of shoring up the state’s pension fund.
The deal has been in the works for more than a year, but the Legislature only has a few days to consider it.
This is the latest development in a long-running effort to get Colorado’s public pension fund, known as the Public Employees' Retirement Association, back to solvency. PERA currently only has enough money to cover 65 percent of its obligations, and isn’t expected to reach full funding for another 35 years.
The bill aims to speed up the timeline. Billions of dollars of bonds could be sold, and the proceeds invested. Backers are counting on investment returns exceeding the cost of interest payments on the bonds so the extra money can go to the pension fund.
The bill was introduced with just days left in the legislative session. PERA’s board narrowly approved the proposal last week. Treasurer Walker Stapleton also supports it.
"I believe this has the potential to be a valuable tool," Stapleton said.
However, the vice-chair of PERA’s board resigned in opposition earlier this week. And Carol Hedges, executive director of the Colorado Fiscal Institute, warned lawmakers that if investment returns fail to cover bond payments the state would lose money on the deal. That could put the squeeze on other state services.
"Your toolbox for balancing the budget is already pretty limited," Hedges said.
The PERA bonds bill passed 10 to one out of committee and now heads to the full House.