Source: Denver Post;by Vincent Carroll at
New York Mayor Michael Bloomberg can be a nanny and a bully when it comes to our diets, but the fellow does know a thing or two about financial markets. So something he said earlier this year ought to give Coloradans pause.
"If I can give you one piece of financial advice," Bloomberg told The New York Times. "If somebody offers you a guaranteed 7 percent on your money for the rest of your life, you take it and just make sure the guy's name is not Madoff."
It so happens that the Colorado Public Employees' Retirement Association insists it will earn not 7 percent for the foreseeable future but 8 percent — and is counting on it to restore the pension system's solvency. In an era of soaring public debt, an aging population, and flagging prospects for strong long-term growth, PERA's assumed rate of return appears almost delusional.
Maybe that helps explain the pension fund's bulldog approach to extracting every possible cent from Colorado Springs' decision to lease its Memorial Health System to University of Colorado Health. PERA must locate its promised benefits somewhere, after all, and if that means targeting funds that might otherwise be spent, say, on indigent health care, so be it.
Colorado Springs decided to lease Memorial because hospitals of its size are expected to have a tough time weathering health care reform. And UCH boasts a terrific central campus and ambitious plans for growth, including a satellite medical school. Last month Colorado Springs residents backed the plan by an impressive 83 percent, and the deal proceeds on Oct. 1.
It seems PERA is the sole party pooper. It says the city owes it perhaps $220 million in unfunded liability — to cite a figure in its lawsuit — for Memorial employees who will be leaving the pension plan and transferring to the university's program. Aware of PERA's position, the city insisted — just to be safe — that the deal with UCH include a $185 million payment to settle PERA claims.
But is PERA really owed anything?