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A Better Approach to K-12 Budget Issues: Don’t Yell at TABOR, Fix PERA

I may risk inducing a heart attack or two with two straight days of spooky posts. But yesterday I produced some school funding data to debunk the idea that Colorado’s Taxpayers Bill of Rights (TABOR) is the cause of apparent “devastation” for school budgets. Today I want to introduce a too-often overlooked factor into the conversation: PERA, also known as the Public Employees Retirement Association.

Lately, the issue keeps popping up. State Treasurer Walker Stapleton penned an op-ed highlighting the fiscal pressure placed on school districts by steadily increasing contributions to employee retirement plans. Here’s a scary phrase the Treasurer offered to explain the ramifications of failing to reform the problem:

A budget hole will continue to grow that no tax increase can fill.

Gulp. Meanwhile, I can almost see some critics looking for a distraction, pointing in a different direction and shouting abruptly: “Squirrel!” or “TABOR!” If PERA were left alone and TABOR completely gutted, officials would continue coming to voters for more taxes while services would still be in jeopardy.

Also this month, Denver’s Donnell-Kay Foundation hosted an event with two national experts laid out the state’s $23.5 billion pension deficit and some ideas to fix it. One of the event attendees, Alex Ooms, made the threefold case for why pensions matter to schools. The current system leaves less money in classrooms and underpays great new teachers, while staying afloat with large number s of teachers paying in and then leaving the profession in a few years.

Opponents to some of the local school tax increases — especially in Jefferson County — have raised the issue of PERA. Jeffco superintendent Cindy Stevenson has publicly downplayed the concern, saying it’s an issue out of the district’s hands.

But Joshua Sharf poked some big holes in that claim, noting that groups representing district employees and officials all lobbied against even some modest but necessary pension reforms:

It is the height of disingenuousness to claim that the solution to PERA is at the state level, and to claim that the district has no flexibility in dealing with it, and then to oppose those very reforms, including one that would have explicitly given the Board the very flexibility it says it doesn’t have. (In fact, the Board and the unions are always at liberty to negotiate changes to the employer-employee contribution mix.)

Jeffco Students First Action notes that the district’s 2004 mill levy increase has all been used up by the increased taxpayer contributions to PERA. And even the additional $20 million slated for those purposes between 2012 and 2018 is based on unrealistic assumptions about investment returns that haven’t been met in more than a decade.

The bottom line? Something dramatic needs to be done to fix PERA. That hard but necessary approach will be a lot more effective than squeezing the TABOR stress ball and throwing it at the wall. Continuing to feed the system with more tax dollars otherwise only delays and intensifies the pain, while adding to the burden carried by already struggling businesses and households.