Defenders of PERA often argue that while the liabilities have been under-funded in the past, it is only now that PERA’s critics have begun to worry about the matter. The implied message is that the complaints are political, rather than financial. Here’s why this isn’t the case:
Yes, Colorado’s economy has grown, but the PERA liability has grown faster. While through the 80s and most of the 90s, the unfunded liability hovered around 2% of the state’s GDP, since 2000, it has grown to 9%. Of course, during the good economic years, it declined somewhat, and it may well decline a little again this year, as PERA’s returns are expected to be around 12% on its portfolio. But sooner or later, we will hit a cyclical recession, and even as the economy shrinks, PERA’s unfunded promises will continue to accumulate.
