Lowering the Hill

Ultimately, large changes will be needed to keep PERA solvent.  But little changes can have an effect, too.  Today, the state House Finance Committee will be hearing HB13-1040 from Republican Rep. Kevin Priola:

Current law averages the 3 highest annual salaries of a member of the public employees’ retirement association (PERA) when calculating that member’s retirement benefit amount. The bill increases the number of highest annual salaries used from 3 to 7 for anyone who was not a member, inactive member, or retiree of PERA as of December 31, 2013.

In 2010, SB1 changed some rules to make it more difficult for employees to suddenly spike their salaries and other compensation at the ends of their careers, in order to game the system and maximize their PERA benefits.  For instance, for benefit calculation purposes, raises and other increases in compensation – like saved vacation being cashed in – were limited to 8% in any given year.  Employees could receive larger raises, but benefits could only be calculated on the first 8% of the increase.

This bill would make it even harder to game the system by averaging the highest seven years’ compensation instead of the highest three.  It’s a reasonable measure, and it would only apply to employees who join PERA after the end of this year.  The Democrats enjoy a large majority on the Finance Committee, so they may well kill the bill.  But the fact that it got assigned to the Finance Committee at all, rather than relegated like SB13-055 to the State, Veterans, and Military Affairs Committee, makes the outcome less certain.

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