When Colorado state workers took a temporary 2.5% pay cut in 2011 to shore up the state’s pension plan, Jane Wilson didn’t like it, but she understood.

The country was in the midst of the worst economic collapse since the Great Depression. And the stock market’s 2008 freefall had put the Public Employees’ Retirement Association — the primary source of retirement income for many Colorado government workers — on a path to insolvency.

A decade later, Colorado’s in the midst of a historic economic expansion that has fueled a private sector hiring spree and caused state revenue to swell to record levels. But to some state workers, it feels like the Great Recession never ended.

“I feel like we’re right back in those days now,” said Wilson, a privacy officer at the Department of Health Care Policy and Financing. “We’re not in a financial crisis, an economic crisis here in the state, but we’re working in similar conditions.”

MORE: What PERA’s bad year means for public workers, retirees and taxpayers in Colorado, explained in charts

Under a 2018 reform package designed to stabilize the pension’s finances, the de facto 2.5% pay cut is back in the form of higher PERA contributions from worker’s earnings, phased in over the next few years, along with even deeper cuts to Colorado public workers’ future retirement benefits.

Meanwhile, employees are fleeing to a booming private sector for better pay, leaving more and more jobs unfilled just as Colorado’s population and the demand for public services keeps growing. In the face of deteriorating working conditions, the state employees’ union is now pushing for collective bargaining rights.

But while there are a number of factors at play, there’s one constant that hasn’t improved since the recession: an underfunded pension that keeps costing workers more for a shrinking retirement package.

“The whole picture of state employment for me is crumbling,” Wilson said. “And I think it’s that way for many other workers.”

MORE: PERA lost $1.8 billion after brutal finish for 2018 stocks. Now public workers and taxpayers will pay more.

“Two steps forward, 10 back” when it comes to salaries

PERA’s financial woes are impossible to separate from the broader unrest in Colorado’s public workforce.

When state workers like Wilson clamor for collective bargaining rights, or teachers protest and go on strike, as they have over the last two years, the gripe that makes the headlines is the low pay. But a closer look at PERA’s finances over the last 20 years shows that, in many cases, the stagnant pay of public workers can be explained by the growing costs of a retirement plan that now covers more than 600,000 members.

In the throes of the recession, state workers had their pay frozen for four years. But the government’s personnel costs kept going up, because of mandated increases to the pension.

Today, most participating government agencies contribute the equivalent of 20.4% of each employee’s pay to PERA, more than double the 10.15% they owed in 2005. Most of that isn’t even going to today’s workforce: it’s paying off an unfunded debt to retirees. And it has left less money available to pay worker salaries, even now that the economy has recovered.

Annual pay raises of varying amounts resumed in 2013, but employees had already lost a lot of ground. And with the passage of Senate Bill 200 in 2018, things got even worse for employees, who now stand to lose an extra 2.5% from their paychecks, phased in over the next few years, as PERA ramps up its efforts to dig out of its financial hole. That will offset much of the planned 3% salary hike lawmakers approved in this year’s budget.

For school districts that faced state funding cuts and PERA hikes over the same period, the specifics were slightly different, but the outcome was much the same.

“The reality is, it feels like when you take two steps forward, it’s 10 back,” said Amie Baca-Oehlert, president of the Colorado Education Association, the statewide teachers’ union. “In all the districts where they were able to negotiate salary increases … in some ways, that’s negated by PERA increases.”

Turnover and vacancies plague Colorado’s state workforce

When Wilson took a state job in 2007, “the retirement benefit was just an enormous factor,” she said. “I couldn’t overstate how much that had to do with why I was comfortable joining the state workforce as a public servant.”

She joined the health care department as a legal analyst, at lower pay than what she could make in the private sector, she said. But she was convinced by the prospect of retiring with a state pension — which, at the time was offering 3.5% annual raises to retirees.

Twelve years, and two rounds of pension overhauls later, the public sector is losing its appeal.

One in five state jobs were vacant in June 2018, the most recent workforce study. Turnover has grown steadily since the Great Recession, while pay and benefits have become less competitive.

In its annual compensation report, the state still falls within what it considers a “competitive” range, paying 9.2% less for salary and benefits than the private sector for similar work.

But worker behavior suggest otherwise. While private sector staffing has swelled since the recession, the number of full-time “classified” workers in the state government fell from 31,801 in 2011 to 28,735 in 2018. (Most workers in executive branch departments fall under the classified system, while most higher education, judicial and legislative employees don’t. Political appointees are considered non-classified.)

Turnover has ballooned from 8.5% in 2009 to 14.7% last year. The average state salary for all state workers is $66,181, but the typical classified worker makes just $57,270. And for new hires, who trend younger, it’s even worse: $46,391. The median household income in Colorado is $74,172.

The short staffing is taking a toll on those who remain. Wilson said it’s hard to take vacation because she’s doing multiple people’s jobs at once. Lawmakers this year passed more than a dozen health care-related bills that will require even more work from her department. Much of the legislation funds new full-time hires to handle the extra work, but her department, which administers the Medicaid program, can’t even fill the current vacancies.

“When I look at all of these factors happening around me, it really makes me wonder,” Wilson said: “Can I hang with it that long? Can I live on the smaller paycheck in the hopes that my pension’s going to be worth it? Or is it time to cut bait and go work in a private sector job?”

Wilson turned 57 in June, and like all PERA members, she won’t receive Social Security benefits for time spent as a state worker. She’s seen her younger co-workers stay a few years to get experience and leave for better pay. But “those decisions are difficult at my age.”

Is PERA still a recruitment tool?

Policymakers and union leaders alike say they feel for PERA’s members, but with the pension’s finances still at a precarious juncture, now is not the time to reverse the changes that have been made.

“We need bigger changes in our state to allow us to become a competitive employer,” said Rep. Shannon Bird, a Democrat who chairs the state’s pension review subcommittee. “I think those fixes don’t come in one year with a major revision to PERA.”

To Colorado State Treasurer Dave Young, a wait-and-see approach is prudent. But he also says there needs to be more conversations about the benefit itself, suggesting that cost of living adjustments should vary based on an employees’ retirement income. The average judicial branch retiree makes $70,980 a year from their pension. School district retirees make an average of $37,020, but the benefit can vary wildly based on their average working salary and how long they paid into the pension.

The average school employee who retired in 2018 with 20 years of service made $27,048 in starting pension benefits. But that number shoots up to $42,960 and $57,996 a year for retirees who worked at least 25 or 30 years, respectively.

“When (a bus driver or school cook) retires it’s probably adequate to sustain them and keep them out of poverty, but when you don’t keep them up with cost of living, essentially they’re going to fall into poverty over time,” Young said. “When people slide into poverty, they end up on Medicaid as well as Medicare. They may be on food stamps, they may be on housing assistance … it’s not a dignified retirement, and it’s still a burden on taxpayers.”

PERA took another hit at the end of 2018, when a bad turn in the market triggered automatic cuts to benefits and additional hikes to employee and government contributions.

Ron Baker, the pension’s executive director, said the automatic adjustment provision was essential to keeping the pension on the 30-year path to full funding that financial watchdogs recommend. But while it can also adjust in the workers’ favor, he said that’s unlikely for the next decade.

“I would think it would take a remarkably extraordinary historic run in the market over some of those years to get to a number where we’re (restoring) benefits,” he said.

The continued erosion of the benefit is a concern, he said. But he still believes the pension is a competitive benefit that helps the public sector compete for workers.

“We exist as a recruitment and retention tool for our employers,” Baker said. “That is the focus of ours: to make sure we stay that way and we’re considered that.”

For Hilary Glasgow, the executive director of the state employees’ union, Colorado WINS, having a guaranteed pension check is still better than a private sector 401(k) plan. But the ongoing cuts are making it harder for workers to see it that way.

Her focus, though, is on boosting pay rather than relitigating last year’s pension fight. The union is seeking collective bargaining rights, an effort that foundered last legislative session, but one that Gov. Jared Polis supported on the campaign trail.

Skip Miller, an IT professional at the Colorado School of Mines, said he was hoping to retire from his state job at age 65. But now he’s not sure he can afford it.

New retirees don’t receive cost of living increases for the first three years after they leave the workforce. And after that, their pension grows by 1.25%, losing buying power each year to rising inflation. Over a 25-year retirement, last year’s benefit cuts represent a loss of $120,000 in compounding interest for the average state worker who retired in 2018 with a $33,540 annual pension.

“I think the perception amongst people is that PERA is like this sweetheart deal,” said Miller, the state union president. “And I have to say, it’s not as sweet of a deal as you think. Especially because we don’t get Social Security.”

His department is short two people, and he’s worried it’ll get worse. The average state IT services worker in 2018 was over 50. More than one in three classified state workers are going to eligible to retire within five years. And, he says, younger workers are increasingly looking elsewhere for employment.

“A lot of them are just saying that they can’t afford to work for the state any more — particularly the younger people, because they’re not as invested in PERA,” Miller said. “They’re (asking): ‘Do I work at the state for 20, 30 years, or do I cut my losses?’”

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