In response to Memorial Health System's claim that it doesn't owe anything to bail from the state retirement system, the Public Employees Retirement Association issued a statement Friday afternoon.
In it, PERA says it must charge agencies to leave the system, because otherwise the association would be underfunded. Here's the statement in full:
Response to Memorial Health System
It’s been reported that Memorial Health System in Colorado Springs is seeking to sue PERA over a disputed amount required to terminate participation in PERA.
PERA operates under Colorado State statutes, which provide guidance on how a local government employer such as Memorial can withdraw its employees from PERA and how the cost is calculated for doing so. PERA must follow the law and cannot negotiate this cost with Memorial because every dollar in reduction from the statutory calculation will have to be paid by the other participating employers.
PERA’s actuaries have produced cost calculations at Memorial’s request using the 2009 year-end financial statements and again using 2010 year-end financial statements. Until the date that Memorial’s employees would cease being covered by PERA is determined, a final amount cannot be calculated. Market volatility and demographic changes up to the date when Memorial's employees would no longer be covered by PERA will also impact the final number.
If Memorial were to leave PERA and not fully pay the costs of the benefits earned by its current and former employees, the other public employers in the Local Government Division would see an increase in their respective liabilities to make up the shortfall. Presently, Memorial claims that it should not pay any amount to address unfunded liabilities. If this were to occur, based on the statutory calculation method using 2010 year-end financials, the liabilities shifting to the five largest remaining employers in the Local Government Division would be:
Colorado Springs-Public Utilities $48,875,224
Boulder County Government $35,042,788
City of Colorado Springs $28,014,469
City of Boulder $22,040,190
City of Pueblo $6,386,566
PERA’s responsibility is to administer the plan as called for in the statute and prevent one employer from shifting its pension costs to others.
PERA believes that the position it has taken throughout this process is the approach required by statute and will be sustained by the court if it is litigated.