DENVER–Today, the Colorado PERA Board of Trustees announced an agreement with the City of Colorado Springs to resolve the lawsuit between the City and PERA over the amount due to PERA to ensure that Memorial Health System’s departure from PERA does not negatively impact the 146 employers and 11,954 members in PERA’s Local Government Division Trust Fund. The agreement provides for the City of Colorado Springs to pay PERA $190 million for the liabilities associated with the retirement and health care benefits already earned by 7,380 Memorial employees for the work that they performed before Memorial ceased to the a PERA employer. The employees of Memorial were covered by PERA until Memorial was leased to the University of Colorado Hospital Authority on October 1, 2012.—————————————ORIGINAL POST, TUESDAY, SEPT. 23, 2014, 1:57 P.M.——————————————————
“This agreement ensures that Memorial’s decision to exit PERA will not negatively impact the other employers and members of the Local Government Division,” said Gregory W. Smith, PERA’s Executive Director. “We are happy to reach closure on this issue and believe this is an appropriate result for PERA members, beneficiaries and employers,” he concluded.
This agreement restores the funded status of the Local Government Division trust fund which will return the trust to fully funded status approximately eight years sooner than is currently estimated. This payment enhances the long term sustainability and retirement security for the 30,000 local government employees, retirees and their employers who participate in Colorado PERA.
Colorado PERA’s General Counsel Adam L. Franklin added, “This agreement adheres to the law that no PERA employer can leave the financial obligations they owe to their employees and retirees for other PERA employers and members to cover. It helps maintain the integrity of one of Colorado’s best investments.”
The City Council of Colorado Springs today approved a Settlement Agreement with the Colorado Public Employees’ Retirement Association (PERA), regarding pension claims arising from the lease of Memorial Health System (Memorial) to University of Colorado Health (UCH) in October 2012.Instead of having $259 million to do its good works, the Colorado Springs Health Foundation will have about $85 million. It currently has $16 million from annual payments made by UCH, and would presumably add the remainder of the initial payment, or $69 million, to that total.
Under the arrangement, a lump sum payment of $190 million will be made to PERA. The settlement payment will be made from the nearly $259 million that the City and UCH set aside during the lease transaction. The settlement does not constitute any admission of liability by Memorial or the City, but avoids the risks and cost of continued litigation and will ensure that the community receives the major benefits of the Memorial lease.
“City Council believes that it is in the best interest of the Colorado Springs Health Foundation, the City and former Memorial employees to settle,” stated City Council President Pro-tem Merv Bennett.
This agreement provides closure of disputed contingent claims, and will free approximately $70 million of additional funds held in escrow for the Colorado Springs Health Foundation, a nonprofit corporation. In total, by October 2017, the Foundation should have, not including interest on investments, a total of approximately $86 million. This includes approximately $16 million currently held by the Memorial Hospital Enterprise.
“One of the important elements from the lease with UCH was the creation of the Colorado Springs Health Foundation. The Foundation was established with the intent of improving the health and quality of life of the community. This agreement will allow the Foundation to begin the important job it was designed to do — fund grants to provide quality healthcare to those who would otherwise not have access, and to encourage healthy living,” said City Councilwoman Jan Martin.