(updated with clarification)
The Colorado House of Representatives passed a bill to issue up to $10 billion in pension obligation bonds for the $45 billion Colorado Public Employees' Retirement Association, Denver.
The measure, which passed the House by a 45-19 vote on May 1, is expected to improve PERA's funding ratio in the near term and builds on 2010 legislation to reduce the amount of time required for PERA to reach full funding, said the governor's office, PERA and the Colorado Coalition for Retirement Security in a joint statement.
No firm dollar amount has been established for the bonds. A PERA spokeswoman said it could as high as $10 billion.
Under the bond issuance, funding ratios for PERA's state and schools divisions, its two largest employee groups, could improve to 70% to 80%, according to the joint statement, up from their current 62%. The issuance is also expected to “reduce the amortization period in the state and school divisions by as many as five years, saving employers $4.5 billion in today's inflation-adjusted dollars,” PERA noted on its website.
The groups also noted in their statement that historically low interest rates make the bond issuance attractive.
House Bill 1388 now moves to the Senate. Even if both chambers agree by the end of the legislative session on May 6, a judicial proceeding will be required to ensure the bond issuance is constitutional.
The bonds would be issued by the Colorado Housing and Finance Authority.