The Colorado Supreme Court ruled Monday that the reduction to cost-of-living adjustments for Colorado Public Employees' Retirement Association members approved under earlier legislation was constitutional, court documents show.
Cost-of-living adjustments for all Colorado PERA members, including retirees, were reduced to a 2% cap from a fixed 3.5% in 2010 under Senate Bill 1. Shortly after the bill's passage in February 2010, four retired public employees filed a joint class-action lawsuit in Colorado District Court in Denver against the state of Colorado and Colorado PERA, which recommended the changes, arguing that COLA reductions for existing retirees were unconstitutional.
In June 2011, the District Court ruled in favor of the state and Colorado PERA. The decision was reversed by the Colorado Court of Appeals in October 2012 and petitioned to the state Supreme Court in November 2012.
“Senate Bill 1 was a difficult but necessary action taken to ensure the long-term sustainability and value of (Colorado PERA),” said Gregory W. Smith, executive director at the Denver-based retirement system, in a news release. “Through the shared-sacrifice approach recommended by the PERA board, the Colorado General Assembly responded after the Great Recession, and the Colorado Supreme Court agreed with our collaborative approach.”
“We are pleased that the Supreme Court agreed with us that the Legislature can make changes to PERA when economic conditions warrant. The law in question was an important part of ensuring that PERA remains there for state retirees long into the future. As we argued to the court, upholding the law helps protect both current and future retirees, and the state's taxpayers,” said Attorney General John Suthers in a statement. Mr. Suthers' office represented the state in the case.
William T. Payne and Stephen M. Pincus, partners at Feinstein Doyle Payne & Kravec, and Richard Rosenblatt of Rosenblatt & Gosch, law firms representing the plaintiffs, were not immediately available for comment.
Colorado PERA oversees more than $47 billion in defined benefit and defined contribution assets.