Colorado Legislature considers debt a public pension rescue

Published April 30, 2015


As its legislative session nears its end, Colorado is considering a bill that would authorize the state to issue up to $10 billion in bonds to shore up the state’s severely under-funded public pensions. The bill has the backing of Republican State Treasurer Walker Stapleton, as well as a number of Republicans in the closely-divided state Legislature.

With Republican support, the Colorado Legislature is considering a bill that would authorize the state to issue up to $10 billion in bonds to prop up the state’s drastically under-funded public pensions.

The Public Employee Retirement System, or PERA, promises a traditional defined benefit pension plan for the state’s government employees as well as nearly all of its public school teachers.  It acknowledges an unfunded liability of $23 billion, with some estimates running as high as $93 billion.

HB15-1388 would authorize the state treasurer to have the Colorado Housing Finance Authority (CHFA) issue bonds whose proceeds would go to the PERA State and School funds.  The supplemental stabilization payments (AED and SAED) that the state government and school districts make would be set aside for bond repayment.

The treasurer would control the timing of the issues.  The expected annual interest payments could amount to no more than two-thirds of the annual stabilization payments, and the spread between the interest rate and the expected rate of return on PERA’s investments could not be less than 2 percent.  Currently, PERA assumes a 7.5 percent return.

According to the Fiscal Note attached to the bill, the issuers envision issuing up to $10 billion in notes, with an interest rate of 4.39 percent.  Currently, taxable Colorado State Certificates of Participation, with maturities of 25 years, are trading at 4.9 percent yield.


Joshua Sharf ([email protected]) writes from Denver, Colorado. Reprinted with permission. An earlier version of this article appeared at

The photo, “Colorado State Capitol Building, Denver, Colorado, USA” is copyright © 2006 Greg O’Beirne, and was made available under Creative Commons Attribution-Share Alike 2.5 Generic license. The image was resized.