Who Is In Charge

State pension plan weathers tough year

The state’s public pension system last year paid out more than it took in, auditors and system officials told the Legislative Audit Committee on Monday.

Greg Smith and Carole Wright
PERA interim executive director Gregory Smith makes a point as board president Carole Wright listens during Monday’s hearing.

The value of all funds administered by the Public Employees’ Retirement Association, known as PERA, declined $1.2 billion, or 2.8 percent, to about $39.9 billion, according to the pension system’s annual report, which was presented to the committee. PERA’s annual report and audit come before the committee every July.

The 483,467-member system covers all Colorado teachers and several thousand higher education employees. PERA’s financial health and its costs also are closely watched by the state’s school districts, whose pension contributions are scheduled to rise to about 20 percent of payrolls by 2018.

Was the decline “just because of market conditions?” asked committee member Rep. Jim Kerr, R-Lakewood.

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“There was a significant decline in overall returns … PERA was generally in line with the overall market” in 2011, said auditor David Eberly of KPMG, which audited the pension system for the state auditor’s office.

PERA’s investment income actually rose last year, up $724 million, a return of about 1.9 percent. The system also recorded employer contributions of just over $1 billion and employee contributions of $855 million.

But the system paid out benefits of nearly $3.3 billion, accounting for the year’s loss.

The pension system has been in the Capitol spotlight since 2008, when the national economic downturn caused a 26 percent loss in PERA assets.

Major legislation passed in 2010 was intended to help restore PERA’s long-term financial prospects by tightening various eligibility and benefit rules. Increased employer contributions were set by earlier legislation.

But some legislators, particularly Republicans, are nervous about PERA’s future, particularly PERA’s current assumption of 8 percent average investment returns over the next 30 years.

Kerr, a leading legislative critic of PERA, noted that the system’s rate of return over the last 10 years is less than 6 percent and said, “I’m curious why you haven’t modified your (assumptions) to reflect that real number.”

Gregory Smith, PERA interim executive director, said the system’s board has studied the issue carefully and received lots of professional advice: “The process has resulted in a belief by the board, or at least the majority of the board, that 8 percent is a realistic figure.”

Kerr continued pushing his point, saying, “Why does the board continue to use a number that hasn’t been sustained for 10 years?”

“The board listens to experts,” Smith replied.

“Are these the same kind of experts who are with the city of San Bernardino?” Kerr asked, referring to a California municipality that recently declared bankruptcy.

“I don’t know who the experts are for the city of San Bernardino,” Smith replied.

Sen. Lois Tochtrop, D-Thornton and a PERA supporter, used a different statistic – a 10 percent rate of return over three years – to conclude, “Overall, PERA is pretty stable.” Tochtrop later made a point of complimenting PERA on a clean audit by KPMG.

After she praised PERA executives for “good work,” Republican Sen. Scott Renfroe of Greeley quipped, “I don’t know if I call a billion-dollar loss good work.”

Jennifer Paquette, the system’s chief investment officer, told the committee that 2012 investment returns through May are running at about 5 percent. She also noted that PERA’s 2011 investment performance was higher than market benchmarks.

Educators major part of PERA membership

The schools division of PERA, which covers most of the state’s teachers, has 51,861 retirees, 116,415 active members and 100,203 inactive members. A separate Denver Public Schools division has about 13,500 members; Denver’s pension system recently merged with PERA.

PERA also has separate divisions for state employees (including higher education), participating local governments and court employees. Each division has a separate trust fund that can be used only for its own members.

Teachers contribute 8 percent of their salaries to PERA, while districts contribute 15.73 percent of payroll, an amount scheduled to rise to about 20 percent by 2018.

The average annual pension for a schools division retiree is $34,740. PERA members aren’t eligible for Social Security. The division’s trust fund is about 60 percent funded and is estimated to be fully funded in 35 years, if the average 8 percent rate of return holds up.

The pension system is governed a 16-person board, including 11 elected by the members, three appointed by the governor and a non-voting member representing DPS retirees. State Treasurer Walker Stapleton, a Republican and a vocal critic of PERA, also sits on the board and has sued the agency over release of some retiree information.

The board is chaired by Carole Wright, a retired Aurora teacher. Six board members have education ties.

Republican lawmakers regularly introduce bills to make major changes in PERA, including the composition of the board. The board has no power over benefits or employer contribution rates; those are set by the legislature.

Such bills have gone nowhere in recent sessions, generally dying in the Democratic-controlled Senate.

Missing from Monday’s meeting was Meredith Williams, PERA executive director for 11 years and a key figure in fending off attempts to change the system and upend the 2010 restructuring. Williams now heads the California-based National Council on Teacher Retirement.

the one to watch

Inside the three-candidate battle for northeast Denver’s school board seat

File photo of student at Marrama Elementary School in northeast Denver. (The Denver Post)

Of the Denver school board races on the November ballot, none packs more intrigue than the fight for District 4.

The three-person slate of candidates features an appointed incumbent who’s never run for office and supports the district’s current path, an outspoken recent high school graduate who sharply disagrees, and a former charter school educator with a more nuanced view and — in what on its surface may seem surprising — the endorsement of the teachers union.

The seat represents a large swath of northeast Denver with a wide range of income levels, including areas that are gentrifying quickly and others that have been home to some of the district’s most aggressive school improvement strategies.

The Nov. 7 election is high stakes. Four of the seven seats on the Denver school board are up for grabs. If candidates who disagree with Denver Public Schools’ direction win all four races, they’ll have the political power to change key policies in the state’s largest school district and one nationally recognized for its embrace of school choice and autonomy.

Tay Anderson is one of those candidates. The 19-year-old graduated from Denver’s Manual High School last year and is now a student at Metropolitan State University. On the campaign trail, he has doggedly criticized the district for what he describes as weak community engagement efforts and a move to “privatize” public education by approving more charter schools, which are publicly funded but independently run (in Denver, by nonprofit operators).

He also has led the charge in attempting to tie the current school board and the incumbent candidates to U.S. Education Secretary Betsy DeVos, whose stance on school choice — and especially private school vouchers, which DPS does not support — have made her a controversial figure.

    This is the first of a series of articles profiling this year’s Denver school board races. You can read about where candidates in all the DPS races stand on issues here, in Chalkbeat’s candidate questionnaire. Check out our coverage of the campaign’s first campaign finance reports here.

When DeVos came to Denver in July to give a speech to a group of conservative lawmakers from across the United States, Anderson organized a protest against her. In front of a crowd of hundreds, he called out the current Denver school board members.

“We can tell them, ‘Screw you. You’re fired in November!’” he said.

Anderson has a compelling personal story. The teenager struggled in high school before becoming a leader at Denver’s Manual High. He was student body president, chairman of the Colorado High School Democrats and a member of the Student Board of Education.

Anderson was also homeless for a time and has said his own challenges give him valuable insight into the lives of other Denver students living in difficult situations. About two-thirds of the district’s 92,000 students qualify for subsidized lunches, a proxy for poverty.

“I have had nobody in my corner when I was a homeless student and when I was in and out of foster care,” Anderson said at a recent televised candidate debate. “And now it is my turn to turn to our students and say, ‘I am going to be your champion.’”

His candidacy has attracted more local and national press attention than is usual for a school board race. But while Anderson has said his young age would bring a fresh perspective to the board, his opponents have questioned whether he has the experience to serve.

“It’s one thing to swing a hammer at a frustration, but it’s another to know where to swing it,” said candidate Jennifer Bacon, one of Anderson’s two opponents.

Anderson is running against Bacon, 35, and incumbent Rachele Espiritu, 48. Espiritu was appointed to fill a vacancy on the board in May 2016. The appointment process was long and marked by controversy. The first appointee, MiDian Holmes, stepped aside after details about a misdemeanor child abuse conviction and her mischaracterization of it came to light.

Both Espiritu and Bacon were among the finalists for the position. But Bacon withdrew, explaining at the time it was “in consideration of my need for growth and readiness for this position, as well as my interests in supporting the board.”

Asked recently to elaborate, Bacon said she withdrew because she sensed she wasn’t going to be appointed. She said she, too, had an arrest in her background: for stealing a necklace from Macy’s when she was in college. Bacon said the charge was dropped and she was not convicted. (No charges showed up in a background check done by Chalkbeat.)

Bacon, who attended college in Louisiana, said the arrest was a turning point at a time when she was struggling to find her purpose. She went on to join the Teach for America corps, teaching for a year in New Orleans and a year in Miami.

After teaching, she went to law school and then moved in 2010 to Denver, where she worked first as a dean for the city’s largest charter school network, DSST, and then in alumni affairs for Teach for America. She is now a regional director with Leadership for Educational Equity, a nonprofit organization that trains educators to advocate for policy changes.

Bacon said she wondered whether her positions on key issues also made her an unlikely appointee. For instance, she has said she’s not opposed to charter schools but believes Denver has reached its threshold and should focus on shoring up its traditional schools.

“People ask me if I’m pro-charter,” Bacon said in an interview. “I’m pro-community.”

Since Espiritu was appointed, she has largely voted in line with the rest of the school board. But she chafes at the idea that the board is monolithic or a rubber stamp for the administration. Much back-and-forth occurs before a decision, she said in an interview, and each board member brings a unique background and set of life experiences to the table.

Espiritu often says on the campaign trail that she’s the only immigrant to serve on the board in the last century. She was born in the Philippines and came to the United States as a toddler. She holds a PhD in clinical psychology from the University of Colorado Boulder and helped found a small business called Change Matrix that assists organizations with planning, putting into place and monitoring change. She and her family moved to Denver in 2012.

Espiritu has two sons. Her oldest goes to DSST: Stapleton High, a charter school. Her youngest goes to William (Bill) Roberts School, a K-8 district-run school. She has said that in choosing schools for her children, she focused on quality and not on type.

As a member of the board, Espiritu has paid particular attention to efforts to improve student mental health. She recently encouraged DPS to become a “trauma-informed school district.”

“I want us to be a district that addresses student and educator trauma in a proactive or preventative way that’s culturally sensitive and systematic in fashion,” she said at a September board meeting. “…We need to shift our thinking from asking what is wrong with a child to what happened with a child.”

Parts of northeast Denver have struggled academically. The region is home to the district’s biggest-ever school turnaround effort, as well as two of three schools the board voted unanimously last year to close due to poor performance.

The candidates’ disparate views on school closure offer a window into what differentiates them. Espiritu voted for the closures, though she noted at a subsequent board meeting that doing so was “a painful process … and such a difficult decision.”

Anderson has said he opposes closing any more traditional, district-run schools. Bacon, meanwhile, has said that while she doesn’t believe in “trapping kids in failing schools,” ideas about how to turn things around should originate with affected families.

Two local groups that traditionally endorse candidates and contribute large sums of money struggled this year with who to support in District 4. The Denver Classroom Teachers Association endorsed Bacon, but a progressive caucus of the union chose to separately support Anderson. The pro-reform group Stand for Children did not endorse any candidate, explaining that both Bacon and Espiritu surpassed its “threshold for endorsement.”

Of the three candidates, Espiritu had raised the most money — $73,847 — as of Oct. 11, when the first campaign finance filing period ended. Bacon had raised $59,302, including $10,000 from the teachers union, while Anderson had raised $16,331.

Espiritu and Bacon have also benefitted from the support of independent expenditure committees. A union-funded group called Brighter Futures for Denver spent $139,000 on Bacon. Two other groups, Students for Education Reform and Raising Colorado, which is associated with Democrats for Education Reform, spent a total of $73,229 on Espiritu.

Sorting the Students

As Nashville heads to court over sharing student information with the state, here’s why Memphis probably won’t

PHOTO: Grace Tatter
Nashville's Davidson County Chancery Court building where the state filed against Metro Nashville Public Schools over sharing contact information with charter schools.

Tennessee’s two largest school districts are often in lockstep on key issues. But in a recent tiff with the state about sharing student information with charter schools, the two districts are poised to part ways.

Leaders of Nashville’s school district have repeatedly defied an order from Tennessee’s education commissioner to share student addresses, phone numbers, and other information with the state’s controversial turnaround district, as required by a new state law. The state filed a lawsuit this week in response.

Meanwhile, leaders of the Memphis district have spoken out about the rule — but are preparing to comply. The district has given parents until Sunday, Oct. 22 to opt out of sharing their contact information with charter schools.

Instead of outright rejecting McQueen’s deadline last month like Nashville did, Superintendent Dorsey Hopson sought a compromise and the district has indicated contact information after the opt out window could be shared.

“… we respectfully request you extend your deadline until October 23, 2017 to allow our families the opportunity to make an informed decision regarding their rights and to give our board an opportunity to vote on the release of the data,” Hopson said in a letter to McQueen.

The state education department says it is holding off filing a similar suit against that district, for now. The Memphis district “is still deciding whether to comply, whereas Metro [Nashville] has made its decision already,” state spokeswoman Sara Gast said. “Given that, it is appropriate to file here and then review Shelby’s decision to decide if litigation is necessary.”

Shelby County Schools declined to share how many parents have chosen to opt out so far, but said it plans to share information with its board about the effort next week.

The fight has ignited long-simmering tensions around enrollment and the state’s influence in local schools, and comes on the heels of Metro Nashville Public Schools board voting to join Shelby County Schools in its landmark funding lawsuit against the state.

Memphis leaders have also said that the issue at hand is student privacy, though a robocall to Memphis parents indicated that the main goal of the opt-out process was not to lose students to charter schools.

Memphis’ compromise stance will be good news to groups like parent advocacy organization Memphis Lift, which says it has gathered about 1,200 parent signatures urging Shelby County Schools to release the contact information.

What Memphis parents should know about how schools share student information

The legal questions at stake are the first challenge to a slight, but significant, amendment to federal rules

The Nashville school board cited two reasons for defying the state’s order in late August: One is U.S. Department of Education rule that allows districts to have discretion on who gets student directory information. The second was that when state lawmakers crafted the law that requires school districts to share student information, they did not intend for that information to be used for recruitment.

According to Frank LoMonte, a First Amendment lawyer and director of The Brechner Center at the University of Florida, said the lawsuit could have national implications.

“What we’re about to see is the first test of whether the U.S. Department of Education amended rules in 2011 are enforceable or not,” he said. What it comes down to, he said, is if a federal rule can give local districts the permission to violate state law.

The Nashville board’s second justification reflects concerns from State Rep. John Forgety, who chairs a key House education committee. He says the state is misinterpreting the law he helped create.

The state said in a statement that Commissioner Candice McQueen is seeking to confirm her interpretation of the new state law, “ensuring that families can be informed of all public education opportunities available to them.”

Below is a copy of the state’s court filing: