H_FIN_2018A 01/05/2018 08:06:00 AM Committee Summary

The committee was called to order.  Representative Pabon made some opening remarks.  Ms. Michelle Colin and Ms. Cindi Radke, Legislative Audit Managers representing the Office of the State Auditor (OSA) described the status of outstanding audit recommendations.  Committee members received the OSA Fiscal Year 2017 annual report (https://leg.colorado.gov/publications/2017-annual-report) and the OSA Status of Outstanding Audit Recommendations as of June 30, 2017 (https://leg.colorado.gov/audits/annual-report-status-outstanding-audit-recommendations-june-30-2017).  Ms.Radke provided details of outstanding audit recommendations for the departments overseen by the Joint Finance Committee.

Ms. Radke answered committee questions.

Mr. Tim O'Brien, the Chairman of the Public Employees' Retirement Association (PERA) Board, made some opening remarks about past executive director Greg Smith.  Mr. Ron Baker, PERA Interim Executive Director, and Ms. Amy McGarrity, Chief Executive Officer, discussed various performance benchmarks for PERA.  Mr. Baker walked the committee through a presentation (Attachment A).  In response to committee questions, Mr. Baker clarified the changes made under House Bill 17-1176.

Discussion continued on HB 17-1176.  Mr. Baker discussed the legislation that established and purpose of the Amortization Equalization Disbursement (AED) and the Supplemental Amortization Equalization Disbursement (SAED) contributions.

Mr. Baker continued his presentation.  Ms. McGarrity continued the presentation with a discussion of PERA's investment policy.  Ms. McGarrity addressed questions about real estate investments.

Ms. McGarrity responded to a question about the assets managed directly by PERA staff.  Mr. Baker responded to questions about information PERA publishes about comparative rates of return to other pension funds and private investment funds.  Mr. Baker continued the presentation with a discussion about the current status of PERA and discussed proposed changes to PERA.  The first change he discussed would redefine the PERA-includable salary from net pay to gross pay.  In response to a question from the committee, Mr. Baker said the proposed changes to PERA will not make a change to AED and SAED contributions.

Mr. Baker continued his presentation and discussed additional proposed changes to PERA.  Discussion ensued on a proposal to change service credit accrual standard for part-time work.  He next discussed proposed changes to the contribution rates of current members and future hires.  Mr. Baker responded to a question about why many of the proposed changes are recommended for 2020 rather than sooner.  Mr. Baker continued to respond to committee questions about proposed changes to PERA.

Mr. Baker continued his presentation and discussed additional proposed changes to PERA, including increasing the age a member will be eligible for full service retirement to age 65; an increase in the number of years in the highest average salary calculation from three to five years; a reduction in the annual cost of living increase from a cap of 2 percent to 1.5 percent; and the suspension in the annual cost of living increase for current retirees for two years.  Mr. Baker responded to committee questions about the proposed changes.  He next discussed provisions that would allow PERA to automatically adjust employee and employer contributions and cost of living increases in order to maintain a 30-year amortization period.

Mr. Baker responded to a question about the normal cost for new employees as compared to current PERA members under the proposed changes.

Mr. Mike Hartman, Executive Director, and Ms. Heidi Humphreys, Deputy Executive Director, presented on the Department of Revenue. Committee members received a copy of Mr. Hartman's presentation (Attachment B).  Mr. Hartman walked the committee through his presentation.

Mr. Hartman continued his presentation by discussing customer service improvements.   He responded to several committee questions.  

Mr. Hartman continued by discussing the department's statutory responsibilities and its rulemaking principles.  He responded to a committee question about General Fund support for the Marijuana Enforcement Division.

Ms. Humphreys continued by discussing how the department measures public confidence in its services.  She responded to questions about enforcement division functions.  Discussion turned to under-age gambling.

Mr. Hartman discussed employee hiring practices and how the department recognizes employees and measures employee satisfaction.  He also discussed audit recommendations and FY 2018-19 operating budget items that will be considered by the Joint Budget Committee.  He concluded his presentation with a discussion of the department's 2018 legislative initiatives.  

Mr. Hartman responded to committee questions.  Ms. Humphreys also provided comment on committee questions.

Mr. Ryan Parsell, Deputy State Treasurer, discussed the responsibilities of the office.  He distributed a copy of the department's 2017 SMART Act Goals (Attachment C).  He discussed Colorado's Unclaimed Property Program and responded to committee questions about the program.

Mr. Parsell continued to discuss the Department of Treasury and answer committee questions.

Mr. Henry Sobanet, Director, and Mr. Jason Schrock, Deputy Directory, both representing the Office of State Planning and Budgeting (OSPB), discussed the most recent economic revenue forecast and some initiatives underway at OSPB.  Committee members received information about the FY 2018-19 General Fund overview published in the OSPB December 2017 economic forecast (Attachment D).

Mr. Sobanet commented on a new policy with regard to how fiscal notes published by Legislative Council Staff will represent continuing tax credits.  Discussion ensued on this topic.  

Mr. Sobanet responded to questions about an audit of tax expenditures, federal tax reform, and findings from the Pay for Success initiative.  He next offered to discuss changes to PERA recommended by the Governor's office.  Mr. Sobanet responded to questions about the residential assessment rate.