Newly released modeling from the Reason Foundation indicates that if PERA experiences a -10% annual return on their investment portfolio, it would add $7 Billion to its current $30 Billion unfunded liability. To pay off this increase in the unfunded liabilities, a combination of contribution increases and/or benefit cuts will be needed to put PERA back on track to pay off the increase in unfunded liabilities within the next 30 years.
Our recent report, Is Colorado’s Budget Ready for a Recession? featured this exact concern. As lawmakers begin to consider the budget priorities for 2021 and beyond, they should recognize the long-term implications of the crisis, as programs such as PERA will again begin to put more pressure on other spending priorities for years to come.
You can test alternatives using Reason modeling yourself by visiting their recent article here.