State treasurer talks entitlements, closing budget gaps in Moffat County
“The pension problem is not a Democrat or Republican problem, it’s a math problem. The great thing about a math problem is if you are open and transparent about it there is nothing else to do but solve it, which is what I am trying to do.”
— Walker Stapleton, Colorado’s treasurer, addressing the audience at Saturday night’s Lincoln Day Dinner at the Holiday Inn of Craig
Walker Stapleton, Colorado treasurer, addressed a Craig and Moffat County audience Saturday night as keynote speaker during the local Republican Party’s Lincoln Day Dinner.
In addition to explaining his position, which he said first and foremost involves investing taxpayer money for the benefit of the state, Stapleton outlined looming issues facing Colorado’s $18 billion budget.
The two primary concerns, Stapleton said, involve automatic spending ratchets and pension entitlements, which have hindered the legislature’s flexibility on how it funds state programs.
Those automatic spending ratchets, particularly concerning education and Medicaid, soak up more than three-fourths of the state’s budget, leaving little left to spread among programs such as roads, infrastructure, mental health services and corrections, he said.
Stapleton said he supports education, but contends there needs to be additional layers of accountability on how money is spent.
“Not unlike the legacy of the Washington, D.C., public education system, which at one time had the highest cost per pupil ratio in the country and also ranked last in achievement, you cannot just throw money at a problem without some accountability built in,” he said. “If you look at all of the money we have thrown at education over the last years, you’ll notice that sixth- and eighth-grade reading levels have not improved at all, graduation rates have actually gone down, and we missed the chance to qualify for Race to the Top grants.”
Stapleton said automatic spending ratchets for education have created significant budgetary holes that are exacerbated by federal Medicaid mandates and the state’s public pension entitlements.
“And I can’t do anything about Medicaid,” he said. “I learned very early in bureaucratic life that if you can’t fix a problem, it’s best not to work on it because you’ll drive yourself crazy by getting nothing accomplished.”
“But, I can do something about the pension problem because, by virtue of the office, I sit on the board of the pension system.”
Colorado’s pension system funds retirement for state employees including teachers, city workers and “yes, government employees,” the treasurer said.
Despite the average return rate on bonds being 5 or 6 percent and 2 or 3 percent on equities, the state legislature approved a bill guaranteeing an 8-percent return for those enrolled in Colorado’s pension program.
“You don’t have to be a math wiz to know that if you’re only getting a rate of return of 3 percent on equities, you need all of your other investments to come back with a return of 12 and 13 percent to meet your 8-percent obligation,” Stapleton said.
“And I’ll remind you that Bernie Madoff is locked up somewhere for engaging in illegality to try to deliver on similar guarantees to his investors.”
Should the state’s investments fall short, Stapleton said the burden of funding pension entitlements would fall to taxpayers.
“The pension problem is not a Democrat or Republican problem, it’s a math problem,” Stapleton said. “The great thing about a math problem is if you are open and transparent about it there is nothing else to do but solve it, which is what I am trying to do.”
The challenge, however, is the state’s pension board is made up of members, the same people enrolled in the pension program who ultimately benefit whether the return rate is realized or not, Stapleton said.