Justification for Emergency Rule Effective

JUSTIFICATION FOR EMERGENCY RULE EFFECTIVE

JANUARY 1, 2010

As a result of Senate Bill 09-282, which merges the Denver Public Schools Retirement System with PERA effective January 1, 2010, it was imperatively necessary to adopt a rule on an emergency basis to implement the Act. Adoption of the emergency rule was completed in accordance with C.R.S. § 24-4-103. The PERA Board also adopted a motion to have this rule become a permanent rule effective March 2, 2010, in accordance with C.R.S. § 24-4-103.

On November 2, 2009, the Denver Public Schools Retirement System adopted a Resolution which states:

Now therefore, be it resolved by the Board of Trustees of the Denver Public Schools Retirement System that it supports Colorado PERA’s comprehensive recommendations to the Colorado General Assembly and recommends to the Board of Trustees of Colorado PERA that any changes proposed for legislation in 2010 with respect to the PERA School Division also be applied to the DPS Division and be included in any forthcoming legislation.

In light of this recommendation, and pursuant to the authority vested in the PERA Board of Trustees in C.R.S. § 24-51-1747(12) (pursuant to S.B. 09-282), adoption of Rule 18.40 is imperatively necessary to shift the effective date of the annual increase payable to all members of the DPS benefit structure who were hired prior to July 1, 2005, to the same date that the annual increase is paid to all members of the PERA benefit structure who were hired before January 1, 2007.

Currently, the majority of PERA benefit recipients receive their annual increase in March in the amount of 3.5 percent. For a majority of the DPSRS benefit recipients, the annual increase of 3.25 percent is paid in January. The PERA Board has recommended to the General Assembly that the date the annual increase is paid to PERA benefit recipients be moved from March to July. The Board has also recommended that the amount of the annual increase paid to PERA benefit recipients be modified from a fixed amount of 3.5 percent to an indexed annual increase with an upper limit of 2 percent.

In recognition of the fact that benefit recipients of the DPS benefit structure normally receive their annual increase in January as compared to the PERA payment date of March, Rule 18.40 provides that these individuals shall receive an increase of .5417 percent in January 2010. This amount signifies two-twelfths of the 3.25 percent annual increase for the months of January and February 2010. The awarding of a unique increase amount is to ensure that by moving the payment date of the annual increase to the date PERA pays its annual increase, benefit recipients of the DPS benefit structure are not negatively affected. Absent further legislative changes, the majority of benefit recipients of the DPS benefit structure will receive an additional 3.25 percent increase in March 2010.

At the PERA Board of Trustees meeting on December 18, 2009 the Board adopted the following motion to indicate that PERA intends for this rules to be effective on an emergency basis on January 1, 2010:

I move that the Board approve and adopt the proposed addition made to the PERA Rules, along with the Statement of Basis and Purpose, as an emergency rule with an effective date of January 1, 2010. As a result of Senate Bill 09-282, which mandated the merger between the Denver Public Schools Retirement System and PERA effective January 1, 2010, it is imperatively necessary to adopt this rule on an emergency basis to implement the Act, and such adoption is in accordance with C.R.S. § 24-4-103.