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Steamboat Springs — When President Bush and Congress first proposed a financial bailout for Wall Street investors last September, a grass-roots chorus - from the left and the right - decried using taxpayer funds to pay off the debts of private investors.

In Colorado, the state's largest pension fund has lost 25 percent of its investment assets - $11 billion - in the past year, jeopardizing its long-term ability to pay retirement benefits promised to some 413,000 current and former government employees.

A year ago, after enjoying a 10 percent return on investment, assets of the Public Employees Retirement Association had grown to $41 billion, or about 78 percent of the funds needed to pay $53 billion in promised benefits to retirees.

Now, PERA's assets have fallen to barely $30 billion. An estimate by the legislature's Joint Budget Committee pegged PERA's current funding ratio at 56.8 cents on the dollar, using 2007 liabilities. However, the actual number is undoubtedly worse given that PERA's liabilities (i.e., promised benefits) grow by more than $3 billion annually.

PERA officials aren't asking the legislature for hasty changes. Although that may be wise as it applies to PERA's investment strategy (which generally exceeds its benchmarks), failure to deal with PERA's unaffordable benefit structure is irresponsible. At last, that costly reality may be inescapable.

Even in a strong year such as 2007, when PERA's investments grew by 10 percent, its liabilities still grew faster, adding $160 million to its funding deficit.

PERA lawyers assert that benefits can be increased retroactively (as they have been), but that once increased, those benefits can never be reduced, even for someone who has worked just one day for a PERA employer. But what if those increased benefits threaten the solvency of the fund? PERA had behaved as if that could never happen.

PERA's party line is that the responsibility to make up for any shortfall rests with taxpayers, represented by state and local governments who contribute to PERA's pension funds on behalf of their employees.

Here is how PERA's retirement plan is funded:

State government, most school districts and many cities and counties deduct 8 percent from their employees' paychecks and send it to PERA, along with a 10.15 percent employer contribution and a 1.5 percent supplemental contribution (which will increase to 6 percent by 2013 to help return to full funding). That's a total contribution rate approaching 24 percent of payroll - compared to 12.4 percent for Social Security.

That money - more than $1.25 billion a year - is invested by PERA staff with direction from the PERA board of directors, 80 percent of whom are PERA beneficiaries themselves. Taxpayers have no meaningful input.

PERA rewards its members with higher benefits when its aggressive investment strategy pays off but soaks taxpayers for a bailout when that strategy backfires.

If PERA can charge its losses to the taxpayers, no wonder it sees no urgency in an unfunded liability of nearly $30 billion or an unsustainable benefit structure or funding models that assume incredible rates of return for decades into the future.

That certainly sounds like using public taxpayer funds to pay off the debts of private investors. Although that's a great deal for PERA members - most of whom can retire at age 55 and collect $2,658 a month - it's a lousy deal for other taxpayers on Social Security for whom the retirement age is 67 and the average monthly benefit is $1,089.

Because PERA won't go belly up tomorrow, the expedient course is to kick the problem down the road.

After contributing generously to fund state employees' retirement and giving those employees virtually unlimited control of their pension investments, Colorado taxpayers deserve to be freed from this heads-they-win, tails-you-lose proposition.

Mark Hillman operates a family farm near Burlington, is a former Majority Leader of the Colorado Senate, a former Colorado State Treasurer, a former PERA Director, and is an honorary member of the Conservative Leadership Council of Northwest Colorado.