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H_FIN_2017A 12/22/2017 08:06:04 AM Committee Summary

Final

STAFF SUMMARY OF MEETING



COMMITTEE ON JOINT FINANCE

Date: 12/22/2017
ATTENDANCE
Time: 08:06 AM to 12:18 PM
Beckman
*
Benavidez
X
Place: RM 271
Catlin
E
Court
*
This Meeting was called to order by
Covarrubias
E
Representative Pabon
Foote
E
Gray
*
This Report was prepared by
Herod
X
Kori Donaldson
Hill
E
Kagan
E
Kennedy
E
Lawrence
*
Michaelson Jenet
E
Tate
E
Thurlow
X
Van Winkle
X
Neville T.
X
Pabon
X
X = Present, E = Excused, A = Absent, * = Present after roll call, R = Remote Participation
Bills Addressed: Action Taken:
Office of the State Auditor

Public Employees' Retirement Association

Department of Revenue

Department of the Treasury

Governor's Office of State Planning and Budgeting
Witness Testimony and/or Committee Discussion Only

Witness Testimony and/or Committee Discussion Only

Witness Testimony and/or Committee Discussion Only

Witness Testimony and/or Committee Discussion Only

Witness Testimony and/or Committee Discussion Only





08:07 AM -- Office of the State Auditor



The committee was called to order. Representative Pabon made some opening remarks. Ms. Michelle Colin, Legislative Audit Manager and Ms. Cindi Radke, Legislative Audit Manager, both representing the Office of the State Auditor (OSA) described the status of the 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.























08:17 AM



Ms. Radke answered committee questions.





08:19 AM -- Public Employees' Retirement Association



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.



17JointFin1222AttachA.pdf17JointFin1222AttachA.pdf



08:33 AM



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.





08:48 AM



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.





08:58 AM



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.





09:17 AM



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.

















09:42 AM



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.





09:56 AM



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





09:59 AM -- Department of Revenue



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.



17JointFin1222AttachB.pdf17JointFin1222AttachB.pdf



10:18 AM



Mr. Hartman continued his presentation and responded to committee questions regarding services for seniors.





10:30 AM



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





10:41 AM



Ms. Humphreys continued by discussing the department's fiduciary responsibility and the lottery division.



























10:47 AM



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.





10:52 AM



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.





11:05 AM



Mr. Hartman discussed employee hiring practices and how the department recognizes employees and measures employee satisfaction.





11:17 AM



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





11:24 AM -- Department of the Treasury



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.



17JointFin1222AttachC.pdf17JointFin1222AttachC.pdf



11:46 AM



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

































11:49 AM -- Governor's Office of State Planning and Budgeting



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).



17JointFin1222AttachD.pdf17JointFin1222AttachD.pdf



11:59 AM



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.





12:09 PM



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.





12:18 PM



The committee adjourned.


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