The Trillion Dollar Gap: Colorado

Underfunded State Retirement Systems and the Roads to Reform

The Trillion Dollar Gap: Colorado

Colorado's management of its long-term pension liability is cause for serious concern, but is doing a relatively good job at handling the bill coming due for retiree health care and other benefits. The state has funded only 70 percent of its total pension bill, below the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts.

And since 2003, it has consistently failed to meet its actuarially required contributions. During this period, its unfunded liability grew by $6.9 billion. In 2006, the state passed legislation limiting future cost-of-living adjustments for new employees, increased the retirement age and implemented restrictions on annual salary increases to inflate benefits.

Meanwhile, 19 percent of the state's total bill coming due for retiree health care and other benefits has been funded. Even this low funding level makes Colorado the state with the eighth-best funded non-pension benefits system in the country.