Wednesday, September 5, 2012

UPDATE: PERA sues the city over Memorial

Posted By on Wed, Sep 5, 2012 at 9:01 AM

City Attorney Chris Melcher got back to us via e-mail, saying:

The City is unfortunately not surprised by PERA's lawsuit, since PERA threatened to sue the City several weeks ago prior to the historic Memorial vote. Our negotiation team has gone to PERA's offices several times this summer in an effort to seek a reasonable resolution in this matter, and we continue to reach out to PERA to involve them in productive discussions. The new Memorial-University of Colorado Health partnership offers a wonderfully bright future for better healthcare for over 600,000 people. The UCH partnership is also terrific multifaceted opportunity for our entire City, improving the lives of both patients and Memorial employees, creating a new branch medical campus at UCCS, and creating jobs and new economic stimulus. With 83% of our City enthusiastically supporting this effort, we will again encourage PERA to look beyond their narrow interests and work together with us towards a positive outcome.

——————————-ORIGINAL POST TUESDAY, SEPT. 4, 3:49 P.M.———————————————

A court should take control over $259 million to be paid to the city of Colorado Springs by the University of Colorado Health for its lease of Memorial Health System, according to a lawsuit filed on Friday.

The Colorado Public Employees' Retirement Association (PERA) filed the lawsuit in response to the suit filed Aug. 1 by the city, which we reported first here. In that case, the city contends the city owes PERA nothing for the more than 4,000 Memorial employees who will leave PERA when on Oct. 1 they become UCH employees and join UCH's retirement plan.

Colorado Springs PERA Memorial Health System

In a news release, PERA notes the city takes the position it owes nothing even as it accepts $185 million from UCH for the purpose of settling accounts with PERA. The other $74 million the city gets is an up-front, one-time payment.

More from PERA's release:

PERA is asking the court to determine that in order for Memorial to terminate its affiliation with PERA, the parties must comply with the law, which includes paying for the retirement benefits already earned by Memorial employees.
Colorado State law sets forth requirements for when an employer in PERA’s Local Government Division “disaffiliates” and moves its employees into another retirement system. In particular, the law calls for reserves to be created for the payment of benefits earned as of the disaffiliation date by the employees of the disaffiliating employer. The law requires that the reserve be sufficient to ensure that there is no adverse impact on the remaining employers in the division.

“If an employer leaves PERA and does not provide an adequate reserve for the liabilities already earned by their employees, the cost of providing these benefits would be shifted to the remaining employers in the Local Government Division, including the City of Colorado Springs and Colorado Springs Utilities,” said Gregory W. Smith, PERA’s Interim Executive Director. “PERA believes this is unfair because these benefits have already been earned as a result of work performed for the disaffiliating employer.”

Memorial is the largest employer in the Local Government Division (with the City of Colorado Springs and Colorado Springs Utilities as the third and fourth largest employers in the division, respectively).

We've asked City Attorney Chris Melcher to comment. We'll update when we hear from him. In the meantime, here's the lawsuit:

2012-08-31_PLAINTIFF_PUBLIC_EMPLOYEES____RETIREMENT_ASSOCIATION_OF_COLORADO___S_PRELIMINARY_INJUNCTION_MOTION.pdf

Our most recent report on this matter can be found here.

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