March 4 (Bloomberg) -- Colorado Treasurer Walker Stapleton, whose family history is populated by state and federal political figures, is using his first elected post to press for pension transparency.
Stapleton, a 39-year-old Republican, and former President George W. Bush share the same great-grandfather, George Herbert Walker. Stapleton’s paternal great-grandfather was Benjamin Stapleton, who during five terms as Denver’s mayor oversaw the expansion of parks and the creation of an airport, which has been redeveloped into a neighborhood of the same name. Walker Stapleton’s father, Craig, was U.S. ambassador to France and the Czech Republic.
The treasurer, who is running for re-election this year, said public service is ingrained in him. As a member of the pension board, he sued the system to get information about payments made to top beneficiaries. His suit, denied by state courts, is now awaiting the scheduling of oral arguments before Colorado’s Supreme Court, said Carolyn Tyler, a spokeswoman for Attorney General John Suthers.
Learning more about payouts could catalyze change to reduce liabilities, he said. Colorado’s system is 63 percent funded, lower than the 68 percent median among all states, according to Morningstar.
The following is condensed from a recent phone interview:
Q: You have said that the Colorado Public Employees’ Retirement Association’s return assumption is unrealistic. In November, it lowered the rate to 7.5 percent from 8 percent. Should it be cut further?
A: Absolutely. There’s more opportunity to go lower. States that have conservative assumptions as their rates of return have assumptions in the sixes, and as a result their plans are quote unquote healthy or better-funded than our plan is. Colorado has consistently ranked in the bottom 20 percent of funding ratios for state public-pension programs.
Q: What changes do you recommend to reduce the pension liability?
A: Retirement age is one of the things that we need to look at. We also need to look at increased contribution levels from new employees and current employees in the system for the defined benefits they’ve been getting. If they’re not willing to have increased contribution levels or the retirement age adjusted, then potentially they could have the option of joining a defined-contribution plan.
Q: Did you support the legalization of recreational marijuana use, which took effect this year? What effect would it have on the economy?
A: I did not support that. The impact is going to be helpful, certainly from a revenue standpoint. The state brought in approximately $10 million last year when it was medicinal and the latest projections show that it can be 12 to 13 times that, $120 to $130 million. But we’re still in the early stages of figuring out what the regulatory costs are going to be, what the societal costs are going to be and how this is working.
Q: What’s the greatest challenge ahead for the state’s economy?
A: The costs associated with the expansion of Medicaid, funding our retirement system, and funding our education system. Over the next five to seven years, those three buckets threaten to crowd out all other budget priorities.
Q: What distinguishes people from Colorado?
A: Colorado is defined by a fiercely independent streak. There is a very strong libertarian undertone in the populace here. People want to be left alone within their own homes and don’t want an overreach in government. People are passionate about their ability to defend the Second Amendment. It’s kind all over the map when it comes to social issues, depending on where you are in the state. But at its core, this is definitively a fiscally conservative state.
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