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  • Public Employees’ Retirement Association of Colorado

    Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2001

  • Cover photography credits from left to right, top to bottom: Colorado Division of Wildlife Jacob Fennell Douglas County School District, Office of Communications Colorado Department of Transportation Jacob Fennell Douglas County School District, Office of Communications Colorado Division of Wildlife Littleton Public Schools

  • Comprehensive Annual Financial Report For The Fiscal Year Ended December 31, 2001

    Public Employees’ Retirement Association of Colorado

    Public Employees’ Retirement Association of Colorado 1300 Logan Street Denver, Colorado 80203 303 . 832 . 9550 www.copera.org

    Prepared by the PERA Staff

  • Introductory Section Letter of Transmittal 3–12

    Certificate of Achievement 13

    2000 PPCC Achievement Award 14

    Board Chair’s Report 15

    Board of Trustees 16

    Administrative Organizational Chart 17

    Consultants 18

    Financial Section Report of the Independent Accountants 21

    Management’s Discussion and Analysis 22–25

    Statement of Fiduciary Net Assets 26–27

    Statement of Changes in Fiduciary Net Assets 28–29

    Notes to the Financial Statements 30–38

    Required Supplementary Information; Notes to Required Supplementary Information 39–43

    Schedule of Administrative Expenses 44

    Schedule of Investment Expenses; Schedule of Changes in Assets and Liabilities— Insurance Division Reserve (Agency Fund) 45

    Investment Section PERA Report on Investment Activity 48–49

    Investment Brokers/Advisors 49

    Investment Summary 50

    Asset Allocation At Market Value 50

    Fund Performance Evaluation 51–52

    Schedule of Investment Results 53

    Colorado Investment Profile 53

    Largest Stock Holdings (Market Value) 54

    Largest Bond Holdings (Market Value) 54

    PERA’s 401(k) Voluntary Investment Program Report on Investment Activity 55–56

    Asset Allocation by 401(k) Voluntary Investment Program Investment Funds 56

    401(k) Voluntary Investment Program Schedule of Investment Results 57

    401(k) Voluntary Investment Program Investment Summary 57

    Actuarial Section Report of the Independent Actuary 60–61

    The Plan Summary For Calendar Year 2001 62–63

    Summary of Actuarial Methods and Assumptions 64–67

    Schedule of Retirees and Beneficiaries Added to and Removed from Benefit Payroll 68

    Member-Retiree Comparison 68

    Schedule of Members in Valuation 69–70

    Summary of Solvency Test 71

    Total Actuarial Liabilities 71

    Summary of Unfunded/Overfunded Actuarial Accrued Liabilities 72

    Unfunded/Overfunded Actuarial Accrued Liabilities (UAAL/OAAL) 72

    Assets as a Percent of Accrued Liabilities 1992–2001 72

    Schedule of Gains and Losses in Accrued Liabilities 73

    Schedule of Computed Employer Contribution Rates for Fiscal Years Beginning in 2003 73

    Schedule of Contribution Rate History 74

    Schedule of Active Member Valuation Data 75

    Statistical Section Schedule of Expenses by Type 78

    Schedule of Revenue by Source 79

    Member and Benefit Recipient Statistics 80

    Schedule of Average Retirement Benefits Payable 80

    Schedule of Benefit Disbursements by Type 81

    Current Average Monthly Benefit by Year of Retirement 81

    Schedule of Retirees and Survivors by Type of Benefit 82–84

    Schedule of Average Benefit Payments 85

    Schedule of Affiliated Employers 86–90

    Health Care Program 91

    Life Insurance Program 92

    Table of Contents

  • Introductory Section

    Judge Leonard Plank Colorado Court of Appeals

    “PERA is an outstanding organization and a driving force in the pension fund arena. PERA is member oriented. It exists for the members, and all actions assist the members in achieving retirement security. PERA enjoys an outstanding staff.”

  • Public Employees’ Retirement Association of Colorado

  • 3Public Employees’ Retirement Association of Colorado

    Introductory Section

    Report Contents This Report consists of five sections:

    The Introductory Section contains the administrative organizational chart, the Certificate of Achievement for Excellence in Financial Reporting, information about the Board of Trustees, this Letter of Transmittal, and the Board Chair’s Report.

    The Financial Section contains the report of the independent accountants, PERA’s financial statements, and certain required supplementary information.

    The Investment Section contains a report on investment activity, investment policies, investment results (including the 401(k) Plan), and various schedules.

    The Actuarial Section contains the certification letter from the independent actuary, Gabriel, Roeder, Smith & Company, along with the results of the annual actuarial valuation and other actuarial statistics.

    The Statistical Section contains tables of significant data pertaining to PERA, a list of affiliated employers, and information on other programs in which the Association is involved for the good of its members and benefit recipients.

    Plan Overview Colorado PERA was established in 1931 by the Colorado General Assembly as an instrumentality of the state. Initially covering only state employees, the Plan has expanded to include all Colorado school districts except Denver, the State’s judicial system, numerous municipalities, and other government entities. The Plan’s purpose is to provide benefits to members at retirement or in the event of disability, or to their survivors upon the member’s death. The Plan is funded on an actuarial reserve basis, with money being set aside for benefits while the benefits are being earned and before they are paid.

    Major Initiatives In 2000, major legislation supported by the Colorado PERA Board of Trustees was passed (House Bill 1458) that lowered PERA’s employer contribution rates while improving benefits for members and benefit recipients. Aware of the additional future liabilities created by enactment of HB 1458, the Board of Trustees did not pursue major changes to PERA’s program in the 2001 legislative session.

    The Board did initiate House Bill 01-1057 “401(k) Option for Rehired Retirees” to allow PERA retirees to contribute to the PERA 401(k) Plan from any wages paid to them by PERA-affiliated employers. This legislation was signed by the Governor on March 9 and became effective July 1, 2001.

    In 2001, one bill passed by the Legislature and signed into law may affect Colorado PERA’s future plan design. Senate Bill 01-149 (“Retirement Options for Public Employees”) as amended:

    Continued PERA’s Defined Benefit (DB) membership requirement for new state employees. Allowed any of the 22 district attorneys in Colorado to elect to join the State Defined Contribution (DC) Plan instead of PERA during January 2002 or in any subsequent January. District attorneys, as elected officials, were required to be covered by PERA prior to enactment of SB 149. Reduced the election period for employees eligible for the State DC Plan from 60 days to 30 days. Required a comprehensive study of DB and DC retirement plan designs that compares current PERA benefits, cost, and portability to other plans around the country. The State Auditor conducted the study using an actuarial and pension consulting firm, and submitted a report to the Legislative Audit Committee and the PERA Board.

    Letter of Transmittal

    June 28, 2002

    Dear Members of the Board of Trustees,

    I am pleased to present Colorado PERA’s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended December 31, 2001. We are proud of PERA’s achievements during the year, and we will continue striving to improve service to our members and benefit recipients in the future. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation rests with PERA’s management.

    Public Employees’ Retirement Association of Colorado 1300 Logan Street, Denver, CO 80203-2386 PO Box 5800, Denver, CO 80217-5800 303-832-9550 ● 1-800-759-PERA (7372) ● www.copera.org

  • 4 Public Employees’ Retirement Association of Colorado

    Introductory Section

    Letter of Transmittal

    Executive

    As introduced, SB 149 would have allowed all new state employees hired in 2002 and later to choose between PERA and the state DC plan, unless a study found that this option would cause PERA to have a large unfunded liability. PERA supported SB 149 as amended.

    In December 2001, the Colorado PERA Board of Trustees discussed the Study of Retirement Plan Designs completed by the Office of State Auditor pursuant to SB 149. The Board was encouraged by the consultant’s findings that:

    The PERA program compares very favorably to other public and private sector plans. PERA’s benefits are high, while costs are low. The PERA plan “offers a blend of both DB and DC features and a high degree of portability…. We see no compelling reason for significant changes.”

    However, in furtherance of the Board’s long-standing commitment to a plan design structure that provides attractive, equitable, and cost-effective benefits to all members, the Board will conduct a comprehensive review of all plan design alternatives presented in the report, as well as other plan design alternatives. With the assistance of PERA’

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