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PERS board and advisers say more recurring funding needed; Moody's cites risk to ratings, ad hoc COLA unlikely while funding gap remains
Summary
PERS board members and outside advisers said a strong single-year investment return alone would not justify granting a COLA while the system remains underfunded; Moody's analysis and a recent legislative hearing emphasized the need for recurring, non-investment funding to reduce risk and protect the state’s credit rating.
PERS board members and outside advisers told the board that a single strong investment year would not justify awarding cost-of-living adjustments (COLAs) for Tier 5 retirees while the system's funding ratio remains low, and rating-service analysis called for recurring, non-investment revenue to reduce risk and protect the state's credit standing.
Ed Coble, identified in the meeting as a representative of CABMAC, said the recent strong investment return would not be a basis to recommend a COLA at current funding levels. "If we were in the situation today and we're 56% funded, then no. I would say investment return that occurred just recently would not, a COLA should not be approved based on the funding ratio in place…
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