When Colorado voters passed Proposition 130, requiring the state to spend $350 million to support law enforcement, they didn’t give the General Assembly any direction on how the state was supposed to pay for it.
With the state facing a $1.2 billion shortfall, the most straightforward path would have meant additional cuts to the two biggest drivers of state spending: education and health care. But lawmakers balked, saying it would be counterproductive to take money from social services — a proven crime preventer — to hire more crime fighters.
Instead, state officials came up with a plan that goes something like this:
Step one: Give a whole lot of money to the state pension. Step two: Hopefully, profit.
It’s more complicated than that, of course. But Gov. Jared Polis this week set the plan in motion by signing Senate Bill 310 into law, implementing an unusual budget maneuver that’s never been tried in Colorado — and maybe not anywhere else, either.
The bill passed unanimously in the state Senate, and overwhelmingly in the House, with nine lawmakers opposed.
How the money will flow
The state will designate $500 million from its reserve fund to the Colorado Public Employees’ Retirement Association, allowing the pension fund to invest it with the rest of its $62 billion portfolio. Those investment returns could, in theory, pay for Proposition 130 within 10 years at no cost to state taxpayers.
But there’s a hitch. Once taxpayer money is given to PERA, it becomes a permanent part of the pension fund and can’t be given back to the state under federal law. That means the state can’t use PERA’s annual earnings to pay for the law enforcement grants directly.
Moreover, if there’s an economic downturn and the state needs to dip into its reserve fund, the state won’t have access to the $500 million of it that’s designated to PERA. (That’s a little over a fifth of the money the state keeps in reserve today.)
Here’s where the maneuvering comes in. Rather than have PERA pay the state the $35 million in annual earnings directly, the state will cut its own payments to PERA by the same amount until the $350 million owed to law enforcement is paid off. In the case of an economic downturn, the state could reduce its contributions to PERA even further in order to replenish its reserves.
What it means for law enforcement
The legislation creates a peace officer training and support fund, which will be paid out to local law enforcement agencies across the state over time. The idea behind Proposition 130 is to combat law enforcement shortages across the state, so the money can only be spent on recruitment, training and employee pay.
Each agency will get at least $15,000, plus additional money for each officer they employ. But it will take at least a decade for the full $350 million to go out — and it’s likely to take even longer than that.
In years when PERA makes at least $35 million in investment earnings from the state’s payment, the state would put $35 million in the law enforcement fund. But in years that PERA makes less, law enforcement would get less too. The state can put as little as $15 million into the fund if PERA’s investment returns disappoint in any given year. That’s all but guaranteed to happen at some point, given the ups and downs of the stock market.
Denver Police Metro Swat vehicle is parked near East 11th Avenue and Elizabeth Street, Wednesday, Mar. 22, 2023, in Denver. (Hugh Carey, The Colorado Sun)Each time the payout drops to the minimum $15 million, it effectively adds a year and a half to the timeline.
Some in law enforcement say that undermines the whole point of what voters approved.
“Even in the best case scenario, that timeline does not align with the pressing staffing and resource challenges that agencies are facing today,” Greeley Police Chief Adam Turk told lawmakers during a committee hearing this spring. “Proposition 130 was passed by voters with the expectation that the funding would help stabilize and strengthen law enforcement capacity now — today — not decades into the future.”
Backed by conservative political activist Michael Fields, the ballot measure didn’t give the legislature a deadline to spend the money.
Turk said the Colorado Association of Police Chiefs initially agreed to a seven-year payout; that’s the timeline Polis sought in his initial budget proposal. They later agreed to draw it out over as much as a decade, given the state’s budget problems, he said.
Others in law enforcement, though, said they supported the bill, given the need to balance spending for police with other social services.
“There is undoubtedly a recruitment and retention issue in law enforcement,” said Amanda Gall, a spokesperson for the Colorado Fraternal Order of Police. “There are many agencies that are understaffed, but we recognize the state’s budget constraints and the state’s needs in other areas, and how those other areas like education, health care, etc., intersect with the work our officers do every day in the streets.”
Voters also approved a $1 million death benefit for families of officers killed in the line of duty, which the state will continue to fund even after the $350 million is spent.
What’s in it for PERA
If all goes according to plan, PERA and its 600,000 members would come out ahead as surprise beneficiaries of the voter-approved law enforcement measure.
“Ultimately, big picture, PERA stands to gain money from the state over the long term,” said Andrew Roth, the pension’s executive director. “That’s not a certainty of course, because we’re investing the money in the market, so there is some risk. However, there’s also some real potential upside for PERA, which is helpful.”
The main upside for PERA is that in the best-case scenarios, it would only have to pay back $350 million of the $500 million it receives from the state. And, those payments would come from its earnings, so PERA is arguably gaining a full $500 million it wouldn’t have otherwise.
There could be more gains, to boot. If PERA earns more than expected, the law enforcement payouts are still capped at $35 million annually, so PERA could keep the difference if its investments do well.
In years when the market disappoints, PERA would be shielded from cuts; the state can only reduce its payments by whatever PERA earns on the $500 million in any given year. And if PERA loses money, the state general fund would be on the hook to cover the minimum payment.
What happens if things go bad
The scheme isn’t without risk — for the state or its retirement system.
The upcoming budget year, which starts July 1, calls for a general fund reserve of nearly $2.5 billion — including the $500 million reserved for PERA. But in an economic crisis, the state wouldn’t have access to the full reserve to keep government services running.
Instead, if the reserves fall below $1 billion, the bill calls for the state to recoup its money by cutting up to $225 million from its annual payments to PERA. And if needed, the state would keep cutting in subsequent years until the full $500 million was repaid.
The exterior of the Colorado Capitol on Wednesday, May 7, 2025, in Denver. (AP Photo/Rachel Woolf)Budget officials say the state isn’t likely to spend its entire reserve in a single year, so the measure should give the state enough time to replenish its reserves.
The bill would also result in the state withholding money from the pension at the moment it needs it most — during a market downturn.
On the other hand, the state has traditionally done that anyway. During the pandemic, for instance, the legislature eliminated its required $225 million payment to PERA for a year. Under the new law, if the legislature cuts PERA in the next recession, the pension will at least start with $500 million more than it would have had otherwise.
It’s not clear how the rating agencies will view the unorthodox maneuver. Mark Ferrandino, the governor’s budget director, told the Joint Budget Committee earlier this year that he didn’t expect it to have much impact on the state’s credit rating. To the extent that they disapprove of the state taking money from the reserves, that could be offset by giving PERA more money, which tends to improve the state’s credit profile.
Read More Details
Finally We wish PressBee provided you with enough information of ( PERA could be the big winner of Colorado’s police funding deal. Here’s how. )
Also on site :