The Colorado Public Employees' Retirement Association believes it's fixed its funding problem for most of its employees, thanks to a great 2006 investment return and higher funding coming in the future.

Still, the plan remains unable to forecast paying off its liability to state employees, one of the largest groups in PERA.

This was the "PERA report card," Executive Director Meredith Williams said. He and PERA staff members presented it at a Monday meeting of the Legislative Audit Committee.

Legislators seemed pleased with the outlook, with Vice Chairman James Kerr, R-Littleton, suggesting the pension plan's issues "have been addressed."

PERA rode the decades-long boom in stocks until it was fully funded in 2000. But the abrupt reversal of the markets, coupled with benefit increases approved in the good years, left it with a $12.8 billion liability at the end of 2005. That means the estimate of what PERA owes its members outstripped its assets by that amount.

That liability did not decrease in 2006, even though PERA made 15.7 percent on its investments and topped $40 billion in assets. That's because PERA must measure its problem based on the current funding and the current benefit levels.

Legislation passed in 2006 tweaked both those things. It gradually increased the amounts employers will put into the plan, and it limited the cost-of-living increases future hires will get in retirement.

PERA's actuarial firm, Cavanaugh Macdonald, estimates that with the funding changes alone, and the assumed annual investment return of 8.5 percent, PERA will pay off the liabilities for judges and local-government employees in less than 30 years. The payoff schedule for school employees would be 52 years.

There still is no payoff schedule for state employees. But unlike in past projections, where the plan seemed headed for collapse sometime after 2034, the new numbers suggest the plan will limp along with a liability for many decades.

"This remains the PERA board and PERA staff's highest priority," Williams said. "We are ahead of the projections made in 2006 that put us on the path to full funding."

Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.