2023 Colorado Revised Statutes › Title 24 - GOVERNMENT - STATE (§§ 24-1-101 — 24-116-102) › PUBLIC EMPLOYEES RETIREMENT SYSTEMS (§§ 24-51-101 — 24-54.8-204) › Article 51 - Public Employees' Retirement Association (§§ 24-51-101 — 24-51-1748) › Part 4 - CONTRIBUTIONS (§§ 24-51-401 — 24-51-416) › Section 24-51-402 - Unpaid contributions for any member - legislative declaration

(1)
The general assembly hereby finds and declares that:
(a)
The litigation of disputes regarding the payment of contributions by employers to the public employees' retirement association represents an inappropriate allocation of public moneys. Courts already suffer from overcrowded dockets, and the use of judicial resources to resolve such disputes means that taxpayers foot the bill for plaintiffs, defendants, and judges alike. Once all appropriate benefits have been accorded to members or inactive members of the association, any dispute then remaining is solely between governmental entities. The general assembly finds that the litigation of these disputes is an inappropriate use of the limited resources of the association, public employers, and the courts because it is possible to establish reasonable and fair rules for the resolution of such disputes without any need for judicial involvement. The general assembly therefore intends to resolve any current disputes and to clearly delineate the responsibilities of governmental entities so that future disputes do not require any litigation or unnecessary expenditure of state moneys.
(b)
Fairness requires that the general assembly prescribe uniform results in every circumstance, a goal that is not obtainable when varying results arise from litigation of contributions disputes in the courts;
(c)
Under the provisions of this section, members and inactive members will receive the full benefits promised by law and, therefore, there is no question regarding the equal treatment of any individual;
(d)
In order to minimize the risk of future litigation between the public employees' retirement association and other governmental entities, it is appropriate to clarify under sections
24-51-205
(3.5) and 24-51-207 (2) that the board of trustees of the association may reasonably settle or compromise disputes without violating any principle of fiduciary responsibility;
(e)
Should any judicial determination regarding an employer's liability for contributions be contrary to the results provided under this section, the association will be required under section
24-51-401 (7)
to accept a reduced employer contribution level to offset all excess damages above the level of contributions the general assembly has established. The general assembly further finds that the establishment of a proper rate of contributions is clearly a legislative function and that it is appropriate for the general assembly to modify the level of employer contributions when necessary to offset the results of judicial awards that are contrary to the amounts established by the general assembly. The general assembly declares that it is its express intent to overrule any judicial decision entered prior to May 22, 1995, that is contrary to the provisions of this section.
(2)
The provisions of this section and sections
13-80-103.5 (1)(d)
and
13-80-108 (13)
, C.R.S., apply to the following:
(a)
Any cause of action accruing on or after May 22, 1995;
(b)
Any unresolved cause of action accruing prior to May 22, 1995; and
(c)
(I)
Any cause of action resolved on or after July 1, 1994, but prior to May 22, 1995. The following shall govern the application of this section to the causes of action specified in this paragraph (c):
(A)
This section shall affect only the total amount of the payments in any cause of action specified by this paragraph (c). Such total amount of payments shall not exceed the amount specified under subsection (3)(a) or (3)(b)(I) of this section, whichever is applicable. The association shall refund, or shall not collect, any difference between the amount paid, agreed to be paid, or awarded in any such cause of action and the amount specified under subsection (3)(a) or (3)(b)(I) of this section. Subsection (3)(b)(II) of this section shall not affect the allocation of payments pursuant to an agreement, settlement agreement, or judgment resolving a cause of action specified by this paragraph (c).
(B)
This section shall not require any member or inactive member to make any payment of unpaid contributions with respect to any cause of action specified by this paragraph (c) if such member or inactive member is not required to make such payment under the agreement, settlement agreement, or judgment resolving the cause of action.
(C)
This section shall not affect any benefits provided to individuals as the result of the payment of unpaid contributions with respect to any cause of action specified by this paragraph (c).
(II)
For the purposes of this paragraph (c), a cause of action is resolved if there is an agreement to make payment under the cause of action, whether or not the full payment has been made, if there is a settlement agreement in a lawsuit between the parties, whether or not the full payment under the settlement agreement has been made, or if there is a final judgment entered, whether or not the judgment has been fully paid or collected.
(3)
If an employer fails to provide membership in the association to an individual so entitled pursuant to the provisions of this article or fails to provide the required level of employer contributions for an individual pursuant to the provisions of this article, the following payment shall be made to the association:
(a)
If the individual is not a member or inactive member at the time the association first notifies the employer of its claim for unpaid contributions, the employer shall pay the unpaid employer contributions on behalf of the individual for the period contributions should have been made at the contribution rate applicable during such period, plus the amortization equalization disbursement in effect pursuant to section
24-51-411
for the period contributions should have been made, plus interest on such employer contributions and the amortization equalization disbursement at the applicable actuarial investment assumption rate, as such interest rate is from time to time adjusted, until such contributions are paid. If an employer pays contributions pursuant to this paragraph (a) on behalf of an individual who was not a member or inactive member when the association first notifies the employer and such individual subsequently becomes a member and completes one year of earned service credit, the member may purchase service credit for the appropriate period by paying the unpaid member contributions for the period for which contributions should have been made at the contribution rate applicable during such period, plus interest on such member contributions at the applicable actuarial investment assumption rate, as such interest rate is from time to time adjusted, until such contributions are paid.
(b)
(I)
If the individual is a member or inactive member at the time the association first notifies the employer of its claim for unpaid contributions, the payment equals the lesser of the following amounts:
(A)
For a member, the cost to purchase the appropriate amount of service credit at the rate established pursuant to section
24-51-505
, plus the amortization equalization disbursement in effect pursuant to section
24-51-411
for the period contributions should have been made; and, for an inactive member, the cost to purchase the appropriate amount of service credit at the rate established pursuant to section
24-51-505
, based upon the salary at the date of last employment, plus the amortization equalization disbursement that should have been made, plus interest at the applicable actuarial investment assumption rate, as such interest rate is from time to time adjusted, from the date of last employment until the date contributions are paid; or
(B)
The unpaid employer and member contributions and amortization equalization disbursement for the period contributions should have been made, plus interest on such employer and member contributions and the amortization equalization disbursement at the applicable actuarial investment assumption rate, as such interest rate is from time to time adjusted, until such contributions are paid.
(II)
The amounts paid to the association shall be allocated and collected in the following order until the full amount that is owed under subparagraph (I) of this paragraph (b) is reached:
(A)
The employer shall first pay the unpaid employer contributions and amortization equalization disbursement on behalf of the member or inactive member for the period contributions should have been made, plus interest on such employer contributions and amortization equalization disbursement at the applicable actuarial investment assumption rate, as such interest rate is from time to time adjusted, until such contributions are paid;
(B)
The member or inactive member shall next pay the unpaid employee contributions for the period contributions should have been made, without interest; and
(C)
The employer shall next pay interest on the unpaid employee contributions for the period contributions should have been made at the applicable actuarial investment assumption rate, as such interest rate is from time to time adjusted, until such contributions are paid; except that the employer is only required to pay interest on the amount of employee contributions owed by the member or inactive member under sub-subparagraph (B) of this subparagraph (II) that the member or inactive member actually pays.
(III)
If the full amount owed pursuant to the provisions of this paragraph (b) is not paid because the member or inactive member pays less than the full amount of employee contributions, then:
(A)
If the member or inactive member was not provided membership during the applicable time period, the association shall provide partial service credit to the member or inactive member in the same proportion to the total amount of service credit that would have been earned if contributions had been made as the amount actually paid to the association bears to the amount that was owed to the association; and
(B)
If the member or inactive member was provided membership during the applicable time period, the association shall provide a partial increase in the highest average salary of the member or inactive member in the same proportion to the increase in highest average salary that would have been earned if contributions had been paid as the amount actually paid to the association bears to the amount that was owed to the association.
(4)
Within ninety days after the time the association first notifies an employer of its claim for unpaid contributions, the association shall attempt to notify all members and inactive members regarding their rights to pay unpaid employee contributions pursuant to subsection (3)(b)(II)(B) of this section. Any member or inactive member who elects to pay all or any portion of unpaid employee contributions shall notify the association of such election within one year after the date the employer pays the unpaid employer contributions pursuant to subsection (3)(b)(II)(A) of this section. If a member or inactive member fails to notify the association of the member's or inactive member's intent to pay as allowed under this subsection (4), the association may elect to treat the member or inactive member as having forfeited the right to make such contributions. Any member or inactive member who elects to pay all or any portion of unpaid employee contributions may pay employee contributions in installment payments over a period not to exceed sixty months or over a period equal to the amount of service credit that would have been earned if contributions had been made, whichever period is shorter.
(5)
If an individual for whom contributions are being claimed is not a member of the association at the time the association first notifies an employer of its claim for unpaid contributions, an action to collect unpaid contributions is subject to the limitations provided in section
13-80-103.5 (1)(d)
, C.R.S. If an individual for whom contributions are being claimed is a member or inactive member at the time the association first notifies an employer of its claim for unpaid contributions, an action to collect unpaid contributions is not subject to any limitation under article
80
of title
13
, C.R.S.
L. 87: Entire article R&RE, p. 1056, § 1, effective July 1. L. 88: Entire section amended, p. 1432, § 16, effective June 11. L. 95: Entire section R&RE, p. 558, § 19, effective May 22. L. 2006: (3)(a), (3)(b)(I), and (3)(b)(II)(A) amended, p. 1177, § 7, effective May 25.
The provisions of this section are similar to §§
24-51-101
and
24-51-203
as they existed prior to 1987.