The New Mexico Public Employees Retirement Association board deserves some credit for finally answering its fiscal wake-up call.
Better late than never.
For years the board, made up of various elected officials and current or retired government employees, has refused to even acknowledge that its public pensions, promised to 54,214 current government workers and 24,572 retirees, are in an overly generous economic free fall destined to end with seriously reduced or even nonexistent monthly checks.
Two years ago the PERA board flatly refused to consider any solvency fixes that would have affected current workers. Last year it failed to send a solvency plan to the Legislature.
This year the fund’s unfunded liability has ballooned to $4.9 billion, meaning it’s short that amount for what it is obligated to pay out.
So it is refreshing to hear pragmatism coming from the PERA board — and an acknowledgement that updating a promise is better than not keeping it at all.
Last week the PERA board recommended revisions that would erase that $4.9 billion shortfall by 2029.
There were some missed opportunities, but some revisions deserve serious Legislative consideration.
The misses include asking taxpayers to shell out more money, leaving unchanged the method used to calculate the retiree’s payout and failing to institute a minimum retirement age.
On the plus side, PERA board members voted 10-1 to delay for future retirees and trim for all retirees the annual cost of living adjustment. The board also voted to establish a benefit tier for new hires and employees hired after June 2010 that encourages longer service by extending the vesting period. Those are important fiscal adjustments.
But asking taxpayers to fork over an additional 1.5 percent is a nonstarter, especially when one considers that next year taxpayers will be paying 16.59 percent into PERA’s largest fund. Many New Mexico taxpayers are lucky to sock away 3 to 6 percent of their salaries into their own pensions — if they even have pensions.
Just as misguided is the proposal to use an employee’s five highest-paid years of state employment to determine an average salary. Many public employees are said to receive promotions in the final years of their careers — a phenomenon known as “spiking” — skewing the numbers rather than fairly reflecting a career of public employment.
Same goes for not setting a minimum retirement age and instead relying on an arcane system that uses years of service plus age to create a population of hale and hearty 50-something retirees.
That said, lawmakers should give some of the PERA board’s recommendations serious consideration. Taxpayers, 54,214 current government workers and 24,572 retirees are depending on them to finally ensure these pension promises can actually be kept.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.