A sensible compromise to put the Public Employees Retirement Association pension fund back on the road to health is in the hands of Gov. Susana Martinez.
Solvency is a big issue for pension funds nationally, given unsustainable built-in benefits compounded by recession-driven market losses and tapped-out taxpayers in no mood to dig deeper into their pockets to pay for public employee pensions that far outstrip their own retirement programs.
PERA is no exception and maintaining its solvency has been a serious concern. PERA covers roughly 86,000 active state and local government workers and retirees.
A recent assessment shows the retirement system with a 65 percent funded ratio, meaning PERA owes about $6.2 billion more in future benefits than it has the ability to pay for. Senate Bill 27, a scaled-back version of what originally was proposed, is estimated to bring PERA’s funded ratio to about 90 percent by 2042.
It calls for retirement benefits to be trimmed and enacts stricter retirement eligibility guidelines. It also would require government employees to pay an additional 1.5 percent of their salaries into the pension fund, a sticking point with some unions. The bill as originally proposed would have increased the state’s contribution to PERA by 1.5 percentage points, but a Senate committee in negotiations with the governor’s office reduced that to 0.4 percentage points, an amount that will cost taxpayers about $2.3 million more a year, starting in the 2015 budget year.
However, SB 27 didn’t get through the House without two attempts by freshman Rep. Emily Kane, D-Albuquerque, to bump the state’s contribution back up to 1.5 percent. Kane, a captain in the Albuquerque Fire Department, essentially was lobbying for an increase in her own pension — to heck with the taxpayers.
Even with the smaller increase in taxpayer-funded contributions, the state PERA retirement program is one of the most generous in the nation. The state now contributes 15.09 percent to the system’s general plan. That already was slated to go up to 16.59 percent in July and under this bill would rise to 16.99 percent in 2015.
While most of the private sector can only look longingly at this kind of employer subsidized program, this legislation represents a fix that is realistic and won’t break the bank. The governor, legislators and most unions worked for a fair deal. This is one.
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.