New Mexico Supreme Court justices posed tough questions Wednesday to attorneys on both sides of a precedent-setting case about the state’s authority to trim certain benefits for retired educators.
After hearing oral arguments and deliberating for 40 minutes, however, the state’s highest court opted not to issue an immediate ruling on the case.
The delay came as little surprise to the attorney for four retired New Mexico educators, who have asked the court to halt the benefit cuts that took effect July 1.
“I’m not that surprised,” Albuquerque attorney Sara Berger told reporters. “I think it’s a very complicated case.”
New Mexico is the latest in a string of states to trim public workers’ retirement benefits in an attempt to shore up cash-strapped pension funds. Solvency fixes approved this year for both of New Mexico’s two public retirement systems – the Educational Retirement Board and the Public Employees Retirement Association – included such trims.
Berger argued Wednesday that the state Constitution protects retirement benefits as a property right. Those benefits cannot be scaled back without the retirees being compensated, she said.
Assistant Attorney General Scott Fuqua countered by claiming the Legislature is allowed to adjust the state’s teacher retirement plan to keep it afloat for future generations.
The Supreme Court’s ruling could hinge on whether the annual cost-of-living adjustments that retired educators receive – starting at age 65 – are considered core benefits, as justices focused several of their questions on that legal issue.
This year’s bill to shore up the ERB, which has about 61,000 active members and roughly 37,000 retirees, trimmed the cost-of-living adjustments for current workers and retirees until the pension fund’s solvency figures improve.
ERB Executive Director Jan Goodwin told reporters after Wednesday’s arguments that the court’s decision could affect the pension fund’s long-term solvency.
“It’s very important,” Goodwin said. “It gets to a very fundamental question of whether the Legislature is allowed to make changes to the retirement plan.”
The solvency fix passed by lawmakers and signed into law by Gov. Susana Martinez in April called for more than just scaled-back benefits. Other pieces included stricter retirement eligibility for future hires and a requirement that employees who earn more than $20,000 annually pay more money into the retirement fund.
Though the legal challenge awaiting a ruling from the Supreme Court asks that full benefits be restored only to the four retirees, a decision in their favor would likely apply to other retirees as well, attorneys said.
It’s not clear whether such a decision would invalidate the entire legislative solvency plan, Goodwin said.