Editorial: UNM’s Retiree Health Plan Defines Insanity

The University of New Mexico is tens of millions of dollars in the hole when it comes to what it has promised in retiree health care. That’s health care for people who don’t work at UNM anymore. Who haven’t, in fact, worked there for years.

New Mexico State University and the state of New Mexico face the same shortfall.

And the prognosis is even worse than the grim fiscal reality of today.

Like the state’s pension programs, these retiree health-care programs will be promises unkept if they remain unchanged.

And that should happen sooner rather than later.

UNM’s retiree health care program has a projected 30-year $153 million unfunded liability. The program cost the university $14 million last year, right out of the operating budget.

When faculty members bemoan low salaries and nonexistent raises, they can in part thank a program that keeps retirees on the health plan for years and covers more than half the premiums until they are eligible for Medicare. Even then they are eligible through UNM for supplemental health insurance coverage.

Regent Jamie Koch says “this is a very generous benefit that you don’t find in the private sector anymore.” He’s right, and there’s a reason why companies don’t pick up health care premiums for early retirees — paying health insurance premiums for ex-employees for a decade or longer might be compassionate, but it’s also the definition of fiscal insanity and insolvency.

But then again, it’s so easy when it’s paid for with someone else’s money.

Koch says regents have “known about this issue since I came on the regents 10 years ago, and we just haven’t had the guts to deal with it.” Regents President Jack Fortner says “it’s a tough spot for everyone. It is a real problem and something we have to address.”

UNM’s retiree health care program isn’t in the state constitution and employees don’t pay into it until they retire. The authority to amend the retirement health benefits rests with the regents.

This week, regents required recommendations by spring for the next budget cycle and warned employees benefits might be reduced.

That beats the usual appointing a panel to study changes and nibbling around the edges with limitations on new hires. It is past time for regents to consider if benefits need to be severely curtailed. Or if eligibility needs to be seriously tightened. Or if employees should pay into their own retiree coverage before they retire. Or if the benefit is fiscally sustainable and prudent at all.

None of these fiscal course corrections will be popular. But they are necessary to prevent UNM from spending more and more of its operating budget on employees who have left — instead of those who are working.

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.