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SANTA FE — New Mexico House members signed off Wednesday on a plan to shore up New Mexico’s public retirement system for teachers and other education workers, sending it to the Senate with less than three weeks remaining in the 60-day legislative session.
The union-backed bill aimed at addressing the worsening fiscal situation of the Educational Retirement Board passed 50-17. All 17 “no” votes were cast by Republican lawmakers.
After Wednesday’s vote, ERB Executive Director Jan Goodwin said she was encouraged by the final tally on the proposed pension solvency fix.
“It was very nice to see the bill get such broad support, and we’ll see what happens in the Senate,” Goodwin said.
Pension reform has emerged as a hot-button issue during this year’s session, as the state’s two large public retirement systems have seen their unfunded liabilities — or the difference between assets on hand and future retirement benefits owed — balloon to $12.4 billion.
Rep. Mimi Stewart, D-Albuquerque, speaks in the House on Wednesday about the pension reform bill. Next to her is Jan Goodwin, Educational Retirement Board executive director. (MARLA BROSE/JOURNAL)
The ERB, which has more than 60,000 active members and covers about 37,000 retirees, is attempting to ensure its future solvency by calling for employees who earn more than $20,000 annually to contribute an additional 1.3 percent of their salaries toward their retirement. The bill approved Wednesday also counts on taxpayer-funded contributions to the pension fund to go up by 1.5 percentage points to the level set by the Legislature in 2005, but delayed in recent lean budget years. The increases in employee and taxpayer-funded contributions would be phased in over two years, starting in July.
In addition, House Bill 64 would impose a new minimum retirement age of 55 and defer the start date of annual cost-of-living adjustments that retirees receive to offset inflation. However, those changes would apply to future workers only.
For that reason, opponents of the legislation criticized it as being unfair to future employees and cited previous testimony that it could have a negative effect on bringing future teachers and higher education employees to New Mexico.
“I appreciate that some of the active members are going to share in the pain, but I don’t think it goes far enough,” said House Republican Whip Nate Gentry of Albuquerque.
Gov. Susana Martinez has also voiced concern about the idea of increasing taxpayer-funded contributions to the state’s retirement programs, while describing them as among the nation’s most “generous” in terms of benefits.
“The governor remains concerned about the current form of the ERB pension bill, which does not enact the types of reforms necessary to make the fund solvent in a balanced way,” Martinez spokesman Enrique Knell said. “The governor continues to have conversations with legislators and ERB managers, and remains optimistic that we can pass meaningful reform this year that will make the fund solvent in a sustainable manner.”
Most educators covered by the ERB must work for at least 25 years to be eligible for full retirement benefits, though there is no minimum age for retirement. Benefits are calculated through a formula that incorporates an employee’s final average salary and number of years worked.
The ERB plan, which was endorsed by the pension fund’s board last year, is backed by nearly 20 labor groups and retiree organizations, which helped craft it during meetings held last year.
The bill’s sponsor, Rep. Mimi Stewart, D-Albuquerque, called it the first pension solvency plan to have consensus support among affected parties. Previous attempts to shore up the ERB have been largely unsuccessful in recent years.
“We’ve been working to fix this now for four or five years,” Stewart said.
Despite criticism that the bill does not go far enough to ensure future solvency, some Republican lawmakers cast votes in support.
GOP Rep. Bill Rehm of Albuquerque, for instance, called the measure a “baby step” in the right direction.
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