Senate approves pension fund fix

A bill that would shore up New Mexico’s financially troubled retirement system for police officers, judges and other government workers took a big step forward Thursday, but not before igniting debate over how much public money should be spent in order to keep the pension fund afloat.

The Senate voted 38-4 to approve the solvency legislation, aimed at the Public Employees Retirement Association, which covers roughly 86,000 active workers and retirees.

Sen. George Muñoz, a Gallup Democrat who is sponsoring Senate Bill 27, said state retirement benefits would remain among the nation’s most generous even if the proposed solvency fix is enacted.

However, a failure to pass the measure could have dire consequences, he warned.

“If we don’t start making pension fund changes now, we may not have a pension fund,” Muñoz told his Senate colleagues.

The bill approved Thursday calls for retirement benefits to be scaled back for retirees, future workers and active employees covered by the retirement system, while enacting stricter retirement eligibility rules for future hires.

In addition, the proposed solvency fix would require government employees to funnel more of their paychecks – an additional 1.5 percent of their salaries – into the pension fund. It would also require a smaller increase in taxpayer-funded state contributions.

Senate Majority Leader Michael Sanchez, D-Belen, attempted to amend the bill during Thursday’s Senate debate by restoring a steeper increase in the taxpayer-funded contributions. That would have changed the bill to its original form, as those increases were trimmed in committee from 1.5 percentage points to 0.4 percentage points.

“There’s no debate in this room that this amendment helps with solvency,” said Sen. Peter Wirth, D-Santa Fe, who was one of its backers.

However, seven Democratic senators joined with the chamber’s 17 Republican members to vote down the proposed amendment.

Gov. Susana Martinez has voiced concern about spending more public dollars on pension solvency, a sentiment also voiced Thursday by several GOP lawmakers.

“We’ve got to remember where this money comes from – it’s not some mythical pool of money out there,” said Sen. Mark Moores, R-Albuquerque, referring to the $17 million in state funding that would have been required by Sanchez’s amendment.

A Martinez spokesman said the governor was encouraged by Thursday’s Senate votes but did not say whether she would sign the legislation.

“Gov. Martinez believes pension solvency must be achieved through meaningful pension reform, not just a taxpayer bailout of one of the most generous pension plans in the country,” spokesman Enrique Knell said.

Union complaints

Meanwhile, labor unions have been divided over the pension solvency legislation, with some union leaders saying it is unfair.

Albuquerque firefighter union President Diego Arencón, who supported the unsuccessful amendment, said the bill approved Thursday would not go far enough in ensuring the pension fund’s future solvency.

“I don’t understand it,” he said. “We’re going to be back here in a few years.”

However, Carter Bundy, the political director for the American Federation of State, County and Municipal Employees union in New Mexico, lauded Thursday’s vote in the Senate, saying pension solvency legislation is urgently needed.

He cited the bipartisan support for the bill approved Thursday, as just four Democratic senators voted against the measure.

“If we miss this opportunity, it will be devastating to working people throughout the state,” Bundy told the Journal. “Legislators of both parties know how important this is, and we hope that carries some weight with the governor.”

Fiscal trouble

Like other national pension funds, the Public Employees Retirement Association has seen its fiscal condition worsen in recent years, due to market-driven investment losses and workers retiring earlier and living longer, among other factors.

The retirement system, which has more than 30 plans, had a 65 percent funded ratio under its most recent assessment. In dollar amounts, that means PERA owes about $6.2 billion more in future benefits than it has in assets on hand.

The legislation approved Thursday would bring PERA’s funded ratio to about 90 percent by 2042, according to the pension fund’s executive director.

The four Democratic senators who voted against the PERA solvency legislation Thursday were Peter Wirth, Michael Sanchez, Richard Martinez of Española and Linda Lopez of Albuquerque.

The bill now moves on to the House with just eight days left in the 60-day legislative session.
Senate approves pension fund fixLegislation scales back public worker benefitsSee SENATE on PAGE 3

LEGISLATURE 2013