Breaking: UNM regents reverse course, approve retiree benefit changes

University of New Mexico regents were so unsure of proposed changes to the school’s retiree health benefits program this morning that they refused to vote on it.

By the afternoon, hearts had changed, and regents unanimously approved measures that increase retirees’ share of premiums and creates a new, tax-exempt trust fund to tackle UNM’s multi-million-dollar unfunded liability.

That unfunded liability will be $162 annually in 30 years. On Tuesday morning, regents made clear their lack of support for the changes by not seconding a motion made by regent Jamie Koch to accept them with stipulations.

So what happened between the morning and afternoon hours that lead to such a change?

Executive vice president for administration David Harris told Regent Jack Fortner that not taking action was a “colossal” mistake, he said.

Regents took another look after passing next year’s budget and voted unanimously to approve the changes. They added a stipulation that the task force look at more ways to mitigate the burden on pre-65 retirees, which co-chair Fran Wilkinson said the task force was happy to do.

Wilkinson was again taken by surprise Tuesday afternoon when she got a call from someone in the regents meeting telling her to rush back.

Wilkinson and the task force were in a meeting with another faculty and staff committee, under the impression the issue was dead for now.

Wilkinson and other members rushed over and walked in on time to hear the brief discussion on the proposal.

She said the task force will continue to meet to look at ways at reducing the impact on pre-65 retirees.

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Update: 4:45 p.m.

After refusing to vote on changes to retiree health benefits earlier Tuesday, regents revisited the issue in the late afternoon and voted to unanimously approve the changes. The vote was at the urging of Vice President David Harris.

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In a twist that left the UNM faculty and staff in shock, regents on Tuesday refused to vote on drastic changes to retiree health benefits that would have created a new trust fund and increased premium costs for employees.

“This came as a surprise to us given the large amount of collaboration. . . to develop a plan that would help (keep) the university’s commitment to retiree health care benefits,” said Fran Wilkinson, who co-chaired the task force that made recommendations, said.

It was a surprise because other than regents Gene Gallegos and Jamie Koch, who supported the plan but wanted it further altered next year, none of the regents expressed discontent.

Koch’s motion to pass the plan as is but revisit in January with a potential for higher deductibles and the introduction of a gap insurance plans for retirees who are under 65 years old was not seconded.
The motion then died.

Wilkinson said she didn’t know what comes next. She said she worried that regents could suggest halting benefits for pre-65 retirees altogether, a suggestion Koch made last year when an audit found the retiree benefits program as a whole was unsustainable.

The administration also asked the task force to review the possibility of cutting off benefits for pre-65 retirees, but the task force remains committee to keeping benefits for all, Wilkinson said.

Regents president Jack Fortner said he would not support the elimination of benefits for that group, nor did he think it was legally possible. He said the board felt they did not have enough information about how much UNM’s cost would be in the future to vote on the new plan.

The regents’ rejection of the plan came after a lengthy discussion before the regents finance committee on Friday, on which regents Koch, Gallegos and Conrad James sit. It was at that meeting that Gallegos and Koch expressed dissatisfaction at the changes, asking the task force to examine imposing higher deductibles for pre-65 retirees.

The task force agreed to do that, but said it would take some time.

The task force, composed of faculty and staff under the advisement of administrators, was asked to reduce the university’s future unfunded liability by 50 percent. The school estimates the cost of covering retiree health benefits will soar to $162 million in 30 years. Their final plan reduced the unfunded liability by 52 percent, or $85 million.

The task force made several recommendations, including the creation of a tax-exempt trust fund to which both UNM and employees would contribute. That trust fund would then be used to fund health benefits in the long run.

In addition, the task force recommended health benefit premiums increase for both pre-65 and post-65 retirees.
That didn’t sit well with several current retirees who attended Tuesday’s meeting in the university student union building.

“Separating based on age is discriminatory and unfair. Yes, younger employees may pay a little more, however, that is not the nature of a group policy,” retiree Barbara Gabaldon said.

Gabaldon, a pre-65 retiree, said she worked at UNM for 26 years and paid her fair share into the benefits.

Wilkinson said she will speak with the administration and get a sense of what other options they could look at.