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Thursday, November 18, 2010
ERB Proposal Sparks Outrage
By James Monteleone And Hailey Heinz
Copyright © 2010 Albuquerque Journal
Journal Staff Writers
Proposed changes to retirement benefits for about 30,000 teachers and staff at public schools and colleges would mean most employees would pay more each year and be required to work up to 10 years longer before retirement.
Employees within three years of eligibility for retirement benefits would be exempt from the changes.
A draft of the New Mexico Educational Retirement Board proposal made public this week has sparked outrage among staff and teachers around the state, with at least one union leader saying teachers would fight the changes.
The ERB plans to vote on the proposal Dec. 9; the changes would go to the Legislature in January to be adopted.
Under the new proposal, all school employees would be required to increase their annual contributions to the pension fund by an additional half-percent of salary. Employees earning less than $20,000 each year would pay 8.4 percent; employees earning more would pay the fund 9.9 percent of their salaries. The half-percent would create about $14 million in new annual revenue for the retirement fund, said ERB Executive Director Jan Goodwin.
The program will also delay retirement for some. In order to retire, teachers and staff would be required to have at least 30 years of service to retire at age 60 or older; they would need 35 years of service to retire before then. Current eligibility allows retirement after 25 years of service or any combination of age and tenure that adds up to 75.
For example, a teacher can currently retire at 50 with 25 years tenure and get maximum retirement. The new plan would require that same teacher to work an additional 10 years to reach the minimum required 30 years.
Employees are also allowed to retire with limited benefits at 67 if they have at least five years of service.
Employees eligible for retirement benefits are given 2.35 percent of their salary for each year of service to schools. The new plan, however, calculates the final salary based on the average of the seven consecutive highest years of pay rather than five.
The amended retirement program is necessary to ensure the fund is sustainable, said Goodwin. The program was modified in 2009, but that revision only affected new hires and didn't do enough to address the growing liabilities of a retirement fund that paid retirees more than $659 million last year, she said.
The state will continue to contribute 13.9 percent of employees' salaries into the retirement fund.
Goodwin acknowledged that the fund is safe for a "very long time," but believes the fund needs to be solvent indefinitely.
After taking a random poll of affected employees, the ERB chose to recommend changes it believed would be best received by staff, Goodwin said.
But teachers and staff say they were caught off-guard and the proposal goes beyond what many expected.
Many University of New Mexico employees first learned of the changes on Wednesday, said Merle Kennedy, president of the UNM Staff Council, which represents about 5,300 workers.
"This is really causing a panic, a stir on this whole campus. Not just the staff, but the faculty as well," Kennedy said. "We know they have to take some serious actions, but changing ... what people have been planning for their retirement is not going to fly very well with anyone."
Christine Trujillo, president of the New Mexico chapter of the American Teachers Federation, sat on the solvency task force that came up with the recommendations, and said there was a lack of consensus on the proposal. She also said that she finds it unnecessary and that some actuaries show the fund is solvent for decades to come.
Albuquerque Teachers Federation President Ellen Bernstein said the proposed changes would have a detrimental impact on the 7,000 teachers the federation represents. "It's such a decrease in benefits and an increase in costs," Bernstein said.
New Mexico teachers have "fought hard to get a decent retirement system," and the union will fight the proposed changes if they go to the Legislature, she said.