Over the past year and a half, the Public Employees Retirement Association (PERA) Board has been grappling with PERA fund solvency and vetting proposals to fill a $6 billion dollar gap in the state’s retiree pension system. In the face of serious questions about PERA’s ability to meet future financial obligations, some board members are unwilling or unable to address these pressing issues.
For those of us who depend on this Board to make sound financial decisions affecting the future of more than 100,000 current and future PERA retirees, there is cause for great concern due to the lack of respect among board members and their apparent inability to work together to meet their mandate to preserve, protect and administer the trust to meet current and future obligations, and to provide quality services to members.
Board dysfunction has become the norm, with a minority contingent spending valuable meeting time arguing about accusations of theft of personal property and whether members should be provided snacks, making personal attacks and filing police reports against one another. There are lengthy disagreements about meeting agendas and a member stormed out to prevent a quorum required for board action.
This dysfunction was also the subject of a May 2019 State Auditor’s report, which expressed “extreme concern” regarding “the Board’s failure to uphold its fiduciary responsibilities” and “lack of focus on its fiduciary responsibilities (which) puts our retirees and future generations of retirees at risk.” It is time to reform and restructure the PERA Board.
Proposals for restructuring the PERA Board are being vetted for potential inclusion in the 2020 legislative agenda. Currently, no member of the PERA Board, which oversees a $16 billion fund, is required to have any experience or expertise in financial or investment management. Restructuring proposals would, among other things, reduce the size of the unwieldy board, while continuing to ensure that interests of state, county, municipal and public safety employees and retirees are represented; impose term limits; add requirements for relevant knowledge and experience; and change the board member selection process from popularity-based elections to a representative appointment process.
Gov. Lujan Grisham has not yet committed to including PERA Board reform in her legislative message, which is a prerequisite for bills to be heard during a 30-day session. The PERA Board is in need of major reform and we urge Gov. Lujan Grisham to include this important issue in her State of the State message on January 21, and then to support and sign PERA reform legislation.
Additionally, Think New Mexico, a non-partisan independent research group, has published a report that addresses the crisis of retirement security in New Mexico. This report makes excellent recommendations that would improve retirement security for all New Mexicans, including PERA fund solvency, PERA Board reform, ensuring access to a retirement savings account for all private sector workers and repealing New Mexico’s income tax on Social Security benefits.
The report is available at http://www.thinknewmexico.org/policy-reports/. By supporting these proposals and avoiding costly retirement insolvency, the governor would help all New Mexicans.
The authors are PERA retirees.