With an unfunded liability in the billions – again? still? – New Mexico’s teacher pension fund is in need of some serious structural changes.
The difference between Educational Retirement Board assets and current and future obligations was $9 billion as of July. To put that in perspective, the state’s total spending for the 2019-20 fiscal year was about $7 billion, so the ERB deficit is more than enough to run the entire state for a year.
Reforms enacted in 2019 weren’t expected to get the ERB to full funding for 46 years. Coupled with unfunded liabilities in the state’s other major pension fund, the Public Employees Retirement Association, the unfunded liabilities in the two have played a key role in downgrades to the state’s credit rating.
And a key role in burdening taxpayers who have no retirement to call their own.
The Senate on Feb. 25 passed Senate Bill 42, which would increase taxpayer-funded contributions to the ERB fund by 1 percentage point over each of the next four years – taking the rate from 14.15% to 18.15% by the 2025 budget year. The price tag for taxpayers is estimated at an additional $34 million in the coming year, rising to an additional $136.2 million by 2025.
The icing on the cake? The bill doesn’t increase educators’ contribution rates. (According to the website, employees put in 7.9% if they make less than $24K a year, 10.7% if they make more.) Ask the majority of New Mexicans who have no pension and less than $10K saved for their own retirements how that feels.
Jan Goodwin, the ERB’s executive director, said she was pleased with the Senate’s 36-6 vote to increase taxpayer-funded contributions to the fund. Why shouldn’t she be? Goodwin, who earns a whopping $183,000 annual salary, is leaving New Mexico after the 60-day legislative session to take a job at the New Hampshire retirement system. She has no reason to worry about the massive debt she leaves behind once she boards the airplane heading East.
Senate President Pro Tem Mimi Stewart, a retired teacher, sponsored SB 42. Stewart, D-Albuquerque, says changes are necessary to put the ERB on more stable financial footing. “I really think maintaining the viability of the fund is a commitment New Mexico makes to its educators,” Stewart said.
Right on both counts. But real change beyond socking it to taxpayers is needed to ensure our state’s teachers, school administrators and university professors can rely on their retirement checks to be there as promised. Sen. William Sharer, R-Farmington, is on the right path when he says lawmakers should look at systemic, structural changes to the ERB – not just higher contribution rates.
ERB’s more than 60,000 active members, 51,000 retirees and New Mexico’s taxpayers deserve pension fund managers and a Legislature willing to do that work. It’s time to teach the ERB how to fish rather than filling up its plate year after year with more taxpayer funds. There should be no legislative bailouts courtesy of already overburdened taxpayers – kicking in from 32% to 79% more than what employees are putting in is already more than their fair share.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.
