SANTA FE – The New Mexico Supreme Court will hear oral arguments next month on whether the Legislature violated the state Constitution by scaling back certain retirement benefits to help shore up the state’s cash-strapped teacher retirement fund.
Four retired New Mexico educators filed a legal challenge with the Supreme Court in June, arguing retirement benefits are constitutionally protected as property rights.
A ruling by the court after the Sept. 4 oral arguments would be precedent-setting, because legal experts say the issue has not been tested in New Mexico law.
However, Chris Schatzman, the Educational Retirement Board’s general counsel, told members of an interim legislative committee Friday that it’s not certain a ruling will be handed down.
“The Supreme Court has many options,” Schatzman told lawmakers. “The fact that we’ll make an argument before them does not mean they will make a decision on the constitutionality.”
Legislators passed a bill this year that trimmed the annual cost-of-living increases received by retirees covered by the ERB – the pension fund has more than 60,000 active members and covers about 37,000 retirees – until solvency figures improve.
The legislation was signed into law by Gov. Susana Martinez in March, with the GOP governor saying it represented “systemic reform.”
Attorney General Gary King’s office has defended the solvency bill, claiming in a legal brief that the Constitution allows for changes to be made to the state’s two public retirement systems to keep them afloat.
The Attorney General’s Office has also pointed out that the decreases in the cost-of-living adjustments that retirees receive – which are tied to inflation and have averaged 2 percent annually – are just one part of the solvency legislation.
If the retirement benefit cuts were to be struck down by the court, the other parts of the bill could remain intact.
However, it could prompt a similar legal challenge to be filed against like-minded legislation, also enacted this year, that trimmed benefits for members of the state’s other public retirement system, the Public Employees Retirement Association.
Meanwhile, members of the Investments and Pensions Oversight Committee were also told Friday about a new attempt to shore up the state’s judicial retirement plan, after Martinez vetoed a bill passed this year.
Scaled-back survivor benefits will likely be one part of the legislation brought forward in 2014, Administrative Office of the Courts Director Arthur Pepin said.