SANTA FE – A legislative panel signed off Monday on a nonbinding proposal that seeks to keep policy changes from being made to the state’s big public retirement system for at least the next five years – amid rising efforts to tweak the system to stem the flood of retirements by police officers.
The proposed moratorium, which is expected to be considered by the full Legislature in the coming 60-day session, could foreshadow a larger debate about the New Mexico Public Employee Retirement Association’s retirement and benefit guidelines.
Wayne Propst, the pension fund’s executive director, said the PERA board believes a five-year “timeout period” would buy more time for the 2013 solvency legislation to get the retirement system on solid financial footing.
“While we’ve had some good (investment) returns and the solvency legislation seems to be working as intended, it’s just too early to start saying let’s revisit the reforms,” Propst told the
Journal after Monday’s meeting of the legislative Investments and Pensions Oversight Committee.
Leaders of some New Mexico cities, including Albuquerque, have recently raised concerns the solvency bill’s provisions are causing a flood of retirements, especially among law enforcement officers.
The Albuquerque City Council this month adopted legislation that calls for bolstering police officers’ paychecks for every year they postpone retirement and stay on the job. That could mean up to $12,000 a year in additional pay for some officers.
Mayor Richard Berry, a supporter of the idea, received the bill last week and plans to sign it, his office confirmed Monday.
However, a PERA analysis of the Albuquerque measure concluded it would add an estimated $6.1 million to the unfunded liability of the pension fund’s municipal police plan.
“If cities or counties are making decisions that take us backwards, that’s a concern,” Propst said.
He said PERA would not oppose “incentive” programs aimed at postponing retirements as long as they do not affect the pension fund’s bottom-line solvency. He said the proposed timeout period was in the works before the Albuquerque proposal and was not specifically crafted in response to it.
During the 2014 legislative session, several bills were introduced that would have allowed certain law enforcement officials to return to work without having their pension benefits put on hold.
Though none of the bills was approved, several lawmakers said Monday that permitting such a practice – commonly known as double dipping – just four-plus years after it was disallowed could undermine the 2013 solvency legislation.
“This is going to come back to us,” said Rep. Luciano “Lucky” Varela, D-Santa Fe. “It’s going to adversely affect the fund.”
However, other lawmakers have lamented the difficulty of finding and retaining experienced candidates for key public safety jobs.
During Monday’s interim committee hearing, several lawmakers suggested the timeout period proposal should be introduced as a bill, not as a nonbinding joint memorial, to give it more heft.
“The bottom line is you need more teeth in it,” said outgoing Rep. Donald Bratton, R-Hobbs.
While Propst said he believes the memorial approach would send a message, he said the idea of a bill to address some of the PERA board’s concerns will be considered.
The sweeping solvency changes enacted in 2013 to both of the state’s primary pension funds – one for state government employees and the other for educators – were an attempt to keep the funds afloat into the future.
PERA, which covers state workers, law enforcement officers and other public-sector employees, had faced a solvency crunch due largely to investment losses, a swell in the number of retirees and longer life expectancies.
The legislative changes signed into law in 2013 by Gov. Susana Martinez trimmed retirement benefits for future workers, active employees and current retirees, while also enacting stricter retirement eligibility guidelines for future hires.
They also required most employees to funnel more of their paychecks into the retirement fund and increased the level of taxpayer-funded contributions into the fund.
Since the changes were enacted, the retirement system’s financial outlook has improved. For instance, the overall funded ratio for PERA retirement plans has gone from 65.3 percent in the 2012 budget year to 75.8 percent in 2014. The funded ratio is a way of measuring assets versus benefits owed.
Journal staff writer Dan McKay contributed to this report.