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Doing Their Part

Obligations on Both Sides

LEGISLATIVE SOLUTIONS for ensuring the long-term health of the Educational Retirement Board are again in the news. … Why should anyone collect state retirement benefits before the minimum age for Social Security?

Regardless of their hire date, it is reasonable to expect that most workers should continue to contribute to the workforce into their early 60s. Early departure from public institution employment is typically a choice. That choice should be weighed with the knowledge that retirement benefits do not begin until age 62.

One notable fact is often missed in these discussions. University employees are given one opportunity to choose the ERB or an alternative defined contribution plan, which is at the hiring date. Even those employees offered a one-time chance to switch were not allowed to transfer funds into the ERB in order to purchase the missing years. This option might have infused large deposits into the fund. Invested wisely, and with limitations on options such as minimum retirement age, the influx could have a bolstering effect.

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The state of New Mexico should also recognize its responsibility to participate in restoring the fund, based upon the increasingly disturbing news about the pay-to-play investment fund strategy during the previous administration. The fund’s past poor performance and high fees reflect mismanagement of employee contributions, now at a staggering 9.4 percent.

BRIDGET WILSON

Albuquerque

No Free Rides (or Lunches)

I APPLAUD Mr. Williams letter to the Journal regarding information on the millions of dollars that New Mexico employees have contributed to these funds. He is correct in saying they are not getting a “free ride.” This (letter) should have been the front page headline. I am sick to death of the whining of others about Educational Retirement Board, Public Employees Retirement Association and Social Security.

MITZI WENCEWICZ

Albuquerque

We Didn’t Create This Mess

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IN A LETTER to the op-ed page on Feb. 3, Brad Day, a retired financial planner and an ERB board member, asked, I assume rhetorically, why the ERB is insolvent. My question, which is not rhetorical, is why is it never mentioned in any article regarding the insolvency, that $250 million was invested — knowingly, it seems — in companies that were not solvent themselves? That money is gone. While $250 million is small potatoes in the scheme of things, it would go a long way in paying retirement benefits to many retirees.

As a public sector retiree, this situation is very frightening. I retired with 33 years at about 71 percent of the average of my last five years. I did not, however, earn a lot of money, so my retirement check is not making me rich.

Day also makes the assumption that I will receive Social Security. I am not so sure. And if I do, that money, in addition to my meager retirement check, is not going to make me rich. I am almost positive that I will never see a COLA from the ERB.

Day says the situation is out of control. I didn’t create this situation. When I became a public-sector employee in 1976, I was not given any option as to investing my retirement contributions. I worked two public-sector jobs that put money into my retirement fund and Social Security and I pay taxes. I mention that I pay taxes because Day said it was costing the taxpayer a lot of money to fix the mess of the ERB insolvency.

Again, I didn’t create this situation, but I am going to get screwed.

CATHERINE SNYDER

Albuquerque

Rich Retired Teachers? Ha!

THE ALBUQUERQUE Journal would have its readers believe that New Mexico educators receive a “gift” from “taxpayers” in the form of their pensions. The fact is they pay for more than half of their pensions in the form of direct payment from their salary. As taxpayers they also pay a portion of it. In fact, there are 97,000 citizens — as reported by the Educaional Retirement Board — who either have 35,000 retirees and 62,000 active employees currently paying into the fund. All of whom continue paying state taxes the rest of their lives.

Over the past two years educators have had to pay an additional 3.25 percent of their salaries to the fund further eroding their salaries. However, this money has not gone to solvency of the retirement fund, but, rather, to offset the employers’ contribution to the fund to save the state money.

The University of New Mexico Retirees Association recognizes and supports long-term retirement fund solvency and made a wise recommendation to the ERB urging that the age to begin receiving one’s pension be increased to 60 — the most important actuarial factor promoting solvency. However, our proposal was rejected and a proposal put forward by a board member, the executive director of the New Mexico Association of Educational Retirees, was adopted. This proposal was never vetted by the NMAER membership. The UNM Retiree Assocation’s major concern is that the proposal cuts the COLA by 12.5 percent. Current retirees have no way to increase their retirement income, their decision to retire was based upon the ERB’s policies at the time.

The recommendation the ERB submitted to the Legislature would have further decreased retirees purchasing power. As the 2010 Census results tell us, the elderly are the most rapidly rising group living in poverty.

Finally, as the UNM Retiree Association looked at the educational retirement benefits, it found a huge disparity between benefits accrued to educators versus other public employees in the PERA retirement fund. Both funds need to address long-term solvency, but PERA has opted not to make changes to their employee benefits at this time.

Thus, public employees in PERA will continue to earn significantly higher benefits from their retirement fund as educators once again continue to lose benefits. The gap between the much greater pension benefits for PERA retirees and those for teachers will continue to widen. The two retirement systems should be fixed at the same time to best serve the state of New Mexico as well as its retirees.

DR. CYNTHIA STUART

and Dr. S. SCOTT OBENSHAIN

Dr. Stuart is the immediate-past president of the UNM Retiree Association Dr. Obenshain is the current president

Albuquerque

Debate Facts, Not Fictions

THE AVERAGE pension for PERA retirees is about $26,000 per year. This is hardly a king’s ransom. This is a pension for decades of public service from our fellow New Mexicans throughout the townships, villages, municipalities and counties of our state. To mention just a few scenarios, we tend to ignore the vital services provided to our communities until the potholes surface, until our neighborhoods are plagued with graffiti, until crime hits close to home, or when the basic service of receiving safe drinking water becomes a concern.

Unlike what is occurring in many parts of the country, I am hopeful that New Mexicans will focus on the facts with reason and respect when considering our public servants who provide vital services every day. We should not react to misleading arguments supported by half-truths that call for “knee jerk” reactions in regard to pension reform. The truth is that all 80,000 PERA members are taxpaying citizens of this state. The reality is that the salaries paid to PERA public workers do include a portion of wages deposited into the pension program by both the employer and the employee in the form of contributions. The overwhelming majority of PERA retiree pensions are paid for by investment earnings, with the rest being funded by employee/employer salary contributions.

Now, if people want to debate an issue regarding the amount of acceptable salaries paid to public employees, that is one thing, but to pretend that the pensions of PERA members are not paid for by wages earned from hardworking, taxpaying public servants is nothing but disingenuous.

There is a concern that upcoming General Accounting Standards Board reporting changes could cause the unfunded liabilities of public pension funds to be a financial liability to our state. This is not unique to New Mexico. Public pension unfunded liabilities and potential challenges caused by these reporting changes are common throughout the country. Before the economic downturn in 2008, it was more than acceptable for a public pension to be funded below 100 percent. Now as the markets have defined a new normal of being unpredictable, it is no longer acceptable.

Pension funding shortfalls, as related to sustainable benefits across all PERA groups including retirees, active members and new hires, COLAs, age and service requirements, contributions and market conditions, are currently being considered as PERA’s goal to develop a plan to become 100 percent funded moves forward. The 2012 legislative session adjourned with overwhelming support of PERA’s House Joint Memorial 19, co-sponsored by Rep. Jim Trujillo and Senator Carlos Cisneros. HJM 19 calls for PERA to make recommendations by October 2012 for an all-encompassing and actuarially sound plan to address its unfunded liability for the 2013 legislative session.

Finally, we need to set the record straight. The PERA is not the Educational Retirement Board, and it is not the State Investment Council. PERA represents a wide variety of public servants from janitors, street maintenance workers, animal control officers, office workers, police officers, firefighters, legislators and many more. It includes 31 membership plans and is governed by an oversight board consisting of representatives mirroring the demographics of its members. The unique and independent structure of the PERA Board has no political appointments from the governor, state representatives or state senators. To date, the board has served New Mexican public servants with a good track record of responsible governance and prudent investments.

GERALD L. CHAVEZ

Chairman, Public Employees Retirement Association

Mountainair

It’s Always the Politicians

IT HAS BEEN said that we often appreciate public officials more after they have left office than we do when they are in office. However, more often than not, we are left wondering who the hell were these idiots, how the hell did they get elected to office and how was the public so easily fooled by them? …

It is the private-sector worker who in most cases is underpaid compared with public workers, overworked and without benefits, who are now expected to pay for this giant folly!

Politicians have been buying votes with taxpayer money for years, knowing full well they were making promises they could never keep and using gimmicky accounting practices to hide the real facts. Politicians banked on the fact, that when it came time to pay up on these impossible-to-keep promises, the bitter fighting that would ensue between public- and private-sector workers would deflect all blame away from the source of the entire mess — a gluttonous government and unscrupulous politicians.

MADELEINE SLOAN

Santa Fe

We Do It for the Students

IT’S NO SURPRISE that more public employees are retiring. As a middle-school teacher with 22 years of service, I look forward to the end of my career in three years. When the bell rings and I’m in charge of my little kingdom, I find delight and joy in my job.

There is nothing outside the classroom, however, to provide one scintilla of illumination to my profession. State-mandated testing has become an overgrown tumbleweed; class sizes have increased from 150 students a day to 170; and salaries have effectively decreased over the last four years.

Yes, I’ll retire at the first possible moment. I shall miss my students deeply. Nothing else shall be missed.

STEVEN P. BRÃœGGE

Albuquerque


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