AFSCME pension reform proposals: Santa Fe, we have (recognized) a problem!

They say that the first step in solving a problem is recognizing that you have one. So, in a sense it is positive that AFSCME, the labor union representing large numbers of government workers in New Mexico, has come up with a list of reforms that it is okay with.

Ideas including raising the retirement age, re-working the cost of living adjustment (COLA), and basing final average salary calculations off of a longer period of time.

The full scope of the plans is outlined at the link above and AFSCME is wise to recognize that the current pension system is unaffordable. Of course, as our own Scott Moody has pointed out, New Mexico’s pension problem is much larger than either side is admitting at this point (more like $22.9 billion as opposed to $4.6 billion).

Interestingly enough, at the very same legislative meeting that AFSCME introduced their proposal, a separate proposal from GASB, the folks that attempt to keep government’s books honest (good luck!), was introduced. In discussing the proposal with Moody, he told me “If these changes happen, it will explode the pension liability. The proposal would also move the pension liability directly onto state’s balance sheets. I would imagine that would mean many states would have negative
equity.”

Looks like AFSCME is doing too little, too late, but something is better than nothing, I suppose.

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