The Rio Grande Foundation has long argued for serious reforms to New Mexico’s pension systems which are underfunded to the tune of a combined $12.8 billion. To her credit, Gov. Lujan-Grisham has outlined some detailed pension reforms to one of New Mexico two deeply-challenged pension systems (PERA). Those reforms are laid out in the Albuquerque Journal article linked above, but even if these proposals were adopted in their entirety, the ERB (New Mexico’s other big pension plan) is in need of reform and even the PERA reforms don’t go as far as needed.
The Reason Foundation has numerous experts on State pension issues and their analysts have taken a close look at New Mexico’s pension problems. A more detailed report including information on PERA’s challenges can be found in this: New Mexico Pension Health Memo. The following chart provides a detailed snapshot of the issues facing New Mexico’s underfunded pension system.
8 Replies to “NM public employee pension systems: changes needed, MLG offers a proposal”
We should all take a hit. Why should state police and corrections be exempt from changes to their contributions?
I understand that perspective and tend to agree with it. That said, we’ll take whatever viable reforms we can get.
The reason for differential handling of police and corrections are similar to those for the military, e.g. these are professions in which people may be required to have a certain level of physical fitness to actually be able to perform their duties and/or are associated with higher levels of stress and risk. One of the things that makes New Mexico’s pension system unusual compared to other states is the fact that ALL employees can take early retirement (after 20 years) and as such can start receiving benefits even at an age as early as 38.
In most states and municipalities outside of New Mexico that option is only available to people such as police, corrections officers and firefighters for the above mentioned reasons. It is probably not a bad idea to start differentiating pension plans between people who sit at a desk all day and those that might have to break up fights between convicted murderers.
Pardon my being a bit facetious.
I can but imagine that for some State employees, sitting at a desk most of the day “trying to look busy”… because their work is completed in a couple of hours…can be stressful!
In addition, having a low level of physical activity can be injurious to one’s health!
I betcha…some Folk might take exception to what constitutes a higher level of stress and risk…e.g. a cop working the NE Heights vs a cop working the SE Heights. ER Nurses stressed worrying if what they are going to do next is going to save or cost a patient their live while fearing for their own safety treating a unpredictable person high on drugs or suffering an acute paranoid episode.
A teacher dealing with a constantly “disrespectful/sullen” 6′ 195# teen boy, let alone a 5’4″ 130# gal with her clique.
Elsewise, given increasing life expectancy, might the years of service to retirement be increased for NEW hires?
The question I have, and do not know the answer to, is whether any of the public sector pension debt in NM would be subject to modification in a Chapter 9 Municipal Bankruptcy filing. States can’t file for bankruptcy, so I assume that STATE employees in NM are safe. However. I don’t think that applies to the ERB. It’s my understanding that school teachers are employees of school districts. It is the school districts who are ultimately on the hook if there is not enough money to pay pensions. Those school districts CAN file for bankruptcy.
To answer my own question,a municipal corporations may only file for chapter 9 protection if the state has granted permission and New Mexico has NOT provided that permission by statute:
In addition, state law must specifically authorize a municipality to file for
Chapter 9. See 11 U.S.C. § 109(c)(2) (2011). Only eighteen states explicitly
empower municipalities to file for Chapter 9 (Alabama, Arizona, Arkansas,
California, Colorado, Florida, Idaho, Iowa, Minnesota, Missouri, Montana,
Nebraska, New York, Oklahoma, Oregon, South Carolina, Texas and
Washington) and eight other states attach preconditions to filing
(Connecticut, Kentucky, Louisiana, Michigan, New Jersey, North Carolina,
Ohio and Pennsylvania). Twenty-three states and the District of Columbia
have no authorization statute (Alaska, Delaware, District of Columbia,
Hawaii, Illinois, Indiana, Kansas, Maine, Maryland, Massachusetts,
Mississippi, Nevada, New Hampshire, New Mexico, North Dakota, Rhode
Island, South Dakota, Tennessee, Utah, Vermont, Virginia, West Virginia,
Wisconsin, and Wyoming) and Georgia explicitly prohibits its municipalities
from filing for Chapter 9. Thus, even a municipality may file only in half the
states and roughly, a third of those states impose significant restrictions on
a filing. These two requirements reduce substantially the number of entities
eligible to file for Chapter 9.
8/18/19: ERB unfunded liability = $7.4 Billion*.
12/10/03: Dave Miles, Albuquerque Journal header: $1.1 Billion Shortfall in State Pension Fund Feared.
*I betcha a bunch of Legislators swear on their Mother’s grave “T’wasn’t my fault!” while today’s Legislators say it is only Fair…without a rationale “Why?”…to take it out on current retirees…”Why the heck do they need a COLA?”
And let’s not even go down the Rabbit Hole of what was characterized as the Richardson era of Pay-to-Play Players!
Aah Yes: https://tinyurl.com/ok8xr7r
And then our own HomeBoy: https://www.youtube.com/watch?v=d09tL9eByOY