Dan Klein: Governor’s PERA Task Force Chairman Promotes Public Safety Unions Agenda And Own Agenda; Also: Task Force Recommendations And Underfunded Plans Identified

On February 19, 2019, Governor Michelle Lujan Grisham announced a “solvency task force” for the Public Employee Retirement Association (PERA) pension program. The 19-member task force included PERA officials, labor union leaders, retiree representatives and others. The committee was tasked with providing recommendations to Governor Lujan Grisham by August 30, 2019. The task force was to make recommendations on contributions and payouts and a plan will be presented to the 2020 New Mexico legislative session.

On August 8 , 2019, the Solvency Task Force released its recommendations to eliminate the $6.1 billion unfunded liability in New Mexico’s pension system for municipal, county and state workers known as the Public Employees Retirement Association commonly referred to as PERA.


Dan Klein is a retired Albuquerque Police Sergeant after 20 years of public service. He has been a small business owner in the private sector now for 15 years. His business is USA Locators. Mr. Klein has been a reporter for both on line news outlets the ALB Free Press and ABQ Reports. Mr. Klein is a fully vested PUBLIC Employee Retirement (PERA) retiree receiving a PERA Pension for his service as a police officer with APD. He has submitted the following guest column to this blog for publication. Following the Dan Klein column are the related topics “PERA SOLVENCY TASK FORCE PRELIMINARY RECOMMENDATIONS” and “PERA PENSION PLANS AND UNDERFUNDED PLANS IDENTIFIED IN 2017” and related blog articles at the end.

(NOTE: The opinions expressed in this opinion article are those of Dan Klein and do not necessarily reflect those of the www.petedinelli.com blog).

“Imagine, you go to your doctor, Governor Michelle Lujan-Grisham (MLG) in this case, and present to her your symptoms. Your pension fund in the Public Employees Retirement Association (PERA) is still sick even after Senate Bill 27 was passed in the 2013 legislative session. Doctor MLG refers you to an “expert” to fully diagnose and recommend how to fix your illness. Except in this case the “expert” is not an expert in anything related to pensions. The governors’ expert is her Assistant Chief of Staff Diego Arencon, whose background is that of a career Albuquerque Firefighter, an Albuquerque Fire Department Union president and Fire lobbyist.

Apparently, Governor MLG didn’t think that a pension expert was necessary to diagnose and treat the $15 billion-dollar PERA pension illness. Quackery continues to reign supreme at PERA.

Mr. Arencon immediately appointed his own “experts”. Stacking the PERA Task Force with firemen and police officers who also have ZERO knowledge of how a pension fund operates. Fire and police represent less than 10,000 PERA members, yet they had seven votes on this task force. Retired Public Employees, represent 40,000 PERA members but they received only one vote. AFSCME represents 25,000 PERA members they also received one vote. It’s obvious Diego Arecon stacked this task force with friends who would blindly follow him.

This stacked task force was exposed to Governor Michelle Lujan Grisham but she turned a blind eye. This is certainly not the way for her to start her tenure as governor.

I confronted Diego Arencon about stacking this task force. He denied it but offered no reason why public safety needed seven votes, while Retired Public Employees of New Mexico (RPENM) and American Federation (AFSCME) received only two votes.

Then Mr. Arecon decided to only hold two public meetings! All other task force meetings were closed to the public. No formal record was kept as to what was said by the Task Force members and witnesses. Governor Lujan Grisham and Attorney General Balderas were both contacted regarding this blatant disregard for public testimony, which is affecting 90,000 New Mexico families. Again, the silence from the Governor and the Attorney General was deafening. Is this the change we voted for in 2018? In complete disclosure, I voted for both Attorney General Balderas and Governor Michelle Lujan Grisham.

It comes as no surprise that Mr. Arencon’s rubber stamped task force presented a plan to fix PERA that would force all PERA members to share the pain. He calls it the “shared risk” plan. But the problems at PERA don’t require shared risk, nor shared pain. The problems at PERA are very specific, but Diego Arecon intentionally refused to address them.

In 2017 PERA Executive Director Wayne Propst, in his annual report to the PERA Board, presented three graphs. You can review the entire April 27, 2017 PERA presentation with all the graphs and pie charts is here:


The graphs show that Senate Bill 27 worked for all of the funds within PERA, with the exception of two, Fire and State Workers. Arencon was a fireman and as a lobbyist he worked with legislators who represent State Workers. These PERA graphs show that by 2043 all PERA funds are 100% solvent, except Fire and State Workers. Those two funds, representing half of PERA membership, dive to below 40% solvency by 2043 and to 0% solvency by 2066!

I called PERA Executive Director Wayne Propst and asked why Fire and State Workers pension funds are heading into insolvency. Propst response was that Fire and State Workers funds provide benefits that their contributions can’t pay for. Propst stated that when a pension fund is in trouble it comes down to benefits being paid and not enough contributions being received. It’s that simple.

Fire and State Workers funds are the real problem afflicting the PERA fund. Their benefits are too rich for their contributions. This must be fixed or PERA will continue to falter. By refusing to address this obvious issue, Mr. Arencon has tethered all the solvent PERA funds to the corpses of Fire and State workers. By not fixing them they will ultimately drag all of PERA into the abyss of insolvency.

Prior to the task force first meeting I asked Diego Arencon if he was going to take testimony regarding the sickness that is destroying the State Workers and Fire funds. Mr. Arencon’s reply was shocking. “I will not pit funds against each other” he said thereby killing any chance for a real solution to PERA’s problems The PERA patient is on the operating table but Dr. Diego Arencon refused to cut the cancer out.

Arencon believes that everyone in PERA should suffer, to bail out the sick Fire and State Workers funds.

This is insanity!

This task force just continues the dysfunction that we have witnessed at the PERA Board and the PERA Executive staff who are still under investigation by the Attorney General and State Auditor. Instead of being honest about the problems and taking serious testimony from pension experts around the nation, we get more agenda driven shenanigans from people we trust, and the governor trusted to fix PERA.

I hope Governor Grisham and the legislature toss into the trash the recommendations of this blatantly slanted task force. They purposely dodged the one issue they knew would fix PERA, which is making adjustment to the Fire and State Workers plans.

If any recommendations from this task force are approved by Governor Grisham and the legislature, I will guarantee that in two years PERA will be back screaming about how the fund is still going insolvent. What will they do then?

Governor Lujan Grisham and the New Mexico Legislature, how about putting people in charge of fixing PERA who aren’t under investigation, who are pension experts and who don’t come with an agenda?

My recommendation is simple, the governor instructs the legislature [interim committees] to start taking public testimony from pension experts, with a focus on the illness in the Fire and State Workers Funds, but with an eye on rewriting the entire PERA statute. This will take months, possibly an entire year. In the 2021 legislative session the [ legislative interim committees] can present proposals to the legislature and governor.

This is the only way to honestly fix PERA.”



Following are the PERA Solvency Task Force Preliminary Recommendations as released by the Governor’ s Deputy Chief of Staff Diego Arecon who chairs the Task Force:

“• Fulfill the requirements of Governor Michelle Lujan Grisham’s January Executive Order including placing PERA on a path to pay off its $6 billion unfunded liability by the year 2043.

• Provide for sustainable, “profit sharing” Cost of Living Adjustments for current and future PERA retirees based on investment returns and funded ratio.

• Guarantee a minimum COLA of 0.5% and a maximum COLA of 3% based on investment returns/funded ratio. Once PERA achieves full funding of 100% the maximum COLA increases to 5%.

• Begin to address disparity in funding levels among PERA Divisions by exempting State Police and Adult Correctional Officers from proposed contribution increases.

• Protect lower income employees and retirees by exempting employees making less than $25,000 from proposed contribution increases and providing a 2.5% COLA to retirees with pensions of less than $25,000 and 25 years of service to include disability retirees.

• Result in an immediate $700 million reduction in PERA’s unfunded liability.

• Replace prior PERA proposals to freeze COLAs for 3 years with a 2%, simple COLA, pausing only the compounding factor, to be paid annually for the next 3 fiscal years. Simple COLAs will be paid for by a one-time appropriation of $76 million. PERA will administer a 13th check to retirees annually for 3 consecutive years.

• Provide incentives for employees to continue working by removing the cap on earning service credit.

• Eliminate the current 7 year wait to receive a COLA upon retirement and restore it with the 2-year calendar period.”


There are 5 major PERA Pension Plans administered by PERA:

State Employees General
State Police and Corrections
Municipal Employees General
Municipal Police
Municipal Fire

On April 27, 2017 a presentation was made to the PERA governing board on the current status of asset valuations and projected liabilities. The report includes 23 pie charts and graphs that effectively reveals the current and projected status of all the pension plans PERA administers and pending shortfalls. The pie charts disclose what will be paid into the pension programs by government employers and employees, income from investments and what will be paid out in benefits from 2016 to 2046 with one chart projecting to 2066.

The link to the April 27, 2017 PERA presentation with all the graphs and pie charts is here:


A few of the pie charts and graphs in the presentation are worth highlighting:

The pie chart on page 7 reflects that on June 30, 2016 Actuarial Accrued Liability for PERA is $19,474,241,000.

The pie chart on page 12 reflects the present Value of Benefits as $21,951,183,972 managed by PERA and invested with a funding ratio of Assets to Accrued Liability of 75.3%. The goal is to have a 100% funded liability by 2046.

The graph on page 19 reflects the assets to pay expected benefits and Market Value of PERA Market Value with no contributions to have a Zero return in 2026.

The graph on page 18 provides projections PERA expected total benefit payments including current employees, future members and retirees.

2016 PERA Total Contribution Rates are reflected in a pie chart on page 20 as follows:

12.28% Employee Contribution Rate
3.61% Employer Normal Cost Contribution
11.67% Employer Unfunded Accrued Liability Amortization Rate

Significant funding shortfalls are reported on page 24 as being 7.99% of State General pensions and 13.87% for Municipal Fire Pension programs. The graph on page 25 reflects contribution shortfalls of State General and Municipal Fire up and until 2066. According to the report the municipal fire department pension plans have the most serious problem of under-funding of almost twice that of the State General Pensions. The number of fire department retirees and law enforecent retirees combined is only a small fraction of the largest majority of State General pension retirees.

For related ww.petedinelli.com blog articles on PERA see:

Governor’s PERA Solvency Task Force “Pokes The Bear”; Dissolve Task Force And Form Working Group

PERA Pension Plan Investments Continue To Falter; Gov.’s PERA Solvency Task Force Top Heavy With Public Safety Reps

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Pete Dinelli was born and raised in Albuquerque, New Mexico. He is of Italian and Hispanic descent. He is a 1970 graduate of Del Norte High School, a 1974 graduate of Eastern New Mexico University with a Bachelor's Degree in Business Administration and a 1977 graduate of St. Mary's School of Law, San Antonio, Texas. Pete has a 40 year history of community involvement and service as an elected and appointed official and as a practicing attorney in Albuquerque. Pete and his wife Betty Case Dinelli have been married since 1984 and they have two adult sons, Mark, who is an attorney and George, who is an Emergency Medical Technician (EMT). Pete has been a licensed New Mexico attorney since 1978. Pete has over 27 years of municipal and state government service. Pete’s service to Albuquerque has been extensive. He has been an elected Albuquerque City Councilor, serving as Vice President. He has served as a Worker’s Compensation Judge with Statewide jurisdiction. Pete has been a prosecutor for 15 years and has served as a Bernalillo County Chief Deputy District Attorney, as an Assistant Attorney General and Assistant District Attorney and as a Deputy City Attorney. For eight years, Pete was employed with the City of Albuquerque both as a Deputy City Attorney and Chief Public Safety Officer overseeing the city departments of police, fire, 911 emergency call center and the emergency operations center. While with the City of Albuquerque Legal Department, Pete served as Director of the Safe City Strike Force and Interim Director of the 911 Emergency Operations Center. Pete’s community involvement includes being a past President of the Albuquerque Kiwanis Club, past President of the Our Lady of Fatima School Board, and Board of Directors of the Albuquerque Museum Foundation.