Albuquerque Journal Editorial: Much-lauded state pension ‘fix’ is really just a Band-Aid; 2020 PERA Pension Reform Measure “Fabricated Crisis”

Below is the Albuquerque Journal March 14 Editorial with link followed by the link to my March 9 blog article entitled “Governor Lujan Grisham Signs PERA Pension Reform Measure To Fix Fabricated Crisis Created By Her Appointed Pension Reform Task Force”

Editorial: Much-lauded state pension ‘fix’ is really just a Band-Aid
Saturday, March 14th, 2020 at 12:05am

There was plenty of self congratulation when the Legislature passed and the governor signed New Mexico’s latest “fix” for the state’s chronically underfunded public employee pension system. It pumps in a one-time cash infusion of 55 million in tax dollars, freezes and limits cost-of-living adjustments for two years, moves to a profit-sharing model for COLAs – based on investment success – and bumps up contributions by both employees and government employers – aka taxpayers.

“By paying out more than it was taking in,” the governor said, “PERA was on a path to eventual bankruptcy. Now we’ve reversed course, and I’m confident New Mexico can keep its promises to current and future retirees.” Sen. George Munoz, D-Gallup and a pension-fix co-sponsor, said “we’re watching after everyone’s future.” Rep. Phelps Anderson, R- Roswell and a co-sponsor, told colleagues “New Mexico has overpromised, (and) we’ve got to step up and deal with that. …”

They were half right. We have overpromised. But this isn’t the long-term fix needed. If it feels like you’ve seen this movie before, you have. You’re likely going to see it again – especially if markets continue to reel under the impact of oil prices and coronavirus. Fund solvency is tied to investment success.

Lawmakers “fixed” PERA in 2013, using many of the same tools – increasing contribution rates and trimming benefits.

PERA Executive Director Wayne Propst said in November 2013 he was optimistic but it was too early to “pop the champagne corks.” No kidding. PERA’s unfunded liability has climbed from $4.6 billion to more than $6 billion since then. (And in 2019 the Legislature approved a $5.5 million infusion – described as a small step for pension reform.)

This year’s legislation grew out of a governor’s task force and drew heated opposition from retirees, who understandably feel promises should be kept. Approval wasn’t easy.
But declaring victory and achieving it are different things.

When this legislation is fully implemented in 2023, government will contribute 19.24% of each salary under the main plan for PERA-covered workers, who will contribute 10.92%.
The “fix” didn’t implement the vital structural change needed for long-term solvency – changing when workers can start drawing benefits. At a time when life expectancy has increased, as a general rule state workers can retire after 25 years and draw benefits of up to 90% of their best three years’ salary for life.

It’s worth noting in 2013 the state had about 55,000 employees and nearly 34,000 retirees. This year? Workers are about 50,000, retirees 40,000. With the baby boom aging out of the workforce, the basic trend will continue – and a hiring spree to shore up the fund will make things worse.

Sen. Daniel Ivey-Soto, D-Albuquerque, said during a pre-legislative seminar it isn’t possible to have a fiscally sound system in which you can work for 25 years, then draw benefits for 45. “That’s not a pension system. That’s a Ponzi scheme.” Ultimately, current workers must be protected but a path to fiscal sanity needs to look more like Social Security, where you don’t draw full benefits until close to retirement age.

The structural problem here is pretty obvious, as is the lack of appetite for real reform – especially in an election year. Meanwhile, it’s fair to suggest that at nearly 20%, we’ve reached the limit for bumping up public contributions. Let’s face it. A huge part of the state’s population has no retirement plan outside Social Security.

Ivey-Soto is right. This hard discussion can only be put off for so long. The taxpayers of this state, and the public employees, deserve a real “fix.”

Below is the link to my March 9 blog article entitled “Governor Lujan Grisham Signs Pera Pension Reform Measure To Fix Fabricated Crisis Created By Her Appointed Pension Reform Task Force”

Governor Lujan Grisham Signs “PERA Pension” Reform Measure To Fix “Fabricated Crisis” Created By Her Appointed Pension Reform Task Force

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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.