NM Senate Ponders Equalizing Pensions of Teachers, Public Employees

The New Mexico Senate is considering a request for a study regarding equalization of teachers’ pensions with those of public employees. 

Sen. Mimi Stewart (D-Bernalillo), President Pro Tempore of the New Mexico Senate, on Jan. 18 introduced SM 4, a bill requesting that the Legislative Finance Committee conduct a study about equalizing the pension benefit structures of the Educational Retirement Board (ERB) and the Public Employees Retirement Association (PERA). 

The ERB was created in 1925 to serve university faculty, which now includes teachers and other employees in public and higher education within its scope. The PERA was created in 1945 to serve state government employees, which now includes municipal and county employees within its scope.

The bill notes that the ERB and the PERA administer different computations of pension benefits, multipliers and cost-of-living adjustments under their respective pension plan options. This, it says, results in a “substantial inequity of retirement benefits provided to the members of the educational retirement system versus the members of the public employees retirement system.” 

An analysis of the issues behind the bill reports that in the fiscal year 2023, the benefit funds distributed $2.7 billion to approximately 101,000 beneficiaries, with a combined benefit fund net position of $33.1 billion. For FY23, average annual allowances were $24,900 for ERB beneficiaries and $30,3000 for PERA beneficiaries.

Research

The study Stewart’s bill calls for would build on research already done. The ERB contracted with the University of New Mexico Bureau of Business and Economic Research to study the historical differences between the ERB’s pension plan and the PERA pension plan. 

The University of New Mexico Bureau of Business and Economic Research published a report in September 2020 comparing the systems. They found that members of the educational retirement system earn slightly less in compensation during their active years and receive significantly less in pension benefits than members of the public employees retirement system with comparable backgrounds and experience levels. 

What the Bill Would Do

SM 4 argues that the disparity the University of New Mexico Bureau of Business and Economic Research found may be mitigated by bringing the ERB’s pension structure into parity with that of the PERA. 

The measure requests that the study be conducted in collaboration with (1) the interim committee that studies investments and pensions, and (2) the University of New Mexico Bureau of Business and Economic Research.

The bill would call on the Legislative Finance Committee to:

• Conduct a comprehensive study on equalizing computations of pension benefits, multipliers and cost-of-living adjustments for members of the ERB pension plan and the PERA pension plan 
• Research the histories of the two plans and their different pension benefit structures. 
• Report the findings to the interim committee that studies investments and pensions before the 2025 legislative session.

The bill calls for its text to be transmitted to:

• the director of the Legislative Council Service on behalf of the interim committee that studies investments and pensions;
• the director of the Legislative Finance Committee;
• the director of the University of New Mexico Bureau of Business and Economic Research; and
• the executive director of the ERB and the executive director of the PERA.

Status

The Rules Committee recommended in a 6-0 vote on Feb.12 recommended that the bill be passed; the Education Committee followed suit, also unanimously, the next day.