At least three separate controversies are going on these days at PERA, the Public Employees Retirement Association. One involves hundreds of thousands of dollars; the second involves billions, and the third involves open meetings.
PERA, the Public Employees Retirement Association, is the agency that pays pensions to New Mexico state and local government retirees. PERA is somewhere between a government agency and a private organization. It’s funded by mandatory contributions from active employees (future retirees) and their employers. It is governed by a combination of state law and its own board, elected by active employees and retirees.
A critical aspect of PERA’s mission is managing the billions of dollars (currently about $15.3 billion) in the fund to ensure that there is enough money to pay pensions into the foreseeable future.
The six-figure controversy is about salaries at PERA. Director Wayne Propst has had a couple of generous salary increases, approved only by the chairperson of the board, not the whole board as required by law. One version of the story is that the then-chairperson, Patricia French, was inappropriately persuaded to sign the first salary increase in 2014. Other employees have also received generous salary increases that were not authorized by the full board.
This has become controversial now because the information came to light only last year.
At the recent annual meeting of RPE of New Mexico, the retirees’ watchdog organization, there were some very angry people and talk of lawsuits. (Disclosure: I am a state retiree, an RPE member and an interested party in all of this.)
The much bigger issue is the long-term solvency of PERA– keeping the promises that were made to more than 40,000 retirees and 50,000 current employees.
There are good reasons to keep the pension system stable. A stable pension system benefits not only the recipients but also, especially in our economically fragile state, the communities whose well-being is supported by secure pensions. And government agencies need incentives to attract qualified employees, especially in professional positions, who could earn higher salaries in the private sector.
In 2013, retirees accepted a reduction in their annual cost of living adjustment. This year, House Bill 338 proposed to suspend all cost-of-living increases for three years and then change the rate of increase to a formula instead of a number. The legislation also would have increased the contributions from both employees and employers. The bill died because of strenuous objections. Governor Michelle Lujan Grisham has appointed a Solvency Task Force to meet over the next few months and develop a plan.
Retirees are asking why, if we fixed the problem five years ago, isn’t it fixed? That is the multibillion-dollar issue, and it’s related to the salary question.
As I wrote last year (www.triplespacedagain.com, July 2018), the PERA board reformed its practices to reduce board member participation in investment decisions and give more authority to staff. The theory is that expert staff will likely make better investment decisions than board members, who are amateurs. A majority of board members were in favor of this, but a few were furious.
It’s argued that investment experts are highly prized and if we don’t pay them enough, they’ll go elsewhere. I agree with that. If they can make investment decisions that put PERA on firm ground, they are worth whatever we pay them. But obviously that hasn’t happened, or we wouldn’t need a solvency task force.
The third issue that’s infuriating activist retirees is the decision to conduct most of the meetings of the Solvency Task Force behind closed doors. Meetings are scheduled for June 6, June 20, July 11, August 9, and tentatively August 22. Only the August 9 meeting is scheduled to be open to the public.
Retirees pay close attention to their pensions. If the task force proposes another cut in their future benefits, retirees won’t go quietly.
Triple Spaced Again, © New Mexico News Services 2019