SANTA FE, N.M. (AP) — Teachers and other educators will pay more into their pension program to help shore up its long-term finances under a proposal approved Wednesday by the House.
Besides higher payroll contributions by workers earning more than $20,000, the proposal will change pension benefits for educators hired in the future, including imposing a minimum retirement age of 55 and delaying when they could receive cost-of-living adjustments in their retirement checks.
For a teacher earning an average salary of $45,000, the proposed contribution increases over two years will mean a $1,260 reduction in take-home pay, according to the Legislative Education Study Committee. Once those increases are fully implemented, about 10.7 percent of an educator’s salary will go to support the pension system.
Through publicly financed school employers, taxpayers also are supporting the pension system — contributing just under $3 of every $5 going into the retirement system starting in July.
The bill passed the House on a 50-17 vote and goes to the Senate.
The pension program covers 98,000 educators and retirees, from public school teachers and principals to janitors and college faculty.
Rep. Mimi Stewart, an Albuquerque Democrat, said labor unions and retiree groups had endorsed the legislation.
“This does really represent a consensus,” said Stewart, chairwoman of the House Education Committee.
But opponents said more changes were needed to ensure the retirement fund’s future solvency.
“While I appreciate that some of the active members are willing to share in some of the pain, I do not think it goes far enough,” said Rep. Nate Gentry, R-Albuquerque. “I am concerned that if we do adopt this proposal, while it’s a good start, we are going to be hurting our ability to recruit teachers in the future.”
The Educational Retirement Board has a $6 billion gap between its assets and the benefits expected to be paid out in the future.
Public employee pension funds across the country face similar financial problems, in part because of investment losses during the recent national recession as well as demographic trends of people living longer and collecting pension benefits for more years.
If the legislation is enacted, Stewart said, the pension fund’s assets are estimated to grow in 30 years to cover 93 percent of the benefits earned by educators. Currently that “funded ratio” is 61 percent.
The legislation “is more than a good start,” said Stewart. “I think it will do the job.”
The House also approved and sent to the Senate a proposal to revamp the judicial retirement system. The measure will increase contributions by state judges and magistrates, and eliminate the use of court docket fees for financing the pension plan. The bill passed the House on 46-20 vote.
Rep. William Rehm, R-Albuquerque, objected that $15 million in taxpayer money will be injected into the judicial retirement program over three years to immediately improve its solvency.
“This means we will give each member in that plan a contribution from the state of $40,322. Now how are we going to answer ERB and PERA when they say they want the same treatment?” said Rehm, a retired police officer.
Separate legislation is pending in the Senate to improve the solvency of the state’s other retirement system, the Public Employees Retirement Association. A Senate panel approved a measure late Tuesday to trim cost-of-living adjustments for current and future retirees from state and municipal government jobs. Payroll contributions for workers and their governmental employers also will increase starting in July. The pension program covers about 86,000 workers and retirees.