Pension board scraps big raises for top executives

Pay hikes up to 49% were sought for teacher retirement fund staffers

SANTA FE — Top executives overseeing New Mexico’s pension system for teachers and other educators won’t see fattened paychecks after all.

The Educational Retirement Board has withdrawn its plans for the raises — two of which would have exceeded 40 percent — after Gov. Susana Martinez’s administration refused to carry them out.

Jan Goodwin, the ERB’s executive director, told state lawmakers Wednesday that her board has accepted the denial and is no longer pursuing the raises. She was one of four staffers in line for the increases, ranging from 9 percent to 49 percent.

The raises came up Wednesday as part of a broader discussion at the Capitol over how to shore up the finances of New Mexico’s pension system for retired government employees.

The proposed pay increases, of course, aren’t a significant factor in the financial health of funds that total billions of dollars. But they triggered intense criticism, nonetheless, because of their size and timing, as the pension systems face growing unfunded liabilities.

“What was proposed was just unconscionable,”

Sen. Jim White, R-Albuquerque, said Wednesday as he questioned Goodwin during a meeting of the Legislature’s Investments and Pensions Oversight Committee.

Under the proposed raises, Goodwin’s pay would have increased 46 percent, to $240,000 a year. The deputy director would have received a 49 percent pay increase, to $179,000.

The state Department of Finance and Administration refused to change the employees’ pay, however, and a spokeswoman called the raises “highly inappropriate” and unjustified. A teachers union representative, meanwhile, called the increases “tone-deaf.”

In an interview, Mary Lou Cameron, a retired teacher and chairwoman of the ERB’s Board of Trustees, said she believes Goodwin and other top staffers still deserve a raise. But she said she understands the concerns raised by opponents.

“We’re moving on,” Cameron said. “Our focus now is on our fund, making sure we keep it solvent and that we make the best decisions for the future of the fund.”

Cameron said the raises were justified by the need to recruit and retain highly qualified people to oversee a $12 billion fund and to bring their pay in line with that of their peers around the country. But she said she realizes teachers deserve raises, too, and the board is dropping the proposal.

Much of Wednesday’s hearing focused on the financial health of New Mexico’s two main pension organizations — the Educational Retirement Board and the Public Employees Retirement Association. Neither agency’s pension system is fully funded.

A credit rating agency cited pension liabilities last month as a factor in its decision to downgrade New Mexico’s bond rating.

Rep. Tomás Salazar, a Las Vegas Democrat and chairman of the oversight committee, said he expects lawmakers to consider significant pension legislation. The pension agencies are expected to recommend changes later this year, ahead of the 60-day session starting in January.

“This coming session will be key,” Salazar said in an interview.

No one seemed to have an easy answer Wednesday on how to proceed. But possibilities include scaling back cost-of-living adjustments received by retirees, requiring employers or employees to contribute more to the system, reducing vacancies in the state workforce so that more people are paying into the system, and tightening the rules to keep employees from gaming the system.