Teacher pensions may receive larger contributions

Committee endorses increase of 1 percent a year for next four years

A legislative committee on Thursday endorsed a proposal by Sen. Mimi Stewart, D-Albuquerque, to increase the employer contribution rate to the New Mexico Educational Retirement Board by 1 percent a year for the next four years.

While the employer contribution to the Public Employees Retirement Association of New Mexico will be 19.24 percent by July 2023 under Senate Bill 72, the employer contribution rate to the Educational Retirement Board’s pension system is currently 14.15 percent.

Under Stewart’s proposal, the employer contribution rate for the ERB pension system, which covers all employees in K-12 schools, public colleges and universities, would climb to 18.15 percent in the fourth year.

Stewart, a retired educator, said after Thursday’s meeting of the Investments and Pensions Oversight Committee that her proposed bill is

designed to “at least try to bring some parity between the two systems,” as well as “long-term stability to the ERB pension fund.”

Jan Goodwin, executive director of the ERB, said she was grateful for Stewart’s support and the committee’s endorsement.

“It’s an important step to take to improve ERB’s sustainability,” she said.

Members of the committee, however, raised concerns about the proposal, particularly the cost.

The bill, plus bonding, would cost an additional $150 million a year once the 4 percent cost increase was fully implemented.

Sen. John Sapien, D-Albuquerque, said increasing employer contribution rates would create “the haves and the have-nots.”

“We’re looking at creating a system where we are taking care of government employees — great — but we’re leaving behind the private sector,” he said. “That pendulum is going to swing back the other way, and so then who’s going to be there voicing the concerns for the private sector?”

Sapien said he has “grave concerns” as the state continues to move up the employer contribution rates into public pension plans.

“When you compare it to the private sector, we can’t say that the pay [for public employees] is not equal to the private sector anymore, and now we’re creating pension plans that are way better than what the private sector even offers,” he said.