Heath Haussamen
(Full disclosure: My wife is an ERB member.)
You may recall me arguing in December that changes to make government retirement plans solvent should apply only to new members, not to those who have already been working toward retirement under different terms.
I expressed that sentiment most strongly about an Educational Retirement Board proposal to increase the number of years people had to work before they could retire. Making people work more years than they have been planning for is, in my view, simply unacceptable.
So I was disappointed to discover late Thursday that a bill has quietly but quickly made its way to the House floor that would increase the number of years many existing public employees have to work before they can retire.
If my math is correct, House Bill 644, sponsored by Rep. Mimi Stewart, D-Albuquerque, could increase the number of years some public employees have to work before they can retire by as many as 12.
But before I tell you more about that, let me describe how the bill got to the House floor.
Replacing a dummy bill
Earlier in the session, Stewart introduced House Bill 251, which was cosponsored by Senate Minority Leader Stuart Ingle, R-Portales. The bill would have made changes to the PERA and ERB retirement systems, but it was tabled last week by the House Labor and Human Resources Committee.
End of story, right? Not so fast.
On Wednesday, Stewart brought back a revised version of her proposal using an interesting procedural move that allowed her to bypass the labor committee.
Some lawmakers introduce what are called “dummy bills” – bills with vague titles and language that they can replace with a substitute bill at a later date. It’s essentially a way to introduce legislation even after the deadline to file legislation has passed.
So Stewart’s HB 644 became a bill that changes the retirement systems on Wednesday in the House Appropriations and Finance Committee. The committee approved the substitute for HB 644 on a vote of 11-4, without prior notice to the public that the bill was going to be discussed.
Well, technically, HB 644 appeared on the schedule before the hearing. But if you had looked online to see what the bill was, you would have found a blank dummy bill, not the retirement bill the committee approved. The public was not given notice of what the bill was going to become and what proposal would actually be voted on at the meeting.
The bill is now on the House temporary calendar. It could come up for debate on the floor as early as today.
About the legislation
The bill aims to make the retirement funds solvent by making changes not only for future employees, but also for anyone who has worked less than five years in the system as of July 1 of this year.
Let me highlight the worst-case scenario the bill would create for a public employee:
If an employee started working in the second half of 2006 and was 18 years old, under the existing retirement terms he would be eligible to retire at age 43 – after 25 years of service.
But if Stewart’s bill is enacted, he would have to work 12 years longer, until he is 55, because the bill sets 55 as the minimum retirement age.
That’s the worst-case scenario. For people who started working later than age 18 the changes would be progressively less impactful. And for those who have more than five years of service as of July 1, the changes wouldn’t apply at all.
The bill would also reduce the cost of living adjustment made annually to payouts for future retirees who haven’t worked at least five years as of July 1.
Breaking a promise should not be an option
Our pension funds are not in dire straits. They do need changes to become solvent indefinitely, but making changes that apply only to future hires begins improving the financial outlook of the funds with the first public employee hired under the new terms. It gets better with every new hire after that.
It seems logical to me that changes for only future hires can make the funds solvent. If for some reason they can’t, the state has a duty to come up with another way to stabilize the funds, in my view.
Changing the retirement plan for current members would have widespread, negative effects. Morale would suffer. Productivity would drop. People would learn that New Mexico can’t be trusted and take jobs in other states.
Breaking a promise to existing employees should not be an option.
This article has been updated to clarify that the bill would set the minimum retirement age at 55.