Big raises at PERA, nothing for public retirees

January 3, 2019

 

A New Mexico public employee retirement plan that is facing long-term insolvency and that says it can't give retirees a 2 percent cost-of-living increase gave 30 of its employees salary increases ranging from 6 to 59 percent last year.

 

Here are the PERA employees who got raises in 2018.

 

Those salary increases at the Public Employees Retirement Association, which came in the way of promotions, job reclassifications and raises totaled $633,158 in 2018, according to the state's Sunshine Portal. Those raises were in addition to the 2 percent across-the-board raise that all state workers got last year, and the money for them comes from the PERA's investments funds, not from the state's general fund. In other words, those salary increases have come out of retirees pockets.

 

The salary increases and job reclassifications weren't approved by PERA's 12-member board, because, apparently, the board isn't required to approve them.

 

Representatives of the 40,000 retirees who receive pensions from PERA's $15 billion in funds say the raises are unconscionable given the agency's plea of poverty and insolvency. PERA is facing a $6 billion shortfall over the next decade and it wants to stop the 2 percent COLA increases for the next three years and to require current government workers to put more of their paychecks to the retirement plan.

 

Here is the explanation PERA staff gave for not needing board approval for the raises.

 

 

But PERA General Counsel Susan Pittard said many of the raises and job reclassifications were necessary to bring PERA investment division employees up to the salary levels that people make in other state investment agencies, including the State Investment Council and the Educational Retirement Board.

 

The 2 percent COLA costs PERA about $20 million a year on top of the $1.2 billion it pays out in pensions each year.

 

Gerald Chavez, executive director of the Retired Public Employees of New Mexico, which has around 5,000 dues-paying members, said the raises “don't make sense.”

 

“The fund is in dire straits,” Chavez said. “How could these raises be given and how could the governing body allow it? It's just mind-boggling to me.”

 

Dan Klein, a retired Albuquerque police sergeant who is vocal about PERA and public retiree issues, said the raises and the board's failure to challenge them in a meaningful and public way was “outrageous.”

 

“What is the PERA board doing? They seem to have vacated their authority to the executive director, and they don't seem to be doing their job,” Klein said. “The PERA board is doing a colossal disservice to the tens of thousands of retired New Mexico employees; they rubber-stamp the executive director with no oversight. And those board members that have spoken out, the board censors and gags them.”

 

Pittard said that PERA Executive Director Wayne Probst has authority to hire all PERA employees and to give them raises. Those raises must be approved by the state's personnel department, the Department of Finance Administration, and, basically the state Legislature. The PERA board approves recommended budgets and then the Legislature must approve them, Pittard said. In addition, the Legislature must approve any new positions Probst and his team want to add.

 

“The only position that the board hires and fires is the executive director,” Pittard said. “The executive director hires and fires all the employees for the agency. The executive director is in close communication with the chair and vice chair regarding all personnel issues.”

 

Since 2014, PERA has been budgeted for between 80 to 87 positions each year, and since then the agency's annual salary costs have increased from $4 million to $5.3 million, according to the state's Sunshine Portal.

 

PERA has faced solvency issues in the past. In 2013, the state Legislature approved a solvency fix that included reducing COLA payments from 3 percent to 2 percent a year, increasing the amount of employer and employee contributions, and stricter retirement eligibility guidelines for new hires.

 

The problem that PERA is facing is that yearly contributions from employers and workers aren't enough to pay for future accumulated benefits. And Probst has said that investment income isn't enough to make up for the shortfall.

 

 

The PERA board has recommend a new solvency fix that includes eliminating the COLA for three years and increasing the amount that employees and state and local governments contribute to the fund. For general state workers the amount of their salaries that they contribute to their pensions would rise to 10.42 percent from 8.92 percent. Government—meaning taxpayer—contributions would rise to18.74 percent from 16.9 percent.

 

The average yearly PERA pension is around $29,000.

 

Klein said he doesn't trust PERA staff or board members to do right by current retirees and that even if COLA reductions are approved for three years, the staff will ask for more concessions from retirees.

 

“The COLA cola amounts to a minuscule amount, and they can take it under the guise of solvency,” Klein said. “But in the next two years Wayne Probst and the PERA executive staff will be back crying poverty again. And then what will they blame it on?”

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