Font ResizeLAS CRUCES -- Mary Parr-Sanchez said she lost sleep after hearing that she might not be able to retire until 2020.
Teaching a classroom of eighth-grade students at Picacho Middle School is a job she absolutely loves, but is also incredibly complex, she said.
Parr-Sanchez was planning to retire in five years, but if proposed changes to benefit plans by the New Mexico Educational Retirement Board are made permanent, she will have to work an additional five years.
"It's unthinkable that I would get to my 20th year and have the carpet pulled out from underneath me," Parr-Sanchez said. "It was a contract we entered into and then 20 years into your profession, you don't want that contract to change."
The proposed changes would require that public education employees, from university professors to janitors, contribute an extra 0.5 percent of their total salary per paycheck toward the retirement fund and would delay retirement eligibility by as much as 10 years for some. Some 63,000 public education employees in New Mexico would be affected.
The proposal, approved Nov. 8 by the ERB, seeks to address losses suffered by the retirement fund in recent years and to ensure its long-term sustainability, said ERB Executive Director Jan Goodwin. The goal of the preliminary recommendations is to achieve 80 percent funding for the ERB plan and gradually pay off unfunded liability within 30 years, projected to be $9 billion in 2039, Goodwin said.
And as it stands, the proposal
Eduardo Holguin, government relations coordinator for the National Education Association-New Mexico, said the organization has received a large and emotional response from educators in opposition to the proposed changes.
"This is the one that seems to have awakened everyone," Holguin said, noting that educators were "already in the doldrums" with three years of cuts and after an uptick in member contributions to the fund in 2005.
"We think changing the parameters of the retirement benefits for vested employees is not only unfair, it's unconstitutional," he said.
"Need for change"
Goodwin said large increases in salaries in 2003, low contribution rates and trouble in the investment world have contributed to "the need for change."
"We've seen modest growth in the number of members over the past several years, but we've seen a high increase in the total salaries being reported and a dramatic increase in the number of retirements," Goodwin said.
Over the past 10 years, the ERB saw around a 5-percent increase in membership, while public education payroll has increased by 60 percent. The number of retirees has increased by 59 percent over that same time period, Goodwin said.
At the end of the 2010 fiscal year, the fund had $8.2 billion in assets and $4.9 billion in unfunded liability, up from $6.9 billion in assets and $4.5 billion in unfunded liability in 2009.
Goodwin said the increase was due to the ERB's investment performance. For the 2010 fiscal year, the ERB was the No. 2-performing public fund in the United States, she said.
"Although the investment performance for fiscal 2010 was very good, the two prior years were very difficult for all pension plans. It is not realistic to expect that fiscal year 2010's 18.2-percent investment performance will occur every year," Goodwin said.
Patrick Sanchez, president of the National Education Association-Las Cruces and an eighth-grade teacher at Lynn Middle School, would be eligible for retirement in four years, but under the proposed plan he would be required to work for nine, he said.
"I've taught for 21 years, so they're shutting the door right in front of me," he said, noting that in order to retain highly qualified teachers the state needs to offer an attractive compensation and benefit plans.
"Their proposal may have been a smokescreen so that ... once they take away the draconian proposal we'll be fine with the increase contribution," Sanchez said.
Legislative action
In 2005, the Legislature's House Education Committee was told that the ERB projected a $2.4 billion shortfall; its asset-to-liability ratio was about 75 percent and that, if uncorrected, the fund faced severe problems. As a result, the Legislature increase the state's contribution 0.75 percent a year for seven years and increases the members' contribution by .075 percent a year for four years.
Goodwin said that not all of the employer contributions mandated then have occurred. And for the past two fiscal years, the scheduled employer contributions have been delayed.
"By waiting longer to receive the increased contributions, the unfunded liability continues to grow," she said.
The ERB is continuing to fine-tune the proposal and has asked for public input. Monday was the last day to submit recommendations regarding the proposal, and the ERB received around 80 submissions, said Goodwin. An actuary will review the suggestions and the ERB will vote on a final set of recommendations on Dec. 10.
The Legislature would then have to approve the changes when it meets, starting in January.
Holguin said NEA-NM has submitted a proposal that outlined incentives that would keep educators in the classroom, delaying them from tapping into retirement and health-care funds and allowing the ERB to gain better financial footing as opposed to "punitive measures that change the course in the middle of the ball game."
Approximately 1,800 members retired at the ended of the 2010 fiscal year. The ERB's total payout per month for fiscal 2010 was $54.9 million, according to figures provided by the organization.
Christine Rogel can be reached at (575) 541-5424.
The new deal?
Under the state's Educational Retirement Board's preliminary recommendation, public education employees:
•earning less than $20,000 annually would pay 8.4 percent (up from 7.9 percent) of their salaries.
•earning over $20,000 annually would pay 9.9 percent (up from 9.4 percent) of their salaries.
•with 30 years of service could retire at age 60, or with 35 years of service could retire before then. (Current eligibility allows retirement after 25 years or any combination of age and tenure that adds up to 75.)
•would be eligible for retirement benefits at 2.35 percent of their salary, based on the average of the seven consecutive highest years of pay, rather than five.
•can retire with limited benefits at 67 if they have at least five years of service.
•with 22 years of service as of effective date of plan change are exempt from changes.
