NewsmakersFebruary 21, 2019

New Mexico PERA Gets a Task Force

Governor-appointed group to find ways to patch up $6 billion-plus funding deficit.

Reported by Chris Butera

New Mexico’s governor will help put together state pension fixes as she orders a new task force. Gov. Michelle Lujan Grisham’s 19-member PERA Solvency Task Force will examine ways to close the gap on the Public Employee Retirement Association’s $6 billion (and growing) unfunded liability.

The $15.5 billion pension system was fully funded until benefit increases in the late 1990s combined with the 2008 recession and its aftermath created problems. Reforms made in 2013 have helped push the funding ratio to 71.6%. But the governor fears both an economic downturn and further bond rating downgrades, like Moody’s gave the state last June, could really send things south for the PERA and its 90,000 members.

The committee, implemented by Grisham on Monday, must present its recommendations for preserving the fund to her by Aug. 30. The suggestions will then be presented during the 2020 legislative session.

“I expect diligent, expedient work from this group of stakeholders,” the Democratic governor said. “My expectation is we will assume this shared burden in an equitable fashion to reach our solvency goals, and this group will, I am certain, assure a steady future for PERA.”

The group will consist of PERA officials (including Dominic Garcia, the fund’s chief investment officer), labor union heads, retiree representatives, and a bipartisan and equal number of legislative representatives.

“This is a great thing,” Garcia told CIO. “I appreciate being part of the task force and I think it will come up with a good solution.”

This comes off the death of a state bill that looked to raise select employee and employer contributions from fiscal 2020-2022 while also changing cost-of-living adjustment (COLA) rules in order to help shore up the fund.

“With a new administration committed to truly listening to all sides, and also with the recognition that there were competing and conflicting interests even within the groups of retirees, the governor wanted to ensure that a collaborative and deliberative process could take place, ensuring a substantive result, in time for action in the 30-day legislative session,” a Grisham spokesperson told CIO.