Compensation for “public service” outstrips private-sector pay and benefits in a myriad of ways. But there is little doubt that the disparity’s greatest component is retirement income.
And in 2021, the new boss of New Mexico’s Senate intends to see to it that government teachers’ golden years will be even sweeter.
Mimi Stewart, the Albuquerque Democrat recently picked as her chamber’s president pro tempore, spent nearly three decades as an employee of the Duke City’s school district. A “progressive” zealot not known for her manners — even the left-wing “journalism” website Searchlight New Mexico admitted that she “can be abrupt and hectoring in committee hearings and on the floor” — Stewart has prioritized “long-term stability” for the New Mexico Educational Retirement Board (ERB), which supplies “benefits to active and retired employees of … public schools, institutions of higher learning and certain employees at state agencies who work in educational programs.”
Why an elected official who receives a monthly check from the ERB is allowed to have anything to do with the laws that govern the board — well, let’s chalk that up to standard Land of Enchantment corruption, and leave the matter for another time. Stewart’s obvious conflict of interest aside, her concern for the fund’s solvency is not unwarranted. As the chart below, taken from a December 10 presentation to the Roundhouse’s Investments and Pensions Oversight Committee, shows, for the infinite time horizon, the ERB faces an unfunded liability of $9 billion:
Translation: There’s not enough money in the bank to keep all the pension promises made to ERB beneficiaries.
Stewart’s solution is rather simple: Make taxpayers fork over even more funding for the lifetime, guaranteed income supplied to former educrats. She wants to raise the “employer” portion of payroll contributions to the ERB from the current 14.15 percent to 18.15 percent. That would hike the already-prodigious burden placed on public coffers by 28.3 percent.
There is precedent — sort of. In 2020’s regular session, a bill containing several solvency measures was passed in a bipartisan attempt to improve the vigor of the anemic Public Employees Retirement Association, which “manages 31 … plans and two benefit tiers for state, municipal and county employees.” But predictably, Stewart’s bill draft for boosting the ERB’s fiscal health contains no higher contribution rates for employees. That’s quite a coup for teachers expecting a retirement on Easy Street.
Worst of all, even for government “work,” both the ERB and PERA plans are wildly generous. In 2018, the Legislative Finance Committee revealed that the “combination of social security [sic] eligibility, a high pension multiplier, a compounding COLA, and generous employer contributions results in New Mexico providing among the richest retirement benefits in the nation.”
Meanwhile, life in the private sector is quite different. As the Heritage Foundation’s Jason Richwine explained:
In contrast with the public sector, the predominant retirement benefit now provided by private-sector employers is a defined-contribution (DC) plan, such as a 401(k) or 403(b) account. A DC plan is an account owned and managed by an individual worker. Many employers who offer DC plans make regular contributions to DC accounts as part of their employee benefits program. No contribution is required, however, and no specific benefit is guaranteed.
According to the latest National Compensation Survey, 86 percent of state- and local-government employees have access to defined-benefit systems, and understandably, 76 participate. The respective shares for private-sector workers? Fifteen percent and 11 percent.
In 2013, liberal columnist Milan Simonich lamented that the legislature was “top-heavy with those who are or were on the public payroll,” and that “having so many public payrollers in office is bad for New Mexico.”
Seven years later, nothing has changed. And the Senate’s new leader is eager to keep her former colleagues’ gravy train chugging along.