>>GENE GRANT: NMIF
CORRESPONDENT GWYNETH DOLAND ALSO SPENT SOME TIME IN SANTA
FE, CHECKING IN ON THE PROGRESS ON PLANS TO REFORM
THE STATE’S FAILING PUBLIC EMPLOYEE PENSION PROGRAM. ALL PART OF OUR, YOUR NEW
MEXICO GOVERNMENT PROJECT, A COLLABORATION WITH KUNM RADIO
AND SANTA FE REPORTER.>>Gwyneth: REP. ANDERSON, THE
PUBLIC EMPLOYEE PENSION FUND IS IN A HOLE ABOUT AS DEEP AS
THIS YEAR’S STATE BUDGET, SEVEN BILLION DOLLARS. HOW DO WE GET OUT OF THAT
HOLE?>>Rep. Anderson: I THINK IT
IS GOING TO TAKE LEADERSHIP FROM BOTH THE LEGISLATURE AND
THE EXECUTIVE. OUR GOVERNOR HAD A TASKFORCE
THAT SERVED THROUGH THE SUMMER, DID GREAT WORK. I SERVED ON THE INVESTMENT
PENSIONS OVERSIGHT COMMITTEE ALONG WITH SEVERAL MEMBERS OF
THE SENATE AND THE HOUSE. OUT OF ALL THAT HAS EMERGED A
BILL WHICH I BELIEVE IS GOING TO SET NEW MEXICO ON A COURSE
TO SOLVENCY IN PUBLIC PENSIONS.>>Gwyneth: WHERE EXACTLY IS
ALL THAT MONEY GOING TO COME FROM?>>Rep. Anderson: THAT MONEY
COMES FROM DIFFERENT SOURCE. ONE IF THE GENERAL FUND
SURPLUS THAT WE ARE ALL AWARE OF IN THIS COMING FISCAL YEAR. THE SECOND WILL BE EMPLOYER
CONTRIBUTION. THIRD WILL BE EMPLOYEE
CONTRIBUTION. ALL OF THAT IS GOING TO ADD UP
TO BRINGING OUR SOLVENCY DEFICIT TO BREAK EVEN, TO 100%
FUNDING, THAT BEING BREAK EVEN, AND THIS IS OUR
OBJECTIVE AND WE SHOULD GET THERE IN ABOUT 25 YEARS.>>Gwyneth: RIGHT NOW THE
RETIREMENT BOARD, PERA, GRANTS A COST OF LIVING ADJUSTMENT
BUT THAT IS GOING TO CHANGE, HOW?>>Rep. Anderson: IT IS GOING
TO CHANGE STARTING ON A THREE YEAR MORATORIUM WHEN THE COLAS
WILL NOT BE FUNDED. HOWEVER, HOUSE BILL 2 HAS
70 MILLION WHICH REPLACES THAT FUNDING AND THE PENSIONERS
WILL RECEIVE A 13TH CHECK FOR THE NEXT THREE YEARS FOR THEIR
LOST COLA.>>Gwyneth: THAT COST OF
LIVING INCREASE WILL BE CHANGED. THE WAY WE CALCULATE IT IS
GOING TO CHANGE.>>Rep. Anderson: GOING
FORWARD, IT IS GOING TO BE A RECALCULATION. IN GOOD YEARS IT WILL BE GOOD
YEARS ON COLA AND BAD YEARS WILL BE LESS GOOD YEARS,
OR LOW COLA YEARS AND PROTECTED IN THERE ARE OUR
STATE EMPLOYEES WHO ARE ON PENSIONS AT THE LOWER END OF
THE PENSION RANKS AND THOSE COLAS WILL BE ESPECIALLY
PROTECTED.>>Sec. McCamley: LET’S TALK
ABOUT WHAT THE ISSUE IS. PEOPLE ARE LIVING LONGER AND
BECAUSE OF THAT, THEY ARE TAKING MORE MONEY OUT OF THE
SYSTEM THAN THEY SOMETIMES PUT IN BY WORKING THE SPAN OF TIME
THEY DID. BACK WHEN THE PENSION SYSTEMS
WERE PUT INTO PLACE IN THE 30’S, 40’S, PEOPLE LIVED A
CERTAIN AMOUNT OF TIME AFTER THEY WORKED AND THEN PASSED
AWAY. WELL, NOW, PEOPLE ARE LIVING
LONGER AND YET WORKING THE SAME AMOUNT OF TIME. SO, WHEN YOU LOOK AT WHAT
MONEY IS GOING IN VERSUS WHAT MONDAY IS GOING OUT, THERE IS
A LOT MORE ON THE BACK END THAN THERE USED TO BE. THAT IS WHY IT IS IMPORTANT
THAT PLACES AROUND THE COUNTRY, NOT JUST NEW MEXICO,
LOOK AT WAYS OF CHANGING THE SYSTEMS TO SECURE A PENSION
AND THAT IS WHAT WE ARE TRYING TO DO HERE.>>Gwyneth: THAT IS NOT THE
ONLY RISK, RIGHT?>>Sec. McCamley: IT IS NOT. WHEN THE STATE BORROWS MONEY
TO DO THINGS LIKE CONSTRUCT NEW ROADS OR NEW LIBRARIES OR
NEW SCHOOLS, WE BORROW JUST LIKE YOU BORROW MONEY TO GET A
HOUSE. WE PAY AN INTEREST RATE ON
THAT. IT IS CALLED A CREDIT RATING. IT IS CALLED A BOND RATING. LIKE YOUR AND MY CREDIT
RATING, THE HIGHER YOUR BOND RATING IS, THE LESS MONEY YOU
HAVE TO PAY OUT TO GET THAT MONEY. IF YOUR BOND RATING SHRINKS
JUST LIKE IF YOU’RE CREDIT RATING SHRINKS, IT COST YOU
MORE TO BORROW MONEY. THAT BOND RATING IS DETERMINED
BASED ON RISK. IF WE DON’T DO WHAT WE CAN TO
MAKE THIS PENSION SYSTEM MORE SOLVENT, MORE LESS RISKY OVER
TIME, THAT MEANS THERE IS A CHANCE THAT OUR BOND RATING
COULD GO DOWN, WHICH COSTS YOU AND ME AND OTHER TAXPAYERS
MORE DOLLARS WHEN WE WANT TO MAKE A NEW SCHOOL, A NEW ROAD. THAT IS REALLY IMPORTANT TO
MAKE SURE THAT WE HAVE THE INFRASTRUCTURE NEEDED GOING
FORWARD. TO A DIFFERENT THING, THE
AGENCIES THAT ARE MAKING THESE DETERMINATIONS HAVE IN THE
PAST DECREASED BOND RATING FOR OTHER STATES THAT DIDN’T DO
THE RIGHT THING AND MAKE THESE THINGS SOLVENT OVER TIME.>>Gwyneth: I WANT TO ASK YOU
ABOUT THE PUBLIC EMPLOYEES WHO ARE WORKING HERE NOW. THEY ARE GOING TO BE ASKED TO
PAY A LITTLE BIT MORE.>>Sec. McCamley: ME TOO.>>Gwyneth: DO THEY SUPPORT
THIS?>>Sec. McCamley: YES. ALL THE UNIONS THAT WE CAN
COUNT SUPPORT IT, INCLUDING AFSCME, AMERICAN FEDERATION OF
MUNICIPAL EMPLOYEES, COMMUNICATION WORKERS OF
AMERICA, WHICH REPRESENT A BUNCH OF PEOPLE WORKING IN THE
PUBLIC SECTOR, THE INTERNATIONAL ASSOCIATION OF
FIREFIGHTERS AS WELL AS THE ALBUQUERQUE POLICE OFFICERS
ASSOCIATION. SO, ALL OF THE UNIONS THAT WE
KNOW ABOUT ARE ACTUALLY SUPPORTING THIS BECAUSE THEY
WANT TO MAKE SURE THAT THEIR MEMBERS, WHICH ARE CURRENT
EMPLOYEES, HAVE A SYSTEM THAT IS PROTECTED AND DEFINED
MOVING INTO THE FUTURE. THAT IS REALLY IMPORTANT TO
THEM, REALLY IMPORTANT TO THE GOVERNOR, REALLY IMPORTANT TO
EVERYBODY.>>Gwyneth: I AM HERE WITH
REPRESENTATIVE CHRISTINE CHANDLER OF LOS ALAMOS,
TALKING ABOUT THE PROPOSAL FOR A NEW STATE RETIREMENT PLAN. REPRESENTATIVE, THE HOUSE HAS
APPROVED THIS PROPOSAL ALREADY. WHY DO YOU WANT TO CREATE A
NEW RETIREMENT PLAN FOR THE STATE?>>Rep. Chandler: AT THIS
POINT IN TIME, WE KNOW THAT OVER 60% OF EMPLOYEES THAT
WORK FOR PRIVATE EMPLOYERS OF THE STATE, HAVE NO PRIVATE
RETIREMENT PLANS. IN ADDITION, WE ALSO KNOW THAT
MORE THAN 80% OF PEOPLE WHO ARE TRYING TO SAVE FOR
RETIREMENT HAVE LESS THAN $10,000 SAVED. SO THIS BILL IS INTENDED TO
ALLOW EMPLOYERS TO VOLUNTARILY PARTICIPATE SO THAT THEIR
EMPLOYEES CAN BEGIN DEVELOPING THE HABIT OF RETIREMENT
SAVINGS. AND THAT IS VERY IMPORTANT FOR
THE STATE BECAUSE WE KNOW WE HAVE A HIGH POVERTY RATE AND
HIGH RATE OF INDIVIDUALS WHO ARE OLDER WHO ARE IN POVERTY
OR JUST ON THE EDGE OF POVERTY AND THIS IS INTENDED TO
PROVIDE THEM WITH A TOOL TO PLAN FOR RETIREMENT.>>Gwyneth: SO, WHO WOULD BE
ALLOWED TO PARTICIPATE IN THIS PROGRAM?>>Rep. Chandler: PRIVATE
EMPLOYERS IN THE STATE OF NEW MEXICO, SELF-EMPLOYED
INDIVIDUALS AND NOT-FOR-PROFITS. SO WE KNOW THERE ARE A LOT OF
NOT-FOR-PROFITS AS WELL, WHO DON’T HAVE THE WHEREWITHAL TO
OFFER RETIREMENT PLANS OR COMPLEX RETIREMENT SAVINGS
PLANS, SO, THIS WILL HELP ALL OF THE ABOVE AND, YOU KNOW,
ENSURE THAT PEOPLE WHO WORK FOR THOSE, OR WHO ARE
SELF-EMPLOYED, WILL HAVE ACCESS TO A RETIREMENT SAVINGS
PLAN.>>Gwyneth: CAN’T THEY SIGN UP
WITH MERRILL LYNCH OR SCHWAB?>>Rep. Chandler: THEY CAN AND
WE HOPE THAT THEY DO BUT THIS MAKES IT EASY FOR PEOPLE. WHEN YOU’RE EMPLOYED AND YOU
JUST ARE ALLOWED TO HAVE OR YOU CAN SET UP AUTOMATIC
PAYROLL DEDUCTION, WE KNOW THAT PEOPLE ARE 15 TIMES MORE
LIKELY TO PARTICIPATE IN A RETIREMENT SAVINGS PLAN IF IT
IS DONE THROUGH THE EMPLOYER, THROUGH AN AUTOMATIC
DEDUCTION.>>Gwyneth: IS IT GOING TO
COST THE STATE MONEY TO SET THIS UP?>>Rep. Chandler: WE DID HAVE
APPROPRIATION IN THE BILL BUT IN WORKING WITH THE STATE
TREASURER’S OFFICE, WHO HAS BEEN FANTASTIC, BY THE WAY. THEY HAVE BEEN VERY MUCH ON
BOARD WITH THIS. HE HAS SAID HE IS WILLING TO
WORK WITHIN HIS BUDGET AT THIS POINT IN TIME TO STAND THE
PROGRAM UP. AND WE MAY NEED AN
APPROPRIATION DOWN THE ROAD TO HELP SUPPORT THE PROGRAM BUT
AT THIS POINT THE TREASURER THINKS HE CAN HANDLE IT WITH
THE MONIES HE IS BEING APPROPRIATED RIGHT NOW.

Author Since: Mar 11, 2019

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