Public Employee Pension Problems in NM

New Mexico is a state beset by problems.  Some of them are pretty obvious like crime, poverty and an education system that is just not performing well.  But lurking just beneath the surface is the crucial matter of funding our public employee pension plans.

The combined assets of the Public Employee Retirement Association (PERA) and the Educational Retirement Board (ERB) are about $27.6 billion and the combined liabilities are $40.1 billion leaving the plans with a $12.5 billion deficit.   When you consider that the state will be obligated to pay the health care costs of 40 per cent of the state's population through Medicaid, that a district judge has determined that the state needs to pay more for education, and all the other government programs, the state has financial obligations that are just not sustainable.

The state is anticipating a $1.2 billion windfall from oil and gas revenues this year but that is only a 10 per cent dent in the total deficit.  State legislators are going to have to make some tough decisions like suspending cost of living increases, increased employee contributions and, maybe, converting from a defined benefit plan to a defined contribution plan.