Apparently, Governor MLG didn’t think that a pension expert was necessary to diagnose and treat the $15 billion-dollar PERA pension illness. Quackery continues to reign supreme at PERA.

Mr. Arencon immediately appointed his own “experts”. Stacking the PERA Task Force with firemen and police officers who also have ZERO knowledge of how a pension fund operates. Fire and police represent less than 10,000 PERA members, yet they had seven votes on this task force. Retired Public Employees, represent 40,000 PERA members but they received only one vote. AFSCME represents 25,000 PERA members they also received one vote. It’s obvious Diego Arecon stacked this task force with friends who would blindly follow him.

This stacked task force was exposed to Governor Michelle Lujan Grisham but she turned a blind eye. This is certainly not the way for her to start her tenure as governor.

I confronted Diego Arencon about stacking this task force. He denied it but offered no reason why public safety needed seven votes, while Retired Public Employees of New Mexico (RPENM) and American Federation (AFSCME) received only two votes.

Then Mr. Arecon decided to only hold two public meetings! All other task force meetings were closed to the public. No formal record was kept as to what was said by the Task Force members and witnesses. Governor Lujan Grisham and Attorney General Balderas were both contacted regarding this blatant disregard for public testimony, which is affecting 90,000 New Mexico families. Again, the silence from the Governor and the Attorney General was deafening. Is this the change we voted for in 2018? In complete disclosure, I voted for both Attorney General Balderas and Governor Michelle Lujan Grisham.

It comes as no surprise that Mr. Arencon’s rubber stamped task force presented a plan to fix PERA that would force all PERA members to share the pain. He calls it the “shared risk” plan. But the problems at PERA don’t require shared risk, nor shared pain. The problems at PERA are very specific, but Diego Arecon intentionally refused to address them.

In 2017 PERA Executive Director Wayne Propst, in his annual report to the PERA Board, presented three graphs. You can review the entire April 27, 2017 PERA presentation with all the graphs and pie charts is here:

http://www.nmpera.org/assets/uploads/home-banner/april-2017-board-meeting-public-packet.pdf

The graphs show that Senate Bill 27 worked for all of the funds within PERA, with the exception of two, Fire and State Workers. Arencon was a fireman and as a lobbyist he worked with legislators who represent State Workers. These PERA graphs show that by 2043 all PERA funds are 100% solvent, except Fire and State Workers. Those two funds, representing half of PERA membership, dive to below 40% solvency by 2043 and to 0% solvency by 2066!

I called PERA Executive Director Wayne Propst and asked why Fire and State Workers pension funds are heading into insolvency. Propst response was that Fire and State Workers funds provide benefits that their contributions can’t pay for. Propst stated that when a pension fund is in trouble it comes down to benefits being paid and not enough contributions being received. It’s that simple.

Fire and State Workers funds are the real problem afflicting the PERA fund. Their benefits are too rich for their contributions. This must be fixed or PERA will continue to falter. By refusing to address this obvious issue, Mr. Arencon has tethered all the solvent PERA funds to the corpses of Fire and State workers. By not fixing them they will ultimately drag all of PERA into the abyss of insolvency.

Prior to the task force first meeting I asked Diego Arencon if he was going to take testimony regarding the sickness that is destroying the State Workers and Fire funds. Mr. Arencon’s reply was shocking. “I will not pit funds against each other” he said thereby killing any chance for a real solution to PERA’s problems The PERA patient is on the operating table but Dr. Diego Arencon refused to cut the cancer out.

Arencon believes that everyone in PERA should suffer, to bail out the sick Fire and State Workers funds.

This is insanity!

This task force just continues the dysfunction that we have witnessed at the PERA Board and the PERA Executive staff who are still under investigation by the Attorney General and State Auditor. Instead of being honest about the problems and taking serious testimony from pension experts around the nation, we get more agenda driven shenanigans from people we trust, and the governor trusted to fix PERA.

I hope Governor Grisham and the legislature toss into the trash the recommendations of this blatantly slanted task force. They purposely dodged the one issue they knew would fix PERA, which is making adjustment to the Fire and State Workers plans.

If any recommendations from this task force are approved by Governor Grisham and the legislature, I will guarantee that in two years PERA will be back screaming about how the fund is still going insolvent. What will they do then?

Governor Lujan Grisham and the New Mexico Legislature, how about putting people in charge of fixing PERA who aren’t under investigation, who are pension experts and who don’t come with an agenda?

My recommendation is simple, the governor instructs the legislature [interim committees] to start taking public testimony from pension experts, with a focus on the illness in the Fire and State Workers Funds, but with an eye on rewriting the entire PERA statute. This will take months, possibly an entire year. In the 2021 legislative session the [ legislative interim committees] can present proposals to the legislature and governor.

• Provide for sustainable, “profit sharing” Cost of Living Adjustments for current and future PERA retirees based on investment returns and funded ratio.

• Guarantee a minimum COLA of 0.5% and a maximum COLA of 3% based on investment returns/funded ratio. Once PERA achieves full funding of 100% the maximum COLA increases to 5%.

• Begin to address disparity in funding levels among PERA Divisions by exempting State Police and Adult Correctional Officers from proposed contribution increases.

• Protect lower income employees and retirees by exempting employees making less than $25,000 from proposed contribution increases and providing a 2.5% COLA to retirees with pensions of less than $25,000 and 25 years of service to include disability retirees.

• Result in an immediate $700 million reduction in PERA’s unfunded liability.

• Replace prior PERA proposals to freeze COLAs for 3 years with a 2%, simple COLA, pausing only the compounding factor, to be paid annually for the next 3 fiscal years. Simple COLAs will be paid for by a one-time appropriation of $76 million. PERA will administer a 13th check to retirees annually for 3 consecutive years.

• Provide incentives for employees to continue working by removing the cap on earning service credit.