Governor Susana Martinez announced today that she has signed Senate Bill 115, a sweeping reform measure designed to improve the solvency outlook of the state's educational retirement plan. The agreement is projected to help resolve a $6.2
billion shortfall over a 30-year period by reducing benefit payouts and increasing
employee contributions to the plan.
"This proposal represents systemic reform to the state's educator pension system,"
Governor Martinez said. "Our negotiations with the legislature resulted in several
concessions and improvements to bolster the system's long-term solvency and moved us toward our ultimate goal of saving more than $6 billion over the next three decades.
Ultimately, this bill is an important step forward and I will continue to work with
legislators from both parties to make any necessary adjustments to ensure the fund's
While there are legitimate concerns about the bill's underlying assumptions, the proposal enacts reforms to ensure pensions will be viable for years to come. Key reforms include:
* A reduction in cost-of-living adjustment (COLA) from an average of 2 percent to
an average of 1.8 percent or 1.6 percent, depending on where an individual falls
compared to the median benefit level, until the fund is 90 percent solvent. At 90
percent solvency, the adjustment moves to 1.9 percent or 1.8 percent, on average,
according to benefit level.
* Increasing member contribution from 9.4 percent to 10.7 percent.* A new minimum retirement age of 55 (or earlier with reduced benefits) and
increased COLA eligibility age of 67 for new plan members. Current COLA
eligibility age is 65.