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SPONSOR: |
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DATE TYPED: |
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HB |
116/aHVEC |
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SHORT TITLE: |
PERA Hazardous Duty Members |
SB |
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ANALYST: |
Gilbert |
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APPROPRIATION
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Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
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FY03 |
FY04 |
FY03 |
FY04 |
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$4,492.8 |
Recurring |
General
Fund |
(Parenthesis
( ) Indicate Expenditure Decreases)
LFC Files
Responses
Received From
Public
Employees Retirement Association (PERA)
New
Mexico Corrections Department (NMCD)
SUMMARY
Synopsis
of HVEC Amendment
The House Voters and Elections Committee
amendment to House Bill 116 adds back the language originally struck from page
3, lines 16 and 17. However, for the language to maintain its original meaning,
the word “an” on line 17 should be struck:
(1) "hazardous
duty member" means a state policeman who is a member and who is a juvenile
or an adult correctional officer employed by a corrections facility of
the corrections department or its successor agency;
On page 6, line 25, language is added to clarify
that state hazardous duty member coverage plan 3 is applicable to members who
are adult correctional officers.
Synopsis
of Original Bill
House Bill 116 creates a new Public Employees
Retirement Association (PERA) state hazardous duty member coverage plan 3 for
adult correctional officers.
Significant
Issues
If enacted and approved by election of the
affected membership, HB 116 will allow adult correctional officers to retire at
any age with 20 or more years of service credit. They will receive a 3.5 percent pension
factor for every year of service credit, up to a maximum of 80% of their final
average salaries. Under this new plan,
correctional officers will continue to pay 4.78 % of their salary in
contributions. The employer contribution, however, will rise from 25.72% to
38.2 % of salary, or an increase of 12.48%.
Currently, under hazardous duty plan 2,
correctional officers are eligible to retire at any age with 25 or more years
of service credit. They receive a 3
percent pension factor for every year of service credit and are capped at 100%
of their final average salary. Correctional
officers currently pay 4.78% and their employer pays 25.72% of their salaries
in contributions.
The Corrections
Department FY04 personal services budget request for adult correctional officers
is approximately $36.0 million. The increased employer contributions necessitated
by this new plan will require a recurring general fund appropriation of $4.5
million. There is no appropriation included
in this bill.
If this bill is
adopted, PERA must implement the new plan, amend its regulations and update
member informational publications. PERA
believes that it can absorb this impact.
By deleting “juvenile”
correctional officers from the definition of “hazardous duty member,” juvenile
correctional officers who are currently members of Hazardous Duty Plan 2 will
no longer be covered under that plan.
Rather, they will default to state general plan 3, which provides for a
3 percent pension factor and a cap at 80 % of final average salary. According to PERA, this is a reduction of
benefits to existing juvenile correctional officers and may violate NM Const.,
Art. XX, Section 22 (a member of a retirement plan shall acquire a vested
property right upon meeting the minimum service requirements of that plan).
In January 2000, PERA’s
actuaries determined that a 12.3% increase in contributions, in addition to
what was currently included in Hazardous Duty Plan 2, was required to adequately
fund the enhanced benefits. However,
this valuation was based on active member data for PERA’s
RLG/nw