Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

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F I S C A L I M P A C T R E P O R T

SPONSOR Garcia, M. P.

ORIGINAL DATE

LAST UPDATED

3-13-07

3-14-07 HM 101

SHORT TITLE PERA Info To Interim Committees

SB

ANALYST Aubel

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to HB 313/aHHGAC/aHJC/aSFC and SB 310/aSEC/a/SFC

Note: This FIR has been revised per response from PERA to incorporate salient comments and

re-designate this memorial as having no fiscal impact.

SOURCES OF INFORMATION

LFC Files

Response Received From

Public Employees Retirement Association (PERA)

SUMMARY

Synopsis of Bill

House Memorial 101 requests the Public Employees Retirement Association provide detailed

information regarding return-to-work employees to an interim legislative committee prior to

November 30, 2007.

FISCAL IMPLICATIONS

PERA maintains there is no significant fiscal impact related to compiling and disseminating the

requested information.

SIGNIFICANT ISSUES

PERA retirees were granted the ability to return to work while receiving their pensions by

legislature in 2003. PERA related that since removing the earning limitation for retirees who

House Memorial 101 – Page

2

return to work with affiliated-public employers, PERA has experienced historically heavier end-

of-year retirements. Currently, PERA has approximately 23 thousand retirees; the number of

retirees who have returned to work represents approximately 10 percent to 12 percent of

annuitant payroll.

House Memorial 101 directs the Public Employees Retirement Association to assemble

information on the number of retirees who have returned to employment after retiring from

PERA; the number of years of subsequent employment of these retirees; the number of these

retirees subsequently employed by each department, agency and political subdivision; and the

amount of salary and retirement pension these retirees have received. The memorial requires

that the information be aggregated in such a way as to protect the privacy of the individual

retirees.

At the onset of the retiree-return-to-work legislation, questions arose regarding how to measure

the fiscal impact on state and local governments. PERA’s actuary stated that PERA would need

to compile at least two years of data before any assessment of the fiscal impact could be

calculated. At the same time, PERA also was implementing a new computer pension

administration system. The legacy computer system that was replaced did not have the capacity

to track retirees returning to work. An additional complication occurred at the onset of the return-

to-work program when PERA affiliates incorrectly reported retirees returning to work as exempt.

PERA states these issues have now been addressed and PERA is able to provide the information

requested in HM 101.

PERA affirms it has welcomed the opportunity to work with the Investments and Pensions

Oversight Committee (IPOC) and is committed to providing whatever information is requested

in the format designated by IPOC members or members of any other appropriate interim

legislative committee requesting information or statistics on PERA retirees who have returned to

work for PERA affiliates.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Relates to HB 313 and SB 310, as amended, both which aim at restricting the RTW provisions

for PERA retirees after July 1, 2007.

OTHER SUBSTANTIVE ISSUES

A primary concern for RTW programs is the potential fiscal impact on fund solvency and

whether the RTW programs encourage people to retire sooner than they would have otherwise.

Any such program means that the pension is being paid out longer than actuarially anticipated.

Sufficient numbers of retirees retiring earlier than anticipated could seriously impact fund

solvency.

There has also been concern expressed that RTW programs have negatively impacted current

employee morale and upward mobility, particularly for the state employee system. There can

also be a public perception problem of a system which allows a member to receive both a salary

and a pension.

Prior testimony does suggest that these retirees provide a valuable resource for state agencies and

political subdivisions for “hard-to-hire"’ positions.

House Memorial 101 – Page

3

TECHNICAL ISSUES

According to PERA, the technical issues that originally delayed providing accurate information

on PERA retirees who have returned to work for a PERA affiliate have been resolved. PERA is

now able to generate the information requested in HM 101.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

PERA will continue to track the number of retirees who have returned to employment, the

number of years of subsequent employment by these retirees and the number of these retirees

subsequently employed by each department, agency or political subdivision of the state.

The information will not be provided to the interested committees by November 30, 2007.

Upon request to PERA, legislators have the information needed to properly evaluate the retiree

return-to-work program to enable them to make judicious decisions.

POSSIBLE QUESTIONS

1.

How could the “employee morale" and “upward mobility" issues be validated.

2.

How would replacing the 90-day “wait-out" period with a 12-month period impact the

PERA RTW program.

3.

How will any enactment of legislation revising PERA’s RTW affect this memorial.

MA/csd