Politicians and union leaders alike are taking aim at the controversial practice of “double-dipping” — public employees returning to work after retirement to collect a salary and pension.
The issue comes as lawmakers consider ways to keep some of New Mexico’s biggest retirement funds from hemorrhaging money.
The Public Employees Retirement Association and the Educational Retirement Board have lost billions of dollars in the market over the last several months, raising concerns about their solvency.
Policymakers have discussed ideas such as increasing participation costs for new employees or requiring them to work longer before they can draw the maximum pension. But an idea with perhaps more agreement deals with retired employees who return to the workplace.
State Rep. Lucky Varela, D-Santa Fe, is working on a bill to be introduced this week that would “significantly” revamp the current program, one of his aides said Monday.
“The idea that any PERA retiree can come back to work and earn both a pension and salary — unlimited — that’s his concern,” the aide said.
Some 2,100 PERA retirees, or 8 percent of the government retirement program’s nearly 27,000 retirees overall, had returned to public employment as of October, according to PERA.
The rate keeps increasing, and those retirees are not required to contribute to the PERA fund, said Carter Bundy, political director for the Association of Federal State County and Municipal Employees in New Mexico. “This group is growing at an alarming rate for the fund,” he said. “The sooner we rein in return to work, the better the fund will be.”
Right now, retirees who worked at least 25 years for government receive about 75 percent of their top salary. While the average pension under PERA is about $19,000 a year, Bundy said, “It’s not people who were making $30,000 a year who are double-dipping; it’s people making who are making $70,000, $80,000, $100,000 a year.
“That’s where the big money is, and that’s where they are politically connected to sort of get the permission to get rehired after they resign.”
The bill also creates resentment among current employees who earn less money and seek promotions, according to Varela. “The employees are complaining because there’s no upward mobility to promote themselves,” he said.
The proposal has met resistance from the state Municipal League and Association of Counties, which complain that small communities have a hard time filling positions in such technical fields as water engineering and wastewater treatment.
“We have a lot of professions that we don’t have a workforce for,” said Bill Fulginiti, Municipal League director. He represents 103 cities, towns and villages, and said 65 have populations of less than 5,000. “You’re not going to attract folks from an urban area to a very small town to fill those jobs,” he added.
Fulginiti also disagreed with Bundy’s argument that larger cities have plenty of talent to fill positions. He said the “return to work” provision for pensioners, which he helped get passed five or six years ago, has helped keep cities like Santa Fe, Albuquerque and Las Cruces keep up their ranks of police officers.
There also has been disagreement over other measures to bolster the PERA and ERB funds. Varela and Bundy say the solvency issues will need more time. “If we don’t do it this year, (let’s) at least put it in motion where we can come up with some legislation in the interim,” Varela said.
But Sen. John Arthur Smith, D-Deming, chairman of the Senate Finance Committee, said lawmakers should act now to help PERA and ERB, whose members he said have been resistant to making hard decisions.
“I’m sort of sick and tired of studying on that,” he said. “That really extends false hope that we’re going to come up with a silver bullet. There are two silver bullets — put more money in and reduce benefits.”
Staff writer Kate Nash contributed to this report.