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HOUSE BILL 454
57TH LEGISLATURE - STATE OF NEW MEXICO - FIRST SESSION, 2025
INTRODUCED BY
Brian G. Baca
AN ACT
RELATING TO EDUCATIONAL RETIREMENT; PROVIDING A TEMPORARY,
ADDITIONAL, NON-COMPOUNDING PAYMENT TO RETIRED MEMBERS UNDER
THE EDUCATIONAL RETIREMENT ACT; MAKING AN APPROPRIATION.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. Section 22-11-31 NMSA 1978 (being Laws 1979,
Chapter 333, Section 2, as amended) is amended to read:
"22-11-31. COST-OF-LIVING ADJUSTMENT--ELIGIBILITY--
BASED ON FUNDED RATIO--ADDITIONAL CONTRIBUTIONS.--
A. For the purposes of this section:
(1) "adjustment factor" means a multiplicative
factor computed to provide an annuity adjustment pursuant to
the provisions of Subsection B of this section;
(2) "annuity" means any benefit payable under
the Educational Retirement Act or the Public Employees
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Retirement Reciprocity Act as a retirement benefit, disability
benefit or survivor benefit;
(3) "calendar year" means the full twelve
months beginning January 1 and ending December 31;
(4) "consumer price index" means the average
of the monthly consumer price indexes for a calendar year for
the entire United States for all items as published by the
United States department of labor;
(5) "funded ratio" means the ratio of the
actuarial value of the assets of the fund to the actuarial
accrued liability of the educational retirement system;
(6) "median adjusted annuity" means the median
value of all annuities and retirement benefits paid pursuant to
Section 22-11-29 or 22-11-30 NMSA 1978, as calculated each
fiscal year; provided, however, that the benefits paid to a
member pursuant to Section 22-11-38 NMSA 1978 shall not be
included in the median adjusted annuity calculation;
(7) "next preceding calendar year" means the
full calendar year immediately prior to the preceding calendar
year; and
(8) "preceding calendar year" means the full
calendar year preceding the July 1 on which a benefit is to be
adjusted.
B. On or after July 1, 1984:
(1) the annuity of a member who retires
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pursuant to Subsection A of Section 22-11-23 NMSA 1978 or
Subsection A of Section 22-11-23.1 NMSA 1978 shall be adjusted
annually and cumulatively commencing on July 1 of the year in
which a member attains the age of sixty-five years or on July 1
following the year a member retires, whichever is later; and
(2) the annuity of a member who retires
pursuant to Subsection A of Section 22-11-23.2 NMSA 1978 shall
be adjusted annually and cumulatively commencing on July 1 of
the year in which the member attains the age of sixty-seven
years or on July 1 following the year the member retires,
whichever is later.
C. During fiscal years 2026 and 2027, a retired
member receiving an annuity pursuant to the Educational
Retirement Act shall receive an annual, non-compounding,
additional payment. The amount of the payment shall be
determined each fiscal year by multiplying the amount of annual
annuity payments, inclusive of all cost-of-living adjustments
prior to that fiscal year, by two percent.
[C.] D. Beginning on July 1, 2013 and on each July
1 thereafter:
(1) if the funded ratio of the fund as
reported by the board's actuary in the actuarial valuation
report for the next preceding fiscal year is one hundred
percent or greater, the annuity adjustments provided for under
Subsection B of this section shall be adjusted by applying an
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adjustment factor based on the percentage increase of the
consumer price index between the next preceding calendar year
and the preceding calendar year. The adjustment factor shall
be applied as follows:
(a) if the percentage increase of the
consumer price index is less than two percent in absolute
value, the adjustment factor shall be the same amount as the
percentage increase of the consumer price index; and
(b) if the percentage increase of the
consumer price index is two percent or greater in absolute
value, the adjustment factor shall be one-half of the
percentage increase; except that the adjustment shall not
exceed four percent in absolute value nor be less than two
percent in absolute value;
(2) if the funded ratio of the fund as
reported by the board's actuary in the actuarial report for the
next preceding fiscal year is greater than ninety percent but
less than one hundred percent, except for a member who is on
disability status in accordance with Section 22-11-35 NMSA 1978
and whose benefit is adjusted as provided in Subsection [G ] H
of this section or a member who is retired pursuant to Section
22-11-38 NMSA 1978, the adjustment factor provided for in
Subsection B of this section shall be applied as follows:
(a) if the percentage increase in the
consumer price index is less than two percent in absolute
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value, for a member who has twenty-five or more years of
service credit at retirement and whose annuity is less than or
equal to the median adjusted annuity for the fiscal year next
preceding the adjustment date, the adjustment factor shall be
ninety-five percent of the adjustment factor determined
pursuant to Subparagraph (a) of Paragraph (1) of this
subsection;
(b) if the percentage increase in the
consumer price index is less than two percent in absolute
value, for a member who has less than twenty-five years of
service credit at retirement and whose annuity is less than or
equal to the median adjusted annuity for the fiscal year next
preceding the adjustment date, and for a member whose annuity
is greater than the median adjusted annuity for the fiscal year
next preceding the adjustment date, the adjustment factor shall
be ninety percent of the adjustment factor determined pursuant
to Subparagraph (a) of Paragraph (1) of this subsection;
(c) if the percentage increase in the
consumer price index is greater than or equal to two percent in
absolute value for a member who has twenty-five or more years
of service credit at retirement and whose annuity is less than
or equal to the median adjusted annuity for the fiscal year
next preceding the adjustment date, the adjustment factor shall
be ninety-five percent of the adjustment factor determined
under Subparagraph (b) of Paragraph (1) of this subsection; and
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(d) if the percentage increase in the
consumer price index is greater than or equal to two percent in
absolute value, for a member who has less than twenty-five
years of service credit at retirement and whose annuity is less
than or equal to the median adjusted annuity for the fiscal
year next preceding the adjustment date, and for a member whose
annuity is greater than the median adjusted annuity for the
fiscal year next preceding the adjustment date, the adjustment
factor shall be ninety percent of the adjustment factor
determined under Subparagraph (b) of Paragraph (1) of this
subsection;
(3) if the funded ratio of the fund as
reported by the board's actuary in the actuarial valuation
report for the next preceding fiscal year is ninety percent or
less, except for a member who is on disability status in
accordance with Section 22-11-35 NMSA 1978 and whose benefit is
adjusted as provided in Subsection [G ] H of this section or a
member who is retired pursuant to Section 22-11-38 NMSA 1978,
the adjustment factor provided for in Subsection B of this
section shall be applied as follows:
(a) if the percentage increase in the
consumer price index is less than two percent in absolute
value, for a member who has twenty-five or more years of
service credit at retirement and whose annuity is less than or
equal to the median adjusted annuity for the fiscal year next
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preceding the adjustment date, the adjustment factor shall be
ninety percent of the adjustment factor determined pursuant to
Subparagraph (a) of Paragraph (1) of this subsection;
(b) if the percentage increase in the
consumer price index is less than two percent in absolute
value, for a member who has less than twenty-five years of
service credit at retirement and whose annuity is less than or
equal to the median adjusted annuity for the fiscal year next
preceding the adjustment date, and for a member whose annuity
is greater than the median adjusted annuity for the fiscal year
next preceding the adjustment date, the adjustment factor shall
be eighty percent of the adjustment factor determined pursuant
to Subparagraph (a) of Paragraph (1) of this subsection;
(c) if the percentage increase in the
consumer price index is greater than or equal to two percent in
absolute value for a member who has twenty-five or more years
of service credit at retirement and whose annuity is less than
or equal to the median adjusted annuity for the fiscal year
next preceding the adjustment date, the adjustment factor shall
be ninety percent of the adjustment factor determined under
Subparagraph (b) of Paragraph (1) of this subsection; and
(d) if the percentage increase in the
consumer price index is greater than or equal to two percent in
absolute value, for a member who has less than twenty-five
years of service credit at retirement and whose annuity is less
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than or equal to the median adjusted annuity for the fiscal
year next preceding the adjustment date, and for a member whose
annuity is greater than the median adjusted annuity for the
fiscal year next preceding the adjustment date, the adjustment
factor shall be eighty percent of the adjustment factor
determined under Subparagraph (b) of Paragraph (1) of this
subsection; and
(4) an annuity shall not be decreased if there
is a decrease in the consumer price index between the next
preceding calendar year and the preceding calendar year.
[D.] E. A retired member whose benefit is subject
to adjustment under the provisions of the Educational
Retirement Act in effect prior to July 1, 1984 shall have the
member's annuity readjusted annually and cumulatively under the
provisions of that act in effect prior to July 1, 1984 until
July 1 of the year in which the member attains the age of
sixty-five years, when the member shall have the annuity
readjusted annually and cumulatively under the provisions of
this section.
[E.] F. A member who:
(1) retires pursuant to Subsection A of
Section 22-11-23 NMSA 1978 or Subsection A of Section
22-11-23.1 NMSA 1978 after attaining the age of sixty-five
years shall have the member's annuity adjusted as provided in
Subsections B and [C] D of this section commencing on July 1 of
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the year following the member's retirement; or
(2) retires pursuant to Subsection A of
Section 22-11-23.2 NMSA 1978 after attaining the age of
sixty-seven years shall have the member's annuity adjusted as
provided in Subsections B and [C ] D of this section commencing
on July 1 of the year following the member's retirement.
[F.] G. A retired member who returns to work and
suspends retirement shall be subject to the provisions of this
section as they exist at the time of the member's latest
retirement.
[G.] H. Benefits of a member who is on a disability
status in accordance with Section 22-11-35 NMSA 1978 or a
member who is certified by the board as disabled at regular
retirement shall be adjusted in accordance with Subsections B
and [C] D of this section, except that the benefits shall be
adjusted annually and cumulatively commencing on July 1 of the
third full year following the year in which the member was
approved by the board for disability or retirement."
SECTION 2. APPROPRIATION.--Sixty million dollars
($60,000,000) is appropriated from the general fund to the
educational retirement board for expenditure in fiscal year
2026 and subsequent fiscal years to provide adequate funding to
cover the cost of the temporary, additional, non-compounding
payments. Any unexpended or unencumbered balance remaining at
the end of a fiscal year shall not revert to the general fund.
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