New Mexico Supreme Court hears arguments on cost-of-living raises, but does not rule immediately
The New Mexico Supreme Court declined Wednesday to make an immediate ruling on whether retired school employees have a constitutional right to cost-of-living increases in their pensions.
The five justices took the case under advisement and will issue a decision later.
For now, it means the Legislature's decision to reduce cost-of-living adjustments remains on the books.
Four retirees sued the New Mexico Educational Retirement Board, contending that cost-of-living adjustments are “vested property rights” that cannot be reduced by legislation.
Rep. Dennis Roch, himself a school administrator, said he believed lawmakers were on solid footing last winter when they overwhelmingly voted to reduce
cost-of-living adjustments to school retirees’ pensions.
The bill cleared the Senate 41-0 and the House of Representatives 54-13. Gov. Susana Martinez then signed the change into law.
But four people who retired from jobs at universities or public schools challenged the law, saying it was unconstitutional. Roch, R-Texico, said he was confident the law would hold up under scrutiny from the Supreme Court.
I had to predict, I would say the law will be ruled constitutional. We didn’t change the base in pension
payments, only the cost-of-living adjustments. And we did that as one of
the steps to keep the system solvent,” Roch said.
But the four retirees who are suing say that cost-of-living
increases amount to a property right that is constitutionally protected
four, who range in age from 71 to 94, also say cutting cost-of-living
increases will create hardships for retirees, who are bound to have more
medical bills as they age.
Educational Retirement Board intends to apply COLA reductions to
retirees who have acquired vested property rights,” the four said in
their lawsuit challenging the new law.
say a cost-of-living statute that was in effect when they retired
established ground rules for higher pensions as prices rose.
of the retirees suing the board is Beth Lehman, 71, who retired from
the University of New Mexico with less than 25 years of service.
lawyers wrote in a brief to the Supreme Court that her pension from the
Educational Retirement Board is about $15,000 a year. They project that
the new law will cut her cost-of-living increases by 20 percent, a
critical change to someone in her circumstance of fragile health.
to her lawsuit, Lehman was hospitalized with West Nile virus
meningoencephalitis in 2004 and took catastrophic leave from her job the
“She expects to draw down her assets to survive financially,” her lawyers said in their brief.
Another of those suing is David Hamilton, 94. He retired from UNM in 1988 after 38 years at the school.
Legally blind, Hamilton said the gross income from his retirement board pension was about $50,000 a year in 2011.
Legislators and the governor decided to change parts of public pension programs to save them from collapsing, Roch said. Lawyers for the four people suing said the cost-of-living raises would have a neglible effect on the on the fund's long-term health.
lawmakers acted this year, the Educational Retirement Board projected
that it was facing a deficit of almost $6 billion in the long term.
system for government workers, the Public Employee Retirement
Association, anticipated an even bigger gap between assets and expenses
unless costs were cut.
constitutional provision allows some modification to the system. What
we did was for the long-term health of the fund,” Roch said.
He disagreed with the premise of the school retirees’ lawsuit.
don’t view cost-of-living adjustments as a right. When we have received
something, come to expect something, and then it’s cut back, of course
people are disappointed,” he said.
About 61,000 employees and 37,000 retires are included in the
educational pension program. It covers everyone from teachers to school
janitors to college professors.
The retirement board is being represented in the lawsuit by its own legal team and the state attorney general’s staff.