The Trillion Dollar Gap: New Mexico

New Mexico needs to improve how it manages its long-term liabilities for both pensions and retiree health care and other benefits. New Mexico has set aside 83 percent of the assets needed to pay for its total pension bill—above the 80 percent benchmark that the U.S. Government Accountability Office says is preferred by experts. But the state has failed to pay at least 90 percent of the actuarially required contribution in recent years. The Land of Enchantment's unfunded pension liability in 2008—$4.5 billion—was greater than the state's annual payroll. The state legislature enacted policy reforms in 2009 by temporarily increasing employee contributions and decreasing employer contributions for some members. The state projects this will save $42 million in fiscal year 2010. Meanwhile, New Mexico ranks eighth in the country in terms of the percentage of funding for its long-term bill for retiree health care and other benefits, with $170 million in assets set aside to pay for the $3.1 billion liability.