SB 20 — EDUCATIONAL RETIREMENT BOARD CHANGES

b e d s º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 5 - e a n e d r e l u [ A d and filed with the director to receive a benefit pursuant to the Educational Retirement Act that may be received by someone other than the member or participant;

"service credit" means that period of time with which a member is accredited for the purpose of determining SB 20 Page 3 the member's eligibility for and computation of retirement or h g disability benefits;

o t hr K.

"earned service credit" means that period of g e i k time during which a member was engaged in employment or prior h r i s employment with which the member is accredited for the purpose h , t, e u g of determining the member's eligibility for retirement or e b l e e h disability benefits;

n d d i = = o h L.

"allowed service credit" means that period of l ] b ,d i a º e r i = r time during which a member has performed certain nonservice t e w d m a n o employment with which the member may be accredited, as provided din mthe :Educational Retirement Act, for the purpose of computing retirement or disability benefits;

b e d s º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 6 - e a n e d r e l u [ A d in the Educational Retirement Act, for the purpose of computing retirement or disability benefits;

"medical authority" means a medical doctor or medical review panel designated or employed by the board to examine medical records and report on the medical condition SB 20 Page 4 of applicants for or recipients of disability benefits;

"actuary" means a person trained and regularly h g engaged in the occupation of calculating present and projected o t hr monetary assets and liabilities under annuity or insurance g e i k programs;

h r i s T.

"actuarial equivalent" means a sum paid as a h , t, e u g current or deferred benefit that is equal in value to a regular e b l e e h benefit, computed upon the basis of interest rates and n d d i = = o h mortality tables;

l ] b ,d i a º e r i = r U.

"contributory employment" means employment for t e w d m a n o which contributions have been made by both a member and a local dadministrative munit :pursuant to the Educational Retirement Act;

b e d s º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 7 - e a n e d r e l u [ A d administrative unit pursuant to the Educational Retirement Act;

"qualifying state educational institution" means the university of New Mexico, New Mexico state university, New Mexico institute of mining and technology, New Mexico highlands university, eastern New Mexico university, western New Mexico university, central New Mexico community college, Clovis community college, Luna community college, Mesalands community college, New Mexico junior college, northern New Mexico [state school] college, San Juan college, [and] Santa Fe community college and southeast New Mexico collegecollege; ;

(1) a person regularly employed as a faculty or professional employee of the university of New Mexico, SB 20 Page 5 New Mexico state university, New Mexico institute of mining and technology, New Mexico highlands university, eastern New Mexico university or western New Mexico university who first becomes employed with such an educational institution on or after July h 1, 1991, or a person regularly employed as a faculty or u » r t h professional employee of the central New Mexico community g e l i college, Clovis community college, Luna community college, h r i s Mesalands community college, New Mexico junior college, h , e h t u g northern New Mexico [state school ] college, San Juan college or e b l e e , gh Santa Fe community college who is first employed by the n d d i = = o h institution on or after July 1, 1999, or a person regularly l ] b ,d i a º r employed as a faculty or professional employee of southeast New eMexico rcollege =who tis efirst wemployed dby mthe ainstitution non oor Mexicoafter collegeJuly 1, 2023, and who iselects, firstpursuant employedto bySection the22-11-47 institutionNMSA on1978, orto dparticipate min :the alternative retirement plan;

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 8 - e a n e d r e l u [ A d after July 1, 2023, and who elects, pursuant to Section 22-11-47 NMSA 1978, to participate in the alternative retirement plan;

"salary" means the compensation or wages paid to a member or participant by any local administrative unit SB 20 Page 6 for services rendered.

"Salary" includes payments made for annual or sick leave and payments for additional service provided to related activities, but does not include payments for sick leave not taken unless the payment for the unused sick leave is made through continuation of the member on the regular payroll h for the period represented by that payment and does not include u » r t h allowances or reimbursements for travel, housing, food, g e l i equipment or similar items;

h r i s Y.

"alternative retirement plan" means the h , e h t u g retirement plan provided for in Sections 22-11-47 through e b l e e , gh 22-11-52 NMSA 1978;

and n d d i = = o h Z.

"retired member" means a person whose employment l ] b ,d i a º r has been terminated by reason of age and who is receiving or is e r = t e w d m a n o eligible to receive retirement benefits." dSECTION m2. :

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 9 - e a n e d r e l u [ A d SECTION SFCº3.»SFC SFCº2.»SFC Section 22-11-30 NMSA 1978 (being Laws 1967, Chapter 16, Section 153, as amended) is amended to read:

SB 20 Page 7 B.

Retirement benefits for a member retired pursuant to the Educational Retirement Act on or after July 1, 1967 but on or before June 30, 1971 shall be paid monthly and shall be one-twelfth of a sum equal to one and one-half percent of the first six thousand six hundred dollars ($6,600) of the h member's average annual salary and one percent of the remainder u » r t h of the member's average annual salary multiplied by the number g e l i of years of the member's total service credit.

h r i s C.

Retirement benefits for a member retired h , e h t u g pursuant to the Educational Retirement Act on or after July 1, e b l e e , gh 1971 but on or before June 30, 1974 shall be paid monthly and n d d i = = o h shall be one-twelfth of a sum equal to one and one-half percent l ] b ,d i a º r e r = of the member's average annual salary multiplied by the number t e w d m a n o of years of the member's total service credit.

dD. m :

bRetirement rbenefits efor ta ºmember oretired tpursuant nto =the .223372.2SAAICEducational FebruaryRetirement 24,Act 2023on (9:04pm)or sbefore kJune m30, e1974 -but 10returning -to eemployment on or after July 1, 1974 for a ncumulation eof done ror emore lyears ushall [be Acomputed dpursuant D.to Subsection E of this section.

Retirement benefits for a member retired pursuant to the Educational Retirement Act on or before June 30, 1974 but returning to employment on or after July 1, 1974 for a cumulation of oneless orthan moreone yearsyear shall be computed pursuant to Subsection EA of SB 20 Page 8 this section.section if the member's date of last retirement was on or before June 30, 1967 or pursuant to Subsection B of this section if the member's date of last retirement was on or after July 1, 1967 but not later than June 30, 1971 or pursuant to Subsection C of this section if the member's date of last retirement was on or after July 1, 1971 but not later than June 30, 1974.

Retirement benefits for a member retired pursuant to the Educational Retirement Act on or before June 30, 1974 but returning to employment on or after July 1, 1974 for a cumulation of less than one year shall be computed pursuant to Subsection A of this section if the member's date of last retirement was on or before June 30, 1967 or pursuant to Subsection B of this section if the member's date of last retirement was on or after July 1, 1967 but not later than June 30, 1971 or pursuant to Subsection C of this section if the member's date of last retirement was on or after July 1, 1971 but not later than June 30, 1974.

Retirement benefits for a member age sixty or over, retired pursuant to the Educational Retirement Act on or h after July 1, 1974 but not later than June 30, 1987, shall be u » r t h paid monthly and shall be one-twelfth of a sum equal to:

g e l i (1) one and one-half percent of the member's h r i s average annual salary multiplied by the number of years of h , e h t u g service credit for:

e b l e e , gh (a) prior employment;

and n d d i = = o h (b) allowed service credit for service l ] b ,d i a º r performed prior to July 1, 1957, except United States military e r = t e w d m a n o service credit purchased pursuant to Paragraph (3) of dSubsection mA :of Section 22-11-34 NMSA 1978;

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 11 - e a n e d r e l u [ A d Subsection A of Section 22-11-34 NMSA 1978;

and SB 20 Page 9 (c) United States military service credit for service performed prior to July 1, 1957 and purchased pursuant to Paragraph (3) of Subsection A of Section 22-11-34 NMSA 1978.

provided that this subsection shall not apply h to any member who was retired in any of the four quarters u » r t h ending on June 30, 1987 without having accumulated not less g e l i than 1.0 years earned service credit after June 30, 1987.

h r i s G.

Retirement benefits for a member who retires h , e h t u g pursuant to Section 22-11-23 NMSA 1978 on or after July 1, 1991 e b l e e , gh shall be paid monthly and shall be one-twelfth of a sum equal n d d i = = o h to two and thirty-five hundredths percent of the member's l ] b ,d i a º r average annual salary multiplied by the number of years of the e r = t e w d m a n o member's total service credit;

d(1) mthe :benefit for a member who retires pursuant to Paragraph (3) of Subsection A of Section 22-11-23 NMSA 1978 shall be reduced by:

b(a) rsix-tenths epercent tfor ºeach oone- tSB n20 =Page .223372.2SAAIC10 Februaryfourth, 24,or 2023portion (9:04pm)thereof, syear kthat mretirement eoccurs -prior 12to -the emember aattaining nthe eage dof rsixty eyears lbut uafter [ A d (1) the benefit for a member whoattains retiresthe pursuantage to Paragraph (3) of Subsectionfifty-five Ayears; of Section 22-11-23 NMSA 1978 shall be reduced by:

(a) six-tenths percent for each one- fourth, or portion thereof, year that retirement occurs prior to the member attaining the age of sixty years but after the member attains the age of fifty-five years;

and (3) a member shall be subject to the h provisions of Paragraph (1) of this subsection as they existed u » r t h at the beginning of the member's last cumulated four quarters g e l i of earned service credit, regardless of later amendment.

h r i s H.

Retirement benefits for a member who retires h , e h t u g pursuant to Section 22-11-23.1 NMSA 1978 shall be paid monthly e b l e e , gh and shall be one-twelfth of a sum equal to two and thirty-five n d d i = = o h hundredths percent of the member's average annual salary l ] b ,d i a º r multiplied by the number of years of the member's total service e r = t e w d m a n o credit;

d(1) mthe :benefit for a member who retires pursuant to Paragraph (3) of Subsection A of Section SB 20 Page 11 22-11-23.1 NMSA 1978 shall be reduced by:

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 13 - e a n e d r e l u [ A d (1) the benefit for a member who retires pursuant to Paragraph (3) of Subsection A of Section 22-11-23.1 NMSA 1978 shall be reduced by:

Retirement benefits for a member who retires pursuant to Section 22-11-23.2 NMSA 1978 shall be paid monthly h g and shall be one-twelfth of a sum equal to two and thirty-five o t hr hundredths percent of the member's average annual salary g e i k multiplied by the number of years of the member's total service h r i s credit;

h , t, e u g (1) the benefit for a member retiring pursuant e b l e e h to Paragraph (3) of Subsection A of Section 22-11-23.2 NMSA n d d i = = o h 1978 shall be reduced by:

l(a) ]six-tenths bpercent ,dfor ieach aone- ºfourth, eor rportion ithereof, =year rthat (a)retirement six-tenthsoccurs percentprior forSB each20 one-Page t12 eto wthe dmember mattaining athe nage oof fourth,sixty-five oryears portionbut thereof,after yearthe thatmember retirementattains occursthe priorage dof msixty :years;

b e d s º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 14 - e a n e d r e l u [ A d to the member attaining the age of sixty-five years but after the member attains the age of sixty years;

(a) for the first ten years of the member's service credit, one and thirty-five hundredths percent h of the member's average annual salary multiplied by the u » r t h member's years of service credit between one-fourth of a year g e l i and ten years;

h r i s (b) for that portion of the member's h , e h t u g service credit earned after ten years of service credit and e b l e e , gh through twenty years of service credit, two and thirty-five n d d i = = o h hundredths percent of the member's average annual salary lSB ]20 bPage ,d13 i a º r multiplied by the member's years of service credit between ten e r = t e w d m a n o and twenty years;

d(c) mfor :that portion of the member's service credit earned after twenty years of service credit and through thirty years of service credit, three and thirty- five hundredths percent of the member's average annual salary multiplied by the member's years of service credit between twenty and thirty years;

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 15 - e a n e d r e l u [ A d (c) for that portion of the member's service credit earned after twenty years of service credit and through thirty years of service credit, three and thirty-five hundredths percent of the member's average annual salary multiplied by the member's years of service credit between twenty and thirty years;

(a) Subsection A of Section 22-11-23.3 NMSA 1978 and is under fifty-eight years of age, in an amount equal to the result determined under Paragraph (1) of this subsection, but reduced to the actuarial equivalent, based on what is at the time of the member's retirement the most current h set of actuarial factors determined by the board, of the u » r t h benefit the member would receive if the member had retired at g e l i fifty-eight years of age;

h r i s (b) Subsection C of Section 22-11-23.3 h , e h t u g NMSA 1978 and is sixty years of age or older and under sixty-SB e20 bPage l14 esixty-five, e , gh five, in an amount equal to the result determined under n d d i = = o h Paragraph (1) of this subsection, but reduced by six-tenths l ] b ,d i a º r percent for each one-fourth, or portion thereof, year before e r = t e w d m a n o the member reaches age sixty-five;

or d(c) mSubsection :C of Section 22-11-23.3 NMSA 1978 and is younger than sixty years of age, in an amount equal to one and eight-tenths percent for each one-fourth, or portion thereof, year before the member reaches sixty years of age.

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 16 - e a n e d r e l u [ A d (c) Subsection C of Section 22-11-23.3 NMSA 1978 and is younger than sixty years of age, in an amount equal to one and eight-tenths percent for each one-fourth, or portion thereof, year before the member reaches sixty years of age.

h g (1) the salary in a first twelve-month o t hr interval that occurs beginning July 1, 2019 or thereafter of g e i k the five-year period used to determine the average annual h r i s salary shall be adjusted to exclude any increase in salary in hSB ,20 t,Page e15 u g excess of thirty percent of the salary in the twelve e b l e e h consecutive months of service credit preceding the five-year n d d i = = o h period;

and l(2) ]the bsalary ,din ieach aof ºthe efour rsucceeding itwelve-month =intervals rthat (2)occur beginning July 1, 2019 or thereafter of the five-year period, as adjusted to exclude any increase in salary in the twelve months preceding each such succeeding twelve-month interval that is in excess of the fourthirty-percent succeedinglimitation tprovided ein wthis dsubsection, mshall abe nused oto twelve-monthdetermine intervalsif the salary in that occursucceeding beginningtwelve-month Julyinterval 1,exceeds 2019the orthirty-percent dlimitation mand :to adjust the salary to exclude any increase in excess of that limitation in determining the average annual salary.

b e d s º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 17 - e a n e d r e l u [ A d thereafter of the five-year period, as adjusted to exclude any increase in salary in the twelve months preceding each such succeeding twelve-month interval that is in excess of the thirty-percent limitation provided in this subsection, shall be used to determine if the salary in that succeeding twelve-month interval exceeds the thirty-percent limitation and to adjust the salary to exclude any increase in excess of that limitation in determining the average annual salary.

[Unless otherwise required by the Internal h Revenue Code of 1986, a member shall begin receiving retirement u » r t h benefits by age seventy years and six months, or upon g e l i termination of employment, whichever occurs later] h r i s Notwithstanding any provision of the Educational Retirement h , e h t u g Act, retirement benefits shall be distributed in accordance e b l e e , gh with Section 401(a)(9) of the federal Internal Revenue Code of n d d i = = o h 1986, as amended, and the SB 20 Page 16 regulations thereunder, including the l ] b ,d i a º r minimum incidental death benefit restrictions of Section e r = t e w d m a n o 401(a)(9)(G) of the Internal Revenue Code of 1986, as amended." dSECTION m3. :

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 18 - e a n e d r e l u [ A d SECTION SFCº4.»SFC SFCº3.»SFC Section 22-11-47 NMSA 1978 (being Laws 1991, Chapter 118, Section 5, as amended) is amended to read:

Beginning October 1, 1999, an employee of central New Mexico community college, Clovis community college, Luna community college, Mesalands community college, New Mexico junior college, northern New Mexico college, San Juan college or Santa Fe community college who is eligible to become a participant may make an election to h g participate in the alternative retirement plan within ninety o t hr days of the initial date.

Beginning October 1, 2023, an g e i k employee of southeast New Mexico college who is eligible to h r i s become a participant may make an election to participate in the h , t, e u g alternative retirement plan within ninety days of the initial e b l e e h date.

SB 20 Page 17 Thereafter, any employee who is eligible to become a n d d i = = o h participant may make within the first ninety days of employment l ] b ,d i a º e r i = r with a qualifying state educational institution an election to t e w d m a n o participate in the alternative retirement plan.

Any employee dwho mmakes :the election shall become a participant the first day of the first pay period following the election.

bAny eemployee dwho sfails ºto omake tthe nelection =within .223372.2SAAICninety Februarydays 24,of 2023October (9:04pm)1, s1991, kOctober m1, e1999 -or 19October -1, e2023, awhichever nis eapplicable, dor rwithin ethe lfirst uninety [days Aof demployment whowith makesa thequalifying electionstate educational institution shall become or remain a participantregular themember firstif daythat employee is eligible to be a regular member and shall not later be eligible to elect to be a participant, regardless of whether the firstemployee paysubsequently periodis followingemployed in another position that is eligible for participation in the election.alternative retirement plan.

Any employee who fails to make the election within ninety days of October 1, 1991, [or ] October 1, 1999 or October 1, 2023, whichever is applicable, or within the first ninety days of employment with a qualifying state educational institution shall become or remain a regular member if that employee is eligible to be a regular member and shall not later be eligible to elect to be a participant, regardless of whether the employee subsequently is employed in another position that is eligible for participation in the alternative retirement plan.

When an employee elects to become a participant, h any employer and employee contributions made as a regular u » r t h member shall be withdrawn from the fund and applied instead g e l i toward the alternative retirement plan as if the participantSB h20 rPage i18 sparticipant had been participating in the alternative retirement plan from h , e h t u g the commencement of employment with the qualifying state e b l e e , gh educational institution.

n d d i = = o h D.

On July 1, 2009, any participant who has made l ] b ,d i a º r contributions to the alternative retirement plan for a e r = t e w d m a n o cumulative total of seven years or more shall have a one-time doption mof :electing to become a regular member.

b r e t º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 20 - e a n e d r e l u [ A d option of electing to become a regular member.

(1) may not purchase service credit for h g periods of employment during which the employee participated inSB o20 tPage hr19 in the alternative retirement plan;

and g e i k (2) shall acquire not less than five years of h r i s contributory employment as a regular member as provided for in h , t, e u g Section 22-11-24 NMSA 1978 to be eligible for retirement e b l e e h benefits pursuant to the Educational Retirement Act.

n d d i = = o h E.

The board shall approve the positions at each l ] b ,d i a º e r i = r qualifying state educational institution that are eligible for t e w d m a n o participation in the alternative retirement plan." dSB m20 :Page 20 25

b e d s º o t n = .223372.2SAAIC February 24, 2023 (9:04pm) s k m e - 21 - e a n e d r e l u [ A d