NMERB History

Now & Then

The New Mexico Educational Retirement Board (NMERB) is charged with providing secure retirement benefits to active and retired employees of New Mexico public schools, institutions of higher learning and certain employees at state agencies who work in educational programs.

The NMERB is self-funded, meaning that the operating budget for the association is provided from the return on investment of the fund.  The NMERB uses no money from the state’s general fund. Board members and agency personnel pride themselves on a conservative and careful approach to investing, and in-house procedures provide economy. Board members and NMERB personnel who have built the organization take great pride in NMERB’s sound actuarial management, its efficient operations and its member-oriented focus.

Retirement in New Mexico hasn’t always been funded or structured as it is today. What we take for granted now didn’t exist in the early 1920s – in fact, no pension plan whatever existed for any public servant.

The first serious efforts to create a pension plan for New Mexican educators took place in 1925 when Gov. Arthur Hannett and the Legislature passed landmark legislation establishing the first pension plan of any kind for public servants. On March 19, House Bill 178, An Act Relating to the Retirement of Faculty Members in State Educational Institutions, and Providing for the Payment of Annuities Thereto, was passed marking the beginning of what is now the present New Mexico educational retirement system.

An informal beginning

During the 1925 landmark session,  legislature John Hall provides insight on the ways the Legislature was governed:

“The committees of both houses were powerful and at times highly arbitrary in their conduct. No calendars were kept, committees met at the call of the chair and no minutes of the proceedings were preserved. Furthermore, there is nothing in the state Constitution or in the rules of either house to compel a committee to consider or report a bill … “All members of both houses either spoke or understood English. However, interpreters were available in the lower house, the House of Representatives, when a member of Spanish descent insisted that his argument could be better made in his mother tongue. Copies of the bills were printed in English and Spanish.”

Despite these irregularities, the 1925 retirement act was ground-breaking legislation. House Bill 178, the state’s first pension plan for public servants, was created in a small state of 400,000, geographically remote from the centers of policy making at that time – a remarkable accomplishment.

Who thought up this retirement idea anyway?

Millionaire and philanthropist Andrew Carnegie deserves credit for helping establish a political and social climate that recognized the value of educators. He was an unusual man. As his fortune grew, he came to believe that surplus personal wealth should be used for service to humanity, in particular for educational purposes, and to protect and promote democracy. Carnegie created the Teachers’ Insurance and Annuity Company in 1905 with a donation of $10 million to provide a means for college professors to receive retirement pensions.

His foundation provided “free” pensions;  no contributions were required from the teacher. As time went on, it became clear that no infusion of dollars could provide free pensions for all college teachers, and in 1918, the Teachers Insurance and Annuity Association, (TIAA) was formed to provide annuities under a contributory system.  This company became a model for modern-day pension plans, and TIAA-CREF still exists today as a provider of annuities to university educators in America.

A rocky beginning

The first retirement legislation in New Mexico also applied only to faculty members at the university level. It was to be fully funded by the Legislature, with no contribution required from the employee or university. Strangely, an important feature of the bill was language that made it clear that potential retirees had no right to benefits, and that university boards of regents had the power to grant or deny an applicant benefits without having to offer a reason for refusing any petitioner. Another quirky feature of New Mexico’s first pension plan was the absence of a legislative appropriation to provide retirement benefits, even though the legislation stated that funding would be provided to the operating budgets of universities. This oversight did not stop universities from retiring some faculty. Boards of regents had minds of their own when deciding to award pensions.

In May 1925, Charles E. Hodgin, a University of New Mexico professor of education for most of his career, was approved for retirement, thus making him the first educational retiree and the first educator to receive a state public pension in New Mexico. Hodgin happened to be the vice president of the University of New Mexico at the time of his retirement. A second retirement under this act was awarded to a Mary H. Eckles by the Board of Regents of the  New Mexico State Teacher’s College (now New Mexico Western University). Hodgin was the first person in any public profession to be granted a public pension in New Mexico, and he and Mary Eckles are the only recorded retirees in that year.

Two years later, the Legislature removed the quirks from the retirement legislation for university faculty, funded it, and went on to pass a pension plan for firemen in municipalities of more than 5,000 people.   Public school employees, however, were still without a pension plan.

The legislative bodies of 1929 and 1931 did not consider the subject of retirement (the Legislature met once every two years at this time in New Mexico history). In 1933, new legislation was passed providing a retirement plan for all public school and university teachers. This plan provided for joint funding from the Legislature and contributions made by teachers in the following amounts:



Less than $100 per month $ .50
$100 per month $1.00
$100-$150 per month $1.50
More than $150 per month $ 2.00


However, no one actually retired under this comprehensive new plan because its requirement for contributions from teachers conflicted with the 1925 act which provided “free” retirement for university professors, but that act had never been repealed. The state now boasted two retirement plans for educators, with the provisions of one contradicting those of the other.

At this point, the Legislature charged the State Board of Education with implementing the 1933 Act – however, they did not act. According to Ken Davis, past director of the ERB, “The state board minutes for the four years that this law was on the books, 1933-37, do not reveal one single mention of this retirement law. In view of the inaction of the state board, it is probable that very few teachers even knew about the law.”

Senate Bill 45, passed in February 1935, enacted yet another retirement bill for teachers. But this one was the first really workable public school retirement plan. Part of it is reproduced below:

An Act Relating to the Retirement of Public School Teachers and Providing an Annuity or Pension Therefore

Senate Bill No. 45: Approved February 28, 1935.

Be It Enacted by the Legislature of the State of New Mexico:

Section 1. The Board of County Commissioners of any county in this state shall have the power by a majority vote thereof to retire any public school teacher who shall have taught in the public schools of the state of New Mexico for a period or periods aggregating thirty-five years, and who shall, in the opinion of a majority of such Board, be in needy circumstances; such persons shall thereafter during the remainder of his or her life, receive an annuity or annual pension, payable monthly, of not to exceed one-half of the maximum annual salary received by such person during the five years next preceding his or her retirement hereunder; provided that such annuity not exceed $1,200 per annum.

Section 2. The amount of such annuities shall be included in the annual budget of the county in which the Board of County Commissioners has retired such persons, and a sufficient levy to pay the same shall be made annually on the real property in said county by the Board of County Commissioners.

A decades-long ripple effect

The philosophy of the Legislature regarding public school funding took a dramatic turn in 1935  with the passage of the Emergency School Tax Act which established that financing the public was the state’s responsibility rather than primarily a local function.

In 1937, there was finally just one retirement plan in effect after the Legislature repealed previous acts relating to retirement.  The 1937 Retirement Act would govern teachers’ retirement in the state for the next 20 years.

There was just one problem.

The 1937 Retirement Act did not require contributions from members, and this decision by policy makers turned out to have a significant effect on the long-term actuarial soundness of the fund in the decades that followed. (Today, higher employer contributions approved by the Legislature in 2005 under Senate Bill 181 guarantee the solvency and actuarial soundness of the NMERB fund.)

Another retirement bill, SB 184, known as the Seyfreid Bill, had also been introduced during the 1937 session which provided for member contributions of five percent of salary that would have been matched by the state. The benefit paid to a retiree would be the amount that the employer and employee contributions together with interest earned. The Seyfried bill was actuarially sound, and would have resulted in a stronger retirement system. However, other factors came into play that prevented its passage.

One of those factors was the emergence of the New Mexico Education Association (NMEA) as a powerful player in the debate over how to structure retirement in New Mexico. The only education association for many years until the arrival of the NM American Federation of Teachers in the 1970s, the NMEA came out in favor of a different bill, declaring that the average teacher would be unable to understand the provisions of the Seyfried bill. In truth, NMEA was far more likely to support a bill that required no contribution from teachers than the Seyfried bill, which did, so the 1937 retirement act remained in effect for the next two decades.

The Educational Retirement Board is launched

The first meeting of the Educational Retirement Board was held in March 1941.  Although the board, headed by Superintendent of Public Instruction Grace Corrigan, was not established by law until the legislative session of 1945, it operated de facto serving the needs of members during the war years, apparently without problems. Policy wasn’t set by the board, but retirements were approved.

The Legislature did not pass any laws affecting public retirement in 1943 – the first session in 10 years that did not pass some sort of retirement legislation affecting public schools. Perhaps in the thick of World War II concerns, members of the Legislature had other matters on their minds.

In the postwar years, numerous policy changes were made in the Educational Retirement Act, primarily in the way the retirement act was administered by the ERB, and to its amendments. Chief among these changes was bringing all educational agencies under one retirement act which was accomplished in 1945. Full credit was given to returning service men and women for the time they spent in the armed forces, and the ERB was finally made a legal entity. By law, composition of the board was to be; the state superintendent of public instruction, the state educational budget auditor, the state treasurer, the president of the New Mexico Education Association and the president of the Emeritus Employee’s Association of New Mexico. The board’s makeup remains essentially the same today with the addition of a member elected by the American Association of University Professors and two people appointed by the governor, minus the budget auditor, a position that no longer exists.

The NMERB begins investing

The first recorded investment by the New Mexico state treasurer of the retirement fund, which at that time was $106,434, was ordered by state school superintendent Georgia Lusk, who also headed the NMERB, in May of 1944. Apparently no one had given thought previously to putting retirement fund dollars to work. This was fairly typical of the unsophisticated approach to the retirement business practiced by the board during these early years.

The NMERB engaged an actuary to make a report on the fund’s solvency in 1949, but at the board’s only meeting in 1950, NMERB Director Floyd Santisteven reported that the study had not been accomplished because several of the districts were tardy in their reporting. This easy-come-easy-go attitude seems improbable by today’s thinking, especially in light of the strict requirements under which the present-day system functions. The ERB today requires an actuarial study each year, a yearly outside audit of the agency, and close oversight by both the legislative and administrative arms of state government. Amazing to consider that, in 1949, no records of incoming or outgoing moneys were recorded at all, nor were any detailed records kept of the calculations or amounts each pensioner received.

Major changes to the state’s retirement act took place during the 1950s following an actuarial study that revealed that funds assets as of June 30, 1950 were $7,941,180, and liabilities were listed at $55,371,799 – a whopping $47,430,427 deficit. The report made several strong recommendations to put the program back on track.  Recommendations included increased contributions from the state, employee contributions and that complete and detailed records of the system and membership be maintained. It also stated an annual valuation should be made to determine the true condition of the system.

The board’s response to these suggestions was that, “it might try to implement some of them,” and, “The board saw no immediate necessity to set up a contribution for a special fund for liquidating the accrued liability….” (Davis & Trimmer 1976).

In the end

The process of setting the fund on the road to a sound actuarial basis was begun by an ad hoc state reorganization committee in 1952. This committee recommended that the state Legislature create a committee to study state retirement funds. The study’s findings were clear:  employee contributions were essential to the soundness and solvency of the state’s retirement plan for education employees.  With the support of the NMEA behind it, the New Mexico Legislature passed the Educational Retirement Act of 1957, a true retirement plan with policy in place that would put the fund on a firm actuarial footing for the next several decades.

In January 2005, the Legislature’s House Education Committee was told that the ERB projected a $2.4 billion shortfall; its asset-to-liability ratio was about 75 percent and that, if uncorrected, the fund faces “severe problems.”  News of the projected shortfall spread rapidly throughout the state to public school employees, legislators, and the general public even though the NMERB made clear that the pension fund is able to pay the current level of benefits, without contribution changes, for the next 20 to 25 years.

In response to the projected shortfall, NMERB moved swiftly to gain the support of the NM Legislature resulting in the Legislature’s decision to increase the state’s and member’s contribution thereby adding long term improvement.


Managing the retirement assets of New Mexico Educators since 1957.

Contact Information

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Santa Fe, NM 87505

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