November’s midterm elections season features several gubernatorial races that could deeply impact state retirement plans, in particular those in Oregon, Florida, Colorado, New Mexico and Illinois.
While some candidates have focused their campaigns on reducing their respective state pension system’s deficits, others have directed their efforts toward improving retirement security for both public and private employees.
Here’s a look at some of the key races for governor and how they could influence retirement systems:
In this year’s gubernatorial race, Democratic candidate Tina Kotek, former speaker of the Oregon House of Representatives is running against Republican candidate Christine Drazan, former Oregon House minority leader, and independent candidate Betsy Johnson, who previously served as a Democrat in the state Legislature.
While serving as house speaker, Ms. Kotek sponsored Senate Bill 1049, which passed the legislature in 2019 requiring public employees to divert some of their retirement contributions toward reducing the deficit of the $93.9 billion Oregon Public Employees Retirement Fund. The bill also garnered support from Ms. Johnson, who was serving in the Oregon Senate at the time.
Ms. Drazan voted against the bill, along with all of her Republican colleagues.
The PERS bill has also been at the center of a scandal for one of the candidates.
Ms. Kotek was accused of creating a hostile workplace in 2019 for threatening professional consequences if another state representative did not support the PERS bill she proposed. A draft investigative report, conducted by a private attorney, from September of this year suggested that Ms. Kotek did not violate workplace rules, but the House Conduct Committee will have the final say.
Florida’s Republican Gov. Ron DeSantis is up for re-election this November, facing off against Charlie Crist, a former Florida governor and U.S. congressman who switched from the Republican to the Democratic party in 2012. Mr. DeSantis has been vocal on his disapproval of the ESG movement in investing.
In August, Mr. DeSantis passed a resolution, along with the two other trustees of the Florida State Board of Administration, to prohibit including ESG considerations in investment decisions for the $182 billion Florida Retirement System, which the board oversees.
“With the resolution we passed today, the tax dollars and proxy votes of the people of Florida will no longer be commandeered by Wall Street financial firms and used to implement policies through the board room that Floridians reject at the ballot box,” Mr. DeSantis said in a news release in August.
In July, Mr. DeSantis also announced he would propose legislation in 2023 to restrict the State Board from using any managers that make ESG considerations when investing state money.
Incumbent Colorado Gov. Jared Polis, a Democrat, is running against Heidi Ganahl, a Republican. In 2020, Mr. Polis signed a bill into law that created a statewide retirement program, Colorado Secure Savings, for employees in the private sector who don’t already have a retirement plan. In March of this year, he also signed two bills into law that affect retired educators in the state.
One law allows for a Colorado Public Employees’ Retirement Association service retirees to work full-time without a reduction in benefits if they work in a rural school district with a critical shortage of qualified candidates. The other law temporarily waives the limit on the number of days a PERA retiree can work as a substitute teacher without a reduction in benefits, citing substitute teacher shortages.
Though she hasn’t addressed retirement issues directly, Ms. Ganahl has said she plans to cut the size of the state government by 10% in her first year as governor, according to her campaign website.
Ms. Ganahl currently serves on the University of Colorado Board of Regents.
Incumbent Gov. Michelle Lujan Grisham, a Democrat, will face off against Republican candidate Mark Ronchetti in New Mexico’s election. Ms. Lujan Grisham signed legislation in 2020 that provided a $55 million cash infusion to the $16.6 billion New Mexico Public Employee Retirement Association, aiming to reduce its $6.6 billion unfunded liability. The law also increased the cost-of-living adjustments to 2.5% from 2% for retirees over 75 and incrementally increased contributions for current employees and employers.
This March, she also signed a bill into law that increases employer contributions to the New Mexico Educational Retirement Board, reducing the timetable for the fund to reach full funding by nine years. The contributions are set to increase to 17.5% in the fiscal year 2023 and 18.15% in the fiscal year 2024, from 15.15% in the current fiscal year.
The governor also helped to create a statewide retirement savings program for private sector employees, known as the New Mexico Work and Save program, in February 2020.
Mr. Ronchetti, a former meteorologist, said in a tweet in November 2021 that he would work to exempt veterans from paying taxes on their retirement income.
In his re-election campaign, incumbent Gov. J.B. Pritzker has touted his work on reforming Illinois’ public pensions system.
According to his campaign website, Mr. Pritzker has consolidated 650 local pension plans and “reduced state pension liabilities by fully funding pension contributions, going above and beyond with payments, and expanding the employee pension buyout program.”
The state’s five pension funds face $130 billion in combined unfunded liabilities as of June 30, 2021.
Republican candidate Darren Bailey, an Illinois state senator, family farm owner and Mr. Pritzker’s competitor, told the Chicago Tribune that he would work to reduce the deficit and also reduce taxes.
However, in order to do that, he said voters would need to approve an amendment to the Illinois Constitution addressing pension reform. According to polling from the Illinois Policy Institute released in June, 61% of likely voters in the state would support such an amendment.