Copyright © 2021 Albuquerque Journal
SANTA FE – New Mexico’s $18 billion state worker pension fund is struggling for stability.
The executive director, chief investment officer and general counsel for the Public Employees Retirement Association have all stepped down this year and the search for a new director was recently relaunched by PERA board members who had expressed unease about a previous search process that yielded three finalists.
Secretary of State Maggie Toulouse Oliver, an ex officio PERA board member who is heading up a new search panel for a director, said many board members have been frustrated and suggested an outside firm could be hired to help with the search.
“We were all having some heartburn about how the process has gone,” she said in a recent interview.
Toulouse Oliver also said despite the relaunched search, there’s a sense of urgency to hire a new director for the agency.
“We don’t want to unnecessarily prolong things,” she said.
However, eight months have already passed since the resignation of former PERA executive director Wayne Propst was announced. The pension fund’s chief investment officer Dominic Garcia then stepped down from his post in June and general counsel Susan Pittard resigned in August.
While temporary replacements have been named for all three positions, the situation has caught the attention of some state lawmakers.
“They need to hire a director – this is a critical time when the markets are in good shape,” said Sen. George Muñoz, a Gallup Democrat who chairs the Senate Finance Committee.
“Why that has taken almost a year is amazing to me.”
Muñoz also said some potential applicants might have been scared off due to what he described as “turmoil” on the PERA board, which has seen frequent infighting in recent years.
John Melia, an Albuquerque firefighter and PERA board member, said the board strife – which has included lawsuits, ethics allegations and even debate over snacks during board meetings – has been bad for the pension fund and its members.
“It’s no secret that our board is a disaster,” said Melia, who plans to step down after six years on the board when his term expires in December.
He also said the PERA board has not elected a new board chairperson due to internal divisions. The board’s vice chairman Francis Page is currently serving as acting chairman.
New Mexico’s pension fund that covers state workers, police officers and judges had more than 47,000 active members and paid retirement benefits to roughly 42,700 retirees during the budget year that ended in June, said acting PERA executive director Greg Trujillo.
Trujillo said it’s likely the chief investment officer and general counsel posts, which are both appointed positions, would be filled quickly once a new executive director is hired.
An update on the executive director search is expected to be given during a board meeting scheduled for next week, but some board members say a resolution can’t come quickly enough. “I’m much more concerned that we don’t have the three positions filled than I am about finding the absolute perfect director,” Melia told the Journal.
There have also been legislative proposals in recent years to overhaul the 12-member PERA board, though such bills have ultimately fallen short of approval.
With the start of a new 30-day session set for January, Muñoz said he’ll push for legislation to consolidate investment oversight of the Public Employees Retirement Association and the state’s teacher pension fund, the Educational Retirement Board, with a requirement that members of the newly-created board have at least some investment experience.
“I think it needs to happen sooner and not later,” he said.
Meanwhile, the teacher pension fund has also been operating without a permanent leader since former ERB executive director Jan Goodwin left in March to run a New Hampshire retirement system.
Both New Mexico pension funds have faced long-term solvency concerns over the last decade that have prompted legislative action.
But, like most pension funds nationwide, both the PERA and ERB posted strong investment gains during the 2021 fiscal year, with the teacher fund’s 28.8% return being especially high compared to other similar-sized funds.
Combined, the two retirement systems saw their fund values increase by nearly $6 billion – from $27.6 billion to $33.4 billion, according to Legislative Finance Committee data.