SENATE PUBLIC AFFAIRS COMMITTEE SUBSTITUTE FOR

SENATE BILL 235

54th legislature - STATE OF NEW MEXICO - first session, 2019

 

 

 

 

 

 

 

AN ACT

RELATING TO PUBLIC EMPLOYEES; PROVIDING FOR AN INVESTMENT- PERFORMANCE-BASED FRAMEWORK FOR THE COMPENSATION OF PUBLIC EMPLOYEES RETIREMENT ASSOCIATION, EDUCATIONAL RETIREMENT BOARD AND STATE INVESTMENT COUNCIL INVESTMENT STAFF; EXEMPTING THOSE AGENCIES' INVESTMENT STAFF POSITIONS FROM THE PERSONNEL ACT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. A new section of the Public Employees Retirement Act is enacted to read:

     "[NEW MATERIAL] INVESTMENT STAFF--INVESTMENT-PERFORMANCE-BASED COMPENSATION--REPORTING.--

          A. Each year, the retirement board, in consultation with the executive director of the association, may establish a framework for the compensation of the association's chief investment officer and other investment staff that:

                (1) includes, for each of those positions:

                     (a) a base compensation component; and

                     (b) a variable, investment-performance-based component aligned with investment industry norms and best practices; and

                (2) applies to the following fiscal year.

          B. The association's chief investment officer and other investment staff may receive compensation in accordance with the framework developed by the retirement board.

          C. Each year, the executive director of the association shall report to the legislative finance committee and, as appropriate, to one or more other legislative interim committees, on the compensation framework established in accordance with Subsection A of this section."

     SECTION 2. A new section of the Educational Retirement Act is enacted to read:

     "[NEW MATERIAL] INVESTMENT STAFF--INVESTMENT-PERFORMANCE-BASED COMPENSATION--REPORTING.--

          A. Each year, the board, in consultation with the director, may establish a framework for the compensation of the board's chief investment officer and other investment staff that:

                (1) includes, for each of those positions:

                     (a) a base compensation component; and

                     (b) a variable, investment-performance-based component aligned with investment industry norms and best practices; and

                (2) applies to the following fiscal year.

          B. The board's chief investment officer and other investment staff may receive compensation in accordance with the framework developed by the board.

          C. Each year, the director shall report to the legislative finance committee and, as appropriate, to one or more other legislative interim committees, on the compensation framework established in accordance with Subsection A of this section."

     SECTION 3. [NEW MATERIAL] INVESTMENT STAFF--INVESTMENT-PERFORMANCE-BASED COMPENSATION--REPORTING.--

          A. Each year, the state investment council may establish a framework for the compensation of the state investment officer and other investment staff that:

                (1) includes, for each of those positions:

                     (a) a base compensation component; and

                     (b) a variable, investment-performance-based component aligned with investment industry norms and best practices; and

                (2) applies to the following fiscal year.

          B. The state investment officer and other investment staff may receive compensation in accordance with the framework developed by the state investment council.

          C. Each year, the state investment council shall report to the legislative finance committee and, as appropriate, to one or more other legislative interim committees on the compensation framework established in accordance with Subsection A of this section.

     SECTION 4. Section 10-9-4 NMSA 1978 (being Laws 1961, Chapter 240, Section 4, as amended) is amended to read:

     "10-9-4. COVERAGE OF SERVICE.--The Personnel Act and the service cover all state positions except:

          A. officials elected by popular vote or appointed to fill vacancies to elective offices;

          B. members of boards and commissions and heads of agencies appointed by the governor;

          C. heads of agencies appointed by boards or commissions;

          D. directors of department divisions;

          E. those in educational institutions and in public schools;

          F. those who are employed by state institutions and by state agencies providing educational programs and who are required to hold valid certificates as certified school instructors, as defined in Section 22-1-2 NMSA 1978, issued by the public education department;

          G. those in the governor's office;

          H. those in the state militia or the commissioned officers of the New Mexico state police division of the department of public safety;

          I. those in the judicial branch of government;

          J. those in the public defender department, upon implementation of personnel policies and rules by the public defender commission;

          K. those in the legislative branch of government;

          L. [not more than] up to two assistants and one secretary in the office of each official listed in Subsections A [B] and C of this section [excluding members of boards and commissions in Subsection B of this section] and in the office of each head of an agency appointed by the governor;

          M. those of a professional or scientific nature and that are temporary [in nature];

          N. those filled by patients or inmates in charitable, penal or correctional institutions;

          O. state employees if the board in its discretion decides that the position is one of policymaking; [and]

          P. disadvantaged youth under twenty-two years of age who are regularly enrolled or to be enrolled in a secondary educational institution approved by the public education department or in an accredited state institution of advanced learning or vocational training and who are to be employed for not more than seven hundred twenty hours during any calendar year:

                (1) the term "disadvantaged youth" shall be defined for purposes of this exemption by regulation duly promulgated by the board; and

                (2) the board shall:

                     (a) require that all the criteria of this subsection have been met;

                     (b) establish employment lists for the certification of the highest-standing candidates to the prospective employers; and

                     (c) establish the pay rates for such employees;

          Q. the chief investment officer of the public employees retirement association and those subject to the investment-performance-based compensation framework provided for by Section 1 of this 2019 act; provided, however that the framework has been adopted;

          R. the chief investment officer of the educational retirement board and those subject to the investment- performance-based compensation framework provided for by Section 2 of this 2019 act; provided, however, that the framework has been adopted; and

          S. the state investment officer and those subject to the investment-performance-based compensation framework provided for by Section 3 of this 2019 act; provided, however, that the framework has been adopted."

     SECTION 5. Section 10-9-5 NMSA 1978 (being Laws 1978, Chapter 96, Section 1, as amended) is amended to read:

     "10-9-5. PUBLIC OFFICERS AND PUBLIC EMPLOYEES--EXECUTIVE BRANCH--ANNUAL EXEMPT SALARIES PLAN.--

          A. The department of finance and administration shall prepare, by December 1 of each year, an exempt salaries plan for the governor's approval [The plan shall specify] that specifies salary ranges for the following public officer and public employee positions of the executive branch of government:

                (1) members of boards and commissions appointed by the governor;

                (2) heads of agencies or departments appointed by the governor;

                (3) heads of agencies or departments appointed by the respective boards and commissions of the agencies;

                (4) directors of department divisions;

                (5) employees in the governor's office;

                (6) positions in the state militia and the commissioned officers of the New Mexico state police division of the department of public safety;

                (7) assistants and secretaries in the offices of each official covered by Paragraphs (2) and (3) [and (10)] of this subsection;

                (8) temporary positions of a professional or scientific nature [which are temporary in nature]; and

                (9) state employees whose positions the [personnel] board has classified as [policy-making] policymaking positions and exempt employees of elective public officials [and

                (10) secretaries of departments appointed by the governor].

          B. Excluded from the provisions of this section are:

                (1) employees of the [commission on] higher education [and] department;

                (2) employees of state educational institutions named in Article 12, Section 11 of the constitution of New Mexico;

                (3) the chief investment officer of the public employees retirement association and those subject to the investment-performance-based compensation framework provided for by Section 1 of this 2019 act; provided, however, that the framework has been adopted;

                (4) the chief investment officer of the educational retirement board and those subject to the investment-performance-based compensation framework provided for by Section 2 of this 2019 act; provided, however, that the framework has been adopted; and

                (5) the state investment officer and those subject to the investment-performance-based compensation framework provided for by Section 3 of this 2019 act; provided, however, that the framework has been adopted.

          C. The exempt salaries plan for the ensuing fiscal year, as prepared by the department of finance and administration and approved by the governor, shall be published as a part of the executive budget document presented to the legislature at its next regular session following the preparation of the plan.

          D. Upon the governor's approval, the plan shall take effect at the beginning of the subsequent fiscal year."

     SECTION 6. Section 10-11-2 NMSA 1978 (being Laws 1987, Chapter 253, Section 2, as amended) is amended to read:

     "10-11-2. DEFINITIONS.--As used in the Public Employees Retirement Act:

          A. "accumulated member contributions" means the amounts deducted from the salary of a member and credited to the member's individual account, together with interest, if any, credited to that account;

          B. "affiliated public employer" means the state and any public employer affiliated with the association as provided in the Public Employees Retirement Act, but does not include an employer pursuant to the Magistrate Retirement Act, the Judicial Retirement Act or the Educational Retirement Act;

          C. "association" means the public employees retirement association established under the Public Employees Retirement Act;

          D. "disability retired member" means a retired member who is receiving a pension pursuant to the disability retirement provisions of the Public Employees Retirement Act;

          E. "disability retirement pension" means the pension paid pursuant to the disability retirement provisions of the Public Employees Retirement Act;

          F. "educational retirement system" means that retirement system provided for in the Educational Retirement Act;

          G. "employee" means any employee of an affiliated public employer;

          H. "federal social security program" means that program or those programs created and administered pursuant to the act of congress approved August 14, 1935, Chapter 531, 49 Stat. 620, as that act may be amended;

          I. "final average salary" means the final average salary calculated in accordance with the provisions of the applicable coverage plan;

          J. "form of payment" means the applicable form of payment of a pension provided for in Section 10-11-117 NMSA 1978;

          K. "former member" means a person who was previously employed by an affiliated public employer, who has terminated that employment and who has received a refund of member contributions;

          L. "fund" means the funds included under the Public Employees Retirement Act;

          M. "member" means a currently employed, contributing employee of an affiliated public employer, or a person who has been but is not currently employed by an affiliated public employer, who has not retired and who has not received a refund of member contributions; "member" also includes the following:

                (1) "adult correctional officer member" means a member who is employed as an adult correctional officer or an adult correctional officer specialist by a state correctional facility of the corrections department or its successor agency;

                (2) "juvenile correctional officer member" means a member who is employed as a juvenile correctional officer by the children, youth and families department or its successor agency;

                (3) "municipal detention officer member" means a member who is employed by an affiliated public employer other than the state and who has inmate custodial responsibilities at a facility used for the confinement of persons charged with or convicted of a violation of a law or ordinance;

                (4) "municipal fire member" means any member who is employed as a full-time nonvolunteer firefighter by an affiliated public employer and who has taken the oath prescribed for firefighters;

                (5) "municipal police member" means any member who is employed as a police officer by an affiliated public employer, other than the state, and who has taken the oath prescribed for police officers; and

                (6) "state police member" means a member who is an officer of the New Mexico state police and who has taken the oath prescribed for such officers, except that a state police member shall not include a member who is an officer of the New Mexico state police division and who was certified and commissioned as of June 30, 2015 in the former motor transportation division or the former special investigations division of the department of public safety;

          N. "membership" means membership in the association;

          O. "pension" means a series of monthly payments to a retired member or survivor beneficiary as provided in the Public Employees Retirement Act;

          P. "public employer" means the state, any municipality, city, county, metropolitan arroyo flood control authority, economic development district, regional housing authority, soil and water conservation district, entity created pursuant to a joint powers agreement, council of government, conservancy district, irrigation district, water and sanitation district, water district and metropolitan water board, including the boards, departments, bureaus and agencies of a public employer, so long as these entities fall within the meaning of governmental plan as that term is used in Section 414(d) of the Internal Revenue Code of 1986, as amended;

          Q. "refund beneficiary" means a person designated by the member, in writing, in the form prescribed by the association, as the person who would be refunded the member's accumulated member contributions payable if the member dies and no survivor pension is payable or who would receive the difference between pension paid and accumulated member contributions if the retired member dies before receiving in pension payments the amount of the accumulated member contributions;

          R. "retire" means to:

                (1) terminate employment with all employers covered by any state system or the educational retirement system; and

                (2) receive a pension from a state system or the educational retirement system;

          S. "retired member" means a person who has met all requirements for retirement and who is receiving a pension from the fund;

          T. "retirement board" means the retirement board provided for in the Public Employees Retirement Act;

          U. "salary" means the base salary or wages paid a member, including longevity pay, for personal services rendered an affiliated public employer. "Salary" [shall] does not include overtime pay, allowances for housing, clothing, equipment or travel, payments for unused sick leave, unless the unused sick leave payment is made through continuation of the member on the regular payroll for the period represented by that payment, [and] investment-performance-based compensation received in accordance with Section 1, 2 or 3 of this 2019 act or any other form of remuneration not specifically designated by law as included in salary for Public Employees Retirement Act purposes. Salary in excess of the limitations set forth in Section 401(a)(17) of the Internal Revenue Code of 1986, as amended, shall be disregarded. The limitation on compensation for eligible employees shall not be less than the amount that was allowed to be taken into account under the state retirement system acts in effect on July 1, 1993. For purposes of this subsection, "eligible employee" means an individual who was a member of a state system before the first plan year beginning after December 31, 1995;

          V. "state system" means the retirement programs provided for in the Public Employees Retirement Act, the Magistrate Retirement Act and the Judicial Retirement Act;

          W. "state retirement system acts" means collectively the Public Employees Retirement Act, the Magistrate Retirement Act, the Judicial Retirement Act and the Volunteer Firefighters Retirement Act; and

          X. "survivor beneficiary" means a person who receives a pension or who has been designated to be paid a pension as a result of the death of a member or retired member."

     SECTION 7. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2020.

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