SENATE JOINT MEMORIAL 15

51st legislature - STATE OF NEW MEXICO - second session, 2014

INTRODUCED BY

Sue Wilson Beffort

A JOINT MEMORIAL

REQUESTING THAT THE NEW MEXICO LEGISLATIVE COUNCIL AUTHORIZE A CONTRACT FOR PROFESSIONAL SERVICES TO STUDY THE FEASIBILITY AND POTENTIAL BENEFITS OF COMBINING ALL STATE INVESTMENT MANAGEMENT AND INVESTMENT FUNCTIONS.

     WHEREAS, each legislative interim, the members of the legislature's interim investments and pensions oversight committee hear testimony from various state agencies' staff regarding the status of agency investment funds, investment earnings, investing strategies and benchmarks and payments of investment management fees; and

     WHEREAS, as a result of the information derived from that testimony, legislation has been introduced to alter the manner in which those agencies or their respective boards manage, or cause to be managed, agency investment funds; and

     WHEREAS, three of the state's several investing agencies, the state investment council, the educational retirement board and the public employees retirement association, manage over forty-one billion dollars ($41,000,000,000) in institutional investment assets; and

     WHEREAS, there are additional billions in state dollars currently invested through the office of the state treasurer, the education trust board pursuant to New Mexico's 529 college savings plan, the New Mexico finance authority and the New Mexico mortgage finance authority; and

     WHEREAS, despite only minor differences in the investment strategies and the types of assets owned by these various agencies, and because the investments are managed separately, multiple consultants are paid millions of dollars to provide similar investing advice; and

     WHEREAS, many other states have recognized the benefits derived from implementing a consolidated investment model that, employing economies of scale, taps into efficiencies in investment and client services and savings in fees paid; and

     WHEREAS, along with a direct savings and a positive fiscal impact for investment stakeholders, the state's budget and the budgets of the investing state agencies would benefit as well from the savings achieved through consolidation of investment strategies by eliminating duplication of consultants, management services and investment fees; and

     WHEREAS, New Mexico has already reaped positive results from similar studies sanctioned by the New Mexico legislative council and the state board of finance in 2009 that authorized a professional, independent operational review of the practices and policies of certain state investment agencies, including the state investment council, the public employees retirement association and the educational retirement board;

     NOW, THEREFORE, BE IT RESOLVED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO that the New Mexico legislative council be requested to authorize the legislative council service to contract for professional services by a nationally recognized authority to thoroughly study and assess the feasibility and potential benefits of consolidating the investment management and related investment functions of all of New Mexico's investing agencies; and

     BE IT FURTHER RESOLVED that the contracting authority present its findings to the interim investments and pensions oversight committee and the legislative finance committee no later than December 1, 2014; and

     BE IT FURTHER RESOLVED that copies of this memorial be transmitted to the co-chairs of the New Mexico legislative council and the director of the legislative council service.

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