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Pension Funds

New Mexico PERA puts staff raises on hold

The board of the $14.6 billion New Mexico Public Employees Retirement Association, Santa Fe, approved the agency's operating budget, with the exception of a 4% raise authorized by the state Legislature for 10 exempt employees, said Susan Pittard, the pension plan's chief of staff and general counsel, in an email.

Of the 10 exempt employees, five are in PERA's investment division: the CIO, deputy CIO, director of equity, director of rates and credit, and one investment associate.

The board opted to postpone whether the 10 employees will get the same raise as the rest of the state's employees in the midst of a controversy around past raises at PERA.

Also on May 7, the New Mexico state auditor provided PERA's board with information regarding allegations by state Treasurer Tim Eichenberg and other board members that PERA Executive Director Wayne Propst had given himself and other PERA employees raises without full board approval. The Office of the State Auditor found that Mr. Propst "acted reasonably and within his authority in meeting with and obtaining board approval for the proposed raises," the letter states.

"However, the board has the authority to appoint the executive director and set salary; as such, the board, acting as a whole can determine what salary it deems appropriate for those positions," the state auditor's letter said. "The board has the authority to rescind pay raises it deems inappropriate or no longer supports," the auditor's letter states.

But the state auditor stated that the board's failure to approve a fiscal year 2020 operating budget by the May 1 statutory deadline "was reckless or negligent, or both, and coupled with the board's lack of focus on its fiduciary responsibilities puts our retirees and future generations of retirees at risk," the letter said.

At the same time, the auditor noted that there is a conflict between the applicable statutes, administrative code rules and PERA's policies and procedures.

"The board should take immediate action to provide clear alignment between board policies and procedures and applicable legal authority," the letter states.

The board should also provide a process for approving pay increases, the letter said.

This is not the last word on the subject. New Mexico Attorney General Hector Balderas is reviewing a public referral by Mr. Eichenberg with the same allegations of improper raises.