The New Mexico Legislature has passed three bills impacting the state's largest asset owners.
Sitting on the desk of Gov. Michelle Lujan Grisham is New Mexico Public Employees Retirement Association solvency legislation that would, among other things, provide for automatic increases and decreases of employer and employee contributions based on the Santa Fe-based $15.6 billion pension plan's funded status. Employees with annual salaries of $25,000 or less are excluded from the automatic increases. The bill also limits the cost-of-living pension increases in fiscal years 2021, 2022 and 2023 to 2% of total annual pension payments including cost-of-living adjustments provided through June 30, 2021. After that, employees' cost-of-living increases will be based on the pension plan's funding ratio.
The final bill no longer includes a $76 million appropriation from the state's general fund for the pension plan. Ms. Grisham is expected to sign the bill.
The Legislature during its 30-day session also passed a bill that increases to 11% from 9% the legal cap for investments in New Mexico private equity funds and New Mexico businesses by one of the $27.9 billion Santa Fe-based New Mexico State Investment Council's endowments. Last year, the council increased the target allocation for investment in in-state startup businesses and venture capital investments to 9%, the prior legal limit, from 5% for one of its endowments, the $5.6 billion Severance Tax Permanent Fund.
The new legislation "gives the council some additional flexibility to deploy additional investment capital if we see attractive opportunities," council spokesman Charles Wollmann said in an email. "It also sends a message to investors outside our state that New Mexico is committed to putting hundreds of millions of dollars to work … by investing in the human capital that's driving a blossoming entrepreneurial ecosystem here."
Ms. Grisham is expected to sign the bill.
The Legislature also passed a bill that creates a new $320 million Early Childhood Trust Fund, The council will start investment July 1, Mr. Wollmann said. The Early Childhood Trust Fund creates "a consistent and sustainable endowment specifically for early childhood education and well-being, as part of New Mexico's efforts to support a pre-cradle through college plan for all the kids in our state," he said. Not including money from the new endowment, New Mexico has budgeted to spend more than $500 million on early childhood education programs next year. Ms. Grisham signed the bill Feb. 18.
