New Mexico pension fund puts some staff raises on hold

New Mexico

 The board overseeing a $15 billion public pension fund placed pay increases on hold for top staff members Tuesday amid recriminations over prior raises and whether they were approved properly.

The New Mexico Public Employees Retirement Association board on Tuesday delayed authorization of scheduled pay raises of 4% for 11 appointed employees, including the executive director of the pension plan for state and local workers.

At the same time, the board approved a 4% raise for about 75 rank-and-file retirement fund employees under a $37 million annual operating budget.

Board member and State Treasurer Tim Eichenberg warned that pension finances and fiduciary obligations have been eroded by successive pay increase at the self-funded agency that were approved without a public vote of the full board, dating back to at least 2004.

“I felt state law was very specific,” Eichenberg told pension Executive Director Wayne Propst at Tuesday’s meeting. “Your raise needs to come before the board.”

Propst has called that assessment misleading and said he followed established practices at the agency for the approval of compensation increases.

Other board members warned that suspending pay increases — already authorized by the Legislature and governor for the fiscal year starting July 1 — would only serve to drive away talented employees.

Solvency concerns are mounting as the pension’s unfunded liabilities exceeded $6 billion in June 2018. The looming obligations to current and future retirees have weighed down the credit rating for the state and the city of Albuquerque in recent years.

Eichenberg asserts that the pension’s executive director orchestrated pay increases — including a 10% raise for himself in 2014 — and other staff without full board approval in violation of state statute and fiduciary obligations.

Both Eichenberg and Propst found affirmation Tuesday in an analysis from the state auditor of procedures for staff pay increases.

State Auditor Brian Colón wrote that Propst acted “reasonably and within his authority.” He described a “legal grey area” of conflicting provisions of state statute and board policy on the approval of compensation. The state Attorney General’s Office is researching its own legal opinion.

“The board should take immediate steps to resolve the conflict,” Colón wrote.

Colón’s memo also noted that past discussions of Propst’s job performance were held by the board in executive session out of public view, and that board member Patricia French wrote a letter to the Department of Finance and Administration requesting a 10% raise for Propst in 2014.

French said Tuesday that she should have been told that full board approval was necessary and that she was due an apology from staff advisers.

Board member and Secretary of State Maggie Toulouse Oliver said infighting among board members is overshadowing their fiduciary duties, and warned that the Legislature could decide to “hamstring” the board’s authority.

Democratic Gov. Michelle Lujan Grisham has convened a task force on pension solvency to recommend reforms to the Legislature next year.

Propst currently earns about $166,000 a year.

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