The New Mexico Public Employees Retirement Association board postponed scheduled pay raises for 11 of its top staff, including Executive Director Wayne Propst.
Despite turnover problems blamed on relatively low compensation, the board stopped the 4% pay increases, even though the raises had been approved by the governor and the legislature. The directors insisted that they had to OK any raises at the $15.4 billion self-funded organization.
They haven’t said when, or if, the top officials would get raises.
“I felt state law was very specific,” said state Treasurer Tim Eichenberg, who is a director. He objected to the past practice of skirting the board’s review of raises, dating back to 2004. And he said this had helped widen the now $6 billion funding deficit at the institution. The pension plan is 71.6% funded, according to its latest comprehensive annual financial report.
Board member Claudia Armijo said there was “no way” she could approve the pay boosts, arguing that the fund’s executive staff had already received “huge raises” in 2018. She argued that lower-ranked employees at PERA made far less, as little as $30,000 yearly.
Not everyone on the board agrees that the raises should be stopped. They noted that the top officials’ salaries are at the lower end of their peers nationally, a situation that has encouraged turnover among PERA’s financial professionals.
Propst, the executive director, makes about $164,000 annually, which is far below the $174,740 to $260,795 range for public pension fund chiefs. And that pay range, taken from database Pension 360, actually is outdated. The figures, from 2013 and 2014, have not been refreshed since.
The New Mexico pension plan’s churning of financial pros is indeed remarkable. Dominic Garcia, PERA’s current chief investment officer, is its fourth CIO in eight years. The average investment professional stays at the fund between two and three years.
Propst said he followed established policies for pay raises, calling the board’s assessment misleading. Both the legislature and Gov. Michelle Grisham had already approved the raises for the coming fiscal year, which starts in July.
Agreeing with Propst was state Auditor Brian Colón, who wrote the board the executive director acted “reasonably and within his authority,” although he did note a “legal grey area” existed between the state and board policies regarding raise approval. Meanwhile, New Mexico’s attorney general’s office is looking into the issue.
Colón also urged the board to “resolve the conflict.” He called the board’s communication behavior “unacceptable,” and recommended it improve its relationship with the fund’s executives.