This report will be of particular interest to the staff and many faculty members who see a nice chunk of change from each paycheck go toward a retirement managed by the New Mexico Education Board (ERB). That pension fund, which went through troubled times during the recent recession, reports rather significant progress.
ERB’s financial gurus, presenting to the legislative Investment and Pension Oversight Committee (IPOC) this afternoon, report the fund reached an all-time high of $11.3 billion as of June 30, 2014. The annual investment earnings are $1.46 billion, a 14.5 percent return. The five-year return is 12.6 percent. Both are higher than the ERB’s investment target of 7.75, though the 10 year return falls short of that goal. That’s the time frame within which the recession falls.
Earlier in the meeting, Legislative Finance Committee Director David Abbey cautioned the committee that New Mexico consistently underperforms in the investment universe, with three of its four funds falling short of target goals. ERB was the exception. All of this talk about targets and goals informs the conversation about where the money is invested and how a diversified portfolio is crafted.
Even hearing about good performance, some committee members would like to see ERB drop its target rate of return, which will prove costly when it comes to solvency. But legislators like Sen. George Munoz, (D-Gallup) are wary of volatility within the investment universe, are looking for a cushion and don’t want to revisit those dire conversations of the recent past about pension cuts. However he’d also like to see something done to get the COLA reductions removed more expediently. The committee was told it’s simply going to be a long, slow process.
The funded ratio report, which measures ERB’s march toward solvency, is expected in November.