January 25, 2010 | NEWS ARTICLES
Take Politics Out of Investment Council
By Lt. Governor Diane Denish | The Albuquerque Journal | Link to article
Take Politics Out of Investment Council
By Lt. Gov. Diane Denish
New Mexicans depend on members of the State Investment Council to be faithful stewards of the state's permanent funds — which finance state retirement plans, parts of our education system and key infrastructure projects. It's a rainy day fund that represents our promise to future generations of New Mexicans.
Recently, an independent review identified a number of key recommendations to improve and reform many of the SIC's practices. Many of these recommendations are common-sense improvements and I support them.
As lieutenant governor, I do not have a seat on the SIC and I have no involvement over its investment decisions, but I recognize the important role of the SIC and the need to ensure taxpayers have complete confidence in the council's policies and practices.
We must take swift action to remove the specter of politics from the state's investment process and inject transparency into how investment decisions are made.
These two themes reappear often throughout a recent independent review of the SIC and its practices. In the long run, every recommendation deserves careful scrutiny and consideration, but for now we need to do the following.
First and foremost, the public SIC board members must not all be appointed by the governor — whether it be the current governor or a future governor. Limits must be put on the executive's power, such as taking all SIC staff members, including the state investment officer, off the board; allowing the SIC board to select its own chair and vice chair; and dividing the selection of board member appointments among more entities, including the Legislature. We must create the strongest safeguards to protect New Mexico's tax dollars and ensure the responsible growth of state investments from which all will benefit in the future.
However, while the governor should not be intimately involved in investment decisions, the governor is ultimately responsible for overseeing the state's fiscal health and must receive regular investment reports.
Additionally, legislative changes are also needed to properly overhaul the SIC. Legislators should change the law to allow for removal of board members who don't regularly attend meetings, require basic financial expertise and other relevant qualifications from potential new board members, expand disclosure requirements for board members and executive staff, require orientation and ongoing training for board members and develop a clear code of ethics and charter for the council. SIC staff members should also receive regular, continuing career development in best-investment practices.
These are just a few of the common-sense reforms we can make to help remove politics from the SIC and restore public confidence in the investment decisions that are made.
These funds are a public trust and the people of New Mexico deserve a State Investment Council that is dedicated to serving the best interests of our state and working with an eye toward the state's future development. The SIC must not be beholden to the fickle winds of politics.
