A dispute between the board of New Mexico’s Public Employees Retirement Association (PERA) and its executive staff is set to continue after a contentious special meeting in Sante Fe Tuesday.
The two groups are at odds over proposed pay increases for certain pension fund employees. Investment office staff said that approval power has long rested with the board’s chair, whereas board members argued that they should have all been given the opportunity to consider the proposed raises.
Pay for exempt PERA employees, or those required to disclose their compensation, generally lags peer benchmarks. Nevertheless, board members said they are concerned about the size of the proposed raises.
The organization’s fiscal year 2020 budget proposes that those exempt executive staffers receive four percent raises during the year, a PERA document shows.
As of April 2019, PERA executive director Wayne Propst’s salary was $166,290.45. CEOs at public funds reported compensation of between $174,740.89 and $260,795 in fiscal year 2013-2014 to Pension 360, a database of public pension fund staff’s salaries. With the four percent raise, Propst’s salary would increase to $172,942.06 per year.
Similarly, PERA’s chief investment officer earns below peer standard, and vastly less than typical CIOs at foreign public pension funds, nonprofits, and private-sector firms. CIO Dominic Garcia, who started working for the fund in 2017, is paid $239,700 per year. Ted Eliopoulos, the former CIO of the country’s largest public fund, earned a base salary of $543,780 and a $248,026 bonus in the 2016 fiscal year. Chief investment officers at endowments and foundations tend to make much more than their public pension counterparts. The 35 highest-paid endowment CIOs all made more than $1 million per year, according to the most recent data from search firm Charles Skorina & Co.
The timing of this request rankled PERA board members because investment office staff had received a few raises since 2014 and funded status fell by 3.3 percentage points to 71.6 percent during fiscal year 2018, its annual report showed. PERA has proposed suspending cost-of-living adjustments to pensions for 2019, 2020, and 2021, in the hopes of shoring up funds. As a result, members are concerned about the proposed raises for investment staff, according to board member Loretta Naranjo-Lopez.
“The greed that I see here, I cannot understand it,” Naranjo-Lopez said during Tuesday’s meeting.
The board ought to have acted earlier on the issue, according to investment committee chair John Melia. “The board should take steps to review conflict between laws and policies to prevent this from recurring,” he said at the meeting.
But Tim Eichenberg, the state treasurer who has been criticizing the raises in local New Mexico newspapers, took issue with this defense. “Wrong is wrong, it doesn’t matter who is doing it and when it’s being done,” Eichenberg said during the meeting.
His fellow board member Patricia French asserted that state law required full-board approval for Propst’s raises. The executive director has had three pay hikes since 2014, according to administrative services director Renada Peery-Galon: a 10 percent performance increase in 2014, a 3 percent increase in 2015 and a 2 percent increase in 2016.
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“What I hear is that the entire board was totally responsible for allowing the procedures that took place for years,” said New Mexico secretary of state Maggie Toulouse Oliver. “We should also try to start taking some action going forward knowing that these problems exist. Let’s vote to approve the budget and deal with the salary raise separately.”
Her proposal won out. The board voted to put off the salary issue for later meeting and to approve the rest of the budget Tuesday. What comes next for Propst’s controversial raise is still unclear.
According to PERA’s website, it had $15.4 billion in assets under management as of June 30, 2018.
