Lifetime Citizen Portal Access — AI Briefings, Alerts & Unlimited Follows
State Investment Council urges restoration of 'bar authority,' warns cost of holding cash could be large
Loading...
Summary
State Investment Officer John Clark told HAFC subcommittee D that the State Investment Council manages about $71 billion but lacks a statutory bar authority to pay fund managers; he warned withholding that authority would force sales or cash holdings (about $11 billion currently in cash) and cost the state hundreds of millions to billions in lost returns.
State Investment Officer John Clark told the House Appropriations & Finance Committee subcommittee D that the State Investment Council (SIC) has seen rapid growth in assets under management — from roughly $48 billion two years ago to about $71 billion today — but that the agency’s budget and staffing have not kept pace.
“We desperately need this bar authority back for FY26 and FY27,” Clark said. He warned the committee that without language restoring bar authority the SIC could be forced to “sell off massive investments and then hold it in cash until next fiscal year,” a strategy he said would cost the state “hundreds of millions of dollars this year and likely billions next year.”
Clark highlighted three interlocking problems: (1) assets under management have grown substantially; (2) the agency’s staffing and compensation lag peer public funds — a consultant found SIC’s staffing is less than half of comparable funds when normalized by assets under management; and (3) public fund manager fees are contractually fixed and competitive, so as AUM rises the council needs more budget flexibility to pay managers or else exit investments.
On staffing, Clark said the council seeks to increase its team to about 54 FTEs by the end of FY27 and that the February staffing request totals just over $4 million. He cited a consultant estimate that current understaffing is costing New Mexico more than $300 million a year in lost investment opportunities, noting the agency is currently holding about $11 billion in cash that “should be invested in private markets.”
Clark also reviewed SIC’s role in state economic development and long-term fiscal projections, saying the council’s investments now return roughly $2.5 billion a year to the state and are projected to grow. He pointed to 2023’s Senate Bill 26 as the turning point allowing severance-tax revenue to be invested and projected that SIC-managed funds could send nearly $10 billion a year to the state by 2050.
Committee members pressed Clark on details. Representative Vincent asked how many staff each portfolio manager handles; Clark said about $4 billion per person by the contractor’s last analysis versus an industry average closer to $2 billion. Representative Dixon confirmed the agency is not drawing on the general fund; Clark said SIC is self-funded and a generator of general fund revenue.
Following discussion, Vice Chair Silva moved that LFC and DFA provide a revised figure that moves SIC “halfway to the executive recommendation,” a motion seconded by Representative Duncan. The motion passed with no recorded opposition.
The SIC presentation included accounts of business development commitments in New Mexico: Clark said SIC has committed about $1.8 billion over three years (about $1 billion in the last year) to regionally focused venture and private-market investments, and cited projects the council said will bring jobs and economic activity to the state.
