Trustees for the Public Employees Retirement Association of New Mexico voted last week to restructure the way the fund is managed. The 12-person board, which is mostly elected by pensioners, decided to delegate more responsibility for the selection of fund managers to investment staff.

Under the changes, PERA's investment management staff, which is composed of about 10 employees who are not elected, will have a greater say over where to invest money collected from PERA members. But one board member tells SFR she is concerned the restructuring will make the fund's investment strategies less transparent to pensioners.

The change comes after the $15 billion defined benefit plan, which administers 31 retirement plans for public employees, grew by more than 11 percent in fiscal year 2017 but fell short of investment targets the previous two years. About 90,000 PERA members are actively paying into the system and 40,000 retirees currently receive benefits.

Board member Loretta Naranjo-Lopez worries that the vote, which was 9-2 in favor of the change, will mean she is giving up some of her fiduciary responsibility even though she is still accountable to the retirees who elected her. She says PERA Chief Investment Officer Dominic Garcia did not give board members anything in writing describing the changes in finer detail.

"They're saying [the changes] would make the fund more efficient, but will it make it better investments?" she told SFR hours after the vote on Nov. 30.

Garcia told board members "that the process we do now with the board being involved in the selection of managers and having managers visit with us" wasn't working, Naranjo-Lopez says.

According to her, the previous chief investment officer of the PERA, Jonathan Grabel, began to limit meetings between managers of the fund and board members. She sees the latest restructuring as part of that effort to reduce the board's power.

"A few [board members] still asked for the document to look at what they're proposing and what's existing, but we didn't get it," she says. "So why are they voting for it? I don't understand."

Garcia, who came to New Mexico as CIO after working as the head of external public markets investments for Wisconsin's state pension fund, writes in an email to SFR that the changes are a "good step forward and [reflect] the Board's desire to ensure we have the best governance policies possible."

A presentation Garcia showed to board members immediately before the vote contains a slide suggesting that board members' responsibilities should be contained to adopting a risk budget for PERA's investment portfolio as well as voting on targets for returns, while an investment committee comprised of some board members and executive staff would recommend budgets and targets.

PERA executive management staff cite the State of Wisconsin Investment Board as a model for the restructuring, but that fund came under fire after an audit found that its employees earned over $11 million in bonuses despite negative returns for the main fund.

The restructuring did not include changes to PERA employee compensation for the time being.

Dan Secrist, the vice president of the Santa Fe chapter of the Communications Workers of America (7076) that represents 3,000 PERA members, condemned the restructuring.

"Nearly all votes on the PERA Board are uncontested," he writes in an email to SFR. "The reason why two employee trustees opposed the move is because it is a power grab by staff who want less oversight over what they do with our members' money."