More than 27,000 New Mexicans work for state government, according to the state’s sunshine portal. Those state employees are required to give a portion of their paychecks to a pension fund run by the Public Employees Retirement Association. When an employee retires, the pension is repaid.

But how the pension fund is invested in the meantime—after an employee’s contribution and before his retirement—is much more complex. And as political spending swells in the wake of Citizens United, some critics say certain pension investments may violate public employees’ free speech rights.

Take, for example, an employee of the New Mexico Environment Department who helped hold Chevron Mining Inc. accountable for cleaning up toxic chemicals from a local mine. After his weekly pension contributions are deducted from his paycheck, he doesn’t see where the money goes—even if it goes to a fund that invests in the mine’s parent company, Chevron Corp., which has spent $9.5 million on lobbying in 2011. 

Or consider a faithful Democrat whose pension savings may be invested in Exxon Mobil Corp., the oil giant whose political largess is directed almost exclusively toward Republicans and, along with Chevron, is one of PERA’s top domestic stocks. 

Benjamin Sachs, a Harvard Law School professor, recently argued in the New York Times that public pensions are forcing public employees into political speech. In most states, he argues, public employees are mandated to make contributions from their paychecks into pension funds—which then purchase stock in companies that also make electoral expenditures with their corporate treasuries. Sachs thinks pensions, like unions, should allow public employees to opt out of political spending. 

Carter Bundy, the state political director for the American Federation of State, County and Municipal Employees, points out that union members never have to directly fund the political speech of their unions. On the other hand, corporate shareholders—including PERA—have little control over whether executives direct corporate money to political causes, he says.

“It is absolutely true that our members, through their pension funds, without fair consent or the consent of shareholders, are being forced into types of political speech,” Bundy says, “and it’s a real abuse of power by these corporations.”

Indeed, PERA is a shareholder of some of the largest corporate political spenders in the nation. In 2011, it owned $49.1 million worth of stock in Exxon Mobil, $28.7 million in General Electric Co. stock and $29.6 million in Chevron stock, according to PERA records. 

Alan Jeffers, a spokesman for Exxon Mobil, says the company’s political activity is related to the highly regulated nature of its industries.

“Generally speaking, we monitor and provide input to politicians, often called lobbying, along the lines of how it impacts the business—and fundamentally, that’s the fiduciary duty of the employees and the management of the company, is to represent its interests,” he says. “So I guess, you know, the prerogative of shareholders is either to support that or relinquish their relationship by selling their shares.”

Bundy points out that, compared to PERA’s $12 billion in assets, a $32 million investment isn’t all that significant. Indeed, PERA, like all pension funds, diversifies its money into an array of investment vehicles like US Treasury notes, venture capital partnerships, foreign currencies and municipal bonds.

Felix Meschke, a University of Kansas professor of finance, recently co-authored a study that links corporate political donations to lower stock values. 

Meschke says holding pensions accountable for corporate political spending is “like taking the second step before the first” because corporations often don’t disclose the full extent of their political spending. Some pay dues to trade associations such as the US Chamber of Commerce, which uses some of that money for political expenditures.

“You cannot really put a lot of burden on individual investors on how their money is invested if they don’t have the information infrastructure in place,” Meschke says. “If you want politically conscious people to have a choice, you have to make sure all the expenditures of the companies are accounted for.”

PERA’s Chief Investment Officer, Joelle Mevi, says the retirement account’s investments are “100 percent externally managed.” Through a bid process, PERA chooses institutional fund managers who decide how to invest money. Those managers also vote on behalf of PERA, meaning they’re the ones who could file motions calling for more disclosure or objecting to political spending. 

“While those investments are legally in New Mexico PERA’s name, we didn’t initiate the transaction itself,” she says. “Our perspective here is more in protecting the fund and assuring our beneficiaries have a retirement. That’s hard enough to do with the other forces on the capital markets.”

PERA, like pensions across the nation, is struggling to meet its obligations as it pays out benefits to a growing retiree pool.    

Former public employees interviewed for this article declined to speak on record about the companies PERA invests in. Some said they had no knowledge of the investments or were surprised to learn about them; others were just hoping the fund would remain solvent. Bundy, the AFSCME political director, says the long-term solvency of the fund is the union’s primary concern. 

On Aug. 3, the state Legislature’s Investments and Pensions Oversight Committee will discuss a proposal by PERA that recommends cutting benefits for the state’s public employees. A December study showed that PERA’s ability to meet its pension benefit obligations by 2061 “is bleak at best.” Even the unions, typically resistant to efforts to restructure pensions, are calling for reform; a June 22 document from the PERA Board outlines proposals it deems necessary to shore up the fund’s finances, including reductions in the cost-of-living adjustments, requiring public employees to work longer before receiving benefits and requiring them to pay an additional 1.5 percent of their salaries into the pension fund, beginning as soon as July 2013.