Current through Register Vol. 35, No. 18, September 24, 2024
A.
Constitutional and statutory restrictions: The severance tax permanent fund may
be invested in a series of investments that are identified in Section
7-27-5
NMSA 1978 as "differential rate" investments. Differential rate (DR)
investments are defined as those investments intended to stimulate the economy
of New Mexico. DR investments are authorized in Sections
7-27-5.2 through
7-27-5.5,
7-27-5.7, and
7-27-5.13
through
7-27-5.17
NMSA 1978. As a permanent trust fund and in accordance with Section
6-8-7
NMSA 1978, differential rate investments, as with all investments of the fund,
are subject to the prudent man rule and must provide reasonable diversification
and reasonable yield.
B. Council
goals and policies:
(1) The council has
adopted the following goals for the management of the differential rate
portfolio:
(a) to insure that credit quality
is maintained and risk is minimized;
(b) to maintain a diversified portfolio of
investments that are distributed among the various programs and throughout the
state and its economic sectors;
(c)
to stimulate the economy of New Mexico on a continuing basis;
(d) to expand business activity in the
state;
(e) to promote the creation
and preservation of jobs; and
(f)
to provide a reasonable yield.
(2) Achievement of these goals by the state
investment office will be pursued under the following policy: The state
investment office shall develop investment guidelines and procedures providing
requirements that must be met under the various differential rate programs.
Each of the guidelines and procedures shall be adopted in accordance with the
state's Administrative Procedures Act, other relevant statutes, and council
policy. Each differential rate investment program is unique and requires
separate guidelines and procedures to administer. The guidelines for each DR
program will incorporate the specific requirements that are specified by
statute and will also conform to industry practices for that type of
investment. The staff must therefore conduct independent research and analysis
on each separate security type to understand the risks involved. Each DR
investment should then be structured to minimize all anticipated risks and to
meet all New Mexico and federal legal requirements. Finally, all investments
must be properly documented for auditing purposes. These steps will insure a
reasonable probability of achieving the goals and objectives of the
differential rate programs.
