SANTA FE – State investments are being buffeted by turbulent financial markets as New Mexico voters consider whether to divert more money each year toward early childhood education programs.
A report Thursday from the Legislature’s budget and accountability office shows that the state’s four major public pension and permanent funds shrank by about $825 million during the first three months of the year amid a federal interest-rate hike, the Russian invasion of Ukraine and a wave of COVID-19 infections.
The losses are a tiny share of the funds’ $66.3 billion valuation that grew by 40% over the past five years – a $19 billion surge.
A statewide referendum in November will decide whether to increase annual distributions slightly from the state’s nearly $26 billion Land Grant Permanent Fund. That fund is sustained by investment returns along with oil extraction and other natural resource development on state trust lands.
Currently 5% of the fund balance each year goes mainly toward public schools and universities. The referendum would increase the rate to 6.25% to provide about an additional $200 million to public education.
The increased withdrawals would go toward public school funding for at-risk students and early childhood education programs.
Advocates for the increase want to expand programs such as pre-K, child care assistance and voluntary home-visits to new parents. Critics worry the changes undermine the growth and sustainability of trust.
The referendum would amend to the state’s constitution and also requires authorization from Congress.