The State Investment Council’s history goes back decades, but its origins actually stem from New Mexico’s entry into statehood more than a century ago.
The Land Grant Permanent Fund (LGPF) was created with the public lands given by the United States to the Territory of New Mexico in accordance with the Ferguson Act of 1893, as well as the additional lands deeded to the state by the Enabling Act of 1910, in anticipation of New Mexico’s impending statehood in 1912. These lands, and their associated minerals and other natural resources were designated to provide a benefit to New Mexico schools, universities, and to a lesser degree, a handful of other state beneficiaries.
It was with the creation of the State Investment Council (SIC) in 1957 and the subsequent passage of a constitutional amendment in 1958 that the task of managing the constitutionally protected LGPF was transferred from the legislature to the State Investment Council, formally creating a permanent trust, as well as fiduciary responsibilities for SIC members.
Since then, the State Constitution has been amended a handful of times in regards to the LGPF. These amendments generally allowed the Council to evolve its investment strategies in step with increasingly complex world markets. In November 2014, an amendment removed the 15% limitation on international equity investments and the Uniform Prudent Investor Act (UPIA) was constitutionally adopted.
The Severance Tax Permanent Fund (STPF) has a shorter but equally colorful history. Though severance taxes had been collected in New Mexico since the 1930s, initially those tax revenues were placed in the state’s general fund. Starting in 1959 those revenues were deposited in the severance tax bonding fund, and any excess revenue flowed to the general fund. In 1973, lawmakers established the STPF to save any severance tax revenue not required for annual bond maintenance. Three years later, the legislature passed and voters approved the STPF’s status as a constitutionally protected entity, and in 1983 an additional constitutional amendment removed any legislative authority to draw directly from the fund’s corpus.
In 2000, the Tobacco Settlement Permanent Fund was created, as the result of a Master Settlement Agreement between tobacco companies and most states.
In 2006 and 2007, the legislature appropriated funds to the Water Trust Fund, and granted it constitutional protection from additional legislative draws beyond its $4M/year distribution.
In 2010, the legislature approved statutory improvements in the Council’s administrative structure, changing what had been a primarily executive agency, into a balanced governing entity with a Council comprised of three elected officials, and four appointees each by the Governor and Legislature. These changes removed critical investment decisions from the hands of one or two individuals, placing them more appropriately with the Council as a whole.
More recently, the SIC assumed management of the State’s “rainy day fund”, also known as the Tax Stabilization Reserve (TSR) in 2019. The TSR is invested conservatively, with a focus on principal protection and slow-growth, as it can be drawn-down to meet the state’s fiscal needs in a crisis.
House Bill 83 was signed into law by Governor Michelle Lujan Grisham in February 2020, creating an Early Childhood Education and Care Fund. The endowment will be managed by the SIC in a manner similar to the existing permanent funds. The Fund was established with $300 million on July 1, 2020.