New Mexico T State Treasurer’s Office E S ATE TH O 2055 South Pacheco Street F F Suites 100 & 200 O N

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New Mexico State Treasurer’s Office Annual Report Fiscal Year 2020 Table of Contents

Biography of the State Treasurer...... 3

Statutory Authority...... 4

History of the State Treasurer’s Office...... 5

Significant Milestones...... 6

State Treasurer’s Office Staff...... 8

Budget and Finance Division...... 9

Cash Management Division...... 11

Investment Division...... 14

Operations Division...... 17

Special Programs Division...... 18

Independent Auditor’s Report...... 21

Financial Statements...... 23

Boards and Commissions...... 32

The New Mexico State Treasurer’s Office Annual Financial Report for the Fiscal Year ended June 30, 2020, provides a synopsis of STO’s achievements. An electronic version of this report is available at www.nmsto.gov.

New Mexico State Treasurer’s Office Page 1 Fiscal Year Ended June 30, 2020 E STATE TH O F F O N E

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STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER THE HONORABLE TIM EICHENBERG SAMUEL K. COLLINS, JR. State Treasurer Deputy State Treasurer

December 15, 2020

The Honorable Michelle Lujan Grisham, Governor of New Mexico Members of the New Mexico State Legislature New Mexico State Board of Finance Citizens of the State of New Mexico

Dear Fellow New Mexicans,

The State Treasurer’s Office respectfully submits the Annual Report for the fiscal year ending June 30, 2020. The report includes financial statements and other pertinent information regarding operations and accomplish- ments of the agency, which include generating more than $112.5 million in earnings for FY2020.

It has been an honor to serve as your State Treasurer and I will continue to represent the citizens of New Mexico with honesty and integrity, while safeguarding the taxpayers’ money through sound management practices and a safe investment program.

Due to the COVID-19 pandemic and quarantine, this has been an unprecedented year. The dedicated employees of the State Treasurer’s Office began teleworking in March without skipping a beat. We thank them for their hard work and commitment to the agency’s success and New Mexico’s wellbeing.

Sincerely,

Tim Eichenberg New Mexico State Treasurer

2020 Annual Report Page 2 New Mexico State Treasurer’s Office Biography of the State Treasurer

im Eichenberg assumed office on January 1, 2015, becoming the 29th State Treasurer of New Mexico. Raised in Albuquer- Tque, New Mexico, he attended Albuquerque Public Schools and graduated from the University of New Mexico. He and his wife have two adult children and two grandchildren.

Mr. Eichenberg’s career in public service began when he was elected Bernalillo County Treasurer. The reforms that were implemented dur- ing his tenure saved taxpayers money and led to his re-election. After serving two terms as Bernalillo County Treasurer, he went to work in the private sector. He operated a small business in Albuquerque as a Property Tax Consultant, State Certified Appraiser, General Contractor (GB-98), and Real Estate Broker.

Mr. Eichenberg was first elected to the Albuquerque Metropolitan Ar- royo Flood Control Authority Board in 1994, a position he still holds The Honorable Tim Eichenberg today. He was appointed by Governor Richardson to the position of New Mexico State Property Tax Director.

Mr. Eichenberg was elected to the New Mexico State Senate in 2008. As a State Senator, he chaired the Restruc- turing Committee, which sought to streamline State government and save taxpayers money. In 2010, he carried the Governmental Conduct Act, establishing a code of ethics for all government employees. In 2012, Mr. Eichen- berg served as Chair of the Revenue Stabilization and Tax Policy Committee.

Biography of the Deputy State Treasurer

amuel K. Collins, Jr., was sworn in as Deputy State Treasurer on October 7, 2015, by District Judge Stan Whitaker, and again for Sa second term on January 2, 2019, by the Office of the Secretary of State. Prior to his appointment, Mr. Collins served as the New Mexico State Cash Manager.

Mr. Collins’ background combines experience in the public sector with several years of senior-level bank management. Before beginning public service with the State Treasurer’s Office, which serves as the bank for the State, he served for 15 years as President/Chief Executive Officer of Union Financial Corporation and its subsidiaries (Union Savings Bank and Union Savings Bank Mortgage Company) in Albuquerque. He also served as Vice President/Controller at Pioneer Bank in Roswell.

Mr. Collins is a native New Mexican who was born and grew up in Samuel K. Collins, Jr. Roswell.

New Mexico State Treasurer’s Office Page 3 Fiscal Year Ended June 30, 2020 Statutory Authority

he Office of the State Treasurer was created Section 6-10-10 NMSA 1978, in part, permits the under Article V, Section 1 of the New Mexico State Treasurer to deposit funds in certain financial TConstitution. The duties and responsibilities of institutions and to invest, in certain allowable securi- the State Treasurer are primarily defined by Chapters ties and contracts, money not immediately required 6 and 8 of the New Mexico Statutes Annotated 1978 for the operation of State government. (NMSA 1978). These and other Chapters of New Mexico Statute a) require the Treasurer to act as the Section 6-10-10.1 NMSA 1978 creates a short-term State’s banker to receive, keep, and account for State investment fund, which serves as an optional invest- funds collected and disbursed, and b) define the State ment opportunity for local governments and Native Treasurer’s banking, cash management, and invest- American tribes, nations, and pueblos; and provides ment roles. The principal statutory provisions related for the investment of the fund, either separately or to the State Treasurer’s prudent management of the consolidated with other funds, by the State Treasurer. State’s financial resources and investment authority are listed below. Sections 6-10-24.1, 6-10-25, 6-10-26, and 6-10-29 NMSA 1978 place conditions on the deposit and Sections 8-6-1 through 8-6-7 NMSA 1978 specify investment of State funds in New Mexico financial administrative and procedural requirements and institutions; provide for reports from the State Trea- define certain duties of the State Treasurer. Section surer concerning money on deposit in State deposito- 8-6-3 provides that, among other responsibilities, the ries, including the amount required for operation of State Treasurer shall “receive and keep all monies of State government and the amount available for invest- the State, except when otherwise specially provided” ment; and require depositories to submit an itemized as well as “disburse the public money upon warrants monthly statement concerning the deposits to the drawn according to law.” This section also requires State Treasurer. that the State Treasurer shall “keep a just, true, and comprehensive account of all monies received and Section 6-10-24.2 NMSA 1978 establishes the linked disbursed.” deposit program, which allows the State Treasurer to invest up to 14% of State deposits, not to exceed Section 6-1-13 NMSA 1978 provides that the State $49 million, in certain financial institutions located in Treasurer shall authorize all deposit accounts for State financially at-risk rural communities; places condi- agencies and prescribe conditions and reports appro- tions on the deposit of State funds in these financial priate to such accounts. institutions; and authorizes the State Treasurer to accept a rate of interest not more than 1% below the Section 6-8-6 NMSA 1978 places the State permanent market rate. fund in the custody of the State Treasurer; and provides that the State permanent fund, or any part of the fund, Section 6-10-28 NMSA 1978 allows the State Trea- shall at all times be available to the State Investment surer to invest the proceeds of general obligation and Officer for investment in accordance with State law. State revenue bonds.

Section 6-8-11 NMSA 1978 places in the custody of Section 6-12A-5 NMSA 1978, permits the State Trea- the State Treasurer securities purchased or held by the surer to issue and sell one or more tax revenue antici- State Investment Officer or the State Investment Coun- pation notes; and permits the State Treasurer to pledge cil and authorizes the State Treasurer, with the approv- the anticipated revenue to secure the payment of the al of the Secretary of the Department of Finance and principal of and interest on the anticipation notes. Administration, to deposit the securities with a bank or trust company for safekeeping and servicing.

2020 Annual Report Page 4 New Mexico State Treasurer’s Office History of the State Treasurer’s Office

n 1851, the Legislative Assembly of the Territory members of the executive branch—the Lieutenant of New Mexico passed an act that created the Governor, the Secretary of State, the State Treasurer, IOffice of the Territorial Treasurer and defined the the Attorney General, the State Auditor, and the Com- powers and duties of the Treasurer. missioner of Public Lands—all share the responsibil- ity for administering State government. The State With Statehood in 1912, Article V Section I of the Treasurer serves as the elected chief banking officer of New Mexico State Constitution created the Office of the State and is entrusted with keeping, investing, and the State Treasurer and recognized the State Treasurer disbursing all State money, unless otherwise provided as an elected official within the executive department by law. In addition, the State Treasurer is charged with of State government. While the Governor is the chief a variety of other duties directed toward ensuring pru- executive officer, under New Mexico’s pluralistic form dent management of the State’s financial resources as of executive branch of government, the other elected set forth in various sections of the statutes.

NEW MEXICO STATE TREASURERS

Owen N. Marron 1912–1916 Joe Callaway 1 1959–1962 H.L. Hall 1917–1918 Joseph B. Grant 1 1963–1966 Charles U. Strong 1919–1920 H.E. Thomas, Jr. 1967–1968 O.A. Matson 1921–1922 Merrill B. Johns, Jr. 1968–1969 John W. Corbin 1923–1924 Jesse D. Kornegay 2 1969–1974 Warren R. Graham, Sr. 1 1925–1928 Edward M. Murphy 1975–1978 Emerson Watts 1929–1930 Jan Alan Hartke 1979–1982 Warren R. Graham, Sr. 1931–1932 Earl E. Hartley 1983–1985 Clinton P. Anderson 1933–1934 James B. Lewis 2 1985–1990 James J. Connelly 1 1935–1938 David W. King 1991–1994 Rex French 1 1939–1942 Michael A. Montoya 3 1995–2002 Guy Shepard 1 1943–1946 Robert E. Vigil 2003–2005 H.R. Rodgers 1 1947–1950 Douglas Brown 2005–2006 R.H. Grissom 1 1951–1954 James B. Lewis 3 2006–2014 Joseph B. Grant 1 1955–1958 Tim Eichenberg 3 2015–Present

1 Served two terms of two years each. 2 Served one term of two years and one term of four years. 3 Served two terms of four years each.

New Mexico State Treasurer’s Office Page 5 Fiscal Year Ended June 30, 2020 Fiscal Year 2020 Highlights

• Fiduciary assets reached a new record, exceeding $7 billion

• Local Government Investment Pool assets exceeded $1 billion

• Online portal implemented that gives Local Government Investment Pool participants direct, timely account access

• Investment earnings of $178.6 million distributed

• No findings identified during independent audit

• ABLE program reached record level of accountholders and funds

• Work and Save legislation passed, paving the way for private-sector retirement savings

• Foster youths received financial literacy training

• Work-from-home policy successfully implemented in response to the COVID-19 public health emergency

2020 Annual Report Page 6 New Mexico State Treasurer’s Office State Treasurer’s Office Staff Staff as of December 15, 2020

Tim Eichenberg—State Treasurer Samuel K. Collins, Jr.—Deputy Treasurer

Felicia Anaya Vikki Hanges LGIP Coordinator Chief Investment Officer

Marie Andermann Victoria Hutchison Accountant & Auditor A Securities Coordinator

Claudia Armijo Brent Johnson Work and Save Director IT Technology Officer

Denise Balderas Paul Madrid ABLE Coordinator IT Systems Administrator III

Dominic L. Chavez David Mahooty Cash Management Division Manager Chief Financial Officer

Hannah Chavez Anna Murphy Investment Transaction Supervisor Portfolio Manager A

Charmaine Cook, AAP Denise Payne State Cash Manager Overnight Repo Coordinator

Alisha Dominick Michael Romero Financial Coordinator A Accountant & Auditor A

Dominic Donio Diana Rosales-Ortiz Administrative Operations Manager I Chief Operations Officer/Chief Risk Officer

Robert Feagans Maria Schoeppner Accountant & Auditor O Accountant & Auditor O

Julie Filatoff Katrina Smedley Staff Manager Human Resources Specialist

Arsenio Garduño Annabel Vigil Collateral Manager Accountant & Auditor A

New Mexico State Treasurer’s Office Page 7 Fiscal Year Ended June 30, 2020 Budget and Finance Division

he Budget and Finance Division manages the annual budget, accounts payable, procurement, Tprofessional contracts, fixed-asset inventory, and all financial accounting and reporting activities for the State Treasurer’s Office.

It is the responsibility of the Budget and Finance Division to reconcile and post operating, invest- ment, and long-term debt fund activity in the State Treasurer’s general ledger (financial statements) and coordinate the annual financial audit. The division must comply with State laws, various regulations, and accounting standards that govern its activities.

Chief Financial Officer Budget Bureau The State Treasurer’s Chief Financial Officer (CFO) The Budget Bureau compiles and evaluates annual serves as the Budget and Finance Division Director. budget needs for each division within the State Trea- The CFO is responsible for establishing strong bud- surer’s Office. Proper justification and documentation getary controls and ensuring that financial transac- are required for all budget requests. The appropriation tions and reporting activities are in compliance with request is submitted to the Department of Finance and Generally Accepted Accounting Principles (GAAP) Administration and the Legislative Finance Commit- and Governmental Accounting Standards Board tee for consideration by the Legislature and the Gov- (GASB) rules. This function requires that transactions ernor. When the appropriations act is passed by the are recorded and posted in the proper category and Legislature and signed by the Governor, the Budget that cash account records are reconciled in a timely Bureau prepares the operating budget for the upcom- manner, with monthly reports to the State Treasurer. ing fiscal year. Throughout the fiscal year, the Budget Bureau submits monthly status reports to the State The CFO is responsible for ensuring that budget and Treasurer to ensure that the office is operating within accounting systems function properly and that ap- budget guidelines. propriation requests, operating budget, and quarterly performance reporting documents are submitted on Finance Bureau time. In addition, the CFO coordinates annual exter- The Finance Bureau is charged with the following nal audit work between the State Treasurer’s Office responsibilities: and the independent public accounting firm, and is responsible for having the audit reports completed Reconciliation & Preparation of Financial by the deadline. This position oversees procurement Statements & Treasury Transaction of goods and services, and assures that payments to Postings to General Ledger vendors are completed in compliance with the State The Finance Bureau coordinates information required procurement law. by the independent public accounting firm performing the annual external audit.

Contract Management This ensures that requests for proposals (RFPs) and service contracts are prepared in compliance with

2020 Annual Report Page 8 New Mexico State Treasurer’s Office Budget and Finance Division

statutes, rules, and policies, and that vendor payments in FY2019 and in FY2020. Improved internal for completed services are timely. This unit also en- contraols, and adherence to those controls, led to ters contract transactions into the general ledger and the latest satisfactory audit. subsequently closes them out in accordance with the • Continued to convert physical warrant payments agreement and all applicable regulations. to paperless, all-electronic disbursements. Accounts Payable to Receive and Process • Continued updates of the financial matrix devel- Invoices for Goods and Services Rendered oped by STO and DFA, and continued working This includes the pre-audit of costs in accordance with the agency’s other divisions to overcome the with the contract or purchasing agreement prior to obstacles of SHARE. payment. Accounts payable submits payment requests • Continued improving procurement procedures for to the Department of Finance and Administration; purchases of goods and services to ensure adher- upon receipt of the payment, the warrant is reviewed ence to the State Purchasing Act. for accuracy prior to release to the vendor. • Continued communication and improvement on Investment Accounting Bureau internal and external customer service. The bureau makes all scheduled debt service pay- Initiatives for FY2021 ments to the designated paying agents on general • Convert a majority of physical warrant payments obligation bonds, severance tax bonds, and supple- to paperless all-electronic disbursements. mental severance tax bonds. The bureau tracks invest- ment income to ensure compliance with arbitrage • Continue improving procurement procedures for restrictions and rebate requirements in accordance purchases of goods and services to ensure adher- with the Federal Tax Reform Act of 1986. The bureau ence to the State Purchasing Act. reconciles all investment activity. All certificates of • Continue communication and improvement on deposits (CDs) and New Mexico gaming revenue are internal and external customer service. managed by the bureau. • Address and build redundancy into the division to Significant Milestones & ensure ongoing operations. Accomplishments for FY2020 • Leverage technology to move toward a paper-free • The FY2020 audit yielded an unmodified opin- environment. ion with no findings for the second consecutive year since FY2019. The number of findings has • Update written procedures for the Budget and reduced significantly from four in FY2014 to zero Finance Division to reflect the teleworking envi- ronment.

New Mexico State Treasurer’s Office Page 9 Fiscal Year Ended June 30, 2020 Cash Management Division

he Cash Management Division provides system, and for releasing vendor payments processed treasury banking services to the State through through SHARE as ACH transactions. Tthe fiscal agent contract and relationship. These services include cash forecasting and liquidity Monthly reports are obtained from State agencies de- management to ensure that payments issued by the tailing funds from any source in the agency’s custody. Department of Finance and Administration and other The bureau authorizes State agency requests for de- agencies are funded on a timely basis. Cash Manage- pository bank accounts outside the fiscal agent bank; ment also oversees depository activity by all agencies, reports account balances in each financial institution and ensures that public funds held by financial institu- to the State Board of Finance; verifies compliance tions are collateralized appropriately. Additionally, with established bank account guidelines and reports functional responsibilities have been realigned within any deviations to the agency and the State Board of STO to provide greater separation for investment Finance; and enforces laws and regulations that apply transaction settlement and investment compliance. to financial institutions receiving State funds. This bureau also reviews the monthly fiscal agent account The position of State Cash Manager was established analysis for compliance with the agreement and to in 1993 under 8-6-3.1 NMSA 1978 and its duties are identify and prevent unauthorized use. defined to include: issue regulations to enforce the Cash Management Improvement Act; monitor State Cash Flow agencies’ cash activity and the balances on hand in The Cash Management Division is responsible for financial institutions; monitor deposits and cash bal- projection of the State’s short-term and long-term ances on hand to enable projection of short-term and cash balance needs, utilizing an internally developed long-term cash available for investment; and prepare model. STO uses historical trends, together with in- a monthly written report to the State Treasurer’s formation related to significant receipts and disburse- Investment Committee and the State Board of Finance ments, as the primary input to the model. The division of the State fund balances in financial institutions. coordinates with State agencies that have the largest inflows and outflows of funds to anticipate changes Cash Management Functional Areas in the amount and timing that could impact the cash Banking Resources Bureau position of the State Treasurer’s Office. The cash The Banking Resources Bureau monitors all balances flow model is updated monthly (or more frequently, and activity related to State funds in financial institu- if necessary) and a written report is issued to the tions. Specific activities of this bureau include devel- State Treasurer’s Investment Committee and the State opment of regulations related to approximately 300 Board of Finance. bank accounts, with approval, analysis, and authoriza- tion of these State agency bank accounts. The Cash Management Division also performs daily cash positioning. Cash positioning is the process of The bureau validates deposits and withdrawals into determining the State’s cash needs on an intra-day ba- and out of the State’s fiscal agent accounts, includ- sis to meet its obligations. Funds that are not required ing all adjustments to the accounts such as returned to meet the State’s immediate cash needs are invested checks, stop payments, and other miscellaneous trans- by the investment division to provide additional earn- actions posting to the accounts. The bureau compares ings. Cash positioning is a very critical function be- fiscal agent bank accounts’ activity to transactions in cause errors can result in overdrafts or returned items the State’s enterprise accounting system (SHARE) at the fiscal agent bank. daily. The bureau is also responsible for all Banking and Treasury Module configuration in the SHARE The Cash Management Division will continue to

2020 Annual Report Page 10 New Mexico State Treasurer’s Office Cash Management Division

research and work with the State’s fiscal agent, other CMIA compliance. banking institutions, and other professional organi- zations in implementing modern cash-management Collateral Management/ products to further best practices and accelerate Investment Compliance receipts for more effective cash management, and The Collateral Manager ensures that adequate protec- thereby maximize funds available for investment. tion of State monies is maintained in all State agency deposit accounts at all times. This is accomplished by Cash Management Improvement Act requiring all qualified financial institutions to pledge The CMIA Coordinator is responsible for compliance collateral to secure public deposits. Risk assessment with the Cash Management Improvement Act of 1990 reports are analyzed to determine data accuracy, the (CMIA). Congress established the CMIA to ensure institution’s financial condition, and the percent- efficiency, effectiveness, and equity in the transfer of age of collateral required. The pledged collateral is funds between state and Federal governments. CMIA constantly monitored and must comply with all State addresses key Federal funding issues, such as funds requirements and custodial agreements. Both pro- drawn in advance of need or late grant of awards from posed and current pledged collateral are continuously the Federal government. Major CMIA provisions evaluated for compliance with all applicable statutes, require that: policies, and depository and custodial agreements. Pledged securities are monitored to assure that accept- • Federal agencies make timely fund disbursements able, valid, and marketable instruments secure public and grant awards to states. funds at all times. Custodial banks are monitored to • State and Federal agencies must minimize the evaluate their strength and stability. The Collateral time between the transfer of Federal funds to Manager provides monthly reports to the State Trea- states and the presentment of states’ checks, war- surer’s Investment Committee regarding compliance rants, or settlement of electronic fund transfer by all financial institutions and plays a key role in the payments for program purposes. Division’s cash-forecasting activities. The Collateral Manager also reviews trade documentation for adher- • With minor exceptions, that states earn interest ence to the State Treasurer’s Investment Policies and from the Federal government for the time the state Investment Division procedures. advances its own funds for program purposes prior to Federal reimbursement. Investment Transactions Bureau The movement of funds and recording of investment The CMIA Coordinator performs annual compli- activity into the Treasurer’s sub-ledger accounting ance reviews of State agencies that receive Federal system and the custody system are performed in the funds exceeding an established threshold and for bureau, now aligned under the Cash Management compliance with the CMIA and regulations outlined Division. The bureau verifies all trade activity from in the U.S. Treasury/State Agreement (TSA). This trade documentation, and enters the data into the agreement, negotiated between New Mexico and the sub-ledger accounting systems, SHARE and the QED Federal government, identifies the funding techniques Broadridge Investment Accounting, and the cus- utilized for covered programs. Audits begin at the tody system. The bureau also manages the overnight end of the fiscal year and must be completed by mid- repurchase process. The bureau provides administra- December. The Cash Management Division submits tive management of the Local Government Invest- an annual report to the U.S. Treasury detailing State ment Pool (LGIP), whereby they correspond with and/or Federal government interest liability and any participants on a daily basis. Several reconciliation costs associated with the monitoring and reporting of processes take place regularly, including a weekly

New Mexico State Treasurer’s Office Page 11 Fiscal Year Ended June 30, 2020 Cash Management Division reconciliation submission to the Standard & Poor’s rating agency for the LGIP.

Significant Milestones & Accomplishments for FY2020 • Installed and implemented the iPAS module of the QED Broadridge Investment Accounting system. IPAS enables online access to LGIP participants for statements and transaction initiation.

• Supported the implementation and activation of government money market funds as an additional investment option for managing liquidity.

• Worked with the New Mexico Department of Finance and Administration (DFA) and the New Mexico State Board of Finance (BoF) to guide and support agencies wishing to accept payment cards for the first time and agencies wishing to • In conjunction with the PCI Compliance efforts, expand or modify payment card services; and to the Cash Management Division will continue to provide oversight for the quarterly and annual PCI work with DFA and DoIT to formalize the process audits performed by vendor RiskSense. through which agencies can request approval from the State Board of Finance for additions or chang- Initiatives for 2021 es to payment card services, vendors, or platforms and to implement related services with the fiscal • Fully assess and develop a roadmap for alternative agent bank. solutions for processing bank deposits in remote communities in New Mexico, which have been • Following the implementation of online access for impacted by banks closing branches. LGIP participants, conduct an outreach campaign aimed at increasing the number of local govern- • Actively participate with the Board of Finance ment entities benefitting from the investment in developing one or more requests for proposal expertise provided by STO. (RFPs) for fiscal agent banking services. Work with BOF and DFA to develop an enterprise • Assess operational requirements and develop program for the ongoing support of PCI DSS plans for adoption of alternatives for overnight (bankcard data security) compliance; assist vendor repurchase agreements and a longer-term LGIP RiskSense with obtaining quarterly and annual pool. audit responses from agencies.

2020 Annual Report Page 12 New Mexico State Treasurer’s Office Investment Division

he Investment Division is responsible for Investment Strategy investing money, transacting funds, and ac- During FY2020, the division earned approximately Tcounting for and reconciling funds held in the $112.5 million. At the end of FY2020, the five portfo- custody of the State Treasurer that are not immedi- lios totaled approximately $7.4 billion. All funds are ately needed for government operations or to fund invested in a manner that conforms to Federal, State, capital projects. The managed funds are temporary in and other legal requirements. The division is charged nature, originating from three major sources: revenue with observing the following priorities in making collected by the State awaiting disbursement, legisla- investment decisions, in the order described: tive appropriations, and proceeds from bond issues invested short-term until disbursed for legislatively 1. Safety—The first priority must be accorded to the authorized capital projects. preservation and protection of the principal of the funds to be invested. Investments are restricted to the highest-quality secu- rities according to ratings by the major rating agencies 2. Maintenance of Liquidity Needs—The second and to a term of not more than five years. The State level of priority must be accorded to maintaining Treasurer’s Chief Investment Officer and internal sufficient availability of cash, or the capacity to investment team discuss, agree upon, and recommend obtain it without sacrificing principal loss, to sat- the security types and terms prior to purchase; secure isfy the reasonably anticipated, continuing opera- and distribute post-trade documentation; facilitate tional requirements of the specific fund invested. trade settlement initiation; and report the executed portfolio activity monthly to the State Treasurer’s In- 3. Maximum Return on Investments—The third vestment Committee and the State Board of Finance. priority must be accorded to maximizing invest- The State Treasurer’s Office contracts with an inde- ment return, consistent with the higher priorities pendent investment advisor who provides advisory accorded to the safety and liquidity of principal. services to the State Treasurer and staff. Investment Division Organization The State Treasurer’s Investment Portfolio Management Investment Committee The State Treasurer’s Office makes statutorily defined The State Treasurer’s Investment Committee (STIC) is investments that may be subject to further limita- an advisory committee that meets monthly to review tions or restrictions by the State Treasurer’s Invest- the investment portfolios for statutory compliance, ment Policy, which provides guiding principles for all quality, diversification, maturity, and performance. investment decisions. All portfolios are invested by The STIC also reviews portfolio controls and collat- qualified and experienced in-house portfolio manag- eral adequacy, and recommends investment procedural ers. The internal investment advisory team discusses, changes. Periodically, the committee recommends agrees upon, and recommends the security types changes to the State Treasurer’s Investment Policy. and terms prior to purchase and reports the executed portfolio activity to the STIC monthly. The division, with the assistance of the investment advisor, devel- ops benchmarks against which the portfolios’ per- formance can be measured. The portfolio managers invest the available cash based upon the intended uses into one of the pools described below.

New Mexico State Treasurer’s Office Page 13 Fiscal Year Ended June 30, 2020 Investment Division

Investment Funds Managed by The Bond Proceeds Investment Pools the State Treasurer’s Office The State Treasurer is responsible for investing bond The General Fund Investment Pool proceeds from the issuance of State bonds sold by the The General Fund Investment Pool consists of three State Board of Finance for capital projects, which in- main components: clude general obligation bonds, severance tax bonds, and supplemental severance tax bonds. These bonds • General Fund Liquidity Portfolio—Immediate are long-term obligations issued by the State of New cash needs of the State are met with the General Mexico to fund various infrastructure projects on Fund Liquidity Portfolio. The Liquidity Portfolio behalf of all New Mexicans. is expected to have minimal liquidity risk and all Bond proceed monies are managed according to investments in this portfolio are constrained to whether the issued bonds were tax-exempt or taxable. less than one year. 1. The Tax-Exempt Bond Proceeds Investment • General Fund Core Portfolio—The Core Port- Pool (Tax-Exempt BPIP) holds proceeds from folio is comprised of balances that are not neces- tax-exempt general obligation and severance tax sary to meet the short-term cash-flow needs of the bonds issued by the State Board of Finance until State. Accordingly, it may be invested over a lon- they are expended on capital projects. ger term than the Liquidity Portfolio. Investments are constrained to maturities of five years or less. 2. The Taxable Bond Proceeds Investment Pool (Taxable BPIP) holds proceeds from taxable • General Fund Tax and Revenue Anticipation severance tax bonds issued by the State Board of Notes (TRAN) Portfolio—The TRAN portfo- Finance until expended on capital projects. lio may temporarily hold proceeds of short-term Tax and Revenue Anticipation Notes, which are During FY2020 the bond proceeds pools reported periodically issued and sold by the State Treasurer $13.9 million in earnings. At fiscal year end, the bond pursuant to NMSA 1978, Section 6-12A-5. There proceeds pools had $19.1 million in unrealized gains, were no TRANs issued in FY2020. based on mark-to-market. Most investments are held to maturity. The State Treasurer’s Office makes a portion of the General Fund money available for investment in The BPIPs facilitate the tracking of investment earn- certificates of deposit (CDs) with New Mexico banks ings and project draws to assure compliance with and credit unions to foster the economy of their com- arbitrage restrictions and rebate requirements in ac- munities. The passage of House Bill 471, the “Linked cordance with the Federal Tax Reform Act of 1986. Deposit Program,” during the 2007 legislative session expanded the CD program to allow the Treasurer to Local Government Investment Pool (LGIP) place time deposits with qualifying financial institu- The LGIP is a fund created pursuant to NMSA 1978 tions (those serving economically disadvantaged rural 6-10-10.1 to allow municipal, city, county, tribal, communities) at favorable rates. and quasi-governmental bodies to voluntarily remit money to the State Treasurer to receive professional During FY2020 the General Fund reported $76 mil- money management on a pooled basis. The LGIP is lion in earnings. At fiscal year end, the General Fund rated “AAAm” by Standard & Poor’s, the highest Investment Pool had an unrealized gain of $82.6 mil- principal stability credit rating awarded by Standard lion based on mark-to-market. Most investments are & Poor’s, and has been reaffirmed annually since held to maturity. August 2007.

2020 Annual Report Page 14 New Mexico State Treasurer’s Office Investment Division

The State Treasurer has expanded a statewide out- • Pursued effective portfolio duration and sector reach program to inform eligible entities about the strategies to maximize investment returns in a benefits of investing in the LGIP in concert with the lower interest-rate environment. New Mexico Municipal League and New Mexico • Continued outreach (LGIP, banks, CD program, Counties. Annual Stakeholder Meetings have been counties, and municipalities), within the confines successful, informing LGIP participants of fund of COVID-19 restrictions. performance, investment strategies, and economic conditions. Initiatives for FY2021 • Improve electronic trading capabilities with the During FY2020 the Local Government Investment addition of MarketAxess, to enhance the transpar- Pool reported $13.9 million in earnings. ency and execution for transactions within the corporate sector. The Severance Tax Bonding Fund Pool The Severance Tax Bonding Fund holds severance • Research and implement more robust credit en- tax receipts pledged for debt service on severance tax hancement tools to aid in the restructuring of the bonds. Excess receipts can then be spent on permitted approved credit lists of issuers. uses or transferred to the Severance Tax Permanent • Maximize investment returns through duration Fund held by the State Investment Council. During and security selection, while maintaining adequate FY2020 the Severance Tax Bonding Fund reported liquidity to meet required cash flows. $4.8 million in earnings. • Review the broker/dealers on the approved list. Overnight Repurchase Pool • Conduct the annual portfolio benchmark review The Repurchase Pool acts as a repository for cash for maintenance and to incorporate proposed balances from the portfolios managed by the State changes, followed by obtaining the necessary ap- Treasurer and for cash from the Educational Retire- provals, including the advice and consent of the ment Board, the State Investment Council, and the New Mexico State Board of Finance. Public Employees Retirement Association. • Explore the potential for investing in additional fixed-income sectors. Significant Milestones and Accomplishments for FY2020 • Increase the approved list of creditworthy repur- • Updated and revised the State Treasurer’s Invest- chase agreement counterparties for diversification ment Policies, facilitating implementation through purposes. the prescribed approval processes that culminate • Continue outreach (LGIP, banks, CD program, with the advice and consent of the New Mexico counties, and municipalities). State Board of Finance. • Create a monthly informational newsletter for • Conducted the annual portfolio benchmark re- LGIP participants and prospects. view for maintenance and to incorporate proposed changes, followed by obtaining the necessary approvals, including the advice and consent of the New Mexico State Board of Finance. • Implemented iPAS for LGIP, a front-end automa- tion tool for participants’ contributions, withdraw- als, and reporting.

New Mexico State Treasurer’s Office Page 15 Fiscal Year Ended June 30, 2020 Operations Division

he Operations Division is responsible for facilities management and security, agency Tvehicle maintenance, mail processing, and inter-agency deliveries. It also provides information technology (IT) and daily office operations support to the State Treasurer’s Office. The division responds to internal employee needs and works with external agencies and stakeholders.

Information Technology Bureau The IT Bureau operates, maintains, and monitors the State Treasurer’s Office IT systems. The bureau evaluates business processes and plans for automating enforcement agency and submitted to the Department functions where possible. The bureau maintains the of Public Safety within 60 days following the conclu- agency servers, computers, local area network, invest- sion of each fiscal year regarding seizures and forfei- ment systems, accounting system, and telecommuni- tures conducted pursuant to applicable State law and cations for the office. The bureau also maintains the Federal forfeiture law. disaster recovery network and manages the security systems and information systems (software and hard- Loss Prevention and Control Program ware). The bureau is responsible for cybersecurity and the maintenance of the State Treasurer’s Office The Loss Prevention and Control Program complies Disaster Recovery and Business Continuity Plan. The with the State Loss Prevention and Control Program State Treasurer’s Office maintains a disaster recovery rule (1.6.4 NMAC) to assure that loss prevention and site (hot site) at an off-site location in New Mexico. control is: an integral part of the job (and the required The bureau continuously reviews and evaluates the training of each agency worker); a line-management hardware and software to determine future technol- responsibility of high priority (evaluated on the ex- ogy needs to ensure that the State Treasurer’s Office ecution of this responsibility); an agency commitment can continue operations with minimal downtime and (demonstrated by the appointment of knowledgeable maximum efficiency. and experienced loss-control personnel); and a pri- ority (compliance with workplace safety and em- Forfeiture Program ployment-related civil rights rules and regulations). All divisions within the State Treasurer’s Office are During the 2015 Legislative session, the New Mexico covered by this program. Forfeiture Act (NMSA 1978 § 31-27-1 to 31-27-11 [2015]) was amended. The purposes are to make uni- Significant Milestones and form standards and procedures for the process; protect people’s constitutional rights; deter criminal activity Accomplishments for FY2020 by reducing its economic incentives; and ensure that Information Technology only criminal forfeiture is allowed. The Forfeiture Act • Continued to maintain IT systems at a level to requires forfeited property that is not currency and achieve clean cybersecurity audits. Implemented any abandoned property to be delivered to the State virtual private network (VPN) for 25 users (versus Treasurer for disposition at a public auction. Forfeited two users previously). currency and all proceeds from the sale of forfeited or • Continued to use IT to support reduced business abandoned property must be deposited in the general costs throughout the agency. Under unprecedented fund. An annual report must be prepared by each law

2020 Annual Report Page 16 New Mexico State Treasurer’s Office Operations Division

circumstances (the COVID-19 pandemic/quaran- Initiatives for FY2021 tine), IT transformed processes to support effec- Information Technology tive teleworking, resulting in significant reduction • Implement any recommended upgrades in soft- of paper use. ware and infrastructure (if necessary). • Supported Special Programs as needed, particu- • Continue successful completion of IT security larly with the growth in the number of ABLE audits. account holders and the launch of New Mexico Work and Save. • Continue to develop cost-saving processes utiliz- ing IT to support reduced business costs. Forfeiture Act • Began working with district attorneys, district • Support Special Programs within STO to promote courts, and law enforcement agencies statewide to growth (as needed). implement and refine the program. See IT plan for additional details. Loss Prevention and Control Program • Continued to stay in compliance with the require- Forfeiture Act ment NMAC 1.6.4 even in the teleworking envi- • Work with district attorneys, district courts, and ronment. law enforcement agencies statewide to implement and refine the program. • Required STO staff to sign form for equipment received (cellphones, laptops, jetpacks, etc.). • Obtain program funding. This Act reimburses law enforcement for any costs associated with forfei- • Assured STO’s commitment to make loss preven- tures and seizures but does not provide funding to tion and control an integral part of the job and the manage the program through the State Treasurer’s required training of every agency worker, with Office. All funds received are directly placed into workplace safety and employment-related civil the State’s General Fund, yet STO has no reoccur- rights a priority. ring budget with which to operate the program.

• Maintained offices, vehicles, and facility security Loss Prevention and Control Program by monitoring facility cameras and vehicle logs. • Maintain facility security both in person and dur- ing teleworking environments.

New Mexico State Treasurer’s Office Page 17 Fiscal Year Ended June 30, 2020 Special Programs Division

he Special Programs Division includes the Work and Save Program Achieving a Better Life Experience (ABLE), Studies show that the lack of retirement savings TForfeiture, Retirement Income Security, and by private-sector workers poses serious fiscal chal- Financial Empowerment for Women programs. lenges for states. Aging populations without adequate retirement savings will rely on public funds to ful- ABLE Program fill their needs. Compared to the rest of the United In 2014 Congress passed the Stephen Beck, Jr. States, more New Mexico private-sector workers do Achieving a Better Life Experience (ABLE) Act. This not have access to a retirement savings plan through was historic, life-changing financial legislation for their employers, and more of them have $0 saved for special needs individuals, families, and communities, retirement. By 2040, it is estimated that 469,000 New and was considered one of the most significant pieces Mexicans 60+ years old will have less than $10,000 of legislation for the disability community since the saved for their retirement. Americans with Disabilities Act. The New Mexico legislature authorized ABLE accounts in 2016 with In 2018 House Memorial 12 created the Retirement overwhelming bipartisan support. Income Security Task Force, chaired by the State Treasurer. The Task Force made four recommenda- The program enables eligible individuals with dis- tions: focus on financial literacy, create an online abilities to save money in a tax-exempt account that marketplace, create a voluntary IRA (which, depend- may be used for qualified expenses while keeping ing on certain triggers, could convert to a mandatory their eligibility for Federal public benefits. The total IRA), and request an advisory opinion from New annual contributions allowed into an ABLE account Mexico’s Attorney General. by all contributors (including family, friends, and the beneficiaries themselves) is $15,000 per tax year. An In 2019, Senate Memorial 119 (New Mexico Saves) account may have up to $468,000 before Federal and directed the State Treasurer to devise a plan to imple- State benefits would be affected ($100,000 for those ment the Retirement Income Security Task Force receiving SSI). Eligible individuals must have signifi- recommendations. cant disabilities with an onset prior to age 26. In 2020, House Bill 44 enacted the New Mexico The ABLE accounts are administered as a 529A ac- Work and Save Act. The Act establishes a nine-mem- count, similar to the 529 College Savings Program, ber board. The board is charged with designing and and beneficiaries may choose from a variety of invest- implementing 1) a voluntary retirement marketplace ment options, similar to 529 college savings accounts (a web-based portal connecting private-sector em- or Roth IRAs. Funds within the account can be used ployers and employees with Board-approved invest- to cover qualified disability-related expenses that ment service providers) and 2) a voluntary payroll assist the individual in increasing and/or maintaining deduction Roth IRA program in which employers de- health, independence, and/or quality of life. duct and remit Roth contributions to board-approved investment providers on behalf of employees. The New Mexico State Treasurer’s Office launched ABLE New Mexico in January 2018. It is estimated Financial Literacy Program that currently 30,000 New Mexicans meet the thresh- The Financial Literacy program was initiated during old. More than 100 accounts were opened during the Treasurer Eichenberg’s first year in office. The Trea- first six months of the program. surer believes it is important to bring financial literacy to high school students because these money-manage- ment skills prepare them for real-life experiences.

2020 Annual Report Page 18 New Mexico State Treasurer’s Office Special Programs Division

As the only non-statutory program within the State Treasurer’s Office, Financial Literacy was put on hold for a few years due to budget cuts.

Then in early 2019, the State Treasurer received an appropriation from the legislature in the amount of $150,000 to provide financial literacy education. Per the RFP, the funds will be awarded to a contractor to provide financial literacy classes to youth transition- ing out of the foster care system. The organization awarded will provide a bilingual financial literacy curriculum containing information on budgeting, sav- • Continued tracking and reporting the number of ing and investing, opening and maintaining a bank ac- active ABLE NM accounts, average account bal- count, interest rates, college tuition and student loans, ances, and returns on investment. retirement, and more. The financial literacy contractor • Continued monitoring accounts, support, and will hold regular in-person trainings and offer one-on- guidance to account owners to ensure a less-than- one financial coaching to assist the students as they 24-hour response time for all participants, fami- learn to manage their finances. lies, community members, statewide agencies, public and charter schools, and non-profits. Alternative Dispute Resolution Program • Translated all outreach literature from English to Spanish, Navajo, and Braille to keep accessibility This program promotes early dispute resolution and and cultural awareness at the center of our work. positive collaboration among employees by providing mediation services to resolve workplace conflict. • Developed a monthly newsletter to keep all of the special needs families, communities, non-profit Significant Milestones and organizations, state agencies, public and charter Accomplishments for FY2019 schools, higher education offices, and universities ABLE Program informed. Distributed via email and archived on the New Mexico State Treasurer’s website. • As of June 30, 2020, there were 474 active ABLE New Mexico accounts. • Developed strong partnerships with New Mex- ico’s non-profit organizations, universities of • Continued to collaborate with partner agencies higher learning, public and charter schools, state- and community service providers to inform con- wide agencies, and business leaders. sumers. Work and Save Program • Created a partnership with the Public Education Department and various school districts to include • The New Mexico Saves committee (including the ABLE New Mexico information in every new State Treasurer) met several times and reported its student orientation packet, and presented at sched- findings and recommendations, including pro- uled transition fairs. posed legislation, to legislative committees. • Continued strong adherence to the conditions of • This led to passage of House Bill 44, the New the no-cost partnership with Ohio’s STABLE Pro- Mexico Work and Save Act, which created the gram in maintaining and promoting ABLE New Mew Mexico Work and Save Board and gave the Mexico. board powers and duties. These include creating

New Mexico State Treasurer’s Office Page 19 Fiscal Year Ended June 30, 2020 Special Programs Division

a retirement savings plan web-based marketplace ABLE New Mexico and various disability agen- and a voluntary savings program for private-sector cies and organizations in preparation for students’ and nonprofit employees and the self-employed; future career pathways. and providing protection for covered employers • With other New Mexico universities’ schools of and confidentiality for participants and account social work, develop opportunities for Master’s information. Level students to complete field practicum hours Financial Literacy Program within the ABLE New Mexico program for lead- • Contracted with NMCAN to present a financial ership and professional growth. literacy program to youth in foster care. • Expand outreach by hosting a monthly online Alternative Dispute Resolution Program videoconference (using Zoom) for all ABLE New • Continued to work with the Risk Management Mexico participants and their families. Division Alternative Dispute Resolution Bureau • Track all current and new active accounts by plot- to continue providing employees with conflict- ting the number of accounts by zip code to target resolution options. outreach efforts within communities where there • Tracked all events related to ADR, including are no active accounts. trainings, seminars, and referrals to mediation, Work and Save Program then report these quarterly to the General Services • Convene the Work and Save board. Department (GSD) Risk Management Division. • Assist as needed with legislation or testify before Initiatives for FY2021 the State Legislature. ABLE Program • Stand up the New Mexico Work and Save pro- • Work with the Ohio STABLE program and 10 gram (Marketplace and Auto IRA). partner states to update each state’s website to include an exclusive Spanish enrollment portal for • Promote Work and Save through outreach, includ- Spanish speakers. ing presenting at businesses statewide and through various media outlets. • Offer the ABLE NM newsletter in Spanish. Financial Literacy Program • With the New Mexico Children, Youth, and Families Department, develop pathways for New • Continue to work with NMCAN to present a fi- Mexico’s foster care children and youth to have nancial literacy program to youth in foster care. an account for their financial wellness. Alternative Dispute Resolution Program • With the New Mexico State School Board Asso- • Continue to work with the Risk Management ciation, help support our public schools and com- Division Alternative Dispute Resolution Bureau munities with financial literacy programs (ABLE to continue providing employees with conflict- New Mexico, New Mexico Work and Save, and resolution options. NMCAN Financial Literacy). • Track all events related to ADR, including train- • With New Mexico Highlands University, create ings, seminars, and referrals to mediation, then communication bridges with various deans of report these quarterly to GSD’s Risk Management instructional studies to disperse information about Division.

2020 Annual Report Page 20 New Mexico State Treasurer’s Office Independent Auditors’ Report

STATE OF NEW MEXICO whether the financial statements are free from material misstatement. OFFICE OF THE STATE TREASURER FINANCIAL STATEMENTS AND An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial SUPPLEMENTARY INFORMATION statements. The procedures selected depend on the audi- YEAR ENDED JUNE 30, 2019 tors’ judgment, including the assessment of the risks of Honorable Michelle Lujan Grisham, Governor and material misstatement of the financial statements, whether President, State Board of Finance and due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Office’s Honorable Tim Eichenberg, State Treasurer, New Mexico preparation and fair presentation of the financial statements Office of the State Treasurer and in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an Honorable Brian Colón, State Auditor, New Mexico opinion on the effectiveness of the Office’s internal control. Office of the State Auditor Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting poli- Santa Fe, New Mexico cies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the Report on the Financial Statements overall presentation of the financial statements. We have audited the accompanying financial statements of the governmental activities, each major fund, the aggregate We believe that the audit evidence we have obtained is remaining fund information, the budgetary comparison for sufficient and appropriate to provide a basis for our audit the general fund, and each fiduciary fund, of the State of opinions. New Mexico Office of the State Treasurer (the Office) as of and for the year ended June 30, 2020, and the related notes Opinions to the financial statements, which collectively comprise the In our opinion, the financial statements referred to above Office’s basic financial statements as listed in the table of present fairly, in all material respects, the respective finan- contents. cial position of the governmental activities, each major fund, each fiduciary fund, the budgetary comparison for Management’s Responsibility for the the general fund and the aggregate remaining fund infor- Financial Statements mation of the Office as of June 30, 2020, and the respec- tive changes in financial position for the year then ended in Management is responsible for the preparation and fair accordance with accounting principles generally accepted presentation of these financial statements in accordance in the United States of America. with accounting principles generally accepted in the United States of America; this includes the design, imple- mentation, and maintenance of internal control relevant to Emphasis of Matters the preparation and fair presentation of financial statements Reporting Entity that are free from material misstatement, whether due to As discussed in Note B2, the financial statements of the fraud or error. State of New Mexico Office of the State Treasurer are -in tended to present the financial position and the changes in Auditors’ Responsibility financial position of only that portion of the governmental Our responsibility is to express opinions on these financial activities, and each major fund of the Office that is attribut- statements based on our audit. We conducted our audit in able to the transactions of the Office. They do not purport accordance with auditing standards generally accepted in to, and do not present fairly the financial position of State the United States of America and the standards applicable of New Mexico as of June 30, 2020, the changes in its fi- to financial audits contained in Government Auditing Stan- nancial position, or where applicable, its cash flows for the dards, issued by the Comptroller General of the United year then ended in conformity with accounting principles States of America. Those standards require that we plan generally accepted in the United States of America. Our and perform the audit to obtain reasonable assurance about opinion is not modified with respect to this matter.

New Mexico State Treasurer’s Office Page 21 Fiscal Year Ended June 30, 2020 Independent Auditors’ Report

Pension Accounting and Reporting ited procedures do not provide us with sufficient evidence As discussed in Note P, the State of New Mexico, as a to express an opinion or provide any assurance. single employer, follows Governmental Accounting Stan- dards Board (GASB) Standards No. 68 Accounting and Other Information Financial Reporting for Pensions, as of June 30, 2020, in Our audit was conducted for the purpose of forming opin- the Comprehensive Annual Financial Reports (CAFR). Ac- ions on the financial statements that collectively comprise cordingly, there is no allocation of the proportional share the Office’s basic financial statements. Schedules 1 – 10 in of the net pension liability to individual agencies or to the the Supplementary Information section within the Table of Office’s financial statements. All other required footnotes Contents are required by 2.2.2 NMAC, and are presented and other disclosures required by the Governmental Ac- for purposes of additional analysis and are not a required counting Standards Board are included in the State of New part of the basic financial statements. Mexico CAFR for June 30, 2020. Our opinion is not modi- fied with respect to this matter. Schedules 1 – 10 in the Supplementary Information section are the responsibility of management and were derived Postemployment Benefits Other Than from and relate directly to the underlying accounting and Pensions Accounting and Reporting other records used to prepare the basic financial state- ments. Except for Schedule 10, such information has been As discussed in Note Q, the State of New Mexico, as a subjected to the auditing procedures applied in the audit single employer, follows GASB 75 Accounting and Finan- of the basic financial statements and certain additional cial Reporting for Postemployment Benefits Other Than procedures, including comparing and reconciling such in- Pensions, as of June 30, 2020, in the CAFR. Accordingly, formation directly to the underlying accounting and other there is no allocation of the proportional share of the net records used to prepare the basic financial statements or OPEB liability to individual agencies or to the Office’s to the basic financial statements themselves, and other ad- financial statements. All other required footnotes and other ditional procedures in accordance with auditing standards disclosures required by the Governmental Accounting generally accepted in the United States of America. In our Standards Board are included in the State of New Mexico opinion, Schedules 1 – 9 in the Supplementary Information CAFR for June 30, 2020. Our opinion is not modified with section required by 2.2.2 NMAC are fairly stated, in all respect to this matter. material respects, in relation to the basic financial state- ments as a whole. Schedule 10 is presented as unaudited Other Matters information Required Supplementary Information Accounting principles generally accepted in the United Other Reporting Required by States of America require that the Management’s Discus- Government Auditing Standards sion and Analysis on pages 5 through 12 be presented to In accordance with Government Auditing Standards, we supplement the basic financial statements. Such informa- have also issued our report dated October 31, 2020, on our tion, although not a part of the basic financial statements, consideration of the Office’s internal control over financial is required by the Governmental Accounting Standards reporting and on our tests of its compliance with certain Board which considers it to be an essential part of finan- provisions of laws, regulations, contracts, and grant agree- cial reporting for placing the basic financial statements in ments and other matters. The purpose of that report is to an appropriate operational, economic, or historical con- describe the scope of our testing of internal control over text. We have applied certain limited procedures to the financial reporting and compliance and the result of that required supplementary information in accordance with testing, and not to provide an opinion on internal control auditing standards generally accepted in the United States over financial reporting or on compliance. That report is of America, which consisted of inquiries of management an integral part of an audit performed in accordance with about the methods of preparing the information and com- Government Auditing Standards in considering the Office’s paring the information for consistency with management’s internal control over financial reporting and compliance. responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the Atkinson & Co., Ltd. basic financial statements. We do not express an opinion or Albuquerque, New Mexico provide any assurance on the information because the lim- October 31, 2020

2020 Annual Report Page 22 New Mexico State Treasurer’s Office Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER STATEMENT OF NET POSITION JUNE 30, 2020

New Mexico State Treasurer’s Office Page 23 Fiscal Year Ended June 30, 2020 Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2020

2020 Annual Report Page 24 New Mexico State Treasurer’s Office Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER BALANCE SHEET—GOVERNMENTAL FUNDS JUNE 30, 2020

New Mexico State Treasurer’s Office Page 25 Fiscal Year Ended June 30, 2020 Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER RECONCILIATION OF THE BALANCE SHEET—GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2020

2020 Annual Report Page 26 New Mexico State Treasurer’s Office Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES—GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2020

New Mexico State Treasurer’s Office Page 27 Fiscal Year Ended June 30, 2020 Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES—GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2020

2020 Annual Report Page 28 New Mexico State Treasurer’s Office Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER STATEMENT OF REVENUES AND EXPENDITURES—GENERAL FUND— BUDGET AND ACTUAL (BUDGETARY BASIS) YEAR ENDED JUNE 30, 2020

New Mexico State Treasurer’s Office Page 29 Fiscal Year Ended June 30, 2020 Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2020

2020 Annual Report Page 30 New Mexico State Treasurer’s Office Financial Statements

STATE OF NEW MEXICO OFFICE OF THE STATE TREASURER STATEMENT OF CHANGES IN FIDUCIARY NET POSITION JUNE 30, 2020

New Mexico State Treasurer’s Office Page 31 Fiscal Year Ended June 30, 2020 Boards and Commissions

reasurer Eichenberg is the only elected State Mortgage Finance Authority (MFA) is a quasi-pub- official to serve as a member of all State finan- lic entity, financing housing and related services for cial and investment boards and commissions, low- to moderate-income and underserved families. Twhich have a total fiduciary responsibility of more The Mortgage Finance Authority provides afford- than $60 billion. Here is a list of those boards and able housing finance programs, including assistance commissions. for the homeless, apartment development, and home ownership. State Board of Finance (BOF) has general supervi- sion of the fiscal affairs of the State. It is charged with Educational Assistance Foundation (EAF) is a the safekeeping of all money and securities belonging non-profit corporation, created pursuant to the State to or in the custody of the State, and has the authority Educational Assistance Act, that provides financial as- to issue general obligation bonds and severance tax sistance to qualified post-secondary students. The pur- revenue bonds. pose of the Foundation is to improve the educational opportunities of residents of New Mexico through State Investment Council (SIC) administers and educational assistance programs. manages New Mexico’s three permanent trust funds: the Land Grant Permanent Fund, the Severance Tax Small Business Investment Corporation (SBIC) is Permanent Fund, and the Tobacco Settlement Perma- charged with creating new job opportunities and sup- nent Fund. Additionally, the State Investment Council porting new or expanding businesses in the State. The manages long-term investment funds for multiple SBIC makes more capital available to small business- State and local government entities. es through investing in alternative and micro lenders as well as venture capital funds. Public Employees Retirement Association (PERA) oversees the principal retirement and disability bene- Martin Luther King, Jr. Commission (MLK) fits programs of State, county, and municipal employ- promotes cultural awareness and human rights to all ees, including municipal police and firefighters. The people of New Mexico through Dr. King’s life phi- Board serves as trustee for the association. Its mission losophy and six principles of nonviolent social action. is to preserve, protect, and administer the trust to meet its current and future obligations and provide quality Capitol Buildings Planning Commission (CBPC) services to association members. is responsible for long-range planning and review of State properties and the development of an overall Educational Retirement Board (ERB) provides master plan. retirement benefits for teachers and other school employees from public school districts, institutions of Renewable Energy Transmission Authority higher education, and educational agencies. The Board (RETA) has the authority to issue and sell revenue is the trustee of the Educational Retirement Fund. bonds and use the proceeds to finance eligible energy transmission and storage facilities, and to acquire and Retiree Health Care Authority (RHCA) was cre- operate facilities through leases. ated in 1990 to provide comprehensive and affordable group health insurance to eligible retirees of certain public service employers in New Mexico, to their spouses and dependents, and to surviving spouses and dependents.

2020 Annual Report Page 32 New Mexico State Treasurer’s Office