Early childhood trust fund will invest in bonds

Conservative approach aimed at slowly growing $300M in volatile markets

New Mexico’s new early childhood trust fund will now be invested in the markets, but cautiously.

During a meeting Tuesday, the State

Investment Council approved a “conservative” investment approach for the fund’s initial $300 million, agreeing to put most of the money in bonds.

“Given the financial instability I think that we’re all experiencing right now, I think it’s really good that we’re going conservative,” said Debbie Romero, council member and acting Cabinet secretary of the Department of Finance and Administration.

The New Mexico Early Childhood

Trust Fund was created by a law signed by Gov. Michelle Lujan Grisham in February.

Its size was then slightly diminished from $320 million to $300 million in June. The fund is set to begin allocating money to the state’s new Early Childhood Education and Care Department in the next fiscal year.

The council’s chief investment officer, Vince Smith, said despite the risk-averse approach, the goal is to invest more aggressively in the future, when financial markets are less uncertain.

“We need to talk to folks and make sure folks understand that this is going to be more in a growth mode over the longer run in order to meet those distribution requirements,” Smith said during the meeting, which was transmitted in a live audio feed on YouTube.

Council member Linda Eitzen said the executive and legislative branches

haven’t yet given guidance on how they want the fund to be invested.

“We haven’t been told by the client what their goal is on this,” Eitzen said. “We as members of the SIC, with our consultants and the investment office’s recommendations, are making this decision as to how to allocate this without a client really giving us much direction.”

The Early Childhood Education and Care Department has requested to use its first distribution of $20 million from the fund for a variety of services including prekindergarten, workforce support and expanding Families First, a state home-visiting program that offers medical screenings and other services for pregnant women and their children up to 3 years of age.

Also Tuesday, the council approved a plan to invest up to $75 million from the state’s Land Grant Permanent Fund and

Severance Tax Permanent Fund in renewable energy.

Brookfield Asset Management Inc. will oversee the portfolio of assets in hydroelectric, solar, wind power and battery storage, according to the council’s meeting materials.

“I think that for the State Investment Council to be looking at these things, it is a wise part of a portfolio,” said Nicolas Telles, who is a council member and chief financial officer of Santa Fe Community College.

The council passed the measure 8-2, but some members voiced concerns. Tim Jennings of Roswell, a former state senator, said solar energy was not a

“reliable source” and the majority of the world’s electric power still came from traditional hydrocarbon sources.

“I know it’s politically fashionable to do this now,” Jennings said. “Wouldn’t we be better investing the state money in putting in natural gas plants and stuff like that?”