Guest Op-Ed: PERA Pilfering from New Mexico Retirees’ Pockets
By Tim Eichenberg
New Mexico State Treasurer and PERA board member
Imagine the police officers in your hometown take an oath to serve and protect. But then instead of serving and protecting, they do the opposite and begin raiding the bank accounts and retirement funds of you and your neighbors. And imagine if the bosses of those officers—the police chief, the mayor and the city councilors—know about the illegal pilfering of their constituents and do nothing: they turn a blind eye and keep silent.
There would be outrage and investigations everywhere. Newspaper editorials would be screaming for resignations and prosecutions.
It has been happening at the Public Employees Retirement Association of New Mexico, and the agency’s executive director, general counsel and several members of its governing board are the culprits. PERA’s executive director has basically given himself and other PERA employees tens of thousands of dollars in raises without full board of trustees approval.
In 2014, executive director Wayne Propst, who currently makes $166,290 a year, convinced the then-board chair to give him a $14,000, or 10 percent raise. The full board never voted directly on that raise. And Mr. Propst got two additional raises without full board approval. Overall, he received approximately $25,00 in raises without full board approval. In 2018, Mr. Propst handed out $633,158 in raises, promotions and salary adjustments to PERA employees.
I have called the raises illegal and have asked the New Mexico Attorney General’s office to investigate. Why do I say the raises were illegal, especially the ones Mr. Propst orchestrated for himself? Because of what state law says about how PERA is supposed to work:
“The Retirement Board shall employ professional, technical, clerical and other services as required for the operation of the Association. The compensation for employed services shall be fixed by the retirement board.”
Mr. Propst works for the board and has the same fiduciary responsibility to the retirement trust fund as do board members. The $25,000 in raises that Mr. Propst gave himself will amount to more than $600,000 in salary and retirement benefits for him over his lifetime. And every penny of that money comes directly out of PERA’s trust funds that pay retirement benefits to 40,000 retirees and, eventually, 50,000 current public employees.
Mr. Propst and the board members who choose to turn a blind eye to his pilfering of retirees’ pensions have a fiduciary duty to PERA’s 40,000 retirees. The definition: “The legal duty of a fiduciary is to act in the best interests of the beneficiary.”
It seems that Mr. Propst’s law school didn’t have an Executive Director 101 class that would teach, “When acting as a fiduciary, you don’t circumvent or disregard the law for personal gain.”
Mr. Propst will offer explanations for the raises he orchestrated for himself. But he can’t run from the fact that he has a fiduciary responsibility to the retirement trust fund and that he never should have taken the money without approval of the full board of directors.
PERA retirees and active members, the board’s next meeting is May 7. Our budget is on that agenda, and it includes another 4 percent raise for Mr. Propst and other PERA employees.
Retirees, what will you do? Active employees, what will you do? PERA Board of Trustees, what will you do?
Tim Eichenberg is the New Mexico State Treasurer and a member of the PERA board of trustees.