News | New Mexico State Treasurer's Office

Actions speak louder than words. We often hear this phrase, but what does it mean? To me it means that what is promised is measured only by what is accomplished. As I mark the second year of serving as your State Treasurer, I want to share with you how initiatives to restore credibility and integrity to the State Treasurer’s Office (STO) as promised are yielding results and safely guiding the STO through a turbulent financial market.

As the State’s banker, our mission is to provide the most proficient, efficient, effective and productive banking services with full transparency to all internal and external customers. Our internal customers are the STO divisions, bureaus and staff. Our external customers are state agencies, local governments and, of course, the citizens of New Mexico. It is ultimately our responsibility to restore the public’s trust. Our initiatives focused on the needs of divisions, bureaus and staff; how they collaborate, cooperate and communicate; and how they provide and can improve customer service. We completed staff trainings in ethics, business practices, customer service and effective communication, among other topics, as part of an annual training schedule. We also examined daily workflows to measure efficiency and productivity. You could say that the words in our mission have been the guide for our actions.

During Fiscal Year 2008, we added to the STO team a Local Government Investment Pool portfolio manager, a General Fund portfolio manager, an investment accountant, an administrative assistant, and an Information Technology bureau chief. We also updated the disaster recovery plan, upgraded technology hardware, and reviewed and revised internal policies and procedures. Currently, a workforce study is underway to assess additional staffing needs and proficiency.

To better serve our external customers, we have reached out to local governments and state agencies to assist them with investment education and banking. During the 2008 legislative session, we amended the law to simplify participation in the Local Government Investment Pool. As a result, the first tribal government participant was welcomed into the investment pool in April 2008. By June 2008, the investment pool reached a record $1.7 billion.

Resolving banking-related issues involving the Statewide Human Resource, Accounting, and Management Reporting system (SHARE) was another primary focus during the last fiscal year. Collaboration between STO and the Department of Finance and Administration resulted in a thorough assessment of work processes and the creation of a banking and accounting matrix that will simplify the recording of treasury transaction in the general ledger. We look forward to the release of our Fiscal Year 2007 audit and will begin the Fiscal Year 2008 audit in September. Meanwhile, we continue to review and improve our business practices.

The STO, along with most other public fund investors, viewed the 2008 Fiscal Year as one of the most tumultuous investment markets in history. The credit crisis began in August 2007, and confirmed that even liquidity investing, a market previously considered conservative, can encompass substantial risk. Investment in commercial paper, especially asset-backed commercial paper, was curtailed by the STO portfolio managers early in the fiscal year because of concerns about the risk of default. Unfortunately, some public fund investors, including local government investment pools in other states, aimed for enhanced yield rather than the primary goal of capital preservation and suffered significant losses.

The repercussions of the sub-prime mortgage credit crisis wreaked havoc on the fixed income markets through the year and had major negative consequences for the finance sector, with approximately $500 billion in asset write-downs recorded by financial institutions worldwide. The near-collapse of finance-giant Bear Stearns required swift and unprecedented intervention into the liquidity markets by the Federal Reserve and the U.S. Treasury. Their effort to stabilize and diffuse the crisis is expected to continue into Fiscal Year 2009. Through these extreme market conditions, the STO has maintained a disciplined investment strategy, following the principles of safety, liquidity and yield. By remaining cognizant of market risks, the STO has successfully protected public money.

Looking forward, there is no time to rest on our laurels or loosen our high ethical and professional standards in banking operations, customer service and investment. As we all know, promises can yield results but only when we resolve to take action.