A potential financial quagmire at the New Mexico Finance Authority, brought to light by a fraudulent 2011 audit report, has spurred concern about oversight of quasi-governmental agencies.
Discovery of the fake audit last month has wreaked havoc with the authority's ability to make loans and issue bonds for capital projects for school districts and municipalities. It has postponed a $40 million bond sale. Two national credit rating agencies have placed the NMFA's bond ratings on a watch list for possible downgrading due to concerns over lax internal controls.
Several investigations are under way. Last week investigators with the state Securities Division armed with a search warrant seized documents from the authority's Santa Fe office. A veteran lawyer has been appointed by Gov. Susana Martinez as the new NMFA board chairman and has moved aggressively to get answers.
The authority operates fairly independently. With approval of its board of directors it can set its own budget without going to the Legislature. Its annual operating budget is about $128 million.
State Rep. Luciano "Lucky" Varela, D-Santa Fe, a former state comptroller who is vice chairman of the Legislative Finance Committee, says these quasi-government agencies should get the same scrutiny as regular government entities. He suggests the Legislature consider requiring the finance authority to submit an annual budget request and adhere to the state procurement code, which outlines how state agencies can enter into contracts.
Martinez appears open to proposals to increase accountability and day-to-day oversight of the NMFA.
Reviewing the governance structure and board membership is a good start.
As Dick Minzner, a former Taxation and Revenue secretary, pointed out in an op-ed column published last week in the Albuquerque Journal, state boards and commissions often consist of elected officials — some of whom are designated by statute — high-ranking state employees and private citizens who volunteer their time. Serving isn't their primary responsibility and, generally, qualifications aren't required.
Some people, like Cabinet secretaries with their own agencies and large portfolios to manage, may be members of several boards. So, many board members don't have time to attend meetings, even though in some cases these boards are responsible for hundreds of millions, or even billions, of dollars.
There are legislative committees with oversight of these agencies. In fact, there is one for the finance authority, but it doesn't have much in the way of day-to-day oversight function. Like their executive agency counterparts, legislators have multiple assignments in addition to serving on various legislative committees during sessions. As unpaid citizen legislators most have full-time jobs and other commitments, and many may not have technical or educational expertise related to a committee's assignment.
Qualifications shouldn't be overlooked when the state examines governance structure and internal controls.
The state clearly needs to find a better way to oversee quasi-governmental agencies. Varela's proposals would increase needed routine state supervision. Perhaps the addition of salaried experts would assure more constant and qualified vigilance.
— Albuquerque Journal