NMAGO 00-03.

• Case Date: June 15, 2000
• Court: New Mexico

New Mexico Attorney General Opinions 2000. NMAGO 00-03. June 15, 2000OPINION OF Opinion No. 00-03PATRICIA A. MADRID Attorney General BY: Martha A. Daly Assistant Attorney GeneralTO: The Honorable Michael Montoya, CPAState Treasurer NEA Building, P.O. 608Santa Fe, New Mexico 87504 QUESTION:Would investments in mutual funds and unit investment trusts made by the State Treasurer pursuant to NMSA 1978, § 6-10-10(O)(1) (1999) constitute investment in interest-bearing securities in accordance with the New Mexico Constitution? CONCLUSION: Under the limited circumstances set forth by § 6-10-10(O)(1), and with the prior approval of the State Board of Finance, if the mutual fund is acting as an investment conduit (i.e. an open-end mutual fund or a unit investment trust), an investment in such a fund would be constitutional. N.M. Att'y. Gen. Op. No. 57-279 (1957) is superseded to the extent it conflicts with this opinion. FACTS: In 1997, the legislature enacted a provision authorizing the State Treasurer to invest in mutual funds which themselves invest in specified investments, subject to certain limitations. See NMSA 1978, § 6-10-10(N)(1)(1997) (recompiled in 1999 and hereinafter referred to as subsection O (1)).(fn5) Prior to the adoption of this legislation, the Attorney General had opined that investment in mutual funds did not constitute an investment in "interest-bearing securities", as required by Article VIII, Section 4 of the New Mexico Constitution. See AG Op. 57-279, supra. In light of the 1997 legislation, the State Treasurer has requested clarification on the constitutionality of subsection O(1). ANALYSIS: Article VIII, Section 4 of the New Mexico Constitution declares, in pertinent part, that ...All public money not invested in interest-bearing securities shall be deposited in [certain types of financial institutions]... . In AG Op 57-279, this office was asked specifically whether assets of the previously existing teacher retirement fund which the legislature had directed to be transferred into the educational retirement fund and invested by the state treasurer could be invested in mutual funds. Any such investment was to be invested in the same manner and subject to the same limitations as the investment of other trust funds of the state. See NMSA 1953, § 73-12-49 (1957). Importantly, at the time of that opinion, the legislature had not authorized investment of such funds in mutual...