Early childhood fund a solution for today and a plan for tomorrow

By Peter Frank / Vice-chair, State Investment Council

Sunday, December 29th, 2019 at 12:02am – ABQ Journal

You might not know it but, 60 years ago, some visionary leaders in our state gave you – and every other citizen in New Mexico – an incredible gift.

It was 1959 and New Mexico wasn’t even five decades old. But we had already managed to grow a $150 million “nest egg” from revenues generated on state trust lands we received for entering the Union. Faced with the dilemma of whether New Mexico should save, spend or invest state trust land dollars, policymakers chose an “all of the above” approach and wisely established the State Investment Council (SIC). Today, the SIC invests that New Mexico nest egg – the Land Grant Permanent Fund – which has now grown to more than $18 billion in value.

Those billions aren’t just sitting there locked in a vault – they’re creating income and working for you every day, generating revenue that stabilizes state budgets even in lean years. The Land Grant Permanent Fund and its sister-endowment, the Severance Tax Permanent Fund, will deliver more than $1 billion for New Mexico public schools, universities, hospitals and government services this year. That’s more than $84 million in benefits and tax savings to New Mexicans every month, the equivalent of $1,300 per household and almost $500 for every man woman and child in the state, annually. Together, these two funds constitute the third-largest legacy fund in the country.

When oil and gas prices crashed in 2016 and legislators were forced to slash budgets to the bare bone, revenue from the permanent funds was not only stable, but also the state’s lone source of rising cash flows and new money for our budget.

The stability such funds can provide is one reason states like North Dakota – flush with cash from its own recent oil boom – have looked to New Mexico as an example when dedicating billions to create their own new permanent “legacy” fund. New Mexico’s permanent funds provide both security today and opportunities for the future.

Gov. Michelle Lujan Grisham, who created New Mexico’s first Cabinet-level department focused on early childhood education and care, has proposed establishing a new permanent fund for the same purpose.

It makes sense. With a successful model already in place and the funds available, why wouldn’t we double down on proven strategies? A new permanent fund dedicated to early childhood needs would establish a stable and recurring revenue resource for programs to help children succeed, starting at day one. This fund would improve the outcomes generated by our existing educational funding, make sure our kids are prepared to learn by the time they reach kindergarten, and set the table for their success throughout life.

New Mexico’s fiscal outlook has, thankfully, improved dramatically. But we also know that nothing – perhaps with the exception of permanent funds – is permanent. With oil and gas revenues to the state booming, there is a growing call to do what’s right not only for today, but also with an eye to the future.

A new endowment focused on early childhood education would expand our successful blueprint to create a new revenue engine dedicated to helping drive future generations of kids into successful, educated adulthood.

As we appear to be at yet another of history’s crossroads, why not provide our future generations with a tool, a resource – a gift – so that through hard work and education, our children, grandchildren and generations beyond will have the best opportunities to succeed, no matter what the future may bring?

This op-ed was also signed by SIC council members Land Commissioner Stephanie Garcia Richard, DFA Secretary Olivia Padilla-Jackson, Harold Lavender, Linda Eitzen, L. Michael Messina and Tracy Hartzler.