(Albuquerque) – The scandal-plagued State Investment Council (SIC) manages huge pools of taxpayer dollars totaling $14 billion. While the SIC is limited in how it can invest much of that money, over the years the SIC’s mission has been broadened to include “job creation” under the Council’s private equity program. The idea, of course, is for the SIC to act as a venture-capitalist by injecting funding into New Mexico-based firms that are either attempting to get off the ground or make significant investments in future growth.
With fifteen years experience and 378 million taxpayer dollars invested over that time period, little in the way of objective and independent analysis has been done on the issue of whether the SIC’s efforts have resulted in new jobs or improved economic growth in New Mexico. It’s time we knew the answer.
Jim Scarantino, the Rio Grande Foundation’s investigative journalist, in his new report “A Failure by any Measure: The State Investment Council’s New Mexico Private Equity Program,” has found that not only is the SIC private equity program losing money, but the number of jobs claimed to have been created is overstated. Only about 1,000 jobs in New Mexico today can be credited to the program. Those jobs were created at a staggering price tag of over $378,000 each.
According to Scarantino’s findings, “Sun Mountain Capital, which manages the SIC’s private equity investment program, reports that the SIC has been running an 8.3% loss over the past fifteen years. That loss was calculated as of September 30, 2008, before Eclipse Aviation entered bankruptcy and dismissed its 1,100 employees and before market declines wreaked even more havoc with the portfolio. The second largest position and third largest employer in the SIC’s New Mexico private equity portfolio, Advent Solar, laid off nearly half of its workforce later in 2008.”
Of course, some losses could be tolerated if the program was having great success in creating jobs in New Mexico, but this is not the case either. In fact, excluding the 1,100 lost jobs at now-defunct Eclipse Aviation and the job losses at Advent Solar, only about 1,000 jobs can today be verifiably credited to the SIC’s New Mexico venture capital program, according to Scarantino. The cost of creating each of those jobs comes to approximately $378,000 per job!
Fifteen years of consistent losses and little job creation is a long enough track record to show that the SIC’s private equity program is not a wise use of New Mexicans’ resources. Rather than continuing this ineffective program, the SIC should clarify its mission by focusing on generating the best possible return for New Mexicans.
Scarantino’s study is available here at: http://www.riograndefoundation.org/downloads/rgf_invisible_jobs.pdf