Interim NMFA boss thinks the state’s bond ratings can be saved
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Unraveling the mess at the New Mexico Finance Authority is going to take time but the new interim boss at the authority thinks the biggest issue surrounding the fallout from a fraudulent audit — keeping Wall Street ratings agencies from downgrading the state’s bond ratings — can be avoided.
John Gasparich, interim CEO at the NMFA
Gasparich replaces former CEO Rick May who was placed on paid administrative leave last week. Brett Woods of the Department of Energy, Minerals and Natural Resources has been serving as CEO for the past few days with the understanding that he’d be replaced by someone with more experience in finance.
“I think what our charge is to facilitate [the investigations by the State Auditors Office and the State Regulation and Licensing Department] in any way we can,” Gasparich said. “We’ll provide any information in a timely manner and allow them to complete their work as quickly as possible.”
The State Auditors Office is poring over the NMFA’s numbers after a bogus audit was filed earlier this year. A former employee of the authority has been criminally charged with forging the numbers from Fiscal Year 2011 and the former chief operating officer who was the employee’s supervisor is also charged with multiple felony counts.
The state Securities Division, under the Regulations and Licensing Department, is also conducting a criminal investigation.
So when can New Mexico taxpayers expect to get some accurate numbers back from the NMFA, which controls millions of dollars in projects that affect municipalities and agencies across the state?
Probably not until well after the first of next year.
“I’m hopeful we can get throught the whole thing and be completely operational by the end of the legislative session if not sooner,” Gasparich said. The next legislative session runs from Jan. 13-March 16 of 2013.
“It would be great if we could be ahead of that [schedule] but I just don’t know for sure if we can do that,” Gasparich said.
That echoes was State Auditor Hector Balderas told Capitol Report New Mexico last week.
“We need to get the 2011 and 2012 fiscal year audits completed,” Balderas said last Thursday (Aug. 9th). “Those reports probably will not be reviewed and completed closer ’til next spring.”
In the meantime, Balderas says his office expects to deliver a report — a first phase, rough outline — to the NMFA Board in October.
Hanging over the controversy is a decision by Wall Street ratings firms such as Standard & Poor’s and Moody’s who have placed the state’s bond ratings on a watch list for possible downgrade.
Should the ratings agencies lower the bond ratings, taxpayers will have to pay more in higher interest payments on bond projects across the state.
Officials are hoping that when the investigations and audits (real ones, not fake ones) are completed, they’ll find all or almost all of the monies will be accounted for and that will reassure the ratings agencies and prevent a downgrade.
A decision from Moody’s and/or Standard & Poor’s is expected in October.
“That is the big question,” Gasparich said. “And certainly that’s why we have to be so diligent in terms of getting these audits and make sure that all that financial information is is out there and that the investors have complete information and complete confidence.”
Here’s the entire interview we had with the new interim CEO:
Some background on Gasparich: He has plenty of experience in finance and state government, serving as deputy secretary of the Department of Finance and Administration under former Gov. Gary Johnson. He was also the budget director for former governors Garrey Carruthers and Toney Anaya and currently sits on the Board of Finance.
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In other NMFA news, the board on Friday approved a $1.25 million transfer to the special audit fund supervised by State Auditors Office. The money will help pay for the accounting firm PricewaterhouseCoopers to conduct the special audit.
“I’m glad the board appointed Mr. Gasparich,” Balderas said. “I think this will help lead to more stable decisions [at the NMFA].”
Posted under Capitol Report.
Tags: Brett Woods, Capitol Report New Mexico, Hector Balderas, John Gasparich, Moody's, New Mexico Finance Authority, NMFA, PricewaterhouseCoopers, Rick May, Standard & Poor's, State Auditor's Office, State Regulation and Licensing Department
5:32 pm on August 17th, 2012
Do you ever wonder why the State Government of New Mexico never moves forward? Why there is never any new innovation or movement beyond the same o same o? Why it always stuck in some kind of circular round-a-bout, like that reference you get on a computer spreadsheet when you use a formula that connects to another formula which is comprised of the same formula that you started with. When the same things keep happening over and over and over again. Like that movie “Ground Hog Day”. Let’s see, what do you call it, redundancy. Do I need to repeat myself?
The recent NMFA scandal reminds me of that. Here we have two bureaucrats that got paid a lot of money to do a job that they were too lazy to do, so they cut and paste and plagiarize an old document so they can tell there boss it’s done. The overpaid boss is too lazy to review it so they then bring the document in front of an oversight Board comprised of a bunch of overpaid bureaucrats that never show up to the meeting to review the documents. As a result, the thing goes south and puts the whole state in jeopardy. The state then brings in a retired double dipping former director of such and such who was used to work for the director to the agency that is in trouble, to run it. The state then pays millions of dollars to bring in a politically tied consultant to review the thing. The consultant then says, yep it’s broke but pay us a bunch more money and we can fix it. The state pays a bunch more money, the consultant waits it out until it settles down, tells everyone its fixed, leaves, and two years later, the same thing breaks again. In the meanwhile, the legislature says if the agency is under their control, it will never happen again. The state puts it under their control. Boom, two years later it breaks again. Sound familiar? There should be a light on top of the State Capital that goes off, just like my computer, when the same formula is used over and over again, that says “circular reference”. The only difference is that my $199 used computer tells me that the formula will not work.
10:13 pm on August 17th, 2012
The state of NM will not move forward with the current leadership. Why doesn’t the responsibility fall on the Board of Directors or Governor’s office? How can the majority of the Board choose not to attend, pay attention, give a damn and be surprised when things blow up? Somehow the Board seems proud of themselves for putting Rick May on administrative leave when half of the Board chooses to not attend, appoint their designee who have no clue, or call in. I think the Board of Directors need to be dismissed. NMFA needs to be dismantled and managed by real bankers not relatives, friends and lovers of politicians, or generous donors to their campaigns.
At this point it will not help to conduct another “special” audit when the State Auditor’s office has already conducted the audit. Regardless of how much money we pay for another audit on top of another audit, this state is broken. The “Bored” of Directors earning big bucks are too important to not attend. Their designated appointees are morons themselves. Yet “it’s nobody’s fault” when the fall guys are either behind bars or on administrative leave. One has to wonder if the Board of Directors will ever get tired of pointing fingers.
Shame on the Governor for not recognizing how much money tax payers lost in this whole game played by the Governor’s appointees. As a tax payer, this disgusts me.