underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
SENATE BILL 266
57
TH LEGISLATURE
-
STATE
OF
NEW
MEXICO
-
FIRST SESSION
,
2025
INTRODUCED BY
George K. Muñoz and Carrie Hamblen
AN ACT
RELATING TO HIGHER EDUCATION; PROVIDING FOR REVIEW AND APPROVAL
BY THE STATE BOARD OF FINANCE FOR CERTAIN QUALIFYING AGREEMENTS
WITH ADMINISTRATORS FOR STATE EDUCATIONAL INSTITUTIONS OR
COMMUNITY COLLEGES; PROVIDING FOR REVIEW AND APPROVAL BY THE
ATTORNEY GENERAL FOR RELEASE AND INDEMNIFICATION TERMS OF
CERTAIN QUALIFYING AGREEMENTS WITH ADMINISTRATORS FOR STATE
EDUCATIONAL INSTITUTIONS OR COMMUNITY COLLEGES; REQUIRING
ANNUAL REPORTS REGARDING REVIEWED QUALIFYING AGREEMENTS BY THE
STATE BOARD OF FINANCE TO THE ATTORNEY GENERAL; CREATING A
CIVIL CAUSE OF ACTION AGAINST A BOARD OF REGENTS OR A COMMUNITY
COLLEGE GOVERNING BOARD OR A MEMBER OF THOSE BOARDS FOR A
BREACH OF A FIDUCIARY DUTY; REQUIRING BOARDS OF REGENTS OR
COMMUNITY COLLEGE GOVERNING BOARDS TO SECURE SEPARATE COUNSEL
IN THE EVENT OF A BOARD MEMBER'S BREACH OF FIDUCIARY DUTY
ACTION.
.229970.2 underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be
cited as the "Higher Education Accountability Act".
SECTION 2. [NEW MATERIAL] DEFINITIONS.--As used in the
Higher Education Accountability Act:
A. "administrator" means a president, chancellor,
vice president, vice chancellor, provost or vice provost,
regardless of any executive, senior or assistant designation, a
director of athletics and any other person that is performing a
similar executive function or role at a state educational
institution or community college, regardless of that person's
title. "Administrator" does not include any executive
personnel who are employed by the university of New Mexico
health sciences center;
B. "board of regents" means a board created by the
legislature to control and manage a state educational
institution as provided in Article 12, Section 13 of the
constitution of New Mexico;
C. "community college" means a public educational
institution that provides not to exceed two years of training
in the arts, sciences and humanities beyond the twelfth grade
of the public high school curriculum or, in lieu of that
training or in addition to it, not to exceed two years of a
vocational and technical curriculum and appropriate courses of
.229970.2
- 2 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
study for persons who may or may not have completed the twelfth
grade of public high school;
D. "community college board" means the governing
board of a community college that has a duty to determine the
financial and educational policies of that community college as
provided in the Community College Act;
E. "consideration" means a thing of value that is
adequate to support a promise and that is bargained for,
including cash, other property, services or a form of
compensation that is of a value at least equal to the value of
the property interest to be conveyed;
F. "duty of care and prudent administration" means
the duty of a member of a board of regents or a community
college board to carry out the member's responsibilities using
the degree of diligence, sound judgment and skill that an
ordinarily prudent person would reasonably exercise under
similar circumstances in a like position;
G. "duty of good faith" means the duty of a member
of a board of regents or a community college board to act
within the law to advance the interests of the state
educational institution or community college for which the
member serves and to carry out the member's responsibilities
ethically, honestly and with sincere conduct free from malice
or ill intent;
H. "duty of undivided loyalty" means the duty of a
.229970.2
- 3 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
member of a board of regents or a community college board to
faithfully pursue the mission of, and act solely in the best
interest of, the state educational institution or community
college for which the member serves, rather than for personal
gain or the benefit of other organizations, groups or
individuals;
I. "employment agreement" means a contract between
a state educational institution or a community college and an
administrator that establishes the terms and conditions of the
administrator's employment, including the administrator's
duties, salary, benefits, performance expectations, the
administrator's role, duration of service and employment
relationship with the state educational institution or
community college. An "employment agreement" includes any
financial instrument, however named, that serves the same
purpose;
J. "indemnification" means a contractual
arrangement that provides the responsibilities of one party to
compensate another party for certain damages, losses or
liabilities that may arise during the performance of the
contract, and may include terms to hold harmless or protect one
party from specific financial losses or other legal
consequences resulting from the occurrence of certain events or
actions;
K. "performance or incentive compensation
.229970.2
- 4 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
agreement" means a contract between a state educational
institution or a community college and an administrator that
links additional compensation, including a bonus or other
incentive, to the achievement of a specific performance target
or milestone by the administrator, and may include academic,
financial, athletic or operational performance goals. A
"performance or incentive compensation agreement" includes any
financial instrument, however named, that serves the same
purpose;
L. "qualifying agreement" means an employment
agreement, performance or incentive compensation agreement,
retention agreement, separation agreement or settlement
agreement, including a proposed qualifying agreement or an
amended qualifying agreement or any financial instrument,
however named, that serves the same purposes;
M. "regular full-time employee" means a non-faculty
employee of a state educational institution or community
college who is not employed in a part-time or temporary status,
is hired for an indefinite period of time, subject to
satisfactory performance and availability of funding, and who
is normally scheduled to work at least forty hours each week;
N. "release of liability" means a clause or term,
by any name, in a contractual agreement that provides that a
party to the contract is released or discharged from liability,
including any potential cause of action, obligation, promise or
.229970.2
- 5 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
agreement, in exchange for some consideration;
O. "retention agreement" means a contractual
arrangement that provides an administrator with a specific
financial benefit to encourage the administrator's continued
employment with a state educational institution or community
college. A "retention agreement" includes any financial
instrument, however named, that serves the same purpose;
P. "separation agreement" means a contractual
arrangement between an administrator and a state educational
institution or a community college that provides the terms and
conditions for the administrator's voluntary or involuntary
separation from employment with the state educational
institution or community college and includes any severance
compensation or benefit upon the administrator's separation,
and may include terms related to the release of liability and
indemnification of future claims or loss due to actions of a
party to the agreement. "Separation agreement" includes any
other financial instrument, however named, that serves the same
purposes;
Q. "settlement agreement" means a contract between
an administrator and a state educational institution or
community college that is intended to resolve any dispute or
potential legal claim that may arise from the administrator's
employment or separation from the state educational institution
or community college without the need for litigation or further
.229970.2
- 6 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
legal proceedings. A "settlement agreement" may include
release of liability or indemnification terms related to
future claims or loss due to the actions of a party.
"Settlement agreement" includes any other financial instrument,
however named, that serves the same purposes;
R. "severance compensation" means a financial
benefit or payment provided to an administrator upon the
separation of that administrator from employment with the state
educational institution or community college at which the
administrator is employed;
S. "state educational institution" means an
institution designated in Article 12, Section 11 of the
constitution of New Mexico and provided for in Chapter 21,
Article 1 NMSA 1978; and
T. "total compensation" means the complete package
of direct monetary payments and indirect non-monetary benefits
that an employee receives from the employee's employer. "Total
compensation" may include base salary; performance or retention
bonuses; medical, dental, life and disability insurance and the
premiums for those insurances; employer and employee
contributions to a retirement or pension plan; housing and
relocation allowances; professional development funds; tuition
discounts; research start-up funds; vehicle and travel
allowances; entertainment and networking expenses; equity
options or stock grants; deferred compensation payments; club
.229970.2
- 7 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
or gym memberships; contributions to flexible spending accounts
or health savings accounts; special annuity payments; or any
other fringe benefit that has the purpose of recruiting or
retaining the employee. "Total compensation" includes all
direct monetary payments and indirect non-monetary benefits,
whether provided directly by a state educational institution or
community college or through an external entity affiliated with
the state educational institution or community college,
including any foundation, athletic booster club or other
organization of any name with a similar fundraising purpose.
SECTION 3. [NEW MATERIAL] REVIEW REQUIRED FOR CERTAIN
ADMINISTRATOR QUALIFYING AGREEMENTS--STATE BOARD OF FINANCE--
ATTORNEY GENERAL--CONSEQUENCES FOR FAILURE TO SUBMIT FOR
REVIEW--RULES.--
A. To promote financial stability and the
responsible allocation of state funds and to maintain public
confidence in the financial management of the state's
educational institutions and community colleges, before the
execution of a qualifying agreement for an administrator with
a state educational institution or community college, the
qualifying agreement shall be submitted by the state
educational institution or the community college for review and
approval, modification or rejection by the state board of
finance if the qualifying agreement:
(1) exceeds an employment term of five years;
.229970.2
- 8 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
or
(2) includes a total compensation value that
exceeds ten times the total compensation value of the state
educational institution's or the community college's lowest-
compensated regular full-time employee at the time the
qualifying agreement is submitted for review.
B. When reviewing a qualifying agreement submitted
pursuant to Subsection A of this section, the state board of
finance shall endeavor to prevent financial loss, waste or
abuse and shall:
(1) ensure that any significant expenditures
in the qualifying agreement do not impair the financial
standing of the state educational institution or community
college or limit the ability of the state educational
institution or community college to invest in academic programs
or student services;
(2) ensure that the qualifying agreement does
not contain unwarranted terms, including excessive severance
compensation or other financial benefits; or
(3) identify fiscally imprudent terms deemed
anomalous as compared to like or similar agreements at peer
institutions.
C. Within thirty calendar days of receipt of a
qualifying agreement submitted for review to the state board of
finance by a state educational institution or a community
.229970.2
- 9 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
college, the state board of finance shall complete the state
board of finance's review of the qualifying agreement by taking
one of the following actions:
(1) approving the qualifying agreement;
(2) requesting modification of the terms of
the qualifying agreement and providing the specific
modifications requested; or
(3) rejecting the qualifying agreement and
providing clearly stated reasons for the rejection.
D. If a qualifying agreement submitted to the state
board of finance by a state educational institution or
community college results in:
(1) an approval by the state board of finance,
the state educational institution or community college may
formally execute the qualifying agreement;
(2) a request for modification, the state
educational institution or community college shall modify the
qualifying agreement as provided for by the state board of
finance; or
(3) a rejection, the state educational
institution or community college may:
(a) revise the qualifying agreement in a
manner that addresses the reasons for rejection provided by the
state board of finance; and
(b) submit the revised qualifying
.229970.2
- 10 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
agreement to the state board of finance for further review.
E. If a qualifying agreement that requires review
by the state board of finance pursuant to this section includes
terms providing for a release of liability or indemnification
of a party to the agreement, in addition to submitting the
qualifying agreement to the state board of finance for review,
the state educational institution or community college shall
also submit the qualifying agreement to the attorney general
for review of the release of liability or indemnification terms
as provided in Section 4 of the Higher Education Accountability
Act.
F. A qualifying agreement executed without the
review and approval of the state board of finance or the
attorney general as required pursuant to this section is null
and void.
G. Approval by the state board of finance of a
qualifying agreement submitted for review by a state
educational institution or a community college does not
preclude the attorney general from instituting an action for
breach of fiduciary duty against a board of regents or
community college board or a member of those boards as provided
in Section 6 of the Higher Education Accountability Act.
H. The state board of finance shall promulgate and
adopt rules to implement this section pursuant to the State
Rules Act.
.229970.2
- 11 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
SECTION 4. [NEW MATERIAL] RELEASE OF LIABILITY--
AGREEMENTS--CLAUSES--ATTORNEY GENERAL REVIEW.--
A. Before the execution of a qualifying agreement
for an administrator with a state educational institution or
community college that includes terms related to a release of
liability or indemnification, the qualifying agreement shall be
submitted by the state educational institution or community
college to the attorney general for review and approval,
modification or rejection.
B. Within thirty calendar days of receipt of a
qualifying agreement submitted pursuant to Subsection A of this
section, the attorney general shall complete the review and
shall:
(1) approve the release of liability or
indemnification terms within the qualifying agreement;
(2) request modification of terms to the
release of liability or indemnification within the qualifying
agreement and provide the specific modification requested; or
(3) reject the release of liability or
indemnification terms within the qualifying agreement and
clearly state the reasons for the rejection.
C. If a qualifying agreement submitted to the
attorney general by a state educational institution or
community college results in:
(1) an approval of the release of liability or
.229970.2
- 12 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
indemnification terms by the attorney general, the state
educational institution or community college may formally
execute the agreement;
(2) a request for modification of the release
of liability or indemnification terms, the state educational
institution or community college shall modify the qualifying
agreement as provided by the attorney general; or
(3) a rejection of the release of liability or
indemnification terms, the state educational institution or
community college may:
(a) revise the release of liability or
indemnification terms in the qualifying agreement pursuant to
the reasons for rejection provided by the attorney general; and
(b) submit the revised qualifying
agreement to the attorney general for further review, upon
which the state educational institution or community college
may revise the release of liability or indemnification terms
and submit the agreement for further review.
D. A qualifying agreement executed without the
review and approval of the attorney general as required
pursuant to this section is null and void.
E. The attorney general shall promulgate and adopt
rules to implement the provisions in this section in accordance
with the State Rules Act.
SECTION 5. [NEW MATERIAL] REPORTING REQUIREMENTS--STATE
.229970.2
- 13 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
EDUCATIONAL INSTITUTION--COMMUNITY COLLEGE--STATE BOARD OF
FINANCE REPORT.--
A. Beginning with the 2025-2026 academic year, a
state educational institution or community college that employs
an administrator with an existing qualifying agreement that
meets the criteria established in Section 3 or Section 4 of the
Higher Education Accountability Act shall submit to the
attorney general and the secretary of higher education no later
than June 30, 2026 and no later than each June 30 following the
completion of an academic year a report containing:
(1) the name of each administrator employed
with an existing qualifying agreement;
(2) the title of the administrator;
(3) the total compensation, by category, paid
to the administrator; and
(4) the total compensation, by category, paid
to the lowest-compensated regular full-time employee at the
state educational institution or community college where the
administrator is employed.
B. No later than December 31, 2025 and no later
than December 31 of each year thereafter, the state board of
finance shall submit to the attorney general and the secretary
of higher education a report containing the number of
qualifying agreements reviewed and a breakdown of the types of
qualifying agreements reviewed and whether the qualifying
.229970.2
- 14 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
agreements were employment, performance or incentive
compensation, retention, separation or settlement agreements,
and for each qualifying agreement reviewed:
(1) a designation of which state educational
institution or community college submitted the agreement for
review;
(2) the name and title of the administrator
who is a signatory or a desired signatory to the qualifying
agreement;
(3) a brief description of the qualifying
agreement's terms, including the total compensation paid or
intended to be paid to the administrator;
(4) the determinations reached by the state
board of finance related to the qualifying agreement's
approval, modification or rejection as provided in Section 3 of
the Higher Education Accountability Act; and
(5) a brief explanation of the criteria relied
upon to justify the state board of finance's determination.
SECTION 6. [NEW MATERIAL] BREACH OF FIDUCIARY DUTY--CIVIL
CAUSE OF ACTION AGAINST BOARD OF REGENTS--COMMUNITY COLLEGE
BOARD--MEMBERS OF BOARD.--
A. A member of a board of regents or a community
college board or an administrator of a state educational
institution or community college owes the state educational
institution or community college for which the member or
.229970.2
- 15 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
administrator serves a fiduciary duty, including a duty of care
and prudent administration, a duty of good faith and a duty of
undivided loyalty.
B. The attorney general may bring a cause of action
against a member of a board of regents or community college
board or an administrator of a state educational institution or
community college who commits a breach of fiduciary duty. The
action may be filed in the district where the state educational
institution or community college is located or in the first
judicial district.
C. If the attorney general brings a cause of action
against a member of the board of regents or community college
board, counsel for the state educational institution or the
community college shall:
(1) not serve as counsel to a member named in
the action;
(2) immediately submit a plan to the attorney
general setting forth a process for providing independent
counsel to a member of the board named in the action; and
(3) continue to provide independent counsel to
an administrator named in the action consistent with the
administrator's independent fiduciary duty to the state
educational institution or community college.
D. If the court determines that a member of a board
of regents or community college board or an administrator of a
.229970.2
- 16 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
state educational institution or community college may breach
or has breached a fiduciary duty owed by the member or
administrator to the state educational institution or community
college, the court may:
(1) enjoin the board of regents or community
college board or administrator of a state educational
institution or community college from committing a breach of
fiduciary duty;
(2) compel performance of duties required of a
member of a board of regents or community college board or an
administrator of a state educational institution or community
college;
(3) order the member of the board of regents
or community college board or administrator of a state
educational institution or community college to reimburse the
state for the cost of defending the action;
(4) impound public funds related to the breach
until the resolution of the action; or
(5) order any other legal or equitable relief
the court deems appropriate.
E. The civil action and remedies provided by this
section are not exclusive and are in addition to any other
actions or remedies in law or equity otherwise available,
including the ability to seek removal of a member of a board of
regents under Article 12, Section 13 of the constitution of New
.229970.2
- 17 - underscored material = new
[bracketed material] = delete
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Mexico.
SECTION 7. EFFECTIVE DATE.--The effective date of the
provisions of this act is July 1, 2025.
- 18 -
.229970.2