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State pension fund ahead of curve in recovery from recession losses

Published October 23rd, 2009 | 1 Comments

KINGSPORT — Tennessee’s main pension fund for state and local government retirees has outperformed 80 percent of the nation’s other government pension funds during the economic downturn, State Treasurer David Lillard Jr. said Friday.

Lillard gave brief snapshots of the state’s financial health to about 230 business and government leaders attending a Kingsport Area Chamber of Commerce Fourth Friday breakfast at the MeadowView Marriott.

Lillard, a Republican who has practiced finance and tax law and is a former Shelby County Board of Commissioners chairman, is one of three new constitutional officers appointed early this year by the GOP-controlled legislature.

His job is to manage all state government investments, including overseeing the pension fund known as the Tennessee Consolidated Retirement System (TCRS).

TCRS relies upon contributions from employees and government employers, along with investment income, to stay financially sound.

But, like other government-run pension funds, TCRS fell victim to a stock market decline.

Lillard said TCRS’ value was about $33 billion before the downturn but has since rebounded to the $29 billion level.

“The day before I became treasurer (TCRS’ value) was $25 billion ... right after I became treasurer we went into a very conservative mode,” Lillard said of TCRS’ progression in a tough economy. “We sold a lot of the stock portfolio and kept it in cash and short-term bond investments. That paid off because we reached a low value of about $23 billion. Then after the market hit bottom on March 9 we began redeploying that cash into the market.”

Those pension funds hit hard by Wall Street, said Lillard, had a very high percentage of assets in stocks when the market soured.

“I’ve seen some (pension funds) that were up to 75 to 80 percent in stocks,” he explained. “Tennessee has always been a very conservative state, and that’s served us well. We had about 49 to 48 percent in stocks. Our (fund value) fall was less.”

Last February, the state Treasury Department tried to reassure TCRS members about the future of their benefits.

“First and foremost, retirees and members have no risk of losing benefits as a result of investment market fluctuations. ... So whether the financial markets go up or down, TCRS benefits remain unchanged,” the department told TCRS members, which include state and local employees, higher education employees and K-12 public school teachers.

TCRS now supports about 100,000 retirees in the state with a total annual payroll of about $1.4 billion, including more than $44 million in Sullivan County, according to Lillard.

At the breakfast, Lillard also announced about $15 million in state-approved school construction bonds will go toward building a new classroom wing and other upgrades at Ketron Intermediate School in Bloomingdale beginning next January.

In addition to the 23-classroom wing, a new library media center will be located in Ketron’s current cafeteria, and a new media center will replace the library and house a computer lab.

The project, according to the Tennessee State School Bond Authority, will result in the immediate closure of Kingsley and Cedar Grove elementary schools.

Lillard, who basically serves as the state’s banker, also noted he’ll be there to advise lawmakers expected to go through a tough budget cycle next year.

“State revenues do continue to decline,” he told those at the breakfast. “It is a matter of great concern. The first two months of this fiscal year, we were down about $68 million. ... It just means as we go forward we’re going to have to do a better job of managing the resources we have.

“There’s one thing we want to protect, ... Tennessee is a low-cost environment state when it comes to doing business and economic development.”

Lillard’s visit was hosted by state Rep. Tony Shipley, R-Kingsport.

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It doesn't matter how well TCRS is doing! The wonderful leaders of Kingsport are planning on getting rid of TCRS in Kingsport next year. The city employees will then be subjected to a sub-standard city retirement system. The model city better do all its recruiting in the coming months. No one will want to work here after that!

David Macnamara II | 10/24/2009 - 1:45 PM - ( Comment

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