Montana Pension Fund Shows Losses

By Beacon Staff

HELENA – Nine state and local government pension funds showed a paper loss of $386 million for the year ending June 30, the executive director of the Board of Investments said.

Carroll South said the losses have continued to mount, but retired public employees will still get their pension checks.

South told the Legislative Finance Committee on Friday that the Public Employees’ Retirement System had a paper loss of $195 million while the Teachers Retirement System lost $150 million. Those two funds had a $6.82 billion value on June 30.

The other seven retirement systems for groups including sheriffs, game wardens, Montana Highway Patrol officers, firefighters and judges had paper losses totaling $41 million. Those funds totaled about $817 million on June 30.

The decrease in the funds’ values are called paper losses because the stocks have lost value, but that loss has not been realized through a transaction.

Rep. Janna Taylor, R-Dayton, asked South for an update on the losses since June 30.

He said he couldn’t give ballpark estimates because the year-end totals came from an audit. But he did say the Board of Investments’ custodial bank said the international stock index has fallen by 34 percent from July 1 through Wednesday while the domestic stock index fell by 23 percent. The funds have nearly 40 percent of their investments in the domestic stock index and about 20 percent in the international stock index.

Sen. John Cobb, R-August, pointed out, “Bottom line, everyone is still going to get their (pension) check.”

South said public employees’ pensions in Montana are constitutionally guaranteed.

Sen. John Bruggeman, R-Polson, asked whether the Legislature will have to bail out the pension funds with taxpayers’ money to make up for the investment losses.

“That’s simply not going to happen in the near future,” South said.

Last year, the pension funds reported earnings of nearly 18 percent, after posting earnings of 9 percent the previous year. But losses earlier in the decade required taxpayer infusions to make the funds sound.