Missouri public pension funds drop by $11 billion

COLUMBIA | As stocks and real estate values tumbled, the assets of Missouri's biggest public employee pension funds plunged by more than $11 billion last year, the Columbia Daily Tribune reported Sunday.

The Tribune interviewed executives of the state and local governments' biggest pension funds, which are guaranteed to provide benefits to more than 317,000 current and retired public school teachers, state workers, university professors and local government employees.

They said their 2008 investment experience was the worst for a single year.

While the funds' managers assure retirees their benefits are secure, they also warn that last year's financial meltdown could increase the future tax money and teacher contributions needed to keep the funds on sound financial footing.

Missouri's government-sponsored pension funds are generally conservatively managed. Most are financed well-above the 80 percent asset funding level that actuaries recommend. Their benefits are locked in law.

But the ripple effect from the financial crisis on government pension contributions could put greater pressure on state and local budgets and school districts. The increased funding requirements could come at a time when tax receipts are depressed by a sour economy and governments are struggling with other public needs.

Fund managers hope a market turn-around in the next six months will take the edge off last year's steep losses.

"We're concerned but we are not frightened," said Steve Yoakum, executive director of the state's biggest pension fund, the Public School Teachers Retirement System. The fund lost 25 percent of its value, dropping $7.8 billion in the 12 months ending Jan. 1.

"We have seen declines in the past, and we have the staying power and were funded well enough to come through those," Yoakum said. "It should not have an effect on the benefits received by the retirees in any of the systems. But long term, because of the nature of this decline, it's either going to be made up with increased investments earnings in the future or increased contributions in the future, and it's very difficult to project what that will be at this time."

Yoakum said the teachers' fund would need to earn about 15 percent per year for five years to recover from the 2008 downturn.

"That's one of the things I would say is possible but not probable," Yoakum added.

Like the teachers' system, other funds sustained losses in the 24-25 percent range: the state workers' fund was down about $1.8 billion, the local government employees' fund, about $850 million, and the fund for retired road workers, $510 million.

The final 2008 accounting for the University of Missouri's retirement fund has not been made, but the fund dropped by about $500 million during the nine-month period ending Sept. 30.

"This has been one of those years where with very few exceptions there was no place to hide," said Rick Dahl, chief investment officer of the Missouri State Employees Retirement System, or MOSERS.