Jan. 15, 2009 Getting rid of bad investments and taking on new, diverse ones that could help grow the Government Employees Retirement Systems portfolio was the order of business Thursday, as GERS Board of Trustee members examined their losses in the light of the struggling economy.
The size of GERS portfolio continues to fluctuate along with the financial markets, recently dropping from $973 million to $920 million in a matter of a few weeks, according to board members. If the portfolio were less diverse, GERSs losses in the midst of the ongoing economic recession would have been much higher, they said.
Board members Thursday tried to stay on top of their game by terminating Bjurman, Barry & Associates an investor that they said was significantly underperforming and transferring about $18 million from the company to Oberweis, one of the systems micro-cap investment managers.
Obviously our asset base supports the responsibilities of the system, explained Joseph Boschulte, GERS chief financial officer. With everything thats going on with the economy, we continue to have a net deficit, so every month or every six weeks or so, we have to liquidate our securities to help fill the gap. But now, since the market has constricted, theyre becoming harder to sell.
Last month, GERS brought in about $12.3 million but paid out more than $19 million, for a net deficit of about $7.4 million. And the trend continues so far for fiscal year 2009, the system has collected approximately $46.9 million but has paid out $57.5 million, for a net deficit of $10.6 million, Boschulte said during Thursdays board meeting.
A lot of retirement systems right now are putting more thought into preserving capital instead of trying to grow it, Boschulte said after Thursdays meeting. Especially since everyones having a bad year.
The biggest difference GERS has seen this year, he added, is an increase in personal loans around the holiday season, along with an increase in contribution refunds, which total about $1.2 million so far for FY 2009.
More people have been leaving the system, so theyre asking for their money back, Boschulte said.
Meanwhile, board members are still keeping their options open: on Wednesday night the board met in executive session to hear presentations from four alternative investment managers. No action was taken during the meeting, according to GERS board chairman Vincent Liger.
The board also voted Thursday to: renew its contract with attorney Pedro Williams (the contract is for two years, and Williams bills the board on a monthly basis, Liger said); and re-elect Liger as board chairman and attorney Raymond James as vice-chair.
Board members also received an update on the status of its ongoing data recovery project and discussed the repayment of the $8 million lent to St. Croix based GeoNet Ethanol a couple years ago. GERS got the money back with interest, according to board members.
Present during Thursdays meeting were board members James, Liger, Desmond Maynard and Leona Smith. Absent from the meeting were board members Yvonne Bowsky, Carver Farrow and Marvin Pickering.
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