- Associated Press - Wednesday, December 10, 2014

MONTGOMERY, Ala. (AP) - The state finance director on Wednesday urged the teachers’ pension system to consider creating a new oversight committee, noting that one key measure of pension plan health has fallen for 13 years in a row.

Finance Director Bill Newton asked the control board of the Teachers Retirement System to discuss creating the oversight committee similar to the one established by the board that governs the pension system for state employees. However, the idea prompted immediate pushback from David Bronner, chief executive of the Retirement Systems of Alabama, and board members who called it unnecessary micromanagement.

Newton said there’s been a consistent downward trend since 2000 in the pension plan’s ratio of assets to liabilities. Newton said the pension system had a funded ratio of over 100 percent in 2000 but that dropped to under 80 percent in 2007 and 65 percent in 2013.

“It’s not so much what the funded ratios are now, but it’s the trend,” Newton said. Newton said the board of the Employees Retirement System was concerned by those numbers and he believed members of the teachers’ pension board should be as well.

Newton said a recent analysis by State Street Investment Analytics also showed the teachers’ pension system had among the worst average returns among public pension systems over a 10-year period. Newton said the committee would have oversight over long-range investment policies, but would not be involved in daily decisions.

The board did not take a vote on the proposal, but some board members quickly joined Bronner in speaking out against the idea.

“I think the committee is a slap at me and a slap at the staff,” Bronner said during the meeting. He said all pension systems have gone through similar declines.

He said the 10-year averages were brought down by 2008 and 2009 returns when pension fund investments were hammered during the economic recession.

Bronner said the system’s one-year and three-year returns are in the top 13 percent in the country. “I don’t know anything in Alabama that is in the top 13 percent of anything other than football,” Bronner said.

“We took the system up to 103 percent, not Peter Pan,” Bronner said of the system’s previous funded ratio.

However, Curtis Stewart, a member of the ERS board, told board members that there was nothing wrong with keeping a closer eye on the numbers.

“It was too late to turn the Titanic once the ship hit the iceberg,” Stewart said.

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