The Arkansas Teacher Retirement System's investments dropped by $872 million in value to $14.1 billion last quarter largely due to a downturn in stock markets, the system's investment consultant reported.
But the system's executive director, George Hopkins, on Monday estimated that the investments have rebounded and currently total $14.9 billion.
The Teacher Retirement System is state government's largest retirement agency, with more than 100,000 working and retired members.
The first quarter of fiscal 2016 "was very volatile with pressure from both interest rate concern and economic growth concern from China," Hopkins said. Fiscal 2016 started July 1, and the first quarter ended Sept. 30.
"Strong earnings and a better economic outlook helped the equity markets bounce back with almost double-digit returns for October," he said.
The system's board of trustees is scheduled to receive a report on fiscal 2015 from actuary Gabriel, Roeder, Smith & Co. of Southfield, Mich., on Dec. 7, Hopkins said.
Hopkins said he believes the system's "overall position will be stronger than the actuarial numbers for fiscal year 2014," based on the system's 5.2 percent investment return in fiscal 2015, the actuarial cost savings from legislation enacted during the past seven years and previously unrecognized investment gains from earlier fiscal years.
The system's unfunded liabilities totaled $3.9 billion at the end of fiscal 2014 with a projected payoff period of 39 years, Gabriel reported nearly a year ago. The system aims for a projected payoff period of 30 years or less under state law. Unfunded liabilities are the amount by which the systems' liabilities exceed the actuarial value of the system's assets. Actuaries often compare unfunded liabilities to mortgages on homes.
In fiscal 2014, the system included 70,225 working members with an average age of 44.7 years, an average service of 10.2 years and an average salary of $35,673, Gabriel reported last year. The system also included 38,478 retired members with retirement benefits totaling $822 million, the actuarial firm reported then. The average annual pension was $21,362.
During fiscal 2015, which ended June 30, the system's investments increased by $386 million in value to $14.975 billion as they recorded a 5.2 percent investment return to rank among the top 2 percent of public pension systems nationally, Aon Hewitt Investment Consulting reported in August.
School districts and other system employers paid $409.9 million to the system in fiscal 2015, while their employees contributed $126.9 million, according to Hopkins.
In the quarter starting July 1 and ending Sept. 30, the system's investments fell from $14.975 billion to $14.103 billion and their investment return was minus 5.8 percent for the quarter, ranking the Arkansas system in the middle of public pension plans nationally, the firm reported.
But the system's investments increased in value from $14.103 billion to $14.718 billion in October as they posted an investment return of almost 4.4 percent, based on a preliminary report from the Aon investment consulting firm. The report doesn't include changes in investments in real estate, timber, agriculture, infrastructure and private equity.
The system's stock portfolio dropped from $8.94 billion to $8.03 billion last quarter, the consultant said. However, the system's stock portfolio increased in value to $8.6 billion by Oct. 31.
The system's bond investments totaled $2.35 billion on Sept. 30, after recording an investment return of minus 0.1 percent last quarter, Gabriel reported. Then, they totaled $2.36 billion after posting an investment return of 0.5 percent in October.
Last week, officials for state government's second-largest retirement system reported a similar situation -- investment losses last quarter and a rebound in the value of its investments since Sept. 30.
The Arkansas Public Employees Retirement System's investments dropped by $516.3 million in value to $7.3 billion during "a rough quarter" for stock market investments, the system's investment consultant said last Wednesday.
At that time, the system's executive director, Gail Stone, said the system's investments now "are probably flat, which is pretty good" for fiscal 2016, which started July 1, with the stock markets rebounding since the quarter ended Sept. 30. The system's investments were valued at $7.65 billion through Oct. 31, she said.
Metro on 11/24/2015