Alabama's public pension system posted some of the nation's lowest returns compared to other major funds, a problem the longtime chief executive blamed on investments in the media and a rail car plant in northwest Alabama.
The Teachers' Retirement System had an investment return of 8.4 percent for the year ending Sept. 30, while the Employees' Retirement System posted a return of 8.5 percent.
The funds are worth some $25 billion combined, and both did better than their 8 percent target set by actuaries.
But a nationwide survey by State Street Investment Analytics, a division of State Street financial services corporation in Boston, showed the median return for that period was 10.7 percent for 67 major public pension funds with more than $1 billion each in assets. In all, 96 percent of the funds surveyed nationwide did better than Alabama's.
Returns for those Alabama funds also ranked poorly compared to pension funds surveyed by State Street for the three-year, five-year, seven-year and 10-year periods that ended Sept. 30.
The longtime head of the Retirement Systems of Alabama, David Bronner, said the state results trailed national returns in part because of the funds' investments in TV stations, newspapers and a rail car plant in northwest Alabama.
The pension funds have a total of almost $2 billion invested in two companies controlled by the RSA: Raycom Media, which owns dozens of TV stations nationwide, and Community Newspaper Holdings Inc., which owns more than 100 newspapers and other publications nationwide.
Bronner said the national market for TV stations and newspapers is poor.
"There are no buyers," he said.
He said Houlihan Lokey, an international investment bank, lowered its valuations of Raycom and CNHI, which hurt TRS and ERS investment returns.
"The poor overall peer group performance, for which I am solely responsible, was somewhat due to the lower valuations on ownership of newspapers, television stations and real estate," Bronner wrote in a report to board members earlier this month.
Bronner said returns also were hurt because the state system on Sept. 30 had $500 million invested in the National Alabama rail car plant in Colbert County. But the plant is largely idle and producing no profit because there's been little or no market for rail cars during the recession.
Paul Hubbert, the head of the Alabama Education Association and a member of the teachers' retirement fund board, said the fact that the funds exceeded the 8 percent target for investment returns was positive.
"I hope that's an omen of things to come and that we'll continue doing it, and that the economy will continue improving," Hubbert said. Hubbert said he was satisfied with Bronner's performance as chief executive of the system.
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