State Employees’ Retirement Fund Market Value Altimeter

October 2006

Valuation
Date
Market Value
(in billions)
8/31/06 $10.699
7/31/06 $10.497
6/30/06 $10.494
3/31/06 $10.590
2/28/06 $10.493
12/31/05 $10.273
12/31/04 $9.785
12/31/03 $9.369
12/31/02 $8.573
12/31/01 $9.914
12/31/00 $10.890
12/31/99 $11.055
12/31/98 $10.020
12/31/97 $8.922
12/31/96 $7.654
12/31/94 $5.385
12/31/90 3.9935

The market value of the State Employees Retirement Fund portfolio showed another increase on the bottom line. A positive figure of 202 million dollars developed between July 31 and August 31, 2006. It represents an all-time high at 10.699 billion dollars. At the time the market value of the entire retirement system that included the four units — public school employees, state employees, state police and judges — enjoyed a record high of 54.759 billion. The state employees portion represents 19.6% of the total. Considering there are over 46,000 retirees and beneficiaries being paid their pensions primarily from the fund, we acknowledge the State Treasurer and his workers are doing an excellent job. They know the intent and meaning of the funds mission state verbiage set forth below:

The Bureau of Investments provides quality investment management services, professional expertise and advice to the State Treasurer as fiduciary of the State of Michigan Retirement Systems and Michigan boards and agencies. The Bureau strives to provide consistent and cost effective management of funds to achieve competitive investment returns and meet objectives within an acceptable level of risk for the benefit of employees, retirees and citizens of the State of Michigan.

This writer believes a complement is in order to those involved in attaining the above record figure as indicated. All this in a declining market brought in party by increased interest, a cooling of the housing market and the energy (gasoline) dilemma.

Incidentally, the stock market also set a new record. It was on October 3, 2006 that 11,727.34 broke the record high of 11,722.98 on January 14, 2000. Another high of 11,866 on October 4 wiped out the October 3 high leaving an impression that times may be good! Get in line, elderly SERA members, the trough is filling! We can dream, can’t we?

Observations, Facts and Assumptions

Who would think like this? Statisticians have been found to harbor many similar philosophies. An example: As gas prices rise, President Bush’s standing falls. As prices fall, his ratings rise. We wonder what the gas pumps will show the day after the general election.

It appears the Federal Reserve is at this time keeping interest rates on hold. Mr. Bernanke, Federal Reserve Chairman, and crew voted in August to leave rates unchanged after seventeen consecutive rate increases. The interest rate at this time is being held at 5.25%. Inflation, recession and depression are always on the minds of the Federal Reserve Board. Historically, the Fed has made quick reverses we are told from a stance of tightening the money purse to loosening it as economic conditions change. The Merrill Lynch office, a respected economic forecaster, expects the Fed to start lowering the existing percentage sometime in the first quarter of 2007.

There are new accounting rules issued by the Government Accounting Standards Board. Effective in 2008 they will require public agencies to disclose the future costs of health care and other benefits such as dental, vision and life insurance promised alongside pensions to the nation’s estimated 24.5 million active and retired state and local public employees. Taxpayers nationally, for the first time, will be able to see just how much they are paying to provide the benefits. This probably will generate shock to those taxpayers not on public payrolls. The next few years should prove very interesting in regard to this particular matter.

Did You Know
  1. It was on January 2, 1990 that Secretary of State John Hay announced the “Open Door Policy” to facilitate trade with China. Now we know who to blame.
  2. It was 1823 that the poem, “T’was The Night Before Christmas” appeared in Troy (N.Y.) Sentinal. Written by Professor Clement Clark Moore, the poem was published without his permission.
  3. The present Michigan flag, its third, was adopted in 1911.
Ponder This
  1. Seat belts are not as confining as wheel chairs.
  2. After a certain age, if you don’t wake up aching in every joint, you are probably dead!
  3. When someone asks you “A penny for your thoughts?” and you put your two cents in, what happens to the other penny? — George Carlin
  4. After they make Styrofoam what do they ship it in? — Steve Wright
  5. Shouldn’t the Air and Space Museum be empty? — Dennis Miller
Editor’s note: Al Trierweiter is a former President of the Lansing SERA Chapter, former Chairman of the Michigan SERA Coordinating Council, former Legislative Representative for both the Lansing Chapter and the SERA Council. AI may be reached at 6440 Old River Trail, Lansing 48917; phone 321-0041.

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