‘Super September’ helps teachers’ retirement fund

The chief executive of the state’s largest pension fund recently provided some hope that international markets are emerging from a prolonged bear market, thus padding the $10 billion retirement fund for Arkansas’ retiring teachers.

In an October note to the 77,000 members of the Arkansas Teacher Retirement System, Executive Director George Hopkins said markets have been choppy since late April, but recent trends show some positive progression.

"June was negative, July was positive, August was negative, September was
VERY positive, and October has been very good so far," Hopkins wrote. "September was the best September in the markets in about 70 years."

According to ATRS, the system’s value rose more than $950 million between July 1 2009 and June 30. After the close of September books, ATRS expects more than $100 million in additional gains. Current "flash reports" by system managers in October shows that the ATRS trust fund is now worth at least $10.5 billion.

Hopkins said ATRS board remains committed to a conservative investment philosophy of carefully diversifying "across many asset classes and across the world."

"The ATRS Board has done an excellent job in finding the best mix on allocation of assets and by finding and hiring the best managers in the asset classes," Hopkins wrote. “ATRS has performed well when compared to other pension plans and to the benchmarks that ATRS uses to measure the real value added by active management of assets."

Additionally, Hopkins noted that ATRS has added more than  30 square miles (20,000 acres) of Arkansas forest acreage to its growing timberland portfolio. The system owns timberland in 11 states worth more than $300 million.

"The purchases were outstanding based on land quality, location relative to mills and processing facilities, and price," Hopkins said. "By ATRS having cash to purchase large tracts without the need to finance the purchases, ATRS has been able to move quickly to acquire the timberland at attractive prices relative to even the current market values."

"ATRS is in a position to let the timber grow on the stump until ATRS is ready to sell," Hopkins added. The ATRS chief also said ATRS is looking to add a new alternative investment in farmland, noting that "several farms are for sale in Arkansas."

"ATRS is also looking to add a new alternative investment in farmland. Farmland has
been a great investment opportunity historically," Hopkins said. "ATRS is now at a size that it can allocate enough funding to a farmland manager in a separate account for ATRS to purchase enough farmland in Arkansas and other states for proper diversification."

Concerning the upcoming legislative session, Hopkins said ATRS doesn’t expect any significant changes to the overall structure of benefits besides a few minor issues involving T-Drop — the system’s tax-deferred, interest-bearing retirement plan for teachers.

And although ATRS will not ask for additional staff in its budget request for the upcoming session, Hopkins said additions to staff will be necessary in the future to address growing member benefits needs.