State investment losses hit $2.8 billion
Jody MurphyPARKERSBURG - As the stock market continues to fall, Americans are watching their once-bountiful 401ks and retirement plans hemorrhage money.
West Virginia is no different.
"With Wall Street there is a lot of concern," Delegate Dan Poling, D-Wood, said.
The financial mess has eroded a fourth of the value from the state's investment portfolio, a $2.5 billion decline since the state's budget year began July 1.
"It's kind of a cold-hearted beast, and we felt that like everyone else," Executive Director Craig Slaughter told a joint meeting of major House and Senate committees. "There's nowhere to hide from that kind of a market."
The state Investment Management Board Monday briefed a joint assembly of the major House and Senate committees. The board handles public pension funds and invests them in stocks, bonds and other holdings. The news was neither good nor surprising.
The state's investments are on track to miss its earnings projection for the second straight year, Slaughter said.
Slaughter told lawmakers the board typically relies on a 7.5 percent return. The last quarter saw a 10 percent loss. That leaves the Legislature to carve money from next year's budget to offset the losses.
State Senator Donna Boley, R-Pleasants, attended Monday's meeting.
Boley said the teacher's retirement fund, which had $3.3 billion as of Sept. 30, was down to $3 billion.
Because of the loss the state is going to have to add an additional $50 million annually to the $288 million the state already pays into the teachers' retirement fund, according to Boley.
"With the loss, not the rate of return we expected, we are going to have to pay $50 million more a year, which means it has to come from somewhere in the budget," she said. "It is going to cost us."
Boley said not all the news was bad.
"At this time, it doesn't look like we will have to sell any assets so we have the luxury of waiting for (the market) to come back," she said. "If we had to sell off we would in worse shape."
"Of course everybody is concerned about what their investments are doing," Frank Deem, R-Wood, said. "We are all concerned about it, but the feeling is it will right itself."
Slaughter told legislators the investment board will stay the course and continue with its investment strategy.
Citing Wall Street's historical ability to rebound, and sometimes quickly, Slaughter predicted that West Virginia can stick with a 7.5 percent return as its long-term goal.
"We know the market is going to come up at some time," he said. "We don't want to panic and change our stripes just because of what happened yesterday."
The Associated Press contributed to this story
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bigdaddy
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11-18-08 12:02 AM
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Shades of A.J. Manchin He had a good excuse tho'. He was just plain stupin about the stock market.
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