State pension funds reached at an all-time high in 2000, but that was before the economic aftershocks of Sept. 11.
Investment holdings of state government employee retirement systems reached $1.8 trillion last year, up from $1.6 trillion in 1999, according to the U.S. Census Bureau. Since the terrorist attacks of Sept. 11, however, some state pension funds have reported drops of between 5 and 10 percent in value.
Even before Sept. 11, the market's decline was taking a toll on state pension funds. For example, New York's public employee pension fund lost 11.8 percent of its value from March 2000 to March 2001 as the stock market declined. During that period, the Dow Jones Industrial Average dropped 9.5 percent.
To help make up for the losses, New York state and local governments are expected to resume making basic payments into their retirement fund for the first time since 1997.
Other states may also have to increase employer contributions to keep investment programs sound. In Tennessee, for example, the state will decide next month whether state government will need to contribute more to the employee pension fund next year.
In Oregon, the Public Employees Retirement System fell by $571 million on the day Wall Street reopened after terrorists attacked the World Trade Center.
But investment officers at state pension funds say it would take more than a few months or even one year of bad times to prevent gains and losses from smoothing out.
Glenn Deck, executive director of Kansas Public Employee Retirement System, which lost $1 billion, or 10 percent of its investment assets due to downturns in the stock market over the past 15 months, said state retirees wouldn't feel any short term impact.
"But it puts increased pressure on the state in the long run to make increased contributions," Deck said. "We're in for some continued short-term volatility with the war effort and the economy going into a recession, but we're in it for the long-term. I do feel confident that over the long-term, we'll do alright."
According to the Census Bureau, last year was the first time assets of 2,208 retirement systems (for state and local government combined) passed the $2 trillion mark.
llinois, with 377, and Pennsylvania, with 360, had the most employee retirement systems in 2000. Colorado, Florida, Massachusetts, Michigan, and Minnesota had 100 or more systems. In 21 states, there were fewer than 10 systems. Hawaii and Maine each had only one, which served all state and local government employees.
More than $1.6 trillion of the state and local pension funds were invested in non-governmental securities such as stocks and property. Of the $271 billion invested in government securities, the federal government vested the largest share, $267 billion.
The data is from the 2000 State and Local Government Employee Retirement Systems Survey.