Pension Fund down by $40B

TALLAHASSEE — The value of the state pension fund has plummeted by more than $40 billion since last year in light of an economic maelstrom that has caused the state's investments to greatly decrease in value.

Right now, the losses are on paper. But, financial advisers to the State Board of Administration, which manages the state pension fund, said Thursday that those losses could become very real very quickly if loans are defaulted on.

“We've been devastated,” said Rob Smith, senior financial officer for the SBA. “In a year we've wiped out what we've had in excess for ten years.”

The value of the pension fund has dropped from $137.5 billion a year ago to $95.7 billion. As recently as the end of September, the SBA reported to Gov. Charlie Crist and the Cabinet that the Florida Retirement System stood at $114 billion.

Other funds, including the Lawton Chiles Endowment have also severely decreased in value. The value of the fund fell from $2.1 billion June 30 to $1.1 billion at the end of September.

The Chiles Endowment has been named as a possible source to plug a more than $2 billion hole in the state budget. But state Chief Financial Officer Alex Sink has expressed concern that using the fund would completely deplete it.

At a meeting of the SBA's Investment Advisory Council on Thursday, members expressed concern over the state's investments, but also acknowledged that the economy would ultimately recover. It's just unknown how long it will take. If the stocks come back, the value will go back up.

“I don't think that capitalism is dead,” said SBA executive director Ash Williams.

The situation is obviously the same elsewhere, with global credit markets having been battered for months and fears of a worldwide recession gripping equities markets.