July 12, 2011 09:10 PM UTC

Walker Stapleton--Just a Crappy Investor?

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• by: Colorado Pols

As the Pueblo Chieftain’s Patrick Malone reports, what are we to conclude from the continuous running down of the Public Employees’ Retirement Association (PERA) by Colorado Treasurer Walker Stapleton? Makes you wonder, especially when:

In the calendar year 2010, PERA realized a 14 percent return on its investments, according to Meredith Williams, CEO of PERA. As of last week, PERA had earned 5 percent on its investments.

“I give the PERA investment team credit this year,” Stapleton said. “They did a great job. But we’re not talking about investments in a one-year or a 10-year time frame; we’re talking about a 30-year time frame.”

Stapleton said he objects to the target of an 8 percent annual yield because it fosters risky investments in order to hit such a high mark…

Yes, well:

Over the past 25 years, PERA has averaged a 9.3 percent return on its investments. The rate of return during the past decade has been about half as much thanks to drastic economic downturns in 2002 and 2008…

Looking at investment returns from other states during the same 25-year span, the average annual rate was 8.7 percent, according to [Tom] Cavanaugh [of Cavanaugh Macdonald Consulting].

What this boils down to is a clash between conservatives and public employees over recent PERA reforms–2010’s Senate Bill 1 stabilized the pension fund in the wake of the major economic crises of the last ten years, largely by hiking employee contributions and tightening eligibility for benefits. Based on that, public employees say they have made enough sacrifice. Walker Stapleton, however, clearly isn’t so sure, having testified before Congress about the “unsustainable” nature of PERA’s investments even after reform.

So, you know, maybe he’s right, but the long-term historical and present performance of these investments doesn’t indicate that; as this audit by an independent consultancy shows pretty clearly. And if Stapleton’s PERA investment naysaying continues to underestimate their performance–meaning PERA’s investments simply track their historical average–people might start asking if Stapleton’s just not very good at picking winners in the market.

A harsh indictment for Colorado’s Treasurer and the CEO of SonomaWest Holdings…