GOP claims over Alex Sink role in investments weighed

Millions of Americans had that stomach-churning feeling when headlines announced another bad day on Wall Street as stock and bond markets plunged in value. People watched helplessly as investment nest eggs cracked, leaving many -- particularly seniors -- worried they would never recover what they had dutifully built up in savings.

That raw fear is exploited in a new statewide television ad paid for by the Republican Party of Florida on behalf of the Rick Scott for governor campaign and against Democrat Alex Sink. The 30-second ad began airing on Sept. 21, 2010. It opens with black and white photos of older people as a narrator says: ``You worked your whole life. You saved. It's your pension. You earned it. But with Alex Sink in charge, Florida's pension fund has lost 24 billion dollars. That's not a typo. $24 billion -- gone.''

The ad continues: ``Experts even warned Sink she was making risky investments. Sink gave bonuses to staffers. They were hired to invest our seniors' money. Lost billions. Then Sink gave them bonuses. And now she wants a promotion?''

The television airwaves are loaded with ads that take facts or issues out of context. The Associated Press labeled the RPOF ad ``deceptive.'' The Sink campaign immediately sent out an e-mail statement firing back.

To get to the truth and put the GOP ad in perspective, there are questions to probe here. One is: Did the Florida pension fund lose $24 billion and is it ``gone?'' Did experts warn her ``she was making risky investments?'' And, did Sink give ``bonuses to staffers'' who lost billions?

Let's start with some background. Sink is Florida's chief financial officer and is required by law to sit on the three-member Board of Trustees, State Board of Administration. The board has oversight authority over the state's largest pension fund, the Florida Retirement System Trust Fund. The other board members: Gov. Charlie Crist and Attorney General Bill McCollum.

LOSSES

The trust fund is a massive investment account, today worth about $117 billion and holding the retirement assets of about 1 million current and retired state employees, as well as some local police and firefighters. It's one of the nation's largest retirement funds. According to the last actuarial report done in 2009, the fund is 88.5 percent funded -- meaning if every employee retired today, they would get 88.5 percent of their benefits; 80 percent is considered healthy.

So when Wall Street melted down, and stocks, bonds, real estate and other assets began their steep decline in 2008, the value of Florida's retirement fund fell too. Did the retirement fund lose $24 billion? RPOF does the math this way: On June 30, 2007, the fund was at its peak at $138.4 billion and by June 30, 2010, the value had declined to $109.34 billion, a $29 billion drop in value. The RPOF cites the $4.5 billion paid out to retirees in 2009-10 and concludes the net investment loss is $24.56 billion. Their number is wrong for these reasons: First, the value of the fund was $136.4 billion, not $138.4 billion, in June 2007. And second, the party subtracted the 2009-2010 payments to retirees from that three-year loss, but failed to subtract the payments to retirees in the other two years as well. Those payments were $3.4 billion in 2007-2008 and $3.2 billion in 2008-2009. If they had subtracted all three years, the drop in value since 2007, then, is $15.96 billion.

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