BIRMINGHAM – Commenting on the PACT Board of Directors’ adjustment to PACT’s investment plan, Democratic candidate for Treasurer, Jeremy Sherer, stated, “The management strategy of PACT is completely contrary to one that best secures the programs vitality and limits the State’s future financial obligation”.

At the PACT Board of Directors meeting, held November 4th, the Board voted to convert 50% of PACT’s stock holdings to bonds and cash equivalent funds, leaving only 20% of PACT’s $570 million of assets within the stocks.

“Coupled with the Board’s action earlier this year to restrict any further enrollment into PACT, the Board’s radically conservative investment strategy has placed PACT on the path towards imminent breach – save intervening action by the Legislature that provides significant supplemental funding for PACT,” said Sherer.

“Common sense dictates that if you are not meeting necessary investment projections, and you cut off cash flow while placing your available capital underneath a rock, your future investment goals are destined to fail”.

“The Treasurer and the PACT Board have a duty to the remaining 45,000 PACT families to actively manage PACT funding to best place the fund in position to satisfy its future financial obligations.”

“The PACT Board’s reallocation of PACT funding effectively punts the issue to the Legislature, which was never intended to be responsible for PACT’s management. It is the Treasurer’s and PACT Board’s legal obligation to manage these funds.”

“Due to PACT’s poor financial performance the last two years, future legislative action to supplement PACT funding was likely necessary to make PACT solvent. However, the PACT Board’s recent actions will require the Legislature to act sooner and increase the amount of supplemental funding necessary to solve PACT. Both resulting outcomes are detrimental to our state’s budgets and taxpayers”.

“The investment projections by the PACT Board’s actuary, allowing PACT to be solvent until 2015-2016, are premised on an annual investment return of 8.5%. The more conservative financial strategy makes PACT’s future more precarious and the State’s eventual financial burden greater.”

“The PACT Board’s actions reflect a deficiency of leadership and a failing of government.”

Please contact Jeremy Faulkner at (205) 446-1342 with any questions.

###