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Wednesday, October 29, 1997
Officials say state funds can handle market swings
AUSTIN (AP) -- The billions of dollars invested in stocks to benefit
state retirees and Texas schools are long-term investments that should be
able to withstand stock market gyrations, state officials said.
"The Permanent School Fund is a perpetual fund. We're in it for
the long haul. We can ride out what we think is going to be a short downturn,"
Debbie Graves Ratcliffe, spokeswoman for the Texas Education Agency, said
Tuesday.
The $16.2 billion Permanent School Fund, which provides money for public
schools, is projected to provide $1.3 billion through the next two years,
about $280 per student.
About 55 percent of that fund is invested in stocks and other equities,
Ms. Ratcliffe said, and only 4 percent of that is in international stocks.
She said fund administrators were assessing the markets but "really
see this more as a buying opportunity" for the fund.
"This really seems based more on an emotional panic than a decline
caused by some problem with the economy. They're figuring that the market
will snap back in a very short time. From the beginning of the year, the
market is still up 20 percent," she said.
"They're watching the situation closely but they're not worried
at all about it."
Those comments were echoed by a spokesman for the nonprofit corporation
that manages investments for the $6.4 billion Permanent University Fund,
which helps support 17 institutions in the University of Texas and Texas
A&M systems.
"We invest with a long-term investment horizon and as a result we
try to avoid reacting to daily trading activity," said the fund's Tom
Ricks. "We're making no adjustments as a response to recent trading
activity. The underlying economic fundamentals remain sound."
The Employees Retirement System of Texas, which covers state workers
and their beneficiaries, has more than $5.4 billion invested in the stock
market -- about 36 percent of its $15 billion portfolio.
"We can withstand a lot of ups and down," said Cathy Flautt,
spokeswoman for the retirement fund.
"We're invested for the long term, so we wouldn't be selling those
stocks anyway. They wouldn't even calculate a paper loss because we don't
intend to sell those stocks," she said.
No state tax money in the treasury is invested in stocks, said Ross Ramsey,
a spokesman for Comptroller John Sharp.
Ramsey said that the portfolio of the state-run Texas Tomorrow Fund,
which guarantees college tuition and fees that are paid in advance, is exclusively
invested in bonds.
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