FOR IMMEDIATE RELEASE
Friday, August 9, 2002

James O'Keefe for State Treasurer
PO Box 441031
Somerville, MA 02144
(617) 628-2922
info@jamesokeefe.org
www.jamesokeefe.org

Contact:
Vanessa Bliss, Campaign Manager

News Release

JAMES O'KEEFE CALLS STATE PENSION INVESTMENTS RISKY, CALLS FOR REFORM

SOMERVILLE – James O'Keefe, Green Party nominee for State Treasurer, called for a full review of the investments of the Pension Reserves Investment Trust (PRIT). The PRIT has fallen by $4 billion since its high, and lost more than $1 billion in the first six months of 2002. James O’Keefe attributes this to its risky investment allocation and the legislature’s requirement that the pension fund maintain an excessive expected rate of return.

As of the 2001 report on the PRIT, 3% of the pension fund’s assets were in junk bonds and 6% in venture capital and hedge funds. The current pension plan calls for 10% of the pension’s assets to be invested in venture capital and hedge funds in the future. “By allocating 13% of the pension’s assets to junk bonds and hedge funds, the current state treasurer is making a risky gamble with other people’s money,” stated James O’Keefe.

James O’Keefe attributes the pension fund’s excessive investments in such risky investments to the legislature’s requirement that the PRIT maintain an expected rate of return per year of 8.25%. By comparison, Warren Buffet’s Berkshire Hathaway has an expected rate of return per year of 6.5%, and many state pension funds have even lower rates.

“The expected rate of return that the legislature set for the PRIT is abnormally high for a state pension fund,” stated James O’Keefe. “By setting the rate as high as they have, the legislature is attempting to reduce their responsibility for providing for the retirement of our public school teachers and state workers,” he added.

James O’Keefe calls for greater investments by the PRIT in areas that will provide a good rate of return and pay dividends to the commonwealth. With James O’Keefe as state treasurer, the PRIT will setup funds that give loans to small businesses, for community development and for developing community-controlled medium-cost and affordable housing. He will make sure that the PRIT invests in energy conservation measures that pay dividends from the resulting savings and invest in wind farm and solar power developments that reduce our dependence on fossil fuels and will make the commonwealth an environmentally safe place to live.

Added James O’Keefe, “We need to seek out investments that are financially and socially profitable. If the legislature mandates that the PRIT must maintain an excessive rate of return, then we will be forced to turn away the sound investments I am proposing and instead gamble on very risky investments.”