It reminded me of one of the definitions of “insanity” coined by Albert Einstein that could certainly apply to Alabama: insanity is doing the same thing over and over again and expecting different results. People wanted good-paying jobs for Alabamians, but they did nothing to seriously make that goal happen.
Public pension systems across the country are experiencing funding problems as the number of retirees and their life expectancies increase. These demographic changes accompanied with economic factors such as the decline in global markets and the accompanying recession, plus the slower-than-expected economic recovery, have all contributed to re-evaluating the current benefit structure to determine if changes need to be made for the long-term future of the pension system.
The big question of late is: Why did the Retirement Systems of Alabama choose to invest about 10 percent of the pension fund in Alabama? The reason is simple: it is extremely difficult to convince companies to invest in Alabama if we do not invest in ourselves first.
Not only do these investments help bring industry and jobs to Alabama, they also benefit the pension funds and the state through returns by generating additional tax revenues and creating billions of payroll dollars over the decades.
By investing a small percentage of the funds in the state, Alabama made as much progress in the last 20 years as any state by adding quality jobs and an improved image — thanks to Govs. Folsom, Siegelman, Riley and, I’m sure, Bentley. Sometimes, it took a little push to convince the politicians to welcome great companies like Toyota Engine, when the local leaders at that time did not want higher-paying jobs competing for local workers.
At other times, the RSA was in a position to place on the negotiating table something that is extremely difficult to match in other states: $10 million in free advertising to help land Hyundai in Montgomery instead of Kentucky.
Ask yourself where Alabama would be without these investments, and what it would look like to the outside world without the renaissance of Mobile, Montgomery and the Shoals? Most Alabamians love their state, but it will not grow without investing in ourselves.
Critics of this investment strategy do not want the RSA to worry about the economic growth of Alabama. However, I strongly contend that we must concern ourselves with building the state’s wealth in order for Alabama to provide a sound pension program for its public employees, especially in a state that adores being ranked 50th in the taxation of its citizens. That leads to …
Naysayers have not asked the most important question: In comparing each of the last 10 years’ investment performances with the average investment performance, what did Alabama receive in return for jobs created and additional tax revenue added to state coffers? Independent experts will determine the answer that will decide whether RSA management has erred in its investment policy or done the right thing in investing in Alabama.
David G. Bronner is the chief executive officer of the Retirement Systems of Alabama.