Worker's compensation fund investment.                                  06LSO-0204.C2

FISCAL NOTE

 

The fiscal impact is indeterminable.

 

Currently by law, only the Permanent Mineral Trust Fund and the Permanent Land Fund can be invested up to a maximum of 55% in equities. The equity portion of these portfolios produces income from dividends and capital gains. 

 

Based on market projections, the State Treasurer assumes a 7% long-term (10+ years) total return for a fund like the Permanent Mineral Trust Fund invested in a fully diversified portfolio of 50% equities and 50% fixed income & cash versus a 5% long-term (10+ years) total return for a fund invested solely in fixed income and cash, such as the State Agency Pool. Because the maximum equity allocation for the Worker’s Comp Fund is set at 45%, the long-term total return rate is expected to be slightly less than that of the Permanent Mineral Trust Fund.

 

The Permanent Mineral Trust Fund’s actual return for the 3-year period ending 06/30/05 was 8.2%, with 71% of the portfolio allocated to fixed income & cash and 29% allocated to equities. The State Agency Pool’s actual return for the 3-year period ending 06/30/05 was 4.0% with 100% of the portfolio allocated to fixed income and cash.

 

 

 

 

 

 

Prepared by:   Sharon Garland and Michael Walden-Newman

State Treasurer's Office     Phone:   777-7475 / 777-6704