TTRS Is Considering A Risky Investment

"They should not gamble with the money they are charged with protecting not only for the retired teachers of this state, but for all of those active teachers who are contributing to the fund with every paycheck." These are the words of Linda Bridges, president of the Texas Federation of Teachers. She is talking about a risky investment being considered by the Texas Teacher Retirement System [TTRS].

The TTRS is discussing at this time whether to sink part of its multi-billion dollar portfolio into the Emerging Technology Fund, established in 2005 by Governor Perry to make investment capital available to companies in Texas who are trying to get a foothold in the high-technology market.

I'm all for the TTRS making good safe investments to grow the retirement fund established for teachers. But this sounds more like gambling than the making of a sane investment for teachers' retirement. Especially in light of a TTRS staff memo that states, "The historical returns for venture capital investments possess substantial volatility. It is not uncommon for an early-stage venture capital fund to have nine losses for every home run investment."

This means they are considering an investment that has a 90% chance of failure. What the hell are these guys thinking? The TTRS is charged with growing and PROTECTING the teacher retirement fund, not gambling it away with high-risk investments [even in a fund created by the governor of Texas].

I have no problem with the Emerging Technology Fund. In fact, it is probably a good idea that could help Texas gain a larger share of companies in the high-tech marketplace. But it is far too risky to fund it with money earmarked for teacher retirement. And while I'm on this subject, it is also too risky a venture for the retirement fund of state employees.

There is the possibility of enormous profits from investing in high-tech firms, but it must be done with money that we can afford to lose, since the chance of failure is far greater than the chance for big profits. We cannot afford to deplete the retirement funds of teachers. This would endanger the future of our Texas teachers, and therefore our schools.

The TTRS should not even be considering this kind of investment.