Steve Flowers: Dr. David Bronner celebrates fifty years as CEO of RSA
The legendary head of the Retirement Systems of Alabama (RSA), Dr. David Bronner, celebrates 50 years as CEO this month. When the annals of Alabama history are written, there will never be an Alabamian as remarkable a public servant to our state as David Bronner. Dr. David Bronner has marked his place in Alabama governmental history. When Bronner took his present job with RSA, the Retirement Systems had approximately $500 million of funds. Today, RSA has approximately $43.9 billion in funds under management and manages the pensions for 385,000 public teachers and public employees. Alabama public employees will swear by, stand up for, and place on a golden pedestal David Bronner. They credit him with securing their retirement years with a solid foundation. Indeed, he has. The Employees’ Retirement System and the Teachers’ Retirement System are financially sound and the envy of most other states. Bronner is quick to credit the Alabama Legislature for their part in helping to ensure the systems are fully funded, which is something that has set RSA apart from pensions in other states. Dr. Bronner is also the head of the insurance program for public educators, the Public Education Employees’ Health Insurance Plan. This program covers over 300,000 educators, retirees, and dependents. This $1.4 billion-a-year program provides excellent benefits to members at a low cost to both the members and employers. In fact, RSA has managed the plan with level funding for the past seven years and plans to do the same in the coming year. Bronner was born in Iowa and received his elementary and high school education in Minnesota. He came to Alabama to study law. He earned his Law Degree and Ph.D. from the University of Alabama in 1972. Shortly after graduation, he became Assistant Dean of the Law School at the University of Alabama. A year later, at the age of 28, he became head of the Retirement Systems of Alabama. Today, 50 years later, Bronner is a youthful looking 78 with plenty of vigor and probably no plans to retire. When you have a conversation with him, it is an experience you will never forget. He is extremely quick-witted. There is no mistaking that you are talking with someone very intelligent. He has digested your words almost before they are out of your mouth and will reply immediately with a succinct response that appears as though he has given it 15 minutes of thought. Of course, that may be because we native Alabamians talk a little slower than he does. The Retirement Systems of Alabama has contributed a great deal to the state’s economy over the last 50 years. One of the greatest legacies that Dr. Bronner may enjoy is his creation of Alabama’s Robert Trent Jones Golf Trail. This idea generated a profit for RSA in the first years. The brilliance of the Golf Trail is not only the profits the Trail generates for the RSA but the peripheral boost to our state’s economy. The Golf Trail has enhanced the image of Alabama. It has also benefitted the state’s attractiveness for corporate recruitment. The economic benefits and prestige it brings to our state are exponential and helped increase tourism from a $1.8 billion industry to a yearly $24 plus billion industry. The courses have made Alabama a tourist destination. It brings well-heeled northern golfers to our state for week-long stays, and they spend untold amounts of money in our hotels and restaurants. Snowbird golf enthusiasts are locked out of their courses six to seven months of the year, so they journey to warm climates of the Heart of Dixie to play these world-class courses. They might look at the adjoining hole and see Dr. Bronner playing, chomping on his ever-present cigar. The Robert Trent Jones Golf Trail’s first seven sites were constructed in Birmingham, Mobile, Huntsville, Opelika-Auburn, Dothan, and Greenville. These seven were completed from 1990 to 1994. The Prattville site opened, and the Lakewood Club course in Point Clear joined the Trail in 1999. The premier Hoover site at Ross Bridge appeared in 2005. The Ross Bridge course and Ross Bridge Renaissance Resort Hotel and Spa may be the crown jewel. This Hoover location attracts national conventions and has spawned one of the premier residential neighborhoods in the state. Ross Bridge is home to a good many of the young physicians and medical specialists from UAB. Dr. Mark Fagan has authored a wonderful book on Alabama’s Golf Trail, Dr. Bronner, and the RSA. It is entitled Alabama’s Public Pension Fund Growth and Economic Expansions Since 1972. See you next week. Steve Flowers is Alabama’s leading political columnist. His weekly column appears in over 60 Alabama newspapers. He served 16 years in the legislature. Steve may be reached at www.steveflowers.us.
Alabama state pension funds down, facing challenges
Investments that are a key source of funding for Alabama’s Employees Retirement System have lost ground in the slumping financial markets this year, but officials say the pension fund is sound. The system’s Board of Control heard a presentation on the latest numbers at its quarterly meeting in Montgomery on Tuesday. Retirement Systems of Alabama chief executive David Bronner also talked more broadly about the global economy and said he could not remember when it faced such a multitude of challenges. The employee retirement system, with $15 billion in assets, served more than 139,000 members last year, including about 52,000 active and retired state employees and members from local government entities. Through April, its rate of return on investments was minus 5% for this fiscal year, which started October 1. Bronner, who has led the state pension program since 1973, said participants should not be concerned because they have a defined benefit plan, which means it is not dependent on the investment earnings. Plus, the long-range performance of the fund has been strong, Bronner noted, including a 22% return last fiscal year. The 9% rate of return over the last 10 years puts the ERS in the top one-third of comparable public pension plans, according to the financial firm State Street. Domestic stocks for the employee system are down about 4% for the fiscal year, while overall stocks are down 5%. Domestic stocks are the biggest portion of the investments. Fixed income investments, or bonds, are down by 10%. “Normally history will show you that if the stock market sells off a little bit, the bond market acts pretty good,” said Bronner. “In this situation, they’re both getting killed. I mean you’re getting hurt bad. How long does it last? Will it change? Well, of course, it will change. But when? That’s the question. The stock market and bond markets are being affected by the craziest confluence of different things that I’ve ever seen.” Among those factors are soaring fuel costs and the war in Ukraine and its crippling effect on grain supplies that are a vital food source for countries in Europe and Africa, Bronner said. Drought in Africa compounds the food shortage, he said. Bronner has led the pension system during previous economic downturns, like a stock market crash in 1987, the financial fallout after the 9/11 terrorist attacks, and the Great Recession of 2007 to 2009. The current situation is different, he said. “It’s unusual from the point of view of having a fuel crisis, thrown on top of a food crisis, thrown on top of inflation,” Bronner said. “It’s all working against us right now. It could turn around just as fast. And when we say fast, we don’t mean tomorrow, or the next day, or the next week. But certainly in a matter of months. “It’s just got to settle down. If we could settle the war, that would help immensely. It would help the food crisis, and probably it would also help with the gasoline prices and things like that.” State Treasurer Young Boozer, who serves on the board of the employee retirement system, said the global problems are substantial but expressed confidence in the health of the state’s pension funds. “The markets are in turmoil and they have been for several months,” Boozer said. “And Dr. Bronner talked about the causes of those. And they are here, they are active, and we’re going to be dealing with these things for months to come. “How is that going to impact the fund and RSA and the participants in the plan? The plan is in good shape. We are well funded. We are well-positioned. And if you look at our portfolios, we’ve got a great asset allocation. And I expect that this is just a period of turmoil that we will pass through and settle down. And I think we’re going to be in good shape going forward.” The Retirement Systems of Alabama also manages the Teachers Retirement System, a larger fund with $30 billion in assets. The quarterly numbers for the teacher’s system were released at a previous board meeting, showing a 5% loss on investments. But last fiscal year, teachers’ investments earned a 22.6% annualized return. Overall, the RSA manages 24 funds that had total assets of about $52 billion as of the end of last fiscal year. Bronner said the system’s investments, other than stocks and bonds, are generally doing well. These include the Robert Trent Jones Golf Trail, nine hotel resorts across the state, and 55 Water, the largest office building in New York City. “We’re making the most money we’ve ever made on the hotels today,” Bronner said. “Same way with the Robert Trent Jones Trail. We had the best year we’ve ever had last year (on the golf trail) and this year so far is better than last year.” Republished with the permission of The Associated Press.
Kay Ivey to hand out tourism industry awards on Monday
Gov. Kay Ivey will present tourism industry awards on Monday. Alabama Tourism Director Lee Sentell said more than 250 industry professionals are expected to attend in Montgomery from Sunday through Tuesday. Sixteen tourisms awards will be presented. Honorees include Retirement Systems of Alabama CEO David Bronner and singer-songwriter Jason Isbell. Bronner led the development of the Robert Trent Jones Golf Trail and related resort hotels. The Grammy-winning Isbell is an Alabama native. William E. Barrick, the executive director of Bellingrath Gardens and Home, will be inducted into the Alabama Tourism Hall of Fame. State officials are also expected to give updates on plans for the state’s bicentennial celebration and the opening of a new hotel and conference center at Gulf State Park. Republished with the permission of the Associated Press.
Alabama state pension fund paying $370,000 in bonuses
Alabama’s state pension fund is paying a total of $370,000 in incentive bonuses to 14 employees. The bonuses were approved this month by board directors for the 2015 fiscal year. The head of the Retirement Systems of Alabama, David Bronner, says the bonuses help him keep strong employees in a competitive profession. The pension system earned a 1 percent return on its $32 billion in investments for the year that ended Sept. 30. That’s below its long-range target of 8 percent. But Bronner says the bonuses are based on performance relative to the markets, not the overall target. State Treasurer Young Boozer says the incentive program is “fair and reasonable.” A legislative committee is studying the state pension system and might recommend changes in 2016. Republished with permission of the Associated Press.
