Somerset County pension fund, investments growing with strong economy

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SOMERSET, Pa. – A strong economy has boosted Somerset County’s retirement fund to new heights, the Somerset County commissioners were told this week.

The U.S. stock market’s top equity barometer, the S&P 500 index, delivered its strongest performance since 2012 in the two quarters that ended March 31, said Shane Nickolich, senior vice president for Pittsburgh-based investment manager CS McKee.

Somerset County’s pension fund grew by $2.5 million from January through March, to a total of $73.6 million.

That’s good news for the county, which is obligated to ensure the account is properly funded, and for the hundreds of retirees who collect pension payments – and those who will join them in the coming years.

“The economy is strong, and when the economy is strong, the market reflects it,” Commissioner Pamela Tokar-Ickes said Tuesday alongside President Commissioner Brian Fochtman and Commissioner Irv Kimmel Jr.

Under a move approved in 2021, Illinois-based Marquette Associates oversees the county’s investment portfolio, as well as the asset managers who invest the county’s funds. CS McKee is the investment manager that handles fixed assets within the county’s largest fund, the retirement account.

Nickolich told the commissioners that the county’s strong returns in the past six months reflect a “resilient” U.S. economy that continues to add jobs as wage growth trends upward and the stock market surges.

Nickolich said those factors – and the fact that consumers continue to spend on goods, dining out and other markers used to monitor the economy – are offsetting the fact that service sector-related inflation continues to impact costs such as utility bills and transportation.

Somerset County Treasurer Anthony DeLuca said the county needs to do what it can to take advantage of the strong market.

He asked Marquette Associates Senior Vice President Sarah Wilson if there are steps the county should take to let funds be moved more quickly, or to enable flexibility to invest county funds.

The county invests general fund dollars, federal COVID-19 relief funds and other resources through First National Bank. Somerset Trust Co., meanwhile, serves as the custodian for the retirement fund.

As is, trading procedures are a bit more complicated working through two fund custodians, “but we’ve been able to work through it,” Nickolich told DeLuca, adding that it has not cost the county.

“If you want to see (what options) are out there, it’s up to you. We’ll make it work,” Wilson told the commissioners, noting consultants could help prepare a request for proposals from banks if they choose to go that route.

The commissioners did not take any action related to their investments during their meeting Tuesday.

DeLuca’s efforts to gain more control over separate Somerset County investments put him at odds – and briefly in court – with the previous commissioner board under then-President Commissioner Gerald Walker in 2022.

This year, DeLuca said his ability to invest additional funds, including more general fund dollars, with one institution rather than several is paying off for Somerset County.

While delivering his June report to the board, he said the county generated $146,179 in interest last month.

The county has generated $392,150 in interest in 2024 – much of it over the past two months as tax revenue has refilled the county coffers for the year. That’s approximately $50,000 more than in the same five-month period last year, DeLuca said.

“If we can keep generating this kind of interest, that’s going to be $1.3 million the county will be able to use of (expenditures) we need,” he said.

With the market strong, the county’s willingness to invest more than $30 million into money markets “gives us more power to make the banks work for us,” he said.

First National Bank locked the county’s investments into a rate above 5.5% earlier this year, and he’s hopeful that banking institutions will continue making aggressive offers when new rates are requested later this month.

“The best thing is that there’s no risk. It’s guaranteed interest,” DeLuca said, adding that the money is moveable rather than being essentially frozen in an investment CD. “We can withdraw without getting penalized.”

He credited the current board “for allowing me to do my job.”

“It’s enabled me to get the best bang for their buck … and when you look at the (numbers), it’s showing,” DeLuca said.