Florida Pension Fund to Invest $1.95B in 'Technology and Growth' Industries
Florida Gov. Charlie Crist paid a visit to Wall Street last week to celebrate the signing of a new law that will increase the state retirement fund's investment in high-tech industries. Under the new legislation, the Florida State Retirement System will dedicate up to 1.5 percent of the system's trust fund to technology and growth investments. The Miami Herald estimates that this could provide nearly $2 billion for high-tech industries in the state.
The new legislation also will double the number the number of non-pension state dollars that may be used for alternative investments in venture capital firms, hedge funds and direct investments in portfolio companies. This will make $18.4 billion available for initiatives like the Florida Opportunity Fund, which was approved last year.
Florida's $130 billion retirement system is one of the largest public pension systems in the country. State Senate Commerce Committee documents cite the largest system, the California Public Employees Retirement System (CalPERS), as a model of a pension fund that has successfully employed economically targeted investments as a part of the state's economic development strategy. In 2002, CalPERS dedicated 17 percent of its funds into economically targeted private equity investment, according to the document.
In Florida, these economically targeted investments will have to offer similar returns to other pension activities, but also offer economic benefits such as job creation or new tax revenues. The bill specifically defines technology and growth industries in this case to mean alternative investments in business sectors, including space technology, aerospace and aviation engineering, computer technology, renewable energy, and medical and life sciences. Alternative investments will be limited to 10 percent of overall investments.
The bill also sets aside $20 million in state funds for a competition based on the Ansari X PRIZE program. That program offered a $10 million award to the team that could design the best reusable spacecraft capable of safe and affordable commercial flights. The state of Florida will award $40 million, half from the state and half from private sources, to the company or individuals who produce the most significant advancement toward designing and building a reusable space vehicle between 2009 and 2014. Florida's lieutenant governor will chair the programs, which is intended to spur competition on entrepreneurial investment in the space industry following the close of NASA's space shuttle program.
Read the governor's press release on the new pension strategy at: http://www.flgov.com/release/10027