Renaissance Institutional Fund is Providence Pension fund biggest single investment. Many other investors across the nation have redeemed . What is Elorza doing? Providence pension fund returned 6.2% in 2020 vs S&P 500 gain of 18.4%. In a year of extraordinary returns Providence missed its 7% required rate of Return and the Funding ratio of 22.7% is the worst in the nation.
https://seekingalpha.com/news/3659306-renaissance-hedge-funds-hit-with-5b-in-redemptions
Providence Pension fund and all other municipal and State pension fund have benefited greatly from the tail winds of strong Equity and Bond Markets over the last Decade. Despite those tail winds Providence funding ratio has declined. How could that be? Simple the cost of providing benefits and COLA are now heading up again and in Rhode Island the State Legislature has passed an "evergreen law" allowing unions to at the very worst maintain their current wages and benefits. They have literally outlawed cuts in pay or benefits. Prior to that, the Rhode Island legislature indemnified bond holders from losses by guaranteeing first lien status of municipal tax revenue.
Rhode Island’s New Municipal Debt Law
The new RI law amends existing statutes related to the indebtedness of towns and cities. The amendments grant debt service appropriation a first lien on cities’ ad valorem taxes and general fund revenues. This virtually guarantees bond holders will receive their payments.
Providence can only restructure contracts in Bankruptcy or Municipal receivership which is under the power of the Governor and Revenue Director. Hopefully new Governor Dan McKee will address the Providence time bomb instead of ignoring it like Raimondo and Elorza have.
If we have a bear market, as described by Stanley Druckenmiller, Providence finances and pension fund will implode and end up in the lap of State Taxpayers.
https://www.youtube.com/watch?v=K_u2AI7ZWAk
