The Associated Press

SALEM — Think your 401 (k) has taken a hit this month? The value of the Oregon Public Employees Retirement fund has declined by about $5 billion.

But despite the frightening start to 2008, the state Treasury Department's investment division, which has 53 percent of the fund parked in stocks, is thinking long term and not trying to time the market.

"Generally we don't get overly excited or pessimistic when things are going particularly well or particularly poorly over a period of time," said Ron Schmitz, the pension fund's director of investments. "A few months like this is no different than when things were rocketing up last year, though that's more pleasant to talk about."

Nationwide, public pension systems are underfunded by an average of 18 percent, according to a study last year by the Pew Charitable Trust. Oregon, meanwhile, is sitting on a surplus.

At year-end 2006, PERS had $1.10 in assets for every dollar in benefits it had promised. Actuaries only calculate the collective liability for the PERS members once a year, and are still working on the numbers for 2007. But assets grew by 9.4 percent in 2007, so the fund's surplus likely was even more before January's losses, said PERS Executive Director Paul Cleary.

"Certainly, a $5 billion drop is a huge drop, and if we end the year like that we'll have impacts on us," Cleary said. "No one wants to experience an extended downturn, but we look at things on a year-end basis and we're still hopeful that we'll see a return."

The Oregon public pension fund has experienced losses in only three of its 37 years, Cleary said. In 15 of those years, however, it has earned less than 8 percent, which is how much it credits most members' accounts each year. Falling significantly behind that benchmark for an extended period could lead to underfunding the system.

The losses so far this year have come mostly from declines in the fund's stock portfolio, but the unfolding mortgage crisis has taken a bite out of its bond portfolio.