Arkansas Teachers Retirement Signs with Princeton Financial and JD Edwards

Looking to better accommodate the needs of a pension fund which has grown from $2 billion to $8 billion in only five years, the Arkansas Teachers Retirement System (ATRS) has licensed Princeton Financial Systems’ portfolio accounting system, PAM, and JD Edwards’ general ledger system, General Accounting. The decision to automate its accounting and recordkeeping comes only a year and a half after the Arkansas state legislature charged the pension fund with hiring a CPA-level CFO, a posi

Looking to better accommodate the needs of a pension fund which has grown from $2 billion to $8 billion in only five years, the Arkansas Teachers Retirement System (ATRS) has licensed Princeton Financial Systems’ portfolio accounting system, PAM, and JD Edwards’ general ledger system, General Accounting. The decision to automate its accounting and recordkeeping comes only a year and a half after the Arkansas state legislature charged the pension fund with hiring a CPA-level CFO, a position that was filled in 1998 by George Snyder.

Snyder says that he largely has had free reign to implement processes that will streamline what has been a manual and inefficient process. “Our accountants were doing everything on spreadsheets,” Snyder explains. “Instead of doing analysis, the investment staff was doing data entry.”

After reviewing five other accounting systems, ATRS decided on PAM because Princeton Financial is owned by State Street, the retirement systems’ custodian, so establishing electronic connections from the back office to State Street is a fairly rote process. “Everything we need to get from State Street will flow right into PAM,” Snyder points out. Snyder also considered Advent Software’s Axys and QED Information Systems’ IMS-2000 for portfolio accounting, but Snyder says that the State Street link proved to be the clincher.

Previously, the retirement fund would rely on faxes between its accountants and the custodians, as well as to its outside money managers. Syder’s staff would have to manually review each trade, comparing the data from State Street with that from its money managers. Once the new systems are in place, data will flow electronically from State Street and the outside portfolio managers into PAM, which will kick out any exceptions. The accountants will then only have to focus on reconciling exceptions.

“We expect about 8000 man-hours to be saved every year,” Snyder explains.

Snyder is also looking forward to PAM’s reporting and performance analysis abilities. Till now, ATRS has relied on State Street and an outside consultant for its performance analysis. “We really had no way to prove whether the data we got was right or wrong,” Snyder admits. “This is not the best way to manage an $8 billion fund.”

He expects to download all of the fund’s shareholder information into PAM by March 31st, and for both PAM and the JD Edwards recordkeeping system to go live on July 1. “We know this is a fairly aggressive timetable, but we’ve been told that it’s possible,” he adds.

The teachers retirement system has bought new hardware for these systems. PAM will run on an IBM server running Windows NT, and the general ledger product will be loaded onto an IBM AS/400 mainframe.