LANSING — Michigan pensioners get a little boost every time Ariana Grande's chart-topping song "7 Rings" hits the airwaves.

That's good news for the more than 530,000 people tied to the state's pension programs, most of which are not fully funded.

There isn't a direct line between "7 Rings" to pensioners' pockets, but it's pretty close.

Here's the connection: In the song, Grande puts a feminist spin on The Sound of Music's "My Favorite Things" by boasting about her ability to buy herself all of her favorite things. (While the musical's characters cherished brown paper packages tied up with strings, Grande prefers lashes and diamonds, ATM machines.)

"7 Rings" is at the top of the Billboard charts. It gets played a lot. Every time it does, 90% of the songwriting royalties go to the duo behind The Sound of Music, Richard Rodgers and Oscar Hammerstein II, the music website Pitchfork reported.

A company called Concord Music acquired the copyrights to Rodgers and Hammerstein's collection.

Can you guess who owns the majority of Concord Music?

Michigan. Specifically, Michigan's pension funds. (thank u, Ariana Grande.)

Why did Michigan invest in music?

Treasury Department investment experts have put about $1.1 billion of Michigan's $72 billion pension funds into Concord Music, which has the copyrights to almost 400,000 songs.

The state's investment is now worth $1.8 billion, which means Michigan has earned $700 million from the investment since it made the original $25 million investment in 2010.

"Every time you hear a song, somebody’s getting paid," Michigan Deputy Treasurer Jon Braeutigam said. "Whether it’s in a commercial or in a restaurant or on Spotify, Apple Music, Youtube, you get paid."

It's not just "7 Rings." Braeutigam rattled off a list of other artists whose work benefits Concord Music (and Michigan pensioners): Kidz Bop, Creedence Clearwater Revival, post-Beatles Paul McCartney and George Harrison, Dolly Parton, Ray Charles, Santana, Switchfoot.

Music is a stable investment, less dependent on the economy than many other industries or products, he said.

"We think music rights is somewhat shielded from recessions, compared to more cyclical businesses, like autos," Braeutigam said. "If a recession comes, people stop buying big ticket things."

But if the investors' notions are right, they don't stop listening to music.

About Michigan's pension investments

Michigan Treasury Department's Bureau of Investmentsis charged with making safe and smart use of the money in four retirement systems that pay state worker pensions.

Those include the Michigan Public School Employee Retirement System, the Michigan Judges Retirement System, the Michigan State Police Retirement System and the Michigan State Employees' Retirement System, which was closed for workers hired after 1997.

About 530,000 people are tied into Michigan's pension funds, including about 281,500 who are retired and 227,000 still working.

Those investments are split between public entities, like stocks in companies like Berkshire Hathaway and Facebook, and private ones, like Concord, Braeutigam said. The state also has a stake in television shows (perhaps you've heard of "Friends" or "Big Bang Theory"?), real estate and start-ups like Delphinus Medical Technology, a company developing a type of mammography more suitable for dense breast tissue.

Diversifying investments is one way to keep the pension funds safe, said Robert Kleine, who was Michigan Treasurer from 2006-2011. He was in charge of the department when it took a bet on music copyrights.

"It adds a little pizzazz to investing," he said.

Kleine said the return has been good, though he qualified that it hasn't been as good as an early investment into Microsoft or Google.

"There was some risk involved," he said. "But [before taking a risk], you do a very thorough analysis and use good judgement and try to limit it, somewhat."

How Michigan pension funding compares to other states

Pension investments took a hit in the economic downturn. Kleine said pensions were fully funded in 2000.

"Since 2000, we've had two bad periods for the stock market, and of course in Michigan we had much more economic turmoil than any other state because of the auto industry," he said. "The state wasn't always able to make the contributions they should have been making."

Michigan hasn't caught up, and it isn't alone. Many public retirement systems — especially on the local government level — are notoriously underfunded.

In 2016, there was a cumulative $1.4 trillion deficit between states' assets and liabilities, according to a 2018 Pew Research Center research brief. It was the 15th annual year of increasing pension debt.

Pew researchers said the increasing deficit came from lower than expected investment returns — only about 1% compared to the assumed 7.5% — and inadequate funding.

The difference between pension funds' assets and liabilities is known as a "funding ratio." The average U.S. funding ratio is 66%.

Michigan's funding ratios vary between the state pension funds, but most are close to average. School teacher pensions are 60.7% funded, state police pensions are 65.1% funded, state employee pensions are 66.5% funded and judges' pensions are 97.8% funded, according to the Office of Retirement Services.

A healthy funding ratio is about 80%, Kleine said.

The state adopted a new policy in 2017 that called for lowering the expected rate of return on its investments when they came in higher than expected, which happened in 2017, according to a 2018 press release.

That made the pension fund more stable, Office of Retirement Services Executive Director Kerrie Vanden Bosch said in the release.

That's one reason Braeutigam is optimistic about Michigan's pension fund. He said state leaders have taken steps to reduce risk for pensioners by investing more and expecting less return.

"I think Michigan is light-years ahead of some states that have the same funded ratio," he said.

See it, like it, want it, got it

The billion invested in Concord Music doesn't hurt. Braeutigam said music has long-term value, since copyrights last for 70 years after an artist's death.

Although state treasury workers were the ones who decided to invest the pension fund into music, they aren't behind Concord's day-to-day decisions, Braeutigam said. The state partners with Barings Alternative Investments, which manages the state's investment and has representatives sit on Concord's board.

Kleine said he occasionally ribs Braeutigam about the musicians in Concord's catalog. Florence and the Machine is one of his favorites — perhaps that band would be a good addition, he said.

The state's stake in Concord Music hasn't shaped his tastes.

"I'm a big music fan anyway, so the idea is kind of cool that we invested in that," he said.

More:Michigan's $70 billion retirement fund will now have a board to manage investments

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Contact Carol Thompson at (517) 377-1018 or ckthompson@lsj.com. Follow her on Twitter @thompsoncarolk.