PORTLAND — Just 10 months ago, Oregon’s Public Employees Retirement System was over funded, enjoying a surplus of nearly 12 percent. But just as the economy has tumbled in recent months and days, so has the fund, dropping from $63 billion to $57 billion.

Allen Alley, the Republican candidate for Oregon treasurer, seized on the loss in a recently released TV ad. He said it’s one more sign of the Wall Street meltdown coming to Oregon and one more reason voters should pick somebody with a business background like his own.

“We need somebody who understands Wall Street,” said Alley, who co-founded Pixelworks.

But a spokeswoman for Alley’s Democratic opponent, Ben Westlund, is calling the ad dishonest and opportunistic. “He’s campaigning on fear,” Stacey Dycus said. “Right now we’re fully funded.”

David Crosley, a spokesman for the system, said Dycus was likely right. Despite the loss, the system is close to the 100 percent mark.

While the fund might be fully funded, Alley said, a $6 billion drop is still too much to ignore. The next treasurer, he said, must re-examine the system’s portfolio.

“I don’t think it’s over the top,” he said. “This is a critical time for the state. It’s a critical time for the investment portfolio.”

Dycus argued that, considering the overall market downturn, the fund was doing well. “We have a very diverse investment portfolio,” she said. “That’s the reason we didn’t get hit as hard.”

The economy is also affecting another component of the retirement system: the variable rate program. A portfolio readjustment won’t help the 11,000 retirees enrolled in that program, which pegs monthly earning to a stock portfolio. “Unless something turns around over night, there’s going to be losses this year,” Crosley said.

Exactly what sort of a hit the variable rate retirees will take, Crosley isn’t sure. It won’t be until Oct. 31 that the value for the upcoming year is assessed, and it won’t be until Feb. 1 that the retirement checks reflect the change.

If history is any indication, the last time the economy saw a downturn, in 2001 and 2002, the rates dropped by about 20 percent.

Even so, “for most of our retirees, (variable rate) is a very small component,” said Dale Orr, the system’s actuarial service coordinator.

On average, only about 12 percent of an overall check is related to that rate. So, for instance, if a retiree were collecting $1,000 a month now, and rates drop 20 percent as before, come February the retiree would receive about $24 less.