The Examiner U-46 News FeedBoard member questions U-46 investing options By Seth Hancock
Is School District U-46 earning top dollar for the funds it invests with those it has entrusted with managing the taxpayers’ money?
That’s a question at least one board member, Phil Costello, would like an answer to.
The discussion came up when the district presented its list of authorized depositories at a Board of Education meeting on Monday, June 18. The board will be asked to approve that list at its July 23 meeting.
“These are the same companies that we’ve used in the past,” said Dale Burnidge, director of financial operations. “Once a year we bring this forward so you have the current list.”
The three depositories listed include PMA Securities, Inc., the Illinois School District Liquid Asset Fund and JP Morgan Chase & Co.
Costello asked: “How do we vet these to say ‘should we be looking at other people?’”
Burnidge answered: “PMA really specializes in, really was like one of the founding companies in specializing in investing for school districts and with school districts. They have a pretty long history with working with them.”
“Are there any other entities that do that?” Costello asked.
“I’m sure there are other entities I don’t know,” Burnidge said. “The majority of school districts invest with PMA and through that Illinois liquid asset fund.”
After the discussion, Costello told The Examiner that he believes the funds could be earning more but it is apparent the district is not attempting to find out. He said neither the board nor the district has “had a logical discussion about that” and “what the economic opportunities are for the monies we invest.”
Costello said if the district were to find better options, the extra earnings could go a long way.
“I know that we have well over $250 million in the bank and we’re earning less than 1 percent on that money, and I understand that over time that the yields on our short-term and staggered investments can grow,” Costello said. “But we have to be conscientious about how we invest that, how we understand that we have working capital needs and we can address that with short-term funds that are still earning 1 percent or more and yet, as a whole, we’ve invested all of our money and are earning less than 1 percent.”
Costello said the district is not seeking to create competition as it remains with the same three depositories with the sole apparent reason that the “majority of school districts invest” with them. He said there are questions that should be asked when considering depositories, but the district is not asking them.
“What are the opportunities, what are the alternatives and what’s the risk? All of those come in to play,” Costello said. “It’s not just about how much money we make on the next dollar, it’s how we do it and how we can earn more and risk less. That’s what this district should be looking for. I don’t care who we invest in. I don’t care where we invest. As long as it meets statutory compliance issues, we should be looking at options and not just staying with the status quo.”
Costello added: “Everything is about competition. It’s what creates excellence, from my way of thinking, whether it’s internal or external. We should be looking at anyone out there that can provide a competitive advantage with whatever tax dollar, whether we’re spending it or we’re keeping it and we’re earning the maximum yield.”
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