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|Garrett: Parish school system investments safe|
In spite of an economic downturn in general in the U.S. economy, Ouachita Parish Schools' investments and retirement funds are safe, according to school board business manager Richard Garrett.
Garrett spoke to the school board concerning about the fate of the school system's investments Tuesday during the board's regular meeting.
Garrett said most people are aware deposits at most financial institutions are insured by the Federal Deposit Insurance Corp. The FDIC recently increased the amount of money it guarantees from $100,000 to $250,000 per account.
"We have that $100,000 coverage through the FDIC, but we have a lot more than a $100,000 in the bank," Garrett said. "When it's above $100,000, the bank has investments they bought and they put them as collateral. Any money we have over $100,000, the bank has to pledge securities to give to us in case the bank should go under."
He said the school board's various investments are backed by the federal government.
"They're treasury bills, and they are very secure," Garrett said.
He also pointed out the school system's investment manager, Sharon Bridges, is conservative in handling the school system's investments.
"She makes very secure investments where they are backed by the federal government," Garrett explained. "If one she invests in goes under, then the whole government is gone, so none of it would be worth anything.
"We feel like our money is very safe right now, and we really don't have anything to worry about with this market. The way it's set up, say with Merrill Lynch with their buyout, it's the stockholders who lose the money, and not the individual investors."
School system personnel director Dr. Don Coker recently attended the state personnel director's conference, which addressed the teacher retirement system and the state employees retirement system.
A presentation was made on the teacher retirement system. It has lost $800 million since last year.
"That's where we just said, 'Oh my goodness,'" Coker said. "Well, that is a small percentage when you look at $41 billion that is still in teacher retirement. So, we're still good, we're still sound, and the money is still there to pay retirement."
He noted the state constitution guarantees the state would pay teacher retirement benefits if the teacher retirement fund went bankrupt.
"That was a good feeling coming out of that for a lot of personnel directors to take back to their districts to let them know that," Coker said.
"The message that came across was 'yes, it's tough times, and yes, there has been a loss, but we have enough money to be able to pay our retirement,'" Coker added.
Garrett has discussed the economic situation with several investors who have told him they expect the economy to bounce back.
"We're not going to go to another great Depression," Garrett said. "Back then the government didn't step in, and today they are, and they're trying to do something about it.
"But it's not going to happen tomorrow. We're not going to be back where we were … we are going to have a time of gradual expenses.
"The school board is no different from your personal finances … everyone is saying Americans are going to have to tighten their belts up, and we're going to be the same way with the school system. We've got to watch where we're spending. We've got to be efficient, and it might be another year or two to get back to where we were, but we're going to have to watch what we're doing as we go."
Board member Susan Spence said the school system should consider reviewing the system's financial situation more often, possibly during each quarter.