Responding to news that assets in a state-run investment pool have been downgraded, Florida state officials, including Gov. Charlie Crist, were expected to meet this week to consider recommendations for protecting the fund against possible default.
The Florida State Board of Administration, which manages the pool, also temporarily shut it down last week to avoid further withdrawals from the fund, which includes money from local government entities, including school districts.
The 174,000-student Orange County school district pulled $388 million in surplus money out of the Local Government Investment Pool, according to reports last week by Bloomberg News. The 169,000-student Palm Beach County district pulled out about $300 million at the beginning of November. As of last week, roughly $8 billion had been withdrawn from the pool and about $19 billion remained.
According to a Nov. 28 press release, Coleman Stipanovich, the executive director of the state board, said even the downgraded investments have continued to make principal and interest payments. Florida’s situation, nevertheless, shows that even low-risk funds managed by government agencies are being affected by the sub-prime lending crisis in the mortgage industry.
