The financial meltdown is apparently not just providing all sorts of fun for property owners, but school districts appear to be in on the mix.
"...The value of district investments has declined by $120 million - or 60% - since the transactions were undertaken within the last two years, according to a news release from a public relations firm for the attorneys who examined the deals...
The five districts made the investments in 2006 using borrowed money and, in some cases, district assets to help seed trusts they established to borrow more money to funnel into the CDOs. According to Wednesday's news release, the deals also involved a credit default swap, another fairly recent financial vehicle designed to transfer risk from one investing party to another...."
You can find an earlier report on this here.
There seem to be statutes expressly covering investments that can be made by the school boards with bond moneys, but, after a (non-exhaustive) reading, I could find no similar language on retirement funds.
The districts were not the only ones misled in this fiasco, so they are not the only ones demanding compensation. This will surely shrink the size of the pie available for public instruction.
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