Tom Auxter on the Local Investment Fund crisis
Colleagues:
In the past few days we have learned that the state Local Investment Fund that school districts and local governments use like a money-market account (to invest their money until they are ready to spend money on salaries and expenses) has been frozen. the problem was that the fund had bought worthless sub-prime paper associated with the failing real estate loan market. This led to a run on the fund when localities learned of the news. They rapidly withdrew money from the fund (7-8 billion in a matter of days)– until the state placed a freeze on withdrawals. For some of the smaller school boards and localities the freeze means they cannot meet payroll this week.
It gets worse. The political appointees (left from the Bush era) who manage state funds want to use the state pension fund (your retirement money) to secure the bad debt in the Local Investment Fund. In other words, the state pension fund (Florida Retirement System) is targeted by the Bush appointees as a means to secure up to two billion dollars worth of bad debt. Although the retirement fund has nothing to do with the irresponsible Bush-era decisions undermining the Local Investment Fund, it is now slated by the Bush appointees as a means to bankroll a rescue of the Local Investment Fund and save the politicians who got us into this. Faculty retirement benefits are jeopardized by this scam. (Note: Questions were raised about Jeb Bush’s involvement in this when he was reported to be hired as a consultant — after he left office — by a firm whose debt was underwritten by the State. http://www.forbes.com/business
The three member board that runs the fund will meet on Tuesday, December 4th, to plan the next steps. So far only Alex Sink, the state comptroller, is publicly criticizing the raid on the retirement funds of faculty and other state employees. She deserves your support and encouragement in her courageous fight against this unparalleled proposal (email: cfo@fldfs.com). The other two members, Governor Charlie Crist (email charlie.crist@myflorida.com) and Attorney General Bill McCollum (ag.mccollum@myfloridalegal.com), are still not saying how they will vote on your future.
I have asked the Florida Education Association to use all political and legal services resources available to support Alex Sink, to expose this scam, to mobilize educators, and to hold the state government accountable for the future of faculty and other state employees who for a lifetime invested their earnings and savings in this retirement fund — with the expectation that Florida would honor its commitment to their retirement, without subtraction for unrelated and unethical purposes. We will keep you posted as we learn more.
Tom Auxter
President
United Faculty of Florida
