On Wednesday, the Florida State Board of Administration (FSBA) reopened the state’s Local Government Investment Pool (LGIP) to withdrawals nearly one week after closing it. The fund provides local governments a low cost, low risk, fully transparent investment option for their surplus funds. The closing of the LGIP came amid media reports that some of the investments were in commercial paper backed by subprime loans, and cities and counties began withdrawing money from the fund rapidly. To settle the issue, FSBA contracted with an independent investment advisor, New York-based BlackRock, to review the fund. FSBA also decided to contract with BlackRock to temporarily manage the LGIP.

In a Nov. 28 statement, FSBA Executive Director Coleman Stipanovich reinforced the fund’s solvency. “In fact, certain pool investments have been downgraded below purchase credit rating guidelines, but they have continued to pay principal and interest,” Stipanovich said. “The pool has collected approximately $64 million in principal and interest payments since August on these downgraded investments.”

Although many participants withdrew funds when the LGIP reopened Wednesday, trustees for the LGIP — Florida Gov. Charlie Crist, Attorney General Bill McCollum and Chief Financial Officer Alex Sink — said the level of support the pool has among local government investors encourages them. “Many investors have told us how useful this fund has been to their operations over its 25-year history,” the trustees said in a statement. The trustees also encouraged former participants to reenter the LGIP to increase the number of subscriptions.

A full report on the LGIP is available at https://www.sbafla.com/pool/.