Missouri made an extra $1.7 million last year because of some changes to old rules that restricted the way the state could invest its money.
The legislature adopted the changes in 2009, but they didn’t go into effect until 2010. State Treasurer Clint Zweifel says a cap on how much money the state could make on its investments resulted in Missouri getting a below-market return on its money.
“There is actually no good, common sense reason why there would have been a cap that was in place. This was a cap that really resulted in the state earning as low as 0.20% in the past on its investments that it should have been returning substantially more on,” Zweifel said.
Zweifel says the state is still investing safely, and in a transparent way.
“These are CD investments. These are investments that you and I and other Missourians understand very well… If you go out into the marketplace… and buy a CD for $500 of $1,000, you get a market rate. Before 2010, before we passed the legislation in 2009, Missouri wasn’t allowed to get that market rate even though every consumer was in the state and every local government entity,” Zweifel said.
The cap was tied to the U-S Treasury Yield. Zweifel expects the state to bring in even more money in the future, as the cap continues to be phased out over the next 3 years.