Jackson school board approves $16 million treasury note investment for higher returns

The Jackson Board of Education voted unanimously Thursday, Jan. 8, to approve an investment into treasury notes that could yield approximately $28,000 in interest compared to the school district's current treasury investment.

The investment through LDL Financial will cost the district just under $16 million and will mature Sunday, Aug. 31. As of Thursday's board meeting, the interest rate was 4.219%. Currently, the district has a 91-day treasury bill through The Bank of Missouri at approximately 3.96%.

"When we talk about investments, we're not trying to hit a home run here," Matt Lacy, assistant superintendent and chief financial officer, told the board, "just a nice, solid single, so to speak."

Upon redemption, the district anticipates a $28,000 profit after 231 days compared to what it expects to receive with its current investment through The Bank of Missouri.

"If it costs us just about $16 million to purchase this in the end, whenever we can redeem it, it matures Aug. 31, you're getting $16,388,000 plus the coupon price that the income from the interest of $40,970," Lacy said. "This is going to be made once in the spring and once upon maturity.

"All told, I believe that came to about $429,000 that you could profit if you left that in The Bank of Missouri based on today's rate, over 231 days. It's just a rule over $400,000, so you would profit about $28,000."

Board vice president Brandon Pylate, a commercial lender with Montgomery Bank, doesn't anticipate interest rates increasing.

"The yield curve is starting to flatten," Pylate said.

Lacy explained to the board that the district has enough money to cover its bills through August, and encouraged board members to approve the purchase.

"This is an opportunity where rather than let it sit in one place, we can move it, which is very safe and secure, and make a little bit of money," Lacy said.

Click here to read LPL Financial's customer proposal report regarding the treasury investment. The next regular meeting of the board is scheduled for Thursday, Feb. 13.