Lehman Brothers questions linger

KUSD showed profit from investments

KINGMAN - Even if the nearly $1 million in Lehman Brothers' bonds are a complete loss for the Kingman Unified School District, the district's investments will still be in the black.

During the 18 months with the Mohave County investment pool, the district earned more than $1.2 million, Cindy Cox said.

Cox, former chief deputy treasurer with the Mohave County Treasurer's Office, addressed the KUSD Governing Board during a special meeting on Tuesday.

In a Jan. 5 letter, the Treasurer's Office notified the district the office had segregated the nearly $5.1 million in Lehman Brothers bonds from the county investment pool into a separate account.

"We followed the lead of the state in assuming a complete loss and put aside money," Cox said.

Lehman Brothers filed for bankruptcy last year. The amount on the district loses won't be known until the bankruptcy court reaches a decision.

"This could be a month, two months, six months or two years down the road," Cox said.

It is possible the government may buy the bonds, reducing or eliminating any losses, Cox said.

"Part of the problem is the only person who knows what is going to happen has a crystal ball," Cox said.

Of the $5.1 million of Lehman Brothers funds in the county investment pool, $958,000 was from KUSD, the most of any school district in the county.

The district has been a part of the county investment pool for 18 months, with approximately $1,286,000 in earnings, Cox said.

At the time Lehman Brothers filed for bankruptcy, the Treasurer's Office was the main voice on where the funds in the pool were invested. The Mohave County Board of Supervisors approved the creation of an Investment Oversight Committee in October.

The committee is made up of the county manager, the county finance director, the Office of Management and Budget director, the treasurer and the deputy treasurer. The committee, along with an investment advisor, advises the Treasurer's Office on investments.

School Board President Pat Carlin Jr. asked if pool investors could participate in the Investment Oversight Committee.

"We would certainly like the (Treasurer's) Office to look at maybe getting some input from those giving money," Carlin said.