BRADENTON, Fla. — The newly created Florida Education Investment Trust Fund has hired PFM Asset Management LLC as its investment adviser.

The local government investment pool was created by the Florida School Boards Association Inc. and the Florida Association of District School Superintendents Inc. to invest general revenues, property tax collections, and bond proceeds of the state’s K-12 districts. Community colleges, universities, foundations, and other local entities are eligible to participate.

The FEITF, rated AAAm by Standard & Poor’s, opened with a yield of 22 basis points net of costs on Oct. 22. The Palm Beach County School District made the initial investment of $33 million. Another dozen districts are expected to join in coming weeks, said Steven Alexander, a PFM managing director and partner in charge of all asset management in the Southeast.

The FEITF’s trustees are school board members and school superintendents while its investment advisory board is composed of district chief financial officers offering districts the ability to direct investment strategies and policies that respond to their cash-flow needs in a transparent manner, Alexander said.

“The emphasis behind this is for [school officials] to be in control of their own money,” he said. “They have the ability to set the direction of the fund.”

The FEITF is an alternative to the state-sponsored local government investment pool called Florida Prime run by the State Board of Administration. SBA trustees — the governor, chief financial officer, and attorney general — make ultimate investment policy decisions for a wide range of participants.

Creation of the FEITF, which took more than a year, gives school officials control over how district funds are invested, said Leanne Evans, the Palm Beach County district’s treasurer and a member of the fund’s Investment Advisory Committee.

“We don’t expect school districts to put all their money here,” said Evans, whose district invested only a portion of its $1.2 billion portfolio. “This is giving them an option.”

An added benefit for the start-up FEITF is that initial investments are being made in the nearly $5 billion PFM Funds Prime Series money-market portfolio, also rated AAAm by Standard & Poor’s. Once assets grow large enough, FEITF will invest in its own securities, Evans said.

“It’s an exciting time for all of us who had been working on this,” Evans said. “It’s good to have another investment alternative.”

The FEITF provides school districts with an investment alternative if they no longer use the state-run Florida Prime because of its troubled past, Evans noted.

In 2007, the $30 billion state pool suffered near collapse after a run sparked by fears that it had investments in soured asset-backed securities. It forced the state to hire an outside manager, divide the pool into the Florida Prime AAAm-rated fund, and Fund B where investments linked to troubled ABS investments lost value and had to be restructured for a longer payout. Today its assets total $5.5 billion.

The FEITF is the third local  pool to start up since the state-sponsored program ran into difficulty. PFM manages 16 t pools, plus its registered money-market fund, for a total of $17 billion.

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