Missouri's money

A University of Missouri economist's study for the Missouri Bankers Association that concluded more of the state's money should be invested in state banks has attracted considerable attention -- perhaps a good deal more than Joseph Haslag, executive director of the university's Economic Policy Analysis and Research Center, anticipated.

Haslag's study concluded that more investment in Missouri banks would have a positive ripple effect on the state's economy -- about "a wash" when compared with out-of-state investments with higher interest rates.

More state investment in Missouri banks makes sense, but only if it gives taxpayers the most bang for their bucks and only if Missouri bankers are willing to designate the money for economic development and business growth.

Missouri is one of eight states with an AAA rating -- the highest rating for financial soundness. It also has more of its money (13.44 percent) invested in in-state banks than any of the other AAA-rated states -- twice as much, in fact. Missouri has no funds invested in out-of-state banks. Its portfolio is mostly federal securities (56 percent), commercial paper and repurchase agreements. This includes a commitment to invest in Missouri-headquartered corporations, including a $100 million investment in Anheuser-Busch.

The three guidelines for current state investments (about $3 billion a year) are safety, liquidity and yield. In the last fiscal year that ended June 30, Missouri had an overall return on investments of 1.74 percent. The yield on deposits in Missouri banks was 1.16 percent. The total earnings from investments totaled about $50 million.

If there are ways to make Missouri's money work harder for state taxpayers, it is the obligation of the state treasurer to make that happen. More in-state deposits will work only if banks use the funds to generate economic growth.