Investment rules earn state $1 million so far in 2010

New investment rules passed by the Missouri General Assembly in 2009 - led by efforts from State Treasurer Clint Zweifel - have led to an extra $1 million in earnings on investments in the first half of 2010, according to a news release from Zweifel's office.

Prior to the law change, the state's time deposit investments - similar to certificates of deposit - in Missouri financial institutions were tied to the U.S. Treasury yield, and the state could not receive competitive interest rates. In the past two years, that rate has been as low as 0.20 percent, according to the release.

The law change removed the cap, allowing the treasurer's office to earn a yield closer to rates banks offer to individuals, businesses and other state government entities.

“We have removed the need to choose between getting the best return for taxpayers and investing in Missouri financial institutions,” Zweifel said in the release.

The law change is gradual; in 2010, the first $7 million of time deposits are subject to the U.S. Treasury yield limit. The cap will apply to the first $5 million of deposits in 2011, $3 million in 2012 and $1 million in 2013, before the cap is eliminated entirely in 2014.

Zweifel's office estimates that the law change will earn $15 million a year by 2014.

The treasurer's office also launched an online system for financial institutions to apply for time deposits, in an effort to increase transparency in the deposit process. Available funds are posted every two weeks so that state banks can request them.[[In-content Ad]]