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Home > Leadership > City Comptroller > Press Releases > Innovative investments help increase the rate of return on city funds

Innovative investments help Schroeder increase the rate of return on city funds up to five fold

Innovative investments help Schroeder increase the rate of return on city funds up to five fold

Buffalo Comptroller Mark J.F. Schroeder is finding innovative new ways increase the rate of return on city funds with safe investments that earn as much as five times the amount of interest than the city currently makes in its bank accounts.

“Anyone who has a savings account knows that interest rates aren’t that great right now,” said Schroeder.  “With banks offering the city interest rates of only quarter of a percent, we looked for other options to earn more interest for taxpayers.”

The first of those investments was a $9.9 million Tax Anticipation Note issued by the West Seneca Central School District.  The short-term note, which was issued on August 1 and reached maturity on October 22, had an interest rate of a half percent, double what the funds were earning in the city’s bank account.

“This was a win-win for both sides, since a bank would charge the school district more than we did, and we got a rate that was twice as much as our banks were giving us,” said Schroeder.
With that transaction under his belt, Schroeder looked for similar investments with even better rates of return.  He found one in Orange County, New York with a $4.1 million Revenue Anticipation Note issued by the Kiryas Joel School District.

“We were able to get a rate of 1.25 percent – five times what our money would be earning in our bank account,” said Schroeder.

This transaction was also mutually beneficial, as Kiryas Joel had regularly been charged more than two percent by banks in its previous Revenue Anticipation Notes.  The note, which reaches maturity next September, will result in an interest payment for the city of more than $50,000.

“That is roughly equivalent to the salary of a police officer or firefighter,” said Schroeder. 

Schroeder said that both investments were analyzed and approved by state Comptroller Thomas DiNapoli before being completed, as required by state law.  He indicated that representatives from DiNapoli’s office told him that they had never seen these types of transactions in their decades with state comptroller’s office.

“We are definitely breaking new ground here,” said Schroeder.

The comptroller added that he will be looking for similar investments in a broader effort to increase the rate of return on what he called “idle funds.”

“I was inspired by the late Buffalo Comptroller Chester Kowal, who found new ways to earn more interest on city funds back in the 1950s,” said Schroeder.