The original mid-September estimate, in which the pool of $2.6 billion lost $155 million, or 5.7 percent, hasn't moved. And the net loss is now lower, at 4.7 percent, after including the pool's "considerable" recent earnings, San Mateo County Treasurer Lee Buffington said in an interview.
But the treasurer's reassessment meant Lehman-related losses got worse for some pool account holders, including all of the public school districts in The Almanac's circulation area.
Losses rose after the treasurer, using the same formula used to distribute earnings, recalculated each pool participant's share based on average daily account balances between July 1 and Sept. 30. The new loss figures are:
• Sequoia Union High School District, $6.5 million, or 7 percent of the district's $92 million annual budget, and up from $5.5 million.
• Menlo Park City School District, $3.9 million, or 14 percent of a $28 million budget, and up from $3.5 million.
• Las Lomitas Elementary School District, $397,000, or 2.3 percent of a $16.9 million budget, and up from $320,000.
• Portola Valley Elementary School District, $173,000, or 1.5 percent of a $11.5 million budget, and up from $102,000.
• Woodside Elementary School District, $100,000, or 1.3 percent of a $7.8 million budget, and up from $55,000.
• Town of Atherton, $552,000, or 3.3 percent of a $16.9 million budget, and up from $500,000.
The losses have been "a deep shock," Sequoia district budget officer James Lianides said in an interview. Spending cuts may be ahead, he said.
While schools can exert no direct control over a treasurer's investment decisions, there is now a committee composed of K-12 superintendents and district budget officers from around the county.
Mr. Lianides explained the committee's purpose: "We are not confident that the county treasurer has made investments that constitute a philosophy of capital preservation. We want to share our very deep concern with the composition of the county's portfolio. We have very deep concerns regarding the investment policies."
Asked to comment on Mr. Buffington's assessment to The Almanac of the pool's Lehman debt as "very conservative" and "not risky," Mr. Lianides replied: "Well we have a difference of opinion."
The pool's "significant investment" in Morgan Stanley, an investment bank that is now a commercial bank, is a concern, Mr. Lianides said.
Mr. Buffington said his office sends regular earnings reports and is in frequent communication with many account holders, but school districts are not among them.
"The funny part is that I discovered a long time ago that there were telephone lines that come into this office," he added. "I never get any phone calls from these guys. For crying out loud, we get phone calls every day from everybody else."
"I'm not belittling them," he said, "I'm obviously going to go to the (committee) meetings and I'm going to listen to them."
Indeed, citing school districts' concerns, he said he sold some pool holdings in Morgan Stanley, whose stock had fallen to a 52-week low on Oct. 10. The stock price has since nearly tripled after a $9 billion investment from Mitsubishi and a capital injection from the federal government.
"We could have made money on that stuff," he said. "We were aware of the districts' concerns, so we lightened up. We weren't that concerned. We felt we knew what was going on."
School districts appear to be exploring ways to divert unrestricted funds away from the county pool and put them under other management, perhaps the state treasurer's office that manages municipalities' investments.
That pool, the Local Agency Investment Fund, lost nothing from the troubles at Lehman, investment bank Merrill Lynch, commercial bank Washington Mutual and insurer American International Group, a fund spokesman said.