A controversial investment to help fund retiree benefits has cost the Kenosha Unified School District $214,000 more than it has earned since 2006, according to an analysis by an independent consultant for the Pleasant Prairie School Commission.
Those losses will continue to mount, by about $52,000 per quarter, unless the investment’s value rebounds or the district shores up the investment by contributing millions of dollars more, the analysis found.
“People who got into this should have realized there were some flaws in the program,” said Gene Schulz with financial adviser Piper Jaffray & Co. to the commission Thursday. “I’m assuming they never even knew these flaws existed.”
Officials with Kenosha and four other Wisconsin school districts that invested millions of borrowed dollars in collateralized debt obligations to help fund employee retiree benefits have insisted they protected themselves in the deals. CDOs are bundles of debt that can range from corporate bonds to subprime mortgages