COLUMBUS, Ohio (AP) -- A new state investment program that's offering Ohio school districts, cities and libraries higher yields and easier access to their invested income has surpassed the $1 billion mark, the state treasurer said Tuesday.
Crossing that threshold is evidence that the STAR Plus program has soared in popularity since its inception in June, Republican Treasurer Josh Mandel said. He said it's attracted 320 government accountholders from around the state.
Many local officials were concerned that the traditional investment program, in place since 1985, was not producing results they wanted "to help fund the education of our kids, cops and firefighters to keep our streets safe, and services for our senior citizens," Mandel said.
Unlike STAR Ohio, which is a local government investment pool, STAR Plus is a bank deposit program backed by the federal government. State lawmakers unanimously authorized the first-of-its-kind program in 2011.
Mandel said the public investment fund offers the same flexibility to access cash as some private-sector investment programs while securing public cash deposits through carefully screened, federally insured banks. He hopes it will become a model for other states.
"We believe we're the first state in the country that's using the concept for local governments," he said. "It's important to note that this isn't happening in a vacuum. It's happening at a time when local government funds are being cut and local governments and schools are really struggling. And so we think it's coming at a good time for the state and the country."
The program drives more public deposits to community banks, which are the drivers behind many small-business loans. Thirty are now participating in STAR Plus, Mandel said.
The cities, townships, counties, schools, libraries and other public entities that participate trade daily access to their cash — as allowed with a typical bank account — for weekly access in order to collect higher returns.
The yield of STAR Plus is 21 basis points, more than quadruple the rate of return of the STAR Ohio program, which is 5 basis points.
Mandel said the highly rated STAR Ohio, begun under Democratic State Treasurer Mary Ellen Withrow, is still going strong, and will continue. Its assets stand at $3.25 billion.