Two University of Georgia-related foundations in December withdrew millions of dollars from an investment fund now frozen by Wachovia Bank.
Wachovia officials announced this week that the bank would freeze more than $9 billion in assets in the Common Fund for Short Term Investments, an investment pool used by hundreds of colleges and private schools. Wachovia, sold Monday to Citigroup to avoid collapse, is the trustee of the fund and will release the money little by little between now and 2010 as it liquidates the fund.
The freeze left colleges and schools unable to get to their money, and because some colleges used the fund as a sort of checking account, officials at a few schools across the country said they could have a hard time meeting payroll, according to The Chronicle of Higher Education.
Officials at UGA and other area colleges say the schools won't be affected by Wachovia's turmoil.
UGA's two major foundations had $40 million invested in Wachovia's Common Fund for Short Term Investments, but now have less than $5 million in the fund.
The University of Georgia Foundation investment committee voted in December to remove $15 million of the $20 million the nonprofit corporation had in the fund and invest it elsewhere.
The newer, smaller Arch Foundation followed suit, withdrawing all but $25,000 of about $20 million that foundation had invested in the fund and putting it in an investment fund the state Board of Regents oversees, said UGA spokesman Tom Jackson.
The Arch Foundation has about $800,000 in another account at the Common Fund, but the amount is too small to affect cash flow at the foundation, Mr. Jackson said.
Tim Burgess, UGA's vice president for finance and administration, said he was more concerned about unrelated bank accounts UGA has with Wachovia, including the university's largest payroll account. UGA has a monthly payroll of about $45 million, he said.
He learned the money deposited with Wachovia is safe, backed up by bank-owned securities, he said.
The UGA Foundation's investment committee decided to remove most of its $20 million in the Common Fund after studying the underlying assets for the Common Fund for Short Term Investments. But the group decided to leave $5 million in the investment because of the foundation's 20-year relationship with the fund, said Chip Stewart, of Cookerly Public Relations, a spokesman for the foundation.
The UGA Foundation manages about $700 million in assets. Income the foundation gets from investing the money is used for student scholarships and salary supplements to professors who hold endowed chairs.
The Common Fund has consistently yielded better than average investment returns, Mr. Stewart said.