FARGO - The Democratic candidate for North Dakota treasurer says heavy stock and bond market losses are endangering the state's Veteran's Post War Trust Fund.
In a morning news conference in Fargo, Mitch Vance said today the trust fund has lost value because state Treasurer Kelly Schmidt shifted much of the fund into riskier investments.
By moving much of the trust from investments with a guaranteed return - to stocks and bonds that could lose up to 20 percent of their value in any year, Vance says Schmidt failed to manage the fund prudently.
The fund distributes about $100,000 in benefits to veterans each year. Figures provided by Vance show it had about $4.1 million at the end of September. Safer investments would have put it at more than $5.2 million, he said.
Vance said the fund's liabilities also tripled, and that it now faces a shortfall by the end of June 2009.
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Schmidt said all funds in the country are seeing losses now, and while the market is down more than 30 percent, the trust fund is down just over 9 percent.
"It's really unfortunate that he's resorted to negative campaigning," Schmidt said, adding that Vance is playing on the fears generated by the stock market, "and there's absolutely no need."
Schmidt said she changed the investment strategy in 2005 because the fund was earning just 1.9 percent in interest annually. She added the fund has been able to increase its grants to veterans over the years.
Vance also claims that Schmidt stayed with the riskier investment strategy even after being warned by the state auditor's office.
"The fund is bleeding out as we speak," Vance said, adding that his report does not reflect recent stock market losses.
However, Schmidt said her office never had a conversation with the auditor's office about the trust fund, and that it's not mentioned in the latest audit, which is available online.
Vance was scheduled to speak about the same issue in Bismarck this afternoon and in Minot Tuesday.
