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This is background information related to an article on how one-third of the $1 billion the state of Hawaii invested in controversial auction-rate securities came from the general fund — money that could have been used to balance the state budget.

The state had invested $1 billion in auction-rate securities that were supposed to be accessible. But in 2008, the recession caused the value of those securities to plummet. As a result, the money will be tied up for as long as 40 years, unless the state is willing to sell at a huge loss.

But actually determining how much of the investments belonged to the general fund is complicated.

When asked where the money invested in the securities came from, the department responsible for making the investments refused any comment due to current legal investigations into the securities. “I don’t want to be involved in any more discussion,” said Georgina Kawamura, director of the Hawaii State Department of Budget and Finance. “We’ve said enough.”

But the state’s department of accounting and general services calculated that the general fund was collecting one-third of the interest from the investments. It also took one-third of the losses.

Following the breadcrumbs implies that at least one-third of the $1 billion investments belongs to the general fund.

“How come the general fund would be collecting a third of the interest if it did not in fact comprise a third of the fund?” said State Auditor Marion Higa. “That seems to be so logical.”

Civil Beat has submitted a Freedom of Information Act Request to see the original document that spelled out the writedowns, but the Hawaii Department of Accounting Services sent over the wrong one. Stay tuned and we’ll post about the right one when it arrives.