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Cornerstone adviser tells Council Rock committee district’s investment income likely to exceed conservative budget estimate
Summary
Cornerstone chief investment officer Kevin Karpup told the Council Rock School District finance committee that the district’s investment program is conservative and, while tail risks exist, the general fund’s investment income is on track to exceed the $5.5 million assumption used in next year’s proposed budget.
Kevin Karpup, chief investment officer at Cornerstone, told the Council Rock School District Finance Committee on May 8 that the district’s investment program is positioned conservatively and that the $5.5 million income figure used in next year’s budget is a cautious assumption.
Karpup said the district has recorded $5,660,000 in general-fund investment income for the first three quarters of the fiscal year and that Cornerstone expects the district “to come in on the general fund budget at about 7,000,000 for this fiscal year.” He added, “we are very comfortable. We think we will exceed the budget.”
Karpup framed the projection around current market expectations for Federal Reserve policy. He cautioned there is a “higher tail risk” than usual — a low‑probability scenario in which a sharp economic downturn would prompt large Fed rate cuts similar to 2008 or 2020 — that could push returns below the $5.5 million planning assumption. Absent that outlier event, he said short-term yields and locked‑in short-term Treasury purchases are the district’s primary tools to increase certainty for next year’s income.
Anthony Rapp, director of business administration, and Linda Stone, who chaired the finance meeting, asked for clarification about how the projection was used in the budget. Rapp confirmed the administration is using $5,500,000 as the planning number for the 2025‑26 proposed budget and said the district intends to keep cash management conservative while evaluating limited lock‑in opportunities should that provide more budget certainty.
Why this matters: investment income has been a material contributor to the general fund in the current year, and the administration’s choice of a conservative planning figure affects how large a tax increase or program reductions are proposed in the 2025‑26 budget.
Karpup’s presentation and the committee’s follow-up questions took about 20 minutes of the finance meeting on May 8; the committee asked no formal action on the investment presentation.
