DERIVATIVES: RISKY BUSINESS? : Members of Investment Pool Are OK--for Now : Impact: All but two cities in O.C., most public agencies and school districts share in loss. Officials say their day-to-day operations won’t be affected for now.

Officials of cities, school districts and other public agencies with money in Orange County’s investment pool said Thursday that the fund’s $1.5-billion loss will not affect their day-to-day operations--at least not immediately.

But several said that they will be rethinking their long-term financial strategies.

“We’ve been talking about diversifying,” said Jim Keenan, finance director of the Orange County Transit Authority. With more than $1 billion, or 15% of its assets, in the pool, OCTA is the fund’s biggest investor.

After Thursday’s news, Keenan said, OCTA will re-examine its investments and study “what percentage . . . is going into what investments.”

He and Stan Oftelie, OCTA’s chief executive, said they will stand by County Treasurer-Tax Collector Robert L. Citron’s investment strategy, however, and leave their money in the pool for now. Both blamed the fund’s decline on rising interest rates.

Keenan said OCTA will have no problem making payments on street and road projects. The agency has been “very conservative” with its other investments, he said, so is able to absorb a lower return from the county fund.

“As long as our principal is secure, we are secure,” Keenan said. “So we are OK.”

Except for Garden Grove and San Juan Capistrano, every city in Orange County is invested in the fund, as well as most school districts and large public agencies. Among those with the biggest stakes are the Sanitation District of Orange County, with $450 million invested; the Irvine Ranch Water District, $300 million; the Transportation Corridor Agencies, $306 million; and the city of Anaheim, $169 million.

Most had expected a return of 6% to 6.5% on their money this year. Now, officials say, they will have to wait for reviews in the next several weeks to find out just where their investments stand.

Steve Kozak, financial manager for the Sanitation District of Orange County, said his agency has about two-thirds of its $678.5-million portfolio in the pool and plans to leave it there. The fund’s decline, Kozak said, is “not an emergency situation.”

Anaheim Treasurer Charlene Jung said investors were told by county officials that they would receive “market value as opposed to full face value” if they pull their money out immediately to seek higher yields elsewhere.

“I can understand where they’re coming from,” Jung said of the county officials. “It would not be in the best interest of the participants if everyone drops out.”

Anaheim has invested about 20% of its portfolio in the pool, Jung said, and “we are not panicking.” Treasurer Citron, she said, “has a lot of experience and has done well in the past, so we are going to pretty much hang in there.”

Michael Fine, director of fiscal services for the Newport-Mesa Unified School District, said the district invested $80 million in the pool. He now expects a return of $400,000 less than originally projected for the year, he said, but such a decline would not force the district to change its operations.

“We’ll have to look to see where we’ll absorb it,” Fine said.

Cindy Pendleton, treasurer of San Juan Capistrano, said that her office and the City Council had decided that the county pool was too speculative. “It obviously generates a nice return, but along with that is the higher risk,” she said. “We all understand that.”

Instead, the city put its $15 million elsewhere, including $7 million in a state fund. Though that investment returned only 5.1% for October, Pendleton said, council members chose safety over higher yields.