By Amy Lester, NEWS 9

EDMOND, Okla. -- Schools and cities all over the state are watching their investments during these tough economic times. Some are even changing their investment strategy.

School districts and cities invest hundreds of millions in tax dollars to earn interest. They track the money closely, especially now.

While Edmond's future generation is learning in the classroom, the district's Chief Financial Officer, David Fraser, is watching the district's $34 million in investments.

"Our investments have to be risk-free, you just can't take that chance," Fraser said. "Anything about economic news, I try to kind of see how that's going to come down to the school district."

Fraser's quick thinking may have prevented the district from losing money.

Back in July, he invested more than $4 million in Freddie Mac. That same night, the severity of Freddie Mac's financial situation came out. The next day, Fraser sold it.

"We were given reassurances that our investments were good, but it's a risk factor," Fraser said. "I cannot afford for this district to have any risk in our investments."

Fraser said the district broke even. Now, the district's money is primarily in CDs. But, lower interest rates are taking a financial toll.

"Our investment earnings have just been cut in half," Fraser said.

Fraser said the district will likely make about $500,000 less than expected.

"Our investments, because of what we do invest in, they stay pretty steady," Oklahoma City Treasurer Bob Ponkilla said.

Ponkilla said the city's investments are on par with his projections.

"We're pretty fortunate our investment policy is pretty conservative," Ponkilla said.

The city of Oklahoma City has $950 million invested, mostly in government treasuries and agencies.

"We're not having to deal with the same situation everybody else is because of that conservative atmosphere that we have here in the city," Ponkilla said.

Both the city and the Edmond School district will wait it out, watching the bottom line, expecting a higher return, eventually.

"We just try to make sure from a school district standpoint we have enough revenue to cover our expenses and if we need to drop back a little bit, we try to do that internally," Fraser said.

State law strictly limits how municipalities, school districts and the state can invest its money.

Currently, the state has $5.5 billion invested. State pension and endowment funds are invested in the stock market. The state treasurer's office said those funds could lose $75 million if a bailout plan is not passed.