SENECA — Fear not South Carolinians.

That is the word from state Treasurer Converse Chellis III.

Unlike California, where Gov. Arnold Schwarzenegger is asking for a bailout, or Massachusetts, where state investments are teetering on the brink of insolvency, South Carolina's finances are weathering the current economic and Wall Street storm quite nice — thank you very much.

"Everything we have done has been intended to keep our principle well protected," Chellis said during an interview that followed a meeting with county officials in Walhalla.

Chellis said the state's retirement pool of nearly $29 billion is extremely diversified to risk loss potential. In fact, the funds have generated about $1 billion to the good this past year, despite a $600 million (2 percent) loss during the last six months, he said.

The state only secured the approval of voters eight years ago to invest state funds in diversified portfolios. In the interim, the state's investment committee of five members has attained a number two rating in the country. Chellis said the group is committed to a conservative investment approach.

"We're not designed to make money tomorrow," Chellis said. "We're not trying to beat the market."

Instead, he said, the state hopes to make 8 percent on its investments during the next eight years and is looking at earnings of 8.65 percent over the next year based on current risk analysis.

Chellis oversees two pieces of the state investment puzzle: the $29 billion pool made up primarily of teacher and state employee retirement funds and a $7 billion-$8 billion pool of money that flows through the state.

The smaller pool consists of sales and income tax payments, fees, fines assessed to speeders and federal money. Of that amount, about $1.6 billion is kept in what amounts to a checking account, while another $1.5 billion-$2 billion is in a local government pool that counties can call on. The rest is invested in trust funds and earmarked reserve accounts.

"That's pretty much the money that comes and goes," Chellis explained.

It is also the money most affected by the slowing economy. Not only do sales and income tax revenues fall during a recession, but counties are more apt to call on money from the pool if their revenues drop due to lower sales taxes or fewer permit fees. Again, Chellis said the state attempts to avoid big swings by adopting what it calls a 10-year smoothing period that seeks to level the flow of money during a 10-year period.

Asked about the impact of the Wall Street meltdown, Chellis said South Carolina could actually benefit. He said the investment committee allocated funds for real estate investment some time ago but agreed not to get into the real estate market right away.

"What a great decision that has turned out to be," he said.

Now those allocated funds are still available, and Chellis said the state might actually wade into the financial recovery market, competing with the federal government for some of the discounted funds that have greater potential.

"Of course, we will be conservative," he cautioned, adding that some of the discounted funds could prove lucrative as long-term investments for the state.