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Commissioners study investment policy

GATESVILLE – Is it possible for Gates County government to invest public money in a more prudent manner?

The short answer is yes, but identifying a single source that provides the best financial return and the county’s willingness to stray a bit further out from its traditional conservative investments remains open for debate.

At a special called meeting here Monday, the county commissioners spent 35 minutes discussing investment issues as the board seeks ways to strengthen its financial base.

Last week, newly elected board chairman Henry Jordan called for the special meeting, one where he wished to see the county develop a cash management and investment policy.

At Monday’s special meeting, county manager Toby Chappell presented the commissioners with such a policy. While the board eventually opted to study the policy at greater length, all seemed to be in agreement that Chappell’s suggestions were a good starting point.

Chappell provided the commissioners with a worksheet of current investments. That worksheet revealed the county, as of Jan. 1 of this year, had nearly $4.27 million in a Southern Bank account and $770,295 invested with NCCMT (North Carolina Capital Management Trust). Now, nearly one year later, the Southern Bank account (one that pays an annual percentage rate of 0.79%) shows a balance of $2.755 million while the NCCMT fund (drawing 3.96% interest) is at $1.41 million. Chappell noted that the NCCMT figures were a bit deceiving due to the fact that the money borrowed in June and August of last year for construction of the county’s new DSS building was repaid in February of this year.

The current combined balance of the two accounts is nearly $4.17 million. Chappell said that balance could be roughly $55,000 higher if a more balanced investment approach had been used between the two financial entities.

“Although the board of commissioners is responsible for implementing a financial policy that is prudent, there are also ramifications for being too conservative,” Chappell said.

“Why wasn’t it done that way,” quizzed Commissioner Carlton Nickens, referencing the more balanced investment approach.

“I wasn’t here then to offer that suggestion,” Chappell replied.

Gates County Finance Officer Sandy Pittman added that, “those who did make that decision are no longer here.”

Pittman added that the Southern Bank balance was lower at this time of the year due to the fact that the majority of the county’s revenue stream (property taxes) is not received until late in the year..

“The balance ($2.75 million) in that account right now provides us with operating funds until the tax revenue begins to come in,” she said.

In providing a draft copy of the cash management and investment policy as requested by Chairman Jordan, Chappell confirmed that it followed the requirements as set forth in State Statute 159-30.

“The general strategy to be employed is to maximize the investment yield while simultaneously minimizing the risk or loss of the county’s resources,” Chappell said. “That is what anyone would do with their own investments.”

The proposed policy pointed out that the county manager and county finance officer, in July of each year, will approach financial investment institutions to determine the best offer. Furthermore, Chappell suggested the finance officer make quarterly reports at the commissioners’ meeting. Those reports will include the location of all investments, the amount of money in each investment, the average yield and the amount of gain/loss.

“We will shop around for the best place to invest the county’s money while following the guidelines as set forth in State Statute 159-30,” Chappell said. “We will notify the board of the available options.”

Chappell added, “We will make sound financial decisions that in no way retard the public’s trust in the governing body of the county.”

Currently, the county’s undesignated fund balance stands at a healthy $1.8 million, which represents 15 percent of the county budget.

“That’s good to see; we seem to be in good shape there,” Commissioner Wade Askew said.

Jordan said he would like to see two possible modifications to Chappell’s proposed policy – better control of daily cash deposits and looking into the feasibility of investing money into CD’s.

Pittman, replying to the latter, said the investment return on CD’s is a bit healthier, but there are early withdrawal penalties should the county need the money immediately.

“If we could plan long term and see no immediate need for liquid funds, the CD’s will give us a higher yield on our investment,” Jordan suggested.

Commission Vice-Chairman Kenneth Jernigan asked Chappell to make every effort to do business with one of the three major banks located in Gates County.

“It would be nice, as well as more convenient, to keep our money invested right here at home,” Jernigan said.

On a motion of Commissioner Graham Twine and seconded by Nickens, the board voted to consider amending the policy and revisiting it at their next meeting (Jan. 5, 2009).