County clarifies management fee for CDs

Justices of the peace responded Monday night to constituents who questioned the county’s decision to allow a Fort Smith bank to manage $2 million in certified deposits.

The Garland County Quorum Court unanimously adopted the enabling appropriation ordinance Monday night, but Denise Marion, District 3 JP, told JPs the Finance Committee advanced the ordinance earlier this month before it was fully explained. It appropriated $3,500 to First National Bank of Fort Smith to pay an annual fee for the management of CDs the county purchased after the Federal Reserve Board raised the benchmark interest rate by 0.25-percent last month.

County Treasurer Tim Stockdale told JPs the fee is for collecting interest on nine brokered CDs, record keeping, settling the purchases and maturities of the CDs, distributing monthly interest payments

to the county, providing paper statements and online access to monitor the accounts.

“Since this particular branch of Edward Jones doesn’t provide management of funds, we had to go through another financial institution,” Stockdale said. “The lowest bid on that was from First National Bank of Fort Smith. Bank of the Ozarks put in a bid, but they were much higher.”

The CDs were purchased through Edward Jones Investments, which bought them at a lower cost from Wells Fargo and Timberwood banks and sold them to the county at a markup. Stockdale told the quorum court the markup allowed the county to purchase the CDs without paying a commission.

An email from the treasurer’s office to the county’s office of financial management included with the ordinance request was the only accompanying information. It asked for an appropriation from the Ouachita Memorial Hospital Sale Fund for the “annual fee for investments for the OMH fund.”

“We’re having to have this conversation now as clarification, because the only documentation presented at the Finance Committee was a one statement request for the quorum court to pass an appropriation,” Marion told JPs of the Finance Committee, of which she is not a member. “I had to read about it in the newspaper.”

The nine CDS, eight with a

$249,000 principal and one for

$8,000, have staggered maturities ranging from March 2019 to March 2022. Stockdale told the quorum court the 2.1-percent average interest rate will return

$37,889 in annual net interest income to the county.

“One of the bids I got was

1.5 percent,” he told JPs. “The difference in that was $40,631. We’re paying the $3,500 fee, but after five years we’re getting an additional $40,631 in interest.”

The $2 million is part of the county’s OMH fund, which, according to March’s summary of treasury account balances, had a $7,780,900 cash balance at the end of last month. Stockdale told the quorum court he keeps some of the OMH fund in liquid accounts, such as the

$2.08 million in a Bank of the Ozarks money market account that earns 0.50-percent interest, in case the county needs quick access to funds.

He also puts OMH money in longer-term investments, such as CDs, that give the county a higher rate of return.

“If the quorum court is asked to approve an appropriation from the General Fund, especially if we’re being asked to approve an appropriation from the hospital sale fund, I want to have more information on it,” Marion told the quorum court. “I know the time to do that is at the Finance Committee meeting. The reason I’m bringing it up now is because at the Finance Committee meeting I didn’t know enough about it to have an appropriate question to ask.”

Responding to constituents who questioned why the county would allow a bank outside the area to manage its investments, County Judge Rick Davis said local banks interested in managing county funds need to contact the treasurer’s office.

Davis, Stockdale and County Tax Collector Rebecca Dodd-Talbert make up the county’s depository board. Per state statute, they’re responsible for supervising the depositing of all county funds and all other public funds held by the county treasurer, except school district funds.

“All the lending institutions around the city and county, they need to contact Tim if they think they can meet the criteria,” Davis told the quorum court.