Somerset County commissioners, treasurer at odds over depository

The Somerset County Commissioners and the Somerset County Treasurer are circling back to the determination of where they should be investing funds for a better interest rate.

At Tuesday's regular meeting, the commissioners amended the agenda to include a resolution authorizing the investment of county funds with the Pennsylvania Local Government Investment Trust, aka PLGIT, at an interest rate of 4.76%.

More:Judges decide for commissioners in dispute with treasurer over investments

PLGIT is an historical safe haven for Pennsylvania public funds, the commissioners said. PLGIT is a financial service organization created and run by local government officials exclusively for Pennsylvania’s municipalities, authorities, schools and other governmental entities.

Commissioner Pamela Tokar-Ickes said 55 of 67 counties in the state have funds in PLGIT, eight of 11 school districts in the county have invested with PLGIT and the County Commissioners Association of Pennsylvania also invests with PLGIT. She said PLGIT portfolios are investment safe, low risk. Since PLGIT began in 1981, "no investor has ever lost a dollar of their investment because of it being low risk investing," she said.

PLGIT is not FDIC insured because it is not a bank, it's a trust, she said.

"In my Township Supervisor days we used PLGIT for investing," said Commissioner Gerald Walker. "I was very comfortable with it from when I was a township supervisor."

More:Judges decide for commissioners in dispute with treasurer over investments

Around $3 million will be invested — $10 million will stay in FNB, Tokar-Ickes said. The 90 day renewal date was in January.

What is the interest rate?

Interest rates change daily, and the First National Bank money market interest rate was 3.7%, said Commissioner Colleen Dawson.

She said she asked FNB Tuesday morning for an update on the current interest rate, but did not receive a response before the commissioners meeting. She again checked for a response after the commissioners met, and still hadn't received an email on the current interest rate.

After the meeting, Somerset County Treasurer Tony DeLuca said he called a representative from FNB and was told the bank is willing to give the county a 4.86% rate on every one of the money market accounts. He calculated that PLGIT would gain $145,956 at 4.76% interest. FNB would be $149,091 at 4.86%. He said the county has nine different money market accounts with $8,932,966 total. DeLuca said FNB at 4.86% interest on that money will gain $443,944 in a year.

"That's $443,944 money we can make off that in interest in one year," he said.

"Once everyone figures out what we're going with, then new rates suddenly appear," Dawson said. "FNB was at 3.7% up to the meeting time. We point blank asked them for the number."

More:Somerset County treasurer's year-end report shows best year for increasing funds

How did it start?

The investment discussion between the commissioners and treasurer goes back to Aug. 30, when DeLuca suggested that the board consider investing county general funds with First National Bank in a money market and Certificate of Deposit, aka CD, accounts. The commissioners passed a resolution to include Somerset Trust Co. as a depository. In September, the commissioners approved a resolution to also invest with PLGIT because PLGIT offered the highest rates for both money market funds and certificates of deposit.

But DeLuca wanted the commissioners to invest with First National Bank because he said it had a higher interest rate.

They decided to split $20 million received through the American Rescue Plan between First National Bank and Somerset Trust Co., putting $10 million in First National Bank in a 90-day CD generating 3.82% and $10 million in Somerset Trust Co. in a 60-day CD at 3.36%. The American Rescue Plan is a grant program created to help with expenditures or negative economic impacts caused by COVID-19. The funds have to be committed by 2024 and fully expended by 2026.

DeLuca tried to vote against the resolution. He said he would not sign the Somerset Trust Co. documents.

Complaints against each other were filed by the commissioners and treasurer in Somerset County Court of Common Pleas. In February, Somerset County judges unanimously granted a declaratory judgment in favor of the commissioners.

What now?

When asked with the treasurer's lawsuit being appealed in court, do the commissioners feel DeLuca will comply with the ruling, they responded that it's a court order to follow the judge's direction and they would expect him to abide by the judge's decision.

DeLuca said he will abide by the judgement, but has filed an appeal for reconsideration.

"I will transfer the money but I will let them know it's their neck if it loses money," he said.

This article originally appeared on The Daily American: Who has the better investment rate?