Somerset plans to generate $58,000 monthly via fund investments

Sep. 14—SOMERSET, Pa. — Somerset County officials voted Tuesday to shift $25 million into short-term investments — a step that commissioners said will generate more than $58,000 a month in extra revenue.

The move was fueled by an August presentation by county Treasurer Anthony DeLuca and interest rates that have been surging to the point that county commissioners ended up settling on certificate and money market rates that grew from Monday to Tuesday.

The rates exceeded ones outlined by DeLuca two weeks ago, but that didn't signify the board was altogether in lockstep with DeLuca, who wanted the county to stick with a local bank.

In a resolution approved Tuesday, the county chose to invest with the Pennsylvania Local Government Investment Trust (PLGIT), which offered the highest rates across the board for both certificates of deposit and money market funds.

The county will put $5 million into a money market earning 2.46% and $20 million into CDs — with $15 million of that into a 90-day certificate and the rest into a 60-day one.

Those CDs would be locked in at respective rates of 3.18% and 2.93% — well above rates received by four local banks that submitted rates, figures show.

But DeLuca noted that Pittsburgh-based First National Bank, which already holds millions in county funds, submitted a quote just a fraction of a percent lower in the money market and would have guaranteed its rate.

The county's documented money market quote Tuesday morning was 2.45%.

"That's a local bank paying local taxes. They have local employees," DeLuca said of First National Bank, which has a Somerset branch.

"Let's keep it local," he said after the meeting.

Keeping funds within the same lending institution also simplifies the money transfer process for his office, he added, making it easier to move funds from one account to another.

The fraction of a percent the PLGIT fund generates will amount to just $1,000 a month in extra revenue, DeLuca added.

The county treasurer had been pressing the county to invest with the area bank since August.

But commissioners said Tuesday they have a responsibility to invest county tax dollars wisely.

"We take our fiduciary responsibility very seriously," Commissioner Pamela Tokar-Ickes said.

If county funds are going to be invested, the board has a duty to do its homework and collect multiple quotes before selecting an option — and to get the best rates possible, she said.

Fellow Commissioner Colleen Dawson noted that money market rates are projected to continue increasing in the days and weeks ahead.

And the county will be able to capitalize on that, too, thanks to the variable rate through PLGIT whose return compounds daily.

President Commissioner Gerald Walker said the county will be able to draw any or all of that money out if the need arises — and without penalty.

But the county is continuing to set aside more than $5 million in its First National Bank savings account to continue covering payroll, health care contributions and other monthly costs, the board said.

Much of the money being invested will stem from $14 million in American Rescue Plan funds.

Most of that money has already been allocated for a broad list of projects, including emergency communications upgrades and water system work.

But payments won't be withdrawn until early next year, Walker said, meaning the county can invest the funds at keast through December while the projects are in process.

Cambria County has already been taking a similar approach.

Cambria County received $12 million in ARP funds this year, and Cambria County Controller Ed Cernic Jr. said a similar amount has been earning 2% monthly all summer in a CD through First National Bank while the county has been finalizing plans for its own recovery-related programs and projects.

"In Cambria County, we're generating at least some interest on every dollar we have in all of our accounts. But 2 or 3%, we've never seen that before," he said, noting that even their "idle" savings accounts — general fund dollars separate from ARP funds — are generating 1.74% this month.

ARP funds will dwindle as the months roll on.

But counties owe it to themselves to invest right now, he said.

While Cambria's interest rate is lower than those Somerset has secured this week, there probably won't be much of a difference on the rate of return, Cernic said, noting that Cambria has been collecting its interest all summer.

"When you look at the possibility of $240,000 in extra revenue a year," Cernic said, "that's something to be pretty happy with."