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Sunday, May 1, 2016

City looks for new ways to invest

Friday, July 4, 2008

Indiana Treasurer of State Richard Mourdock and TrustINdiana Director Kelly Mitchell addressed Brazil City officials recently to explain an investment option for city finances. [Click to enlarge]
When it comes to investing money, the City of Brazil now has a new option.

Indiana Treasurer of State Richard E. Mourdock visited Brazil City Hall recently to help explain the TrustINdiana program, which pools investments for local governments.

"The purpose of the program is to allow municipalities, school corporations and other units of local government, along with the State of Indiana, to invest their assets into a common pool," Mourdock said. "The funds are preserved and are highly liquid, allowing for the greatest return on investments."

Mourdock and Kelly Mitchell, Director of TrustINdiana, said while no investment program is devoid of risk, that this is one of the safer options.

"Even if the worst-case scenario were to happen, for every one dollar the local government puts in to invest, they will get that dollar back," Mitchell said. "Another advantage of TrustINdiana is that there are no transaction fees like most banks use."

Any money that goes into the Local Government Investment Pool is protected by the Public Deposit Insurance Fund (PDIF), which is administered by the Indiana Board for Depositories.

Although Indiana is the 43rd state in the nation to initiate an investment pool for local governments, it does have one of the most unique aspects.

"When the bill was about to be passed, the Indiana Bankers Association expressed concern that money would no longer be in Indiana banks," Mourdock said. "Because of that, there is a provision stating that at least 50 percent of the investment must be held in Indiana depositories."

He further explained the money does not necessarily have to stay in the immediate area.

"We could have a portion in South Bend or Evansville or Indianapolis," Mourdock said. "Our goal is to maximize the amount of return on the investment and give local government entities the best rate possible."

The program began Feb. 1 and currently has approximately 90 entities participating.

"As of July 1, we have a balance of approximately $452 million and are currently running at a daily rate of 2.37 percent," Mitchell said.

Many entities, like the City of Brazil, currently utilize Certificates of Deposit (CD) to invest its money, but the TrustINdiana program appears to be more effective.

"Local governments invested in the program have the interest earned added every day instead of having to wait for the CD to mature," Mitchell said. "With the liquidity of the investments, there are times where we have the money in one bank one day, and in another the next because the rate is better elsewhere."

Also, entities have access to their invested money anytime, day or night, without having to worry about losing part of their investment.

"In situations, like the recent flooding, where the city may need money right away, they can get to it," Mitchell said. "We are unique because there is typically a penalty for pulling a CD early, whereas we do not have extra fees."

Brazil City Clerk/Treasurer Karen McQueen is in favor of potentially opening an account with TrustINdiana in the near future.

"It would be a great benefit to the city because we have been having trouble gaining interest with local banks," she said. "For example, we could place any grant money we get into the program, and even if it is only in there for 10 days, we would have that 10 days worth of interest on top of the grant money."

Mourdock admits that most local banks have been put off by the program at first, but tend to see the benefit as time goes on.

"Many local banks fear that they will be losing an investor, which they are not," he said. "We still need the local banks to wire the money into their accounts, but I have also seen cases where once an entity invests with TrustINdiana, the local banks jump up their interest rates, which helps out local governments even more."

Local governments can create as many accounts as they see fit so they can invest money for specific needs.

"Even though the money is invested in hundreds of areas each day, it is more secure than on the local level," Mourdock said. "The state also has money invested into the pool and lately, our interest rate has been higher than what most local banks have been offering. We are just trying to do the best that we can to help the local governments."

For more information on TrustINdiana and the Local Government Investment Pool, visit www.trustindiana.in.gov.

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This is great. I hope that the Clay Community Schools Corporation takes advantage of this, too.

-- Posted by FlyinLion on Sat, Jul 5, 2008, at 11:35 AM

i think they should invest in roads & sidewalks

-- Posted by nobob on Sun, Jul 6, 2008, at 9:56 PM

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