UPDATED & REVISED (re: SCDL) 11/07/2016 12:52 PM
PROMPTS
SHIFT IN FUNDS
FROM STAR PLUS TO STAR FUND
THEREBY
BRINGING MORE $ TO the PUBLIC BENEFIT
SOME
STARK COUNTY POLITICAL SUBDIVISION OFFICIALS
REFUSE TO COOPERATE WITH
SCPR INVESTIGATION
UPDATE: SATURDAY, 11/05/2016 AT 3:15 PM
There has been some difficulty in communications between the SCPR and Nicole Nichols who is treasurer of the Lake Local School District.
Ms. Nichols maintains that she has never received to any of the e-mailed Q&A to her and Superintendent Kevin Tobin.
The SCPR has not received as "undeliverable" return e-mails sent to Ms. Nichols and Superintendent Tobin as is standard protocol when a particular e-mail has been misaddressed.
Beyond the e-mail problem, Ms. Nichols cites being occupied with higher priority tasks and not having adequate administrative support personnel as reasons why a return phone call to the SCPR was not made from the Lake treasurer's office to the SCPR indicating when she might get back to The Report to entertain the Star Plus/Star inquiry.
But in an e-mail received to today in which she says that the first she knew of the SCPR Star Plus/Star allocation questions on the part of the Lake School District from reading this blog, she did respond to the inquiry in the following fashion, to wit:
I evaluate the balances in accounts compared to interest rates overall on a monthly basis. I check all accounts at least weekly to manage the cash balances for district needs. Lake had in fact inquired with the Ohio Treasurer’s Office back in August/September, and based on their response, made an initial move of the majority balance. Following a Market Update seminar I attended as part of the Ohio Treasurer’s CPIM Academy on October 26, I transferred the remaining balance of our Star Plus account, less interest earned, to our Star Ohio account. I am in the process of evaluating all of our cash and investment balances as well as where we hold those accounts, from our local checking account, to Star, to investments. Lake Local has made major strides in the past year or two in interest earnings and in bank fees paid to result in a net positive to the district. This is something we will continue to focus on going forward.
ORIGINAL BLOG
On October 17th, The Stark County Political Report spied
an article in the Cleveland Plain Dealer (online version [Cleveland.com], to wit:
As the SCPR always does when one of Ohio's quality mainstream newspapers does an Ohio-wide investigative journalism that could relate to Stark County government, The Report examines the impact/import of the work to Stark County political subdivisions.
Accordingly,
on October 20th, The Report was in a position to report to the Stark County public the ramifications of the above-headline to the revenues of various Stark County govenment entities including Stark major college (Stark State), local boards of education, libraries, townships, cities, and, indeed to county government itself.
As it turns out, Stark County treasurer Alex Zumbar, being the forthright public official he is, at his own initiative, estimated to the SCPR that because he did not pick up on the significant shift in return on Ohio treasurer Josh Mandel's formulated Star Plus/Star Funds, Stark County missed out on approximately $32,500 in additional revenues as a leverage on taxpayer dollars.
Since the 20th, the SCPR has contacted many fiscal officers serving the entities on the list below and believes that a consequence of doing so The Report was the impetus for these officers to rethink and in quite a number case reorder their investment of taxpayer dollars from the lower paying (beginning months ago) Star Plus to the Star fund.
The
Star fund currently produces about 1/4 cent higher daily return than the Star Plus fund.
The Report thinks that this blog investigative effort has led to—going forward—Stark County taxpayers' money being enhanced to the tune of thousands of dollars.
There is an alarming side to the SCPR's investigation.
While Zumbar was completely cooperative with The Report's survey of local governments; not all fiscal officers were..
Here is a typical template for the inquiry (e.g. questions sent to Lake Schools treasurer Nicole Nichols who earns about $122,000 annually (April 18, 2016) as Lake treasurer; way more than most Stark political subdivision financial officials) that the SCPR made of Stark's local entities involved with the Star accounts:
While the chart above show that Lake has dramatically reduced the Star Plus allocation from $4.24 million to $1,209.95, no response as of the date of the publication of this blog has been received of Ms. Nichols.
NOTE: On Saturday, Treasurer Nichols did respond, see her response at the beginning of this blog
Ms. Nichols says that she never received the SCPR e-mail asking the above questions when sent on October 27th.
At first The Report thought there was some basis for that claim. But on re-examining e-mail records the SCPR is skeptical of Treasurer Nichols' disclaimer and now believes that she is typical of other fiscal officials who The Report thinks tried to "deep six" The Report's inquiry not know how utterly persistent
The Stark County Political Report is.
As of the date of this blog,
(changed as of Saturday, November 5th; see above) Treasurer Nichols has not answered the foregoing questions notwithstanding The Report having sent the inquiry two times after the 27th (once to Superintendent Kevin Tobin).
The SCPR is particularly sensitive to the Lake School District inasmuch Lake Township has been the home of the Olson family for 41 years. The three Olson daughters graduated from Lake and wife Mary served on the Lake Board.
So, media inquiry aside, for a Lake school district official not to—at a minimum—to make a return phone call to a current and long term community resident (or have her administrative assistant do so) to the effect of: "I'm involved with a high priority task, I will get back to by (e.g. Thursday)," is not acceptable.
In 2015, Nichols (a Lake resident/graduate herself) was out with then-superintendent Jeff Wendorf seeking to a Lake trustee meeting support for passage of a before then election challenged bond issue.
The Olsons supported that issue each and every time it came up on the ballot until it passed.
And not taking phones calls
[or responding as to when she will call back] and answering the questions posed is the kind of thanks we get?
Such is a precise example of how governments at all levels lose the respect of and support of the government financial issue in their respective constituencies.
The Report thinks Ms. Nichols as other Stark County fiscal officials are embarrassed at not having kept track of the differences between Star Plus/Star fund returns which can be accessed online in about 15 seconds. Moreover, transfers are a mouse click away.
Many of us use electronic banking and know from that experience alone how utterly easy it is to keep tabs on our accounts and transact whenever we think it is desirable/prudent to do so.
Plain Township's Tom Wolf (recently elected Plain fiscal officer) who is also a CPA working in a local private firm says that he checks rates daily which he admitted was probably not necessary in terms of frequency but that a "due diligence" fair standar of "once a week" would be a reasonable standard.
Wolf said that he figures that Plain lost about $1,500 in interest income because of Plain's $3.2 million being in the Star Plus rather than the Star fund.
The SCPR thinks that Wolf is not to blame for the lost time. If anybody is, it is former fiscal officer Anthony Flex who Wolf defeated in November, 2015 and who now works for former Plain Township trustee and now Stark Dems Central Committee appointee Stark County Clerk of Courts Louis Giavasis.
Flex should have been aware of the Star Plus/Star differential and in the transfer of responsibilities should have given Wolf the heads up on the Star Plus/Star differences.
Wolf (having been in office nearly a year now) has told the SCPR that he only recently learned of the differences and as the chart above indicates.
Note that Wolf has left some Plain Township funds in Star Plus.
There are justifications for doing so.
However, Fiscal Officer Wolf did say that he is totally comfortable with the safety of the Star fund notwithstand that this fund is not Federal Insurance Deposit Corporation (FDIC) protected.
The Massillon Public Library gives as a reason for its staying with the Star Plus is to maintain a diversity of location of investment dollars.
One of the more disturbing responses from those fiscal officials who did take the survey call from The Report came from North Canton financial director Laura Brown.
Brown is recognized by local officials as a top notch financial person.
She played a major role in helping Massillon get its financial matters in order in her participation as a state of Ohio official on the Massillon Planning and Supervision Commission.
When The Report talked with Ms. Brown last week, she said that yes she was aware of the Star Plus/Star differential but that tending to it would have to wait as she is heavily engaged in working on North Canton's 2017 budget.
North Canton's exposure to the lower Star Plus return on investment (ROI) is not that great—some $602,000—but insofar as the SCPR is concerned her, in the perception of The Report "flip" attitude," was troubling.
The Report did bring the matter up with North Canton mayor David Held and seemingly he agreed with yours truly and said he was going to take the matter up with Ms. Brown.
If there was a major investment in time for finance director Brown to attend to the Star Plus/Star differences, that would be a compelling reason for her to defer to after the budget is completed.
But as point out earlier in this discussion, she could easily do the process in a matter of minutes.
No doubt, she and other Stark County fiscal officials spend more time than that chit-chatting with colleagues about the day's weatther.
Accordingly, her reason for not acting comes off more about hubris than a meaningful justification for putting the Star Plus/Star North Canton investment off until after the 2017 budget is completed.
Louisville finance director Jina Turowski is another Stark County political subdivision who failed to return the SCPR's survey call. The Report did get in touch with city manager Tom Ault who deferred to Turowski.
It is obvious from the chart above that the SCPR call to Ault was productive for Louisville taxpayer notwithstanding the apparent refusal of Turowski to answer The Report's specific questions.
Alliance treasurer Denny Clunck also failed to return the SCPR's call.
The most complete answer to the SCPR's inquiry came from Stark State College comptroller Scott Andreani.
Initially, he failed to respond to the SCPR's questions. The reason? The Report's e-mail ended up in Andreani's "spam" file, he says.
Sorry, but the SCPR is skeptical of this excuses too as in the case of Lake's Nichole Nichols
An e-mail to Stark State president Para Jones (which interestingly enough did not end up in her "spam" folder) solved the SCPR/Andreani communication problem as did Stark County District Library (SCDL) Tena Wilson in the case of one unreturned telephone call from the SCDL's financial person. However, the the SCDL official did telephone The Report at Director Wilson's promoting and a fruitful conversaton ensured.
The Stark County Political Report position is that elected/appointed Stark County officials have no right to ignore public (mostly through the media) inquiry as still collect a salary provided by the taxpayers of the Stark County political subdivision for whom they work.
Here is Andreani's response:
Mr. Olson (sent on November 1st)
Thank you for your contacting Stark State College with questions concerning the Star Plus and Star Ohio investments.
The investment committee met to discuss your questions and the resulting answers are in response to those submitted in your original email.
How often as fiscal officer for Stark State do you check the Star/Star Plus accounts in the context of evaluating where Stark State taxpayer money should be held? [SCPR question]
Our investment committee meets quarterly to discuss short term cash flow, changes in enrollment (revenue) and market changes. Most of our reserves are not invested in either Star or Star Plus.
Does Stark State plan to continue holding the nearly $5 million in the Star Plus account? If so, what is the rational for doing so? [SCPR question]
A portion of the money in Star Plus will remain. We are evaluating the amount right now based on our updated cash flow projections. We already keep our long term investments protected by the full faith and credit of the federal government. We plan to keep 10% of total cash and investments under FDIC protection as part our focus on safety, liquidity and yield as required by our policies and state law.
If Stark State now plans to transfer said funds from Star Plus to Star, when will the transfer take place and how much of the $5 million will be transferred?
We are reviewing options for our interim funds which do not involve Star Ohio or Star Plus. We currently have over half of our portfolio invested in federal government securities, yielding three times more than Star Ohio.
Finally, how much money has been lost to the Stark State College as a consequence of the $5 million remaining in the Star Plus account?
There is a qualitative difference between Star Plus and Star Ohio. Star Plus is fully insured. Star Ohio is currently receiving a better rate than Star Plus because they are heavily invested in commercial paper and corporate debt (52%).
Please see Ohio Revised Code Sec. 135 for the limitations and details about how commercial paper can be used in an investment portfolio by political subdivisions.
The difference between the Star Ohio and Star Plus rates were around 1/10th% or less up until the last couple months. If we had made a decision to move all Star Plus funds to Star Ohio back in January, when the spread was very small, we could have earned $4,364 more than we did.
However, the difference in rates did not jump until the last few months.
This is when the State Treasurer decided to invest more heavily in commercial debt. We take a more conservative approach with our investments. Commercial paper and corporate debt introduced additional risk into Star Ohio. We are uncomfortable with investing 52% in commercial paper and corporate debt, and we would be prohibited by law from making an investment in commercial paper at these percentages if done on our own outside Star Ohio. If a bank fails, our investment through Star Plus is guaranteed. If commercial paper goes bad, we would lose principal, not just the interest.
We appreciate your interest in Stark State College and hope you have a great day!
Regards
Scott Andreani
While $4,363.84 is not a lot of money for Stark State (and Ohio's taxpayers) to have lost, in the words of one of our founding fathers Benjamin Franklin: "a penny saved is a penny earned."
Currently, Stark State and the Lake School systems are involved in multi-million dollar building projects.
So it is doubly important for their respective financial officers to see to it that Stark State and Lake scare up every penny in saving that the possibly can.
Beyond Stark State and Lake, the admonition also applies.
For these financial folks have a fiduciary obligation to their respective taxpayer to wring every cent out of every tax dollar no matter how inconvenient "due diligence" might be.
