School’s Bank Bids Questioned
At the GCISD school board meeting Aug. 11, Laura Huitt asked the board to review the school’s last two bank depository bids, which she felt have, and will, cost the school significant losses in interest income. Both the bids for 2001–2003 and for 2003–2005 had been awarded to First National Bank of Sterling City rather than to State National Bank of Big Spring, which had been the school’s depository for many years prior to 2001. Huitt said even though the interest rates bid by the two banks were not dramatically different, because of the school’s several million dollars on deposit, the difference in interest paid on those funds is substantial.
Terming the action of awarding the 2001-2003 bid to FNB “a mistake,” Huitt said her research shows that the school district lost in excess of $163,000 in the 23 months between Sept. 1, 2001 and July 1, 2003. She said, “This was the cost of convenience and two $4,000 scholarships (from FNB).” The figures she presented the board showed an average of 1.35 percent paid by FNB, compared to the 3.5 percent minimum, which was guaranteed by SNB in their 2001 bid. (SNB’s 2001 bid was for a minimum of 3.5 percent and a maximum of 7.5 percent; FNB’s bid had no minimum and no maximum.)
If You Had $6 Million to Invest?
Overall interest rates are lower now, and neither bank offered either a minimum or a maximum rate of interest in their 2003-2005 bid. However, Huitt said FNB paid the school .61 percent last month (July 2003), while SNB paid regular, walk-in customers 1 percent on money market accounts and 1.25 percent on savings accounts during that time. She asked the board, “If each of you had $6 million to deposit, would you prefer .61 percent or 1 percent interest?”
Huitt said she is distantly related to State National Board Chairman John Currie, but was “not trying to rake up business for State National.” Neither, she said, did she intend to criticize the school board or either of the two banks, but rather to possibly influence future board action. She told the board she appreciated the hard work they do, and realized that none of them is an expert in school finance. Huitt mentioned school bookkeeper/secretary Kathy Wheat and the “great job she does.”
Responsibility Called ‘Superintendent’s”
However, Huitt was openly critical of School Superintendent Steve Long, who she said should have provided the board with analyses of the bank bids prior to the board having to take action.
She also said the previous two superintendents (Don Stringer and Charles Zachry) had put much of the school’s funds into CD’s with staggered maturities rather than into one general fund, and also had actively “shopped” CD rates, moving funds where they would generate the most income. Without a business office, Huitt said this responsibility falls to the school superintendent.
She said the school can move funds as they choose, and said, “The man on the street is getting more interest than we are.”
Board President Jimmy Eggemeyer said, “We’re not experts in these matters; no one has ever broken it down for us before.”
Huitt said she would soon complete a degree in accounting, and jokingly said she would be for hire as a consultant to the school the next time depository bids are taken. Board member Carl Hoelscher said, “No, the precedent is set --- you do it for free.”
Roger Williams of FNB was in attendance at the board meeting and said he wouldn’t dispute Huitt’s figures. He said no bank would offer a minimum on bids today. He also said, “So much of school dollars are fluid in a short time, it’s hard to invest them in higher interest vehicles.”