Council to move funds to higher-interest accounts

The Olney City Council gave authority to City Secretary Tammy Hourigan to transfer water surcharge funds from an Interbank account where they are deposited to a Texas Cooperative Liquid Assets Securities System [Texas CLASS] account that pays a higher interest rate.

The Council also instructed Ms. Hourigan at a special Aug. 13 meeting to sweep the interest funds into an account insured by the Federal Deposit Insurance Corp every month.

Texas CLASS is a local government investment pool that allows entities to pool their funds “to preserve principal, maintain the liquidity of the funds and maximize yield.”

The Council made the move after Texas CLASS alerted Ms. Hourigan that the rates in its interest-bearing accounts would rise to 2.24 percent from 2.06 percent, which is higher than the rate Interbank offers, she said.

“When we first started talking [to Texas CLASS officials], the rate was 2.06,” she said. “It will definitely go up in September. It could be 3.5 percent by the end of the year.”

Mayor Pro Tem Tom Parker supported the decision to move the funds, noting that the City has no obligation to Texas CLASS and could quickly close the account or move the funds.

“I think it’s prudent to have somebody who is going to react in real-time in the financial world,” he said. “I don’t know if having $2 million in the bank helps Olney. It doesn’t stay here.”

Ms. Hourigan said the Texas CLASS pool account allows the City to do “anything we want with the interest” including having it wired monthly to the City’s existing Interbank account. The City has deposits of $xx million in the Interbank account as of xxxxx.