Many Andover residents have expressed concern over the Town trust funds’ lack of earnings in the past several years. There are lots of rules about how and when Town funds can be invested, and thus our earnings potential over the past several years has been severely limited, as treasury rates have remained near zero.
While the frustration is understandable, the financial situation has not been one where many gains could be made, especially with municipal funds. The rates for municipal funds are generally different than what you see published when you enter a bank.
In the past year, the Trustees of Trust Funds have been researching and meeting with bankers and financial advisors to find different ways to make a little more money. Recently, interest rates have begun to creep up on treasury funds, which in turn has increased rates on CDs and other money funds.
We have found a couple of CD rates that would give the Town back more money than the funds currently make in the account at Citizens Bank. Additionally, Citizens Bank, which holds the bulk of our funds, has increased our earnings rate as of December 1, 2014 to .15%.
Our plan for 2015 is to pool about 35% of all Town trust account balances in two CDs at different banks, earning greater than .15% for each of them. We plan to open one six-month CD at Lake Sunapee Bank, earning about .35%, and one with Service Credit Union for a 15-month term, earning 1%.
These CDs will be under $250,000 total, keeping just below the FDIC cap. The earnings will be evenly allocated back to each contributing fund as it’s earned.
Our goal as market rates for treasury funds continue to rise will be to pool funds and invest in CDs on a rotating basis. This will allow for greater earnings now that CD rates have improved and access to the funds as needed by the Town or its committees.
If any Town committee would like their funds to be excluded from the CD investments (if, for example, you expect to spend more than 35% of your balance in the next six months), please let us know as soon as possible, and we will accommodate your wishes.
We are hopeful that this action will allow many to be a little happier with the rate of return of Town funds. If you should have any questions, please feel free to contact us at any time: Joanne Edgar, Chair, at Joanne@nullJEdgarCFO.com or 393-8033; Alex Estin at EstinAl@nullProctorAcademy.org; or Sarah Whitehead at WhiteheadSa@nullProctorAcademy.org.