GRAND RAPIDS — Kent County Treasurer Kenneth Parrish has almost another $120 million to manage this year in the county’s investment pool than he had last year.
It’s not that the county had a huge return from last year’s investments. Those additional dollars represent the revenue the county’s aeronautics board received from the bond sale that is building the new parking ramp and making other improvements at the airport.
Parrish recently told county commissioners that he invested the bond revenue with Bayerische GIC, a German bank, in a guaranteed investment contract that operates like a money market account. Parrish said he chose that fund because the return rate is fixed for whatever amount the balance is, so as the dollars are withdrawn over the next two years to pay for the project, the interest rate will remain the same.
Wells Fargo Bank is the fund’s trustee.
“So we are protected,” said Parrish.
There was $468 million in the county’s investment pool as of the beginning of this year and another $6.5 million in cash at area banks. Most of the investment dollars, $291 million, are in money-market accounts and certificates of deposit at 24 banks. About $183 million of that total is invested with five banks, a figure that accounts for 63 percent of the investments made with local banks.
“Because of their size, we feel safe investing with them,” said Parrish.
“I think we invest with every bank that has a presence in Kent County, and a few in Michigan outside of Kent County.”
Parrish explained that he won’t invest an amount that is larger than 1 percent of a bank’s total assets.
“We look very carefully at the size of the institution involved,” he said.
Huntington Bank held the biggest bank deposit with $60.4 million, while the deposit with Charter One of Kalamazoo was only $500,000. Parrish, though, hasn’t placed an investment with Chase. But he did say the county has 35 or 40 checking accounts at Chase.
“Their interest rates haven’t been real competitive,” he said.
The county’s investment pool also includes $54.7 million in government securities, with $10 million of that amount in U.S. Treasury bonds, notes and STRIPS (Separate Trading of Registered Interest and Principal of Securities). Another $123 million is invested in pooled funds. Almost that entire total, $117 million, is in the Bayerische fund.
For 2007, the investments earned $23.4 million in interest. Just under $20 million of that was earned by the pool, while the county’s general operating fund earned $3.8 million for the year.
About $56 million of the pool funds don’t belong to the county. Townships and other units, like the Grand Valley Metro Council and the Convention and Arena Authority, invest in the pool with the county.
“At my last count, there were over 500 funds,” said Parrish. “I can get a better rate by investing $1 million than $100,000.”
State law requires Parrish to make an annual report on the county’s investments and also provides directives as to the type of investments the county can make. The county, though, has its own investment policy.
“Kent County’s policy is more restrictive than state law, which I am very happy about,” said Parrish.
The policy reads: Kent County will invest in a manner which will ensure the preservation of capital while providing the highest investment return with maximum security, meeting the daily cash flow demands of the county and conforming to all state statutes governing the investment of public funds. The county’s primary objectives for investing are safety, liquidity and yield, in that order.
Commissioners recently revived the policy, as required by an update made late last year to the state law. The revised policy now requires Parrish to file an investment report with the commission within 60 days after the end of fiscal-year quarter.
Parrish said what is currently going on in the financial markets scares him, and having a conservative investment policy makes for good business decisions.
“We have no funds with investment banks,” he said. “We do not invest in commercial paper.”