District requests bank proposals

One bank and one local government investment trust responded to Lehighton Area School District’s request for banking services proposals and representatives from both will be invited to present before the district’s finance committee next month.

Mauch Chunk Trust Company and the Pennsylvania Local Government Investment Trust were the lone respondents to an RFP issued by the board following controversy over a motion in November 2018.

At that time, the board unanimously approved opening accounts with TD Bank after former district business administrator Brian Feick told finance committee members the district would generate between $120,000 and $150,000 per year more in interest than what it was bringing in by using Mauch Chunk Trust Company.

The bank accounts, however, were never opened, and current business administrator Patricia Denicola said she could not find any written proposal from TD Bank indicating how the promised savings would be reached.

“There are no records here to show that, and that is why we’re recommending doing an official request for proposals and give all area banks the opportunity to show us how they could potentially save us money,” Denicola said last month.

TD Bank did not respond to the most recent RFP, noting that “the numbers do not allow them to be as aggressive as they were last year.”

“During our last review, which was a year ago, the rate environment was on the rise,” TD Bank representatives told the district. “Higher earnings credit s make it easier to offset bank fees. After our meeting, we saw that balances were reduced and the Feds are planning more rate cuts for 2019 and 2020. I don’t want to put a proposal on the table that may not meet your needs given the anticipated rate movement.”

Denicola said by the bank’s response, it is clear they intended to use earnings credit to offset banking fees the district would be charged.

Mauch Chunk Trust Company and PLGIT did not include any bank fees in their proposals.

“The rates were going to do what they were going to do anyway,” she said. “Had that money been moved last year, I don’t think the earning credits would outweigh the fees the district would be paying and it would have the potential to put the district in a negative situation.”

Bradley who participated in Monday’s finance committee meeting by phone, contended the district showed “failure and neglect” by not following the board motion in 2018 to open the TD Bank accounts.

The recommendation going forward, Denicola advised, would be to use Mauch Chunk as the local bank depository and use PLGIT for cash management or investment opportunities.

The district currently has accounts with PLGIT, she added.

“I think the fair thing to do,” finance committee chairman Andrew Yenser said, “would be to bring both Mauch Chunk and PLGIT in next month and hear what they are proposing to offer.”

Lehighton’s next finance committee meeting is at 6 p.m. Oct. 14.