By Paul Gable
The Horry County Solid Waste Authority (SWA) Finance Committee demonstrated the strange logic that pervades the agency while discussing annual audit results during a recent committee meeting.
At issue was an audit exception finding that approximately $6.5 million of authority money was potentially not collateralized over a weekend at the end of Fiscal Year 2019.
The $6.5 million came from a certificate of deposit that matured near the end of the business day on Friday June 28, 2019, the last business day of the fiscal year, and was not collateralized by the bank until the following business day, in accordance with standard bank policy, Monday July 1, 2019, the beginning of the new fiscal year.
All public monies on deposit with a bank must be secured (collateralized) by either Federal Deposit Insurance or investment vehicles, normally certificates of deposit.
Those are the technical facts of the issue. It must be stressed that at no time was the $6.2 million in danger of being lost.
However, that didn’t stop SWA board member Pam Creech from trying to blow the issue out of proportion with statements like, “I’m glad we didn’t lose that money,” and “We’re responsible for that $7 million.”
Creech went on to say the SWA should send a letter to Horry County Treasurer Angie Jones to make sure that “some kind of plan” is in place so “this doesn’t happen again.”
What Creech, and apparently the other committee members, failed to do was check to understand the background of the issue before pontificating in public at the committee meeting.
The Treasurer is solely responsible for the investment of county, school district, SWA and county airport department monies. The SWA board has no function in this process.
Jones notified the bank via email two days prior to the maturation date of the CD that the bank would need to increase collateralization of SWA monies by the amount coming in from the maturing CD.
GSD has viewed a copy of Jones’ email and of the bank’s fixed income sales director internal email recognizing the maturation and directing the collateralization to be done Friday (June 28th).
Additionally, the bank sent a letter to Jan Bitting, SWA Finance Director, three weeks prior to the committee meeting, providing clarification concerning the SWA collateral holdings by the bank.
In that letter, a bank senior vice president wrote that the Treasurer had properly notified the bank two days prior of the need for additional collateral and a communication error within the bank prevented the collateral group from adding the proper amount of collateral.
Apparently no committee member bothered to view any of those emails or the letter from the bank prior to the committee discussion. Reading them, it is readily apparent that the Treasurer did everything she could do to ensure the proper collateralization was applied and no letter, policy change or any other steps Creech apparently thinks the SWA board can take would have solved the problem.
It must also be noted here that eleven months ago, Jones took steps to have all county monies she is responsible for investing covered by a blanket collateralization agreement with the bank. This would eliminate the need for coordinating collateralization with a specific Employer Identification number for the four agencies for which the Treasurer invests.
The bank sent Jones a contract for just such an agreement in November 2018. The contract has been held up in the Horry County Attorney’s office since November 2018 with no action taken and no explanation for the long delay on what should be a simple contract review.
The Treasurer did her job despite Creech’s pontifications in the committee meeting. The bank admitted an internal communication error was at fault. The blanket collateralization contract, which would have prevented such an issue, has lain in the county attorney’s office with no action for eleven months.
And, if the SWA board is really worried about its monies, it should stick to areas it can control such as not using funds from its closure and post-closure accounts for construction purposes in violation of a board resolution that has been in place at the SWA since the 1990’s prohibiting such transfer of funds.