AREA TREASURERS INVEST ON SAFE SIDE

BENTON -- When cities, school districts and other governmental entities invested in Orange County, Calif., they didn't know the county fund would be eliminated by risky investments and the county would file for bankruptcy.

Now there's a hiring freeze in Orange County, and capital improvements have stopped. The money for them is gone.

With current investment practices in three Southeast Missouri counties, it would be virtually impossible for a similar scenario to happen here.

Local treasurers choose security over potential high income, and Missouri's state auditor requires counties to back up their investments with U.S. Treasury notes.

Scott County Treasurer Cotton Holyfield said a few of his neighbors followed the Orange County debacle with concern.

"People told me: `You better not lose our money!'" Holyfield said. "The way ours is set up, it just couldn't happen. Even if our bank failed, we would only be in a pinch for awhile."

Scott County's money is invested in 14-day certificates of deposit in First Financial Bank of Southeast Missouri in Sikeston.

Every two years, banks bid on the county's business, and Holyfield picks the one offering the highest interest rate on short-term CDs.

Right now, the county gets 4.12 percent. Every 14 days, Holyfield either takes out expenses and reinvests or adds sales tax revenue and reinvests.

In addition, First Financial handles the county's 35 checking accounts. All bank services are free.

"In my 12 years as treasurer, I've never felt our money was in any danger," Holyfield said. "I have made $1 million in interest since I've been here."

Cape Girardeau County Treasurer Bill Reynolds said his county's funds were equally safe. They are divided between CDs and repurchase agreements with Capital Bank, and both investments draw 4.17 percent interest every six months.

Again, the investments are backed by government securities, held by a third party in St. Louis.

"Apparently, they have some different rules in Orange County than we do," Reynolds said. "They were speculating, but all our investments are secure. I can speculate with my own money, but not with the county money."

Reynolds, treasurer for 14 years, said his office gets calls from companies all over the United States, trying to lure him into investing. He said he refuses to do business with strangers over the phone and keeps Cape Girardeau County money in the county.

Perry County investors apparently feel secure about their county's funds, too, Treasurer Veronica Hershey said. She hasn't heard any comments about Orange County's problems.

"I think the high interest rates must have blinded their treasurer, and he wasn't thinking about protecting the taxpayer's money," Hershey said. "I was in banking before I took office in 1991, and I guess my background makes me want to keep things more secure."

Perry County's money is invested in CDs, money market accounts and checking accounts in five banks. Money market accounts carry higher rates of interest, but allow access to money for the county's numerous capital projects.

The county receives 5.53 percent interest on its nine-month CDs and 5 percent for six-month CDs.