LOW INTEREST RATE FOR DEPOSITORY BIDS DISAPPOINTS COUNTY

JACKSON - Cape Girardeau County officials voiced disappointment Thursday at the low interest rate received on depository bids for county funds.

County officials had not expected to receive a top rate of 9.53 percent, which the county has enjoyed for the past two years. But they were stunned at Thursday's top bid of 6.15 percent.

"It is a very disappointing bid," said Associate Commissioner E.C. Younghouse.

Associate Commissioner Leonard Sander, who presided over the bid opening in the absence of Presiding Commissioner Gene Huckstep, said he expected a bad bid in comparison to the current rate, "but not this bad."

"I certainly expected it to be down, but not this much," remarked Sander.

The 6.15 percent figure is the minimum guaranteed amount that Capital Bank would pay on certificates of deposit in which a minimum of $100,000 would be invested for at least six months.

The only other bid the commission received for the large certificates of deposit was 6.01 percent from Boatmen's National Bank.

Jackson Exchange Bank responded to the bid request and indicated it would negotiate rates with the county but would not guarantee specific rates. Mercantile Bank indicated it did not want to submit a bid this time.

Sander said that if interest rates increase, the county will receive a higher rate. He said Thursday's bids dealt with the minimum amount.

Capital Bank has been the county depository for the last several years. By law, the county has to bid the depository in May of odd-numbered years. The new, two-year contract would run from July 1 to June 30, 1993.

For the last two years, Capital Bank has paid 9.53 percent interest on the large certificates of deposit. For the two years prior to that it paid 9.14 percent.

For the last two years, Capital Bank has paid 9.13 percent on large certificates of deposit for 31 to 180 days. The comparable bids Thursday were 6.03 percent from Capital and 5.88 percent from Boatmen's.

County Treasurer Bill Reynolds pointed out that the large drop in interest rates will have a major impact on county funds, which have thrived in recent years with high interest income.

Cape County has consistently had about $2.5 million in county revenue invested at the 9.53 percent rate and all interest from those funds had been earmarked by the county commission for the road and bridge fund. The lower interest rate could mean a loss of almost $100,000 for the road fund.

The county also maintains a capital trust account for major equipment purchases, construction or major remodeling, and as a special fund for emergencies. All interest earned from that fund is put in the capital trust account, which has been used for such things as constructing the new county administration building in Jackson and purchasing large equipment items for the highway department.

Reynolds said he has also been able to invest tax revenue for other county entities, such as mental health, the sheltered workshop, and health department. He has also invested funds for the Industrial Development Authority at the high rate.

Those funds have totaled about $1.3 million and the interest earned is distributed to each entity.

Reynolds said the new interest rate will also reduce the income earned for those entities.

"Obviously, we're disappointed with the news we received today," said Reynolds.

Reynolds, Auditor H. Weldon Macke and County Clerk Rodney Miller are members of the bid review committee that will make a recommendation to the county commission on which bid to accept. A recommendation could be ready within a week.

Financial institutions were also asked to bid on a money market account with a $10,000 minimum. Boatmen's bid 5.88 percent, while Capital Bank bid 5.25 percent. Balances in the treasurer's account are normally low, with most excess revenue invested in longer term certificates of deposit.

Boatmen's bid 5.14 percent and Capital 5.25 percent on the collector's account. This account also normally has a low balance because it is where Collector Harold Kuehle deposits tax collections before distributing the money on a regular basis to taxing entities in Cape County. All interest earned from this account is distributed to the entities for which the funds were collected.