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Lenox council votes to park DOC proceeds in local bank, directs monthly rebate if software allows
Summary
The Lenox City Council voted to deposit DOC proceeds in a 12-month Security Bank money-market account at a 4.24% annual yield and directed staff to implement monthly DOC surcharge rebates if the billing software supports negative-line-item rebates; staff will return with a formal fees resolution.
The Lenox City Council voted to deposit Department of Corrections (DOC) proceeds in a 12-month money-market account at Security Bank with a quoted 4.24% annual percentage yield and approved staff direction to implement monthly DOC surcharge rebates on customer bills if the city’s billing software supports that feature.
The decision came after staff reviewed options that included the State of South Dakota pooled account (SD FIT) and local proposals. Tom Cate, representing Security Bank, told the council the money-market account would provide immediate access to funds and that the bank had offered both a six-month and a 12-month term with repricing on maturity. “With the money market account, you guys would have immediate access to the funds at any point in time when you need them,” Cate said.
City staff told the council the Security Bank proposal offered a 6-month option at 4.49% and a 12-month option at 4.24%, and that Security Bank can provide additional collateral options (letters of credit from a Federal Home Loan Bank or pledged securities) to further secure deposits. Staff also noted SD FIT’s daily yield had been roughly 4.00% the week prior, but that those rates fluctuate with the market.
The council discussed trade-offs: keeping proceeds local to support Lenox banks versus potentially higher daily yields at the state pool, administrative burden of implementing ongoing rebates, and the risk that future councils might reallocate the funds. One councilmember said, “I like the option of keeping the funds local, and nothing against the state funding… but there’s a lot of value in parking it in a local bank.”
Staff advised the council it had previously agreed to a manual rebate for 2024 and that the plan going forward was to implement monthly negative-line-item rebates on utility bills if the billing system allowed it. The city will return with a formal fee resolution that creates an explicit negative fee line for the DOC surcharge rebate.
Councilmember motioned to park the DOC proceeds with Security Bank in the 12-month money-market account at 4.24% APY; the motion passed.
Why it matters: The council’s choice locks near-term interest income for the proceeds while preserving liquidity and directing staff to rebate the DOC surcharge on customer utility bills monthly if technically feasible. The action affects how interest on the proceeds will be earned and how billing will reflect the surcharge rebate.
Votes at a glance: The council approved the investment motion by voice vote; the clerk recorded the motion as carried.
Speakers quoted or summarized in this article are drawn from council discussion and the city’s staff presentation.
