Finance committee weighs moving fund interest into general fund

The County Finance Committee discussed a proposal from Councilman Harmon to direct interest earnings that are not legally required to remain in special-purpose accounts into the county general fund and asked staff to analyze which funds would be affected and how large the transfer amounts might be. The committee made no policy change at the meeting and asked Harmon to bring a formal proposal for consideration.

The matter matters because interest on cash balances can be used for routine budgeting or retained in dedicated funds for restricted purposes; shifting interest to the general fund would reduce revenue available for some special-purpose accounts and increase the general fund’s discretionary revenue. Committee members identified highway and reassessment funds as examples that currently receive interest and noted that a rainy day fund was intended to remain intact unless the council directs otherwise.

Officials clarified several operational and legal constraints. The treasurer said the Board of Finance must meet annually by Jan. 31 and that interest allocations were set previously; the committee cannot reassign interest earnings retroactively before Jan. 1 of the year in which a policy change would take effect. The treasurer and other staff noted that some funds, such as drain-maintenance accounts, are statutorily required to retain interest and therefore cannot be redirected. Committee members also emphasized the need to keep sufficient cash in the operating account so daily checks clear and cautioned against moving all cash into higher-yielding vehicles without preserving liquidity.

Staff described the county’s current cash-management arrangements. Most operating balances are in the Everwise cash-management account under the county’s cash-management agreement; some balances are placed in Trust Indiana. Participants noted that recent rates were in the low- to mid-4 percent range, with Trust Indiana reported at about 4.3 percent at one check, but rates fluctuate and the cash-management agreement is revisited every two years.

Committee members asked for three pieces of follow-up before any action: a formal proposal from Councilman Harmon outlining which funds he recommends be changed; an auditor-level review to identify which funds are statutorily restricted and which are discretionary; and a dollar estimate of how much interest would be redirected in the current year if the policy were adopted. Members said any decision should be made before the end of the year and one member asked that it not be decided in December.

The meeting ended with no vote on the proposal. The committee’s next step is to schedule a follow-up meeting at which Harmon will present a written recommendation and staff will report legal and fiscal impacts.