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Stratham board weighs moving district cash into PDIP to earn higher interest; subcommittee proposed
Summary
Board members heard an analysis showing investing pooled funds in a PDIP could generate roughly $50,000 for Stratham (and up to $400,000 across SAU 16), but members raised liquidity, cybersecurity and operational concerns and voted to form a subcommittee to study the option further.
The Stratham School Board spent an extended portion of its meeting discussing a cash‑management proposal to move some district funds into a Public Deposit Investment Pool (PDIP) rather than keep all operating funds in TD Bank.
Consultant Luke Pickett presented an analysis showing a roughly 2 percent interest gap on average balances and estimated the district’s share — based on an average daily balance around $2.7 million — could be about $50,000 annually; SAU‑wide, the figure cited in discussion was as high as $400,000. "Rounded, it's about 2% and their average daily balances are 2.7 million for the district. So it's 2% times 2.7 is the $50,000," Pickett said.
Molly, the district financial staff member, explained how the PDIP has been used to hold bond proceeds and described operational differences: TD Bank serves as the checking account for day‑to‑day payments while PDIP holds invested funds and requires an ACH transfer to draw down funds when needed. Molly said PDIP can earn higher rates but would require staff to make timely transfers for payments: "We'd still have to use TD Bank as our checking account to be able to pay the bills," she said.
Board members raised several concerns: liquidity and the mechanics and timing of transfers; whether moving some deposits would reduce fraud protections or the bank’s managed‑rate benefits; how the PDIP is collateralized; and staffing or process overhead if more transfers or reconciliation work would be required. One member warned that splitting funds across systems could add operational burden for central office staff.
The board agreed it would be prudent to form a finance subcommittee or advisory group, drawing community members and town representatives, to review collateralization, fees, operational impacts, cybersecurity protections, and the potential net benefit before any funds are moved.
Next steps: staff will assemble a subcommittee and return with additional analysis, documentation from PDIP on collateralization and liquidity, and a clearer estimate of net gains after fees and any changes to TD Bank fee structures.
