County wisely hoarding cash

February 21, 2014 

For county government, how much cash on hand is too much?

From time to time, Johnston school leaders have complained that County Commissioners keep too much money in savings. The schools, they argue, could use some of those dollars to hire teachers or pay the light bill.

In a perfect world, we suppose, county government wouldn’t keep much of a savings account. It would either spend the bulk of its surplus or return the money to taxpayers; it is their money after all.

And in years past, before Johnston’s growth spurt, County Commissioners didn’t keep much money in savings. Indeed, the state’s local government watchdog used to routinely admonish commissioners to build up the county’s cash reserves.

But those commissioners, including Norman Denning and Frank Holding, ruled a county that had virtually no debt, so they saw no need to save money for a rainy day. The way they saw it, Johnston would never face the day when it could not pay its bills.

But then Johnston County started borrowing money to build schools, and lenders like to know a county can repay its debt even when revenue slows. That’s why Johnston now maintains a savings account equal to about 15 percent of total spending. In dollars, that’s roughly $27 million in the bank that commissioners pledge not to touch.

That’s the money school leaders sometimes look upon with envy. They see no reason for the county to be sitting on money the schools could be putting to good use. Whether the schools need all of the money they ask for is a matter for debate, but school boards have a statutory obligation to ask for all of the money they think their schools need.

But Johnston County Commissioners have wisely resisted the temptation to deplete their savings in the name of school spending, or any other spending for that matter. That’s because the savings account determines the interest rate Johnston pays on its borrowing; the higher the savings account, the lower the interest rate.

By county government’s estimation, it’s propensity for savings has saved taxpayers about $12 million in interest expense over the years. That’s essentially an elementary school the county has been able to build without having to borrow the money for it.

We sympathize with those school leaders who would like to see the county shed some of its savings. But that money is doing too much good doing nothing, and County Commissioners are right to insist on a healthy savings account that saves taxpayers money.

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