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By Chris Trump, PLGIT Consultant

Local governments have used investment income as an important source of revenue for many years. But with returns on those investments at historic lows, it has become more critical than ever for local governments to take advantage of every fraction of a percentage in returns, and to look closely at every investment to determine whether it will deliver the returns it advertises.

Even a small variation in a financial institution's methods of calculating returns or maintaining accounts can translate into unrealized interest earnings. Municipalities should be aware of the following factors when researching investments and institutions:

TRUE RATE OF RETURN VS. ANNUAL PERCENTAGE YIELD

A simple yield calculation can provide a "true rate" of return which describes a local government's actual earnings rate. An Annual Percentage Yield - or APY -- rate assumes the reinvestment of interest and daily, weekly or monthly compounding for an entire year even if the investment period is less than a year. APY may therefore overestimate interest earnings. Financial institutions typically quote rates either as a simple yield (true rate) or APY (assumes compounding) for a fixed-term, fixed-rate investment. An example of a fixed-rate investment includes Certificates of Deposit with a bank or the PLGIT-CD Purchase Program.

One method is not better than another to calculate rates of return; however, it is important when comparing rates to know how the rate is computed and whether two competing rates are using the same calculation method. It may help to not only get the rate from a financial institution, but also the projected earnings in dollars assuming the investment is held to maturity.

COLLECTED VS. LEDGER BALANCE

A financial institution may calculate interest based on the collected balance - the amount of funds actually in an account - as opposed to the ledger balance - funds that do not include checks that haven't cleared or other similar assets. This disparity can be substantial, and the resulting calculated interest from the ledger balance can differ greatly from what had been expected from the collected balance.

FEES: UPFRONT AND HIDDEN

The rate of return is clearly an important variable to consider when selecting an investment, but not the only one. In fact, the fees a financial institution charges may reduce the overall return on an investment. In some instances, these fees may be somewhat complex, which can create difficulty for municipalities to determine their actual net return on an investment.

FEES FOR SERVICE

Some banks simply charge a municipality an explicit fee for holding that entity's funds. But financial institutions may also operate under different arrangements. For example, they may offer an earnings credit rate, where interest earnings can only be used to offset fees. Besides those types of fees, some financial institutions charge fees for a variety of basic services, such as check writing or check stock, wire transfers or account maintenance.

PLGIT, as a not-for-profit cooperative investment trust, does not charge its investors any out-of-pocket fees for these types of cash management services offered through the share classes of the PLGIT portfolio.

FORWARDED FDIC FEES

A financial institution may also pass on Federal Deposit Insurance Corporation (FDIC) charges. In September of 2009, the FDIC Board voted to 1) require all institutions to prepay the next three years of their estimated risk-based assessments, and 2) impose a fee increase of $.03 cents per $100 of domestic funds that each financial institution has on deposit. Currently, banks pay the FDIC as much as $.16 cents for every $100 they have on deposit - and some of those fees have been passed on to municipal customers.

FUNDS HELD "IN RESERVE"

In yet another scenario, a bank may only pay interest on 90% of a local government's funds on deposit. The bank's rationale is that, because it must keep 10% of funds on deposit in reserve - that is, they cannot lend those funds - it will only pay interest on the 90% of those funds that the bank is able to "put to work." The interest that could have been earned by a municipality becomes an implicit fee paid to the bank.

Local governments should conduct careful research to determine what return they will actually receive with a selection of an investment - as opposed to the return that is advertised. Local governments should ask questions about what fees apply to their investments, and should talk in terms of dollars - not percentages.

By determining precisely how fees are charged by financial institution and how rates of return are calculated, local governments can make decisions based on a clearer understanding of the net earnings on an investment. Understanding these earnings can be confusing at times. If you have questions, contact your PLGIT representative.

By Bob Lauzonis, Loss Control Specialist

WHAT ABOUT WINTER

Winter brings special hazards to every county's operations. From December to March, nearly every part of the state can expect some days when the temperature drops into the thirties and often this is accompanied by some form of precipitation. Cold temperatures mean that road moisture can turn to ice crystals, especially in shadows. Bridges and overpasses freeze before other road surfaces because they are not warmed by underlying earth. Winter storms dump snow on streets and highways - and ice storms know few boundaries.

DEFENSIVE DRIVING TIPS

The KEY to slick roads, snow and ice is SPACE and SPEED. When road surfaces

become slick, your first defense is to keep more space between your vehicle and others around. Increase your space cushion (or following distance) by at least one more second. If you do not tailgate, you won't be caught by surprise when the brake lights of the vehicle ahead suddenly come on. Leave more space between your vehicle and parked vehicles, vehicles approaching from the opposite direction and between the edge of the road. Plan your stops at lights and stop signs so if your wheels slide at the last minute, you have a margin of safety.

The second and equally important defensive driving technique is to drive more slowly.

"Speed too fast for conditions" is often a key element in winter accidents . Slow down in advance of curves, downgrades, shadows, wet spots, patches of ice or snow, and other slick areas. Speed increases the likelihood of being involved in an accident. Sure, slowing down during inclement weather may make you five minutes late, but which is better, to be late or to be in an accident.

SUMMARY AND CONCLUSION

Safety on slick roads requires more space and less speed. Remember to slow down, increase your space cushion (or following distance) to at least three seconds and drive safely.

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Timely Tool Tips

By Bob Lauzonis, Loss Control Specialist

HAND AND POWER TOOLS

Most of us have been using hand tools all of our lives. Power tools of many types have also been a part of our environment since we were young. But we should never get so comfortable with these tools that we forget to use them safely. Hand tools and power tools are responsible for many injuries and accidents including cuts, amputations, puncture wounds, bruises, fractures, electrical shock, fires, explosions and other incidents.

Here are some reminders about tool safety:

• Wear your safety eyewear whenever you use hand or power tools.
• Look for defects like chips, cracks, loose handles, sprung jaws on wrenches and mushroomed heads on striking tools like hammers or struck tools like chisels.
• Use the right tool for the job.
• Use the tool for the purpose it was intended. Don't use a wrench as a hammer or a screwdriver to punch open a can.
• Read the manufacturer's instructions before using the tool.
• Store the tool correctly to keep it from being damaged, and to prevent accidental contact with sharp or otherwise dangerous parts.
• Don't let a tool provide a source of ignition for a fire. Sparks from cutting and grinding can ignite gases, flammable liquid vapors and combustible materials.
• Overloading of electrical circuits by power tools can set off fires. Even the spark from a hand tool can cause an explosion of gas or vapor in a confined space. 

Here are some additional reminders for using striking tools:

• Strike squarely; avoid "glancing" blows.
• Use the striking face; never the side of a hammer.
• Make sure the surface of the striking tool is larger than the surface being struck.

Screwdrivers are also responsible for many injuries. Here are suggestions for safe use:

• Use the correct screwdriver.
• Hold the screwdriver so it is perpendicular to the work.
• Secure the work with a vise or clamp. Do not hold the work piece in your hand.

It can be tempting to misuse a wrench. Remember these precautions:

• Don't use a handle extender to turn a wrench. Instead, change to a wrench designed for the job.
• Don't try to get by with pliers if it is a wrench you need to use.

The power behind power tools greatly increases the potential for serious injury. These tools operate at much higher speeds and with much greater force than hand tools.

Here are some reminders about power tool safety:

• Wear the required safety equipment. Besides safety eyewear, a face shield may also be required when using certain power tools.
• Keep hands and all body parts and clothing away from the tool's point of operation.
• Use safety guards the way they were designed to protect you from accidental contact with the point of operation.
• Protect the electrical tool from exposure to moisture and from damage to the cord, connection and insulation.
• When using an electrical tool in a damp area or outside, use a Ground Fault Circuit Interrupter to prevent electrical shock.
• Arrange power cords to prevent tripping hazards.
• Turn off the tool before making adjustments and changing parts such as bits and drills.

SUMMARY

Hand and power tools are part of just about every workplace, every work day and home use. Don't let familiarity with them make you careless. Use them safely every time.

By Bob Lauzonis, Loss Control Specialist

By John Sallade, Managing Director, Insurance Programs 

PCoRP's newest member service starts this month - watch for more details coming to you soon from Loss Control Services Manager Gary Nicholson. The new Loss Prevention Grant Program is an opportunity for PCoRP members to fund loss prevention projects for their county or county related entity. This new program from PCoRP was announced at the November 2011 Delegates Dinner in Hershey. The PCoRP Board has set aside $500,000 to fund the program.

The Loss Prevention Grant program is designed to support your safety committee and administration by awarding grants to offset the costs of enhancing your safety, maintenance and risk management programs.

Funds are to be used for:

• Equipment, videos or materials that promote safety or good employment practices
• Equipment or materials that promote regulatory compliance (including ADA compliance)
• Repairs to sidewalks, parking lots, building electrical wiring and other projects to make property safer
• Safety and maintenance equipment such as fire extinguishers, smoke detectors, carbon monoxide detectors, video cameras and other similar equipment to reduce property and liability exposures
• Training or equipment to assist with an internal "train the trainer" program such as AV equipment or costs to send a county employee for training
• Other enhancements to safety or risk management programs

Time-Out for Safety 

SAFETY SLOGANS

• If you want to finish the daily grind, keep all the safety rules in mind.
• Airborne objects can be a shattering experience.
• A mess on the floor is something you should never ignore.
• If it starts to get away, release the trigger without delay.
• Make safety education a part of new hire orientation.
• Are you ready for ever? Stay alert.
• There's no safe fix when tools and fools mix.
• Play it safe and leave enough space. Let's not meet by accident.
• Power tools when misused can maim or kill if used by fools.
• Don't be a fool, please follow the three - second rule.

NATIONAL SAFETY, AWARENESS AND WELLNESS OBSERVANCES FOR FEBRUARY

• National Eating Disorders Awareness
• National Blood - Organ Donor Awareness
• National Cancer Prevention
• National Senior Health and Independence
• Prevent Blindness and Vision Awareness
• Personal Best - Healthy Heart Awareness

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Coverage Corner 

Reminders and Pointers about Insurance Coverage and Risk Management 

Work Release Inmates

Did you know medical expenses for work release inmates injured on the job can be covered under a volunteer accident policy? In addition to work release inmates, this type of policy offers coverage for community volunteers, court alternative sentencing participants, and juvenile tobacco settlement program participants. The premium for this type of policy is very reasonable!

CCAP Insurance Programs
 PO Box 60769, Harrisburg, PA 17106-0769
Phone (800) 895-9039 - FAX (717) 526-1020
Claims Fax (888) 692-2368

 Click here to go the Insurance Section of the CCAP Website.

email: jsallade@pacounties.org 

Insurance Matters is published monthly by CCAP's Insurance Programs for the use of members of CCAP's UC Trust, PCoRP, PComp, PIMCC, COMCARE, COMCARE PRO, PELICAN, Health Alliance and other insurance programs, and insurance producers of these members.

Advice contained in this publication is not legal advice and members are encouraged to seek the opinion of their solicitor.

The information provided in this publication is not intended to take the place of professional advice. Readers are encouraged to consult with competent legal, financial, or other appropriate professionals. Statements of facts and opinions expressed in this publication, by authors other than Association staff and officers, are the sole responsibility of the authors and do not necessarily represent an opinion or philosophy of the officers, members and staff of the County Commissioners Association of Pennsylvania (CCAP). No endorsement of advertised products or services is implied by CCAP unless those products or services are expressly endorsed, or are owned or managed by the Association programs, or our affiliates. This publication may not be reproduced, modified, distributed, or displayed in part or in whole, by any means, without advance written permission of CCAP. Please direct your requests to John Sallade, Managing Director, CCAP Insurance Programs, jsallade@pacounties.org

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