5.a) Discuss Banking Issues c� � � �
� �. �.. �
SCANDIA
Staff Report
Date of Meeting: December 11, 2012
To: City Council
From: Kristina Handt, City Administrator
Re: Discussion of Banking Issues
Agenda Item#: S.a)
Background:
The city began offering direct deposit to employees in 2009. Since Security State Bank of Marine
does not offer ACH services, the deputy clerk is required to bring a CD containing payroll
information to the bank each pay day before noon. The staff at the Scandia branch then have to
transmit the data to the Marine branch in order for it to be uploaded to the Federal Reserve and
deposits made into employee accounts the following day.
Last month the city experienced problems with the direct deposit for the November 19`�payroll. The
staff at the Marine branch failed to upload the data on Monday when it was sent to them. As a result,
some employees incurred overdraft charges and other service fees. Security State Bank is willing to
reimburse employees for these charges if they bring in appropriate documentation. Because we
learned of this failure to deposit funds on the day before Thanksgiving, I contacted Greg Isaacson
and asked that the funds be wired immediately and that the bank cover all of the charges. I also asked
Mr. Isaacson what would be done to ensure this didn't happen in the future, as this was the third time
in three years there has been a failure in the process. He suggested that the deputy clerk wait at the
bank when dropping off the data until confirmation is received from the Marine branch that the data
has been received. He explained that most of their clients use a payroll company to process their
direct deposits as they do not have ACH origination capabilities.
Issue:
Should the City consider switching to a different banking institution as its primary depository?
Proposal Details:
Resolution No. 1-17-12 designated Security State Bank of Marine, Central Bank and the 4M
Fund of the League of Minnesota Cities as the official depositories for 2012. The council will
need to designate official depositories for 2013 again in January.
Staff has done some preliminary research and found a number of banks in Forest Lake that offer
ACH origination, credit cards services,remote deposit, and have longer hours among other
services available.
Staff is looking for direction on whether or not to contact these banks to discuss interest rates and
services and bring a proposal on changing primary banks to the council meeting in January.
Fiscal Impact:
Unknown until banks are contacted regarding specific products and fees.
Options
1) Direct staff to gather information for January 2013 council meeting.
2) Make no change in primary bank depository.