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Forster & O’Callaghan Lead Crusade for NF Water Board to Finally Earn Interest on its Cash!!
By: Frank Parlato & Nicholas D. D’Angelo
By law, the Niagara Falls Water Board [NFWB] is required to keep around $30 million on deposit in the bank for emergency or extraordinary needs. Some might call it a ‘rainy day’ fund.
As it turns out, $25 million has been on deposit for 15 years in interest free bank accounts.
Led by board member Nick Forster and board chairman Dan O’Callaghan at their April 30 meeting, the board voted to switch to a bank that will pay interest.
No, it did not take a genius to think of this, but nobody did before Forster and O’Callaghan insisted.
Present, along with the two men, were board members Gretchen Leffler, Colleen Larkin and Renae Kimble when the vote went down.
When Forster and O’Callaghan proposed changing banks, Kimble was supportive. The resolution passed, but both Larkin & Leffler were concerned about why the change was being made.
Forster said his reasoning was simple: The old bank was not paying interest on $25 million. The new bank pays interest.
Forster added – perhaps theatrically – that it was “shameful and borderline criminal to think that [NFWB had] $25 million in non-interest bearing bank accounts.”
Calculating interest rates paid by banks for big depositors for the last 15 years, the board lost about $5 million.
Said Forster, “officials at the water board were asleep at the switch for 15 years, and millions of dollars were left squandered.”
Digging a little further, Forster and O’Callaghan learned the person who should have been in charge of banking at the NFWB is called the Director of Financial Services. That position was vacant when O’Callaghan and Forster joined the board.
“When I joined the board in March of 2017,” said Forster, “the financial services director position had been vacant … and, instead of finding someone new, the board at that time, led by Gretchen Leffler, hired an accounting agency for $50,000 per month. Instead of hiring another financial services director, with a salary of $88,000 per year, their answer was to spend $600,000 a year.”
The accounting firm, Pronexus, LLC, based in Rochester, NY, evidently did not advise the NFWB to put money in a bank account where they would get interest.
“I wanted to understand where all of our assets were,” said Forster, “but because we did not have a Director of Financial Services, it took us months to assemble all of the information that should have been readily available in minutes.”
Forster and O’Callaghan decided to stop paying $600,000 per year to an outside accounting firm to do the work an $88,000 employee can do. They decided to find a bank that would pay interest.
After interviewing several banks, the NFWB chose Bank On Buffalo.
“We wanted the best interest rate for our ratepayers,” said O’Callaghan.
According to the president of Bank on Buffalo, Martin Griffith, if the Water Board’s money had been in one of their interest-bearing accounts during the last 12 months, ratepayers would have earned $427,000 in interest.
Instead of hardly any.
It was embarrassing for Leffler, who has been on the board for more than five years, to have newcomers, Forster and O’Callaghan, upstage her. It was interesting to see Leffler and her Republican colleague, Larkin, appear more interested in raising suspicions about how the new bank was selected, rather than condemning prior actions that left more than $5 million on the table.
The Reporter was in the audience when Leffler fired at Forster saying he was, “just grandstanding for the Reporter.”
Forster replied, “the ratepayers deserved better. This should have been your concern since day one, and instead you’re here worried about the Reporter.”
It’s not that it was really genius to ask for interest on $25 million. You’d do it too.
Thank Forster and O’Callaghan for caring enough to do it for you.