A state comptroller’s audit into the investment practices of the Bethpage Water District found the agency must choose a new bank in order to earn better returns on its deposits -- a determination that Bethpage Wednesday agreed with and said it was working to remedy.
The audit showed one of two banks where Bethpage keeps cash changed its policy in April 2011, making fees charged higher than interest earned.
In an example cited in the audit, the district lost $323 last April because of the policy change.
The audit, covering Jan. 1, 2010, to April 30, 2011, and released last week by Thomas DiNapoli’s office, showed district officials immediately began researching alternative banks. The audit said the district’s management of cash and investments “has generally been adequate.”
District Superintendent Michael Boufis Wednesday explained the agency keeps accounts at TD Bank and Flushing Bank.
When TD Bank changed its policy, the district began moving funds to its Flushing account, which has a higher interest rate, he said.
The move allowed Bethpage to earn more interest to offset TD Bank’s fees while the district searches for an alternative to TD Bank, Boufis said.
Bethpage has put out seven requests for proposals and expects to have a new bank chosen by next month, Boufis said.
The process of finding a replacement bank “has taken a lot longer than we initially anticipated,” Bethpage board of water commissioners chairman William Ellinger explained in a letter to the comptroller’s office. “The main cause for this delay is that many banks have been recently increasing their fees.”