To account for any potential delays in reimbursement that could affect the Texoma Council of Government’s cash flow, the Governing Board approved a motion at its Thursday meeting to establish an internal line of credit.
The reserve fund of $355,000 will be moved into a new cash account at a different bank so an internal line of credit can be established for the organization. As the use of the reserve fund was restricted by the board, the account will be also, so the board can direct its use.
“So when you’re on a reimbursement basis you play this cash game all the time, and this will allow the organization to have that money readily available,” TCOG accounting consultant Lori Cannon said to the board. “And having it in a separate account will also allow myself, the finance committee and any board member that wants to see the ins and outs of this. In addition to this, it is recommended that we put a $100,000 ceiling on that such that no more than $100,000 is borrowed from that fund at any one point in time.”
The action to make the internal line of credit was broken down into two parts, with the first part to reduce the reserve fund by from $410,000 to $355,000. The $55,000 reduction was placed into TCOG’s local funds to make that account whole from the settlement agreement payout, and Cannon said that money in the local funds account is used to match grants.
The money in the reserve fund came about when the TCOG refinanced its building in 2015. The amount originally totaled $538,253, and money was taken out to pay for parking lot and elevator repairs.
The internal line of credit is also a proactive measure, Cannon said, for when the Texoma Housing Partners separates from TCOG in September. As TCOG managed the programs under THP, TCOG would previously invoice THP, which helped in regards to TCOG’s cash flow. As the entities become financially separate, the ability will be gone.
The internal line of credit provides TCOG the ability to have cash at hand when certain one-time fees are due, Cannon said.
“When those one time fees hit, when an audit comes in, it’s a pretty good size chunk of change to let out at one time, so every now and then we need additional cash flow and we have that,” Cannon said.
TCOG Board President Jason Brinkley asked that a system be put in place so the board is alerted when funds are transferred out of the account, instead of waiting for the monthly meeting. TCOG Executive Director Susan Thomas noted they have the cash flow reports on Thursdays, so the board members could be added to that system.
Board member Jeff Whitmire made the motion, and the board approved the action unanimously.