CEO Roundtable: Municipal Deposits

1. CEO Roundtable: Municipal Deposits Douglas Petix- 2nd Vice President of GFOA of NJ & Michael Drulis, GFOA and NJCFE

2. Who Is the GFOA of NJ Since 1937, the GFOA of NJ has been a professional association of government finance officers working together to enhance and promote professional management of government for public benefit.

3. Who Is the GFOA of NJ The GFOA of NJ’s membership includes those working in state, county, and municipal government, school districts, the public employee retirement systems, libraries, federal agencies, investment banks, and accounting, law, and consulting institutions.

4. Who is the NJCFE • The NJCFE is a statewide organization comprised of about 150 representatives of government agencies, schools, businesses, and non-profit organizations whose main goal is to improve the personal financial literacy of New Jersey's citizens by promoting the teaching of personal finance to people of all ages.

5. Who is the NJCFE • The NJCFE believes that all citizens of New Jersey must have the financial literacy necessary to make informed financial decisions.

6. City of New Brunswick Notable Demographics about New Brunswick • 50,000 Citizens • 5.5 square miles • 620 Employees, 136 Police, 85 Fire • $75 Million Budget • $10 Million- Sewer Utility • $10 Million- Water Utility • Maintain approximately 30 bank accounts

7. CFO and Treasurer • Payroll • Accounts Payable • General Ledger • Pension Reporting • Cash Management • Grant Reporting and Reimbursement • Budget

8. Professional Culture of a Municipal CFO • Higher Expectation of Fiduciary Responsibility • Protect community assets rather than the assets of a limited group of owners or shareholders • Higher degree of regulation, reporting and restriction from other governmental agencies

9. Municipal Needs and Functions • Collections and Cash Flow • 99% rate of collection through an accelerated tax sale process • Revenue Cycle • Tax Collection February 1st , May 1st , August 1st and November 1st • State Aid – August/September Infusion • July and August, tightest cash flow months

10. Municipal Needs and Functions • Surplus • 2.5% of budget appropriations-healthy • Levy Cap makes it nearly impossible • Lending • Notes and Bonds through Bond Council

11. Municipal Needs and Functions • Employee Banking • Direct Deposit • No fee ATM banking or local bank

12. Municipal Needs and Functions • Home Rule • Connection to local branch offices for business and employee needs • Encourage support of local business

13. Municipal Needs and Functions • Changing back accounts is difficult • Millions of dollars are wired in and out automatically annually • Predictability through relationships is important • Banking is secondary to daily operations – a change requires a SIGNIFICANT incentive

14. Municipal Needs and Functions • Reasons to Consider Banking Changes • All accounts must be interest bearing by statute • Higher yielding money market accounts or shorter time periods on CD’s • Little to no banking fees • Banking changes come slow and through relationships, one account at a time

15. Experience with Commercial Banking • Consolidation • Out of state/region decisions made that do not fit the NJ municipal need • No longer desiring cash deposits • Professional interaction on banking side degrading, mistakes increasing

16. Experience with Commercial Banking • Long lines, Night Deposits • Minimal Interest rates, disproportionately high fees • Currently, movement towards Community Banks

17. Banking Needs • Money Market accounts with interest and minimal to no fees • Investment • Safe and liquid • Minimum period of time with incentives rather than penalties • Payment of outside payroll processing service

18. Future, BUT Not Today • Credit Card Processing • Insurance

19. Questions? Thank you for your interest, any questions?