Revenue Management Program – RMP October 23 and 24 th Training Manual Cash Managment

1. Revenue Management Program – RMP October 23 and 24th Training Manual Cash Managment

2. Agenda • Revolving Fund • How our cash world works right now • Why we are giving up Revolving Fund as we know it • Banking Transition in Second Quarter • Forecasting Cash Needs • Funding the State Treasury Account • Complications and Issues • Cash Management Tools • Once the CSU Depository Bank is Implemented • Notification to the CMO

3. How our cash world works right now • Campuses must have a State Treasury Bank account designated by a 3 digit number. • May also have one or more bank accounts – ex.Trust Account for further credit to MetWest • Campuses write the majority of checks from the State Treasury account. • The checks are initially backed by the Revolving Fund cash advanced from the General Fund on deposit in the State Treasury account. • Claim or other reimbursement checks are deposited into the State Treasury account to replace the Revolving Fund cash.

4. Why we will give up the Revolving Fund as we know it • One of the main tenets of the Revenue Management Program is that the General Fund will be fully spent every fiscal year. • Revolving Fund Advance amount reduces the budget balance available. • To fully expend the General Fund, all Advance amounts must be returned to the General fund

5. Banking Transition in 2Q • CSU campuses will continue to write checks from the State Treasury until they are fully implemented in the CSU Central Disbursement Bank. • Based on implementation phase selected, campuses will return their revolving fund advance during the second quarter 2006. • CSU Central bank will not be implemented until January 2007. • Since Revolving Fund/Claims Processing are no longer funding checks, campuses will need to forecast cash needs and fund checks written at the State Treasury. • Per AD 06-08 campus Direct Vendor Payment (DVP) activity will be accounted for in CSU fund 499

6. Forecasting Cash Needs • Campuses will need to determine the following • ACH and Wire data should be easily collected. • AP data will need to be gathered from Peoplesoft Payables • The following Report/Query may be used to collect this data • Query results for APY2004

7. APY2004

8. Funding the State Treasury Account • In order to determine how much, if any, cash will need to be added to campus State Treasury account to cover disbursements, must calculate the available balances :

9. Funding the State Treasury Account cont. • The available cash balance at the STO must then be compared to the cash forecast: • Note: This process does not replace bank reconciliation. • Campus may want to establish a minimum balance to cover express payments.

10. Funding the State Treasury Account - Example

11. Funding the State Treasury Account • To add money to the State Treasury account campuses will wire the funds or deposit a check. Further detailed instructions will be provided by Cash Management Operations. • Journal entry to record cash infusion in the ledger: • 101001 General Cash DR • 101006 Cash in Agency Bank CR

12. Complications & Issues • At the CSU all cash is not equal. • Appropriated funds – such as Capital Outlay • Specific processing options shown in another presentation • Financial Aid • Campus draw down funds prior to disbursal • vs. • Advance from other campus funds • Enterprise Fund spend down • Campus practices in these areas may reduce interest earnings.

13. Funds in typical cash deficit

14. Deficit and Drawdown Cash Issues Please note Federal cash management improvement act of 1986 – state pays interest on federal funds on behalf of all state agencies as part of the budget process. CSU, therefore does NOT have to pay interest on federal funds. Current year state budget item 9625 allocates $24,702,000 in interest from the State to the Federal Government for Fed Funds

15. Additional Notes • Notes of Interest: Fed Drawdown timing effects cash efficiency Recommended backup staff for cash draw downs in cash of illness or vacations State Treasury deposits and Dept of Education wire department problems or shut downs need to be communicated to CMO Year-end prepay for Insurance or SUG will go away

16. Complications & Issues cont. Specific campus issues to be resolved: • More to come from the FOA Committees and RMP Taskforce, but • How will the campus SWIFT earnings on quarterly or semi-annual basis • What is the campus earnings distribution method and how often (quarterly or semi-annual) • If SCO 948 Trust pooled cash is used for “advancing” Funds for Cap. Outlay/Dorm Construction should CSU 485 Fund earnings be specifically be reduced correspondingly or should all specific CSU Funds earnings share the loss of potential earnings?

17. Cash Management Tools • Possible tools to utilize to get a more thorough grasp on campus cash needs: • Daily Trial Balance of all Funds Cash 101001 (Daily auto run) • Monthly recon vs bank cash • Comparison of check float (bank login) vs claim float (SCO login) • Financial Aid and Student disbursements calendar • Examine how many times claims processing occurs • Standardized CSU Query and Pivot Tables

18. University Fee Revenue Example CSU Long Beach

19. Expenses vs. Cash Used

20. CSU 485 Flow Chart Campus example of CSU 485 cash balances (New World)

21. CMO Notification • Once the Depository Bank is implemented on January 2, campuses will provide information similar to the cash forecast to the CMO • These figures should be communicated to the CO Cash Management Office (CMO) via email at cmo@calstate.edu by 10am daily • A query will be provided in the RMP Peoplesoft patch released December 18th. Query results will be emailed to communicate check disbursement activity. • Wire and ACH forecasts for tomorrow must be indicated in the email. • Additionally, if funding needed at another campus local bank account, campuses will provide the activity amount needed, along with the applicable banking information – Bank name, ABA Number, Account Number and Account Name • The CMO will move cash between the CSU Bank and the campus accounts indicated accordingly.