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CASH AND INVESTMENTS

CASH AND INVESTMENTS. Sources. GASB Statement 3 GASB Statement 31 GASB Statement 40. Mission. Safety Liquidity Returns. Mission. Investment Policy SDCL 4-5-8. Mission. Consider an investment committee. Definitions. Statutory terminology: Deposits………..FDIC

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CASH AND INVESTMENTS

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  1. CASH AND INVESTMENTS

  2. Sources • GASB Statement 3 • GASB Statement 31 • GASB Statement 40

  3. Mission • Safety • Liquidity • Returns

  4. Mission • Investment Policy • SDCL 4-5-8

  5. Mission • Consider an investment committee

  6. Definitions • Statutory terminology: • Deposits………..FDIC • Investments……..federal government • SDCL 4-5-6 • U.S. securities directly or indirectly • Repurchase agreements • Open-end no-load fund • INTERNAL CONTROL – prospectus, document your conclusion regarding allowability

  7. Definitions • Deposits are restricted by law: • Schools – SDCL 13-16-15…within state • Municipalities – SDCL 9-22-6..within state • Counties – SDCL 7-20-1…within county • Out-of-state CD’s not allowed, except CDARS

  8. Definitions • Financial Reporting Terminology: • Cash and Cash Equivalent…matures within 3 mo • Investments……..longer focus

  9. Safety • FDIC…Federal Deposit Insurance Corporation • FSLIC…..Federal Savings and Loan Insurance Corp • NCUA…National Credit Union Administration

  10. Safety • Pledged Collateral • SDCL 4-6A • Eligible collateral • State Treasurer • Shall at all times maintain collateral

  11. Safety • CDARS • SDCL 4-5-6.1 • Certificate of Deposit Account Registry Service

  12. Risks • Custodial Credit Risks • Deposits are exposed to custodial credit risk if they are not covered by depository insurance • Investment securities are exposed to custodial credit risk if the securities are uninsured, are not registered in the name of the government and are not held by the entity or its agent. SDCL 4-5-9 • DTC – Depository Trust Company – physical security of investments, book entry basis

  13. Risks • Credit risk • Rating Agencies---AAA • Not needed for obligations explicitly guaranteed by the U.S. Govt.

  14. Risks • Concentrations of Credit Risk • 5% or more • By amount and issuer • Explicitly guaranteed U.S. securities are exempt

  15. Risks • Interest Rate Risks • Risks that are inherent because of the duration or term of an investment • Addressed in investment policy

  16. Other Points • Interest Earned • Receipt to all funds • Policy may allow for transfer to General Fund • Agency Funds • Debt Service Funds • Scholarship, Cemetery, etc….

  17. Other Points • Sweep Accounts • Understand the account your money is swept into • Internal control – document this understanding

  18. Other Points • Tax ID number • Don’t loan it out to non-entity organizations • Confirm with your bank how many accounts use your number

  19. Other Points • Outlying Cash Accounts • Mainly resulting from debt issuances • Allowable investments • Reconciled monthly

  20. Other Points • Unclaimed Property • SDCL 43-41B-14 • One year, old O/S checks, customer deposits • First attempt to resolve locally • State Treasurer

  21. Other Points • Electronic Payment • SDCL 4-3-27 requires a policy • Payroll, debt service, etc… • Internal control • Other statutory steps…..

  22. New Laws – SB 91 • CO Fund Expanded Use: • Property and casualty insurance • Energy and utility costs • Motor fuel costs • Any contract for student transportation • Student mileage reimbursements

  23. New Laws – SB 91 • CO Fund expanded use: • 45% of total tax revenues deposited current year • If “tax levy” is higher than base year FY2008 • What would have been deposited if tax levy had not increased from base year

  24. New Laws – SB 80 • Revised General Fund levies: • Commercial $8.656 • Ag 2.573 • Owner – Occupied 4.042 • Non-ag Z 3.573

  25. New Laws – SB 143 • State will maintain an internet site of local government financial information. • Site to be maintained by BIT, BFM and BofA

  26. Contact • deene.dayton@state.sd.us • 773-5932

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