Revenue Management Program – RMPOctober 23 and 24th Training

Manual Cash Managment

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

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.

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

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

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

APY2004

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 :

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.

Funding the State Treasury Account - Example

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

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.

Funds in typical cash deficit

Fund 408 Pell Grants

CSU 408 Funds

-3000000

-2000000

-1000000

0

1000000

J A S O N D J F M A M J

Total 02/03 Total 03/04 Total 04/05 Total 05-06 408

Perkins LoansCSU 403 Funds

-800000

-600000

-400000

-200000

0

200000

400000

600000

J A S O N D J F M A M J

Total 02/03 Total 03/04 Total 04/05 Total 05-06 Total 06-07

Deficit and Drawdown Cash Issues

Perkins LoansCSU 403 Funds

-800000

-600000

-400000

-200000

0

200000

400000

600000

J A S O N D J F M A M J

Total 02/03 Total 03/04 Total 04/05 Total 05-06 Total 06-07

1. 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

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

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?

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

University Fee Revenue

Example

CSU Long Beach

CSU 485 Net Cash Revenue

0.00

5,000,000.00

10,000,000.00

15,000,000.00

20,000,000.00

25,000,000.00

30,000,000.00

35,000,000.00

Jan-06 Feb-06 Mar-06 Apr-06 May-06

Jun-06 Jul-06 Aug-06

Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07

Jun-07

CSU 485 Revenue

Expenses vs. Cash Used

Budget World vs Cash World

-

5,000,000.00

10,000,000.00

15,000,000.00

20,000,000.00

25,000,000.00

Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07

Monthly Budget Cash Feed State Approp

CPA AREA

Payroll vs Non Payroll

-

5,000,000.00

10,000,000.00

15,000,000.00

20,000,000.00

25,000,000.00

Jan-06

Feb-06

Mar-06

Apr-06

May-06

Jun-06

Jul-06

Aug-06

Sep-06

Oct-06

Nov-06

Dec-06

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

CSU Payroll Expenses CSU Non Pay Expenses

CSU 485 Flow Chart

Campus example of CSU 485 cash balances (New World)

CSU 485 CASH Balances

0.00

10,000,000.00

20,000,000.00

30,000,000.00

40,000,000.00

50,000,000.00

60,000,000.00

70,000,000.00

80,000,000.00

90,000,000.00

Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07

CSU 485 CASH Balances

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.