© 2016 PFM Asset Management Institute of School Business Management CASH MANAGEMENT & INVESTING Presenters: Michelle Evenson – Benton Stearns Education District Michelle Nelson – Sartell-St. Stephen ISD #748 Carole Loehr - PFM Asset Management LLC February 23, 2016

© 2016 PFM Asset Management 2 What is Cash Management? o Controlling receipts and disbursements of cash o Pay the bills on time o Recognize the need to borrow o Maximize amount available for interest earnings

© 2016 PFM Asset Management 3 Why do a Cash Flow Forecast? o Good fiscal management (best practice) o Fulfill responsibility to: o School Board – keeps them informed o Taxpayers – maximizes interest income and minimizes borrowing o Students – maximizes potential educational opportunities

© 2016 PFM Asset Management 4 Why do a Cash Flow Forecast? o To plan: o For shortages / borrowing o For investment portfolio optimization o Account analysis

© 2016 PFM Asset Management 5 Ideal Cash Flow

© 2016 PFM Asset Management 6 Deficit Cash Flow

© 2016 PFM Asset Management 7 Benefits of a Cash Flow Forecast o Establish and maintain an adequate liquidity level o Maximize investment income o Extend length (duration) of investments o Realize the benefits of longer-term investing of “core balances” in a “normal yield curve environment”

© 2016 PFM Asset Management 8 Benefits of a Cash Flow Forecast o Provide that all expenditures are properly funded o Identify all material expenditures o Project cash flow timing and amount o Avoid over-funding of expenditures o Utilize JIT (Just-in-Time) funding of payments/expenditures

© 2016 PFM Asset Management 9 Benefits of a Cash Flow Forecast o Identify near-term cash short falls o How much and when? o Clarify short-term borrowings

© 2016 PFM Asset Management 10 Benefits of a Cash Flow Forecast o Identify macro fiscal trends o Administrative tool o Provide continuity and safeguards through changes in staff

© 2016 PFM Asset Management 11 Cash Flow Forecast Methodology o Two forecasting methods: o Historical analysis o If the District is relatively stable (finances, enrollment) o If historical data is reliable and in a consistent format

© 2016 PFM Asset Management 12 Cash Flow Forecast Methodology o Two forecasting methods: o Projection based o Is District growing / declining? o Have there been material changes to educational programs? o Any new outsourcing? Could it possibly effect bill timing? o Payroll cycle change? o Revenue stream change?

© 2016 PFM Asset Management 13 Goals of a Cash Flow Forecast o Be conservative o Keep cash flow materials updated o Be aware of your school board investment policy statement o Have written assumptions o Liquid balance o % increase for estimates

© 2016 PFM Asset Management 14 Required Data for a Cash Flow Forecast o Historical monthly receipts and disbursements o Historical cash flow borrowing o Current budget o Payroll schedule o Board meeting schedule o Bond and interest payment schedules o Capital expenditure schedules o School calendar o Current investment schedule

© 2016 PFM Asset Management 15 Cash Flow Forecast Data o Which funds should be included? o General (Transportation, Capital Service, etc.) o Food Service o Community Service o Debt o Funds usually kept separate o Building o Student Activity

© 2016 PFM Asset Management 16 Cash Flow Forecast Data The accuracy of any cash flow forecast is dependent upon the accuracy of the input data used in the spreadsheet o All bank accounts o All current investments – noting final stated maturity dates

© 2016 PFM Asset Management 17 Cash Flow Forecast Data o Receipts o State o IDEAS o Federal through the State o Other – Finance Department o County o Tax settlements o School tax report o Levy certification

© 2016 PFM Asset Management 18 Cash Flow Forecast Data o Receipts o Other o Federal direct o Food services o Gate receipts o Community services o Donations o Debt o Aid anticipation certificates o Interest

© 2016 PFM Asset Management 19 Receipts Schedule

© 2016 PFM Asset Management 20 Cash Flow Forecast Data o Disbursements o Payroll o Pay dates o 12 months of net or gross payroll history o Extraordinary payroll o Accounts Payable o Other o Capital Projects

© 2016 PFM Asset Management 21 Cash Flow Forecast Data o Disbursements o Debt o Aid anticipation certificates o Bonds

© 2016 PFM Asset Management 22 Disbursement Schedule

© 2016 PFM Asset Management 23 Cash Flow Forecast Assumptions o Payroll – timing and amount (any variations) o Accounts payable – timing o Minimum liquidity level o Revenue receipts o Non-recurring receipts and disbursements o Budgets (current and future years) o Assumptions unique to each District

© 2016 PFM Asset Management 24 Cash Flow Forecast Procedure o Estimate cash receipts o Estimate cash disbursements o Record investment activity o Redemption of outstanding investments o Purchase of future investments

© 2016 PFM Asset Management 25 Cash Flow Schedule

© 2016 PFM Asset Management 26 Cash Flow Forecast Summary o “a quality cash flow forecast will…” o Project timing and amount of all receipts and disbursements o Maximize investment earnings o Identify cash flow shortages o Establish and maintain comfortable liquidity o Identify fiscal trends o Provide administrative efficiency o Provide continuity in the business office o Be a communication tool

© 2016 PFM Asset Management 27 Other Resources o MN State Statute 118A – Deposit And Investment of Local Public Funds o MSBA Sample Investment Policy – o UFARS Manual – Chapter 12 - Authorized Borrowing For School Districts –

© 2016 PFM Asset Management 28 Contact Information Michelle Evenson Business Manager Benton Stearns Education District Phone: Michelle Nelson Accountant Sartell-St. Stephen ISD #748 Phone: Carole Loehr Senior Managing Consultant PFM Asset Management LLC Phone: