1. Fiscal Management Conference
Georgia Office of the State Treasurer (OST)
Scott Austensen, Deputy Treasurer
October 2, 2017

2. OST Bank Program (7 Banks) 84% Reduction in Bank Fees over FY10-FY17
Year over Year Savings
Total Bank Fees
Year
YoY Savings ($)
YoY Savings (%)
FY11
$2,205,892
25.68%
FY12
$2,228,055
34.89%
FY13
$433,507
10.43%
FY14
$219,402
5.89%
FY15
$64,663
1.85%
FY16
-$145,134
-4.22%
FY17
-$1,070
-0.03%
Total Bank Fees Net of ECR
Year
YoY Savings ($)
YoY Savings (%)
FY11
$2,637,420
32.52%
FY12
$2,723,688
49.77%
FY13
$488,656
17.78%
FY14
$434,818
19.24%
FY15
-$4,998
-0.27%
FY16
$82,638
4.52%
FY17
$465,818
26.65%
To add another fiscal year’s data point to this chart, click inside the chart and then right click to select Edit Data in Excel. The line chart is pulling from the three row table in green. The YoY savings tables on this slide must be manually edited (not in Excel). Just click on the chart, add another row and then the data for the new row can be automatically calculated in the Excel spreadsheet linked to the graph.
Total Bank Fees (58% Reduction over 7 Years)
Total Bank Fees Net of ECR
(84% Reduction over 7 Years)

3. $15.4 Million Earnings on State General Fund from Bank Relationships (Fiscal Years 2015-2017)
Addtl. Earnings to State (Only)
The green lines are calculated based on the total returns from the 7 key banks less the total bank fees net of ECR. Just open up the bank relationship scoring model to see the returns data and then subtract out the total bank fees net of ECR (orange line chart) which you already verified on the previous slide.
The FY balance numbers at the bottom of the slide were changed the day before the board prep meetings and calculated by taking the sum of the average balances from the 11 banks and then taking that sum and multiplying by that year’s percentage of state general funds. The number in the title of the slide was calculated by taking the sum of the three fiscal years’ risk adjusted return totals for each year after multiplying by the state general fund percentage by each year.
Total Bank Fees Net of ECR
Total Bank Fees
FY 2015 Balance: $962 million FY 2016 Balance: $1.23 billion FY 2017 Balance: $1.21 billion

4. Why RFQB Process?
OST has historically worked with about 11 “Relationship Banks”
The Goal of the RFQB process was to deepen these relationships in a way that would reduce bank fees and increase risk adjusted returns to General Fund and other investments
The RFQB process will lead to fewer banks to be included in evaluations, and more choice for Merchant Card Services

5. RFQB Evaluation Process
Out of 10 official responses, six finalists were identified for additional presentation using submitted line item pricing; and 3-year historical, risk adjusted, weighted average investment returns
The four banks with the highest “net” benefit were named as Primary Banks for FY18

6. REQB Pro-Forma Results of Bids

7. Future Primary Bank Selection
Each fiscal year, OST will review the RFQB banks, using updated (rolled forward) information for risk adjusted returns and ensuring the highest overall net benefit to the state
Primary Banks in future fiscal years may change, which could affect future bank evaluations

8. OST Bank Evaluation Overview
BANK REGISTRY UPDATED
Step 9
Step 1: OST Letter and Evaluation Packet with Banking Questionnaire
Step 2: Agency completes and returns Questionnaire
Step 5: OST Banking Evaluation Report
Identifies lowest cost bank
TREASURY
STATE AGENCY
Step 6: Agency response to OST selecting lowest cost Bank(s)
Step 7: OST Notifies Agency & SAO of Bank Approval by
State Depository Board
Step 8: Agency & SAO complete process to open accounts; Execute Signature Card(s)
Step 4: Banks Complete Templates and Proformas
Step 3 B: OST Requests the Primary Banks + Incumbent prepare Proformas
For Non-OST Bank Program Accts
INCUMBENT
BANK
Step 4: Banks Complete Templates and Proformas
PRIMARY BANKS
Step 3 A: OST Requests the Primary Banks prepare Proformas
for OST Bank Program Accts

9. Bank Evaluation Calendar FY 2018
July 2017-Nov 2017
Nov 2017-Jan 2018
Feb 2018-April 2018
May 2018-Jun 2018
Dept. of Community Affairs
Dept. of Public Health
Dept. of Revenue
State Properties Commission
Dept. of
Community Supervision
Dept. of Transportation
Dept. of Veterans Services
Office of
Insurance Commissioner
Board of Regents
Dept. of Community Health
Dept. of Driver Services
Georgia Bureau of Investigation
Public Service Commission .

10. Statewide Merchant Card Services (“MCS”) Agreements
OST has entered into statewide agreements with three merchant card service providers for use by all state agencies
Starting in Oct. of 2017, state and local entities will be able to select from among these 3 MCS providers

11. Statewide MCS Agreements
The 3 MCS Providers will be:
Branch Banking and Trust Company
SunTrust Bank/SunTrust Merchant Services LLC
Wells Fargo Bank NA/Wells Fargo Merchant Services LLC
Note that the existing, Banc of America Merchant Services contract will expire in April 2018; state agencies will need to migrate

12. MIGRATION TO NEW MCS PROVIDERS
Each MCS provider will have a statewide Master Services Agreement (MSA), executed by OST. Each MSA defines lower costs than the existing MCS Agreement
Each vendor is highly qualified and staffed to accommodate the diverse set of state entities using MCS
It is incumbent upon each state entity to explore each of the three options available and determine the most efficient provider for its needs

13. State Agency Contract Considerations
The State Treasurer is not a party to nor has approved the terms of the Participation Agreements
Participation Agreements define specific MC services (such as security or portal functionality)
After selecting an MCS provider and services, Agencies should obtain necessary approvals (internal and OST) to execute Participation Agreements
Agencies using BAMS should do so before April 26, 2018

14. State Agency Selection Considerations
State entities should carefully compare costs among the three approved providers as well as compatibility of equipment and gateway services in order to determine which approved provider offers the most efficient solution
OST recommends that state agencies seek bids from all 3 MCS providers and request a detailed proforma of costs based upon FY 17 actual transactions

15. State Entity MCS Approval
Agencies selecting one of the approved 3 MCS should submit a request by to OST asking for SDB approval. The request should include a statement that the state entity is requesting the most efficient provider for the MCS that it expects to transact annually
As in the past, SDB approval requires approval from:
OPB if state general funds are to be used to pay MCS fees
GTA for payments to be collected by electronic means (website or Gateways, etc.)

16. OTHER GOVERNMENT PARTICIPATION
Under the Policy, state universities and colleges, and units of local governments are not considered state agencies and have the option, but not the requirement, to participate in the statewide card services program
These entities can apply to utilize any of the three approved MCS providers by submitting a request for approval to OST
These entities should note the expiration of the BAMS contract (April 26, 2018)

17. MISC. SLIDES

18. $98 Million Earnings on All OST Managed Funds from Bank Relationships (Fiscal Years 2015-2017)
Gross Returns from OST Bank Relationships
Risk Adjusted Returns from OST Bank Relationships
The balance numbers at the bottom of the slide are the sum of the average balances of the 11 banks. The
FY 2015 Balance: $7.64 billion FY 2016 Balance: $7.41 billion FY 2017 Balance: $7.40 billion