1. 1 CASH AND INVESTMENTS

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

3. 3 Mission  Safety Liquidity  Returns

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

5. 5 Mission  Consider an investment committee

6. 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. 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. 8 Definitions  Financial Reporting Terminology: Cash and Cash Equivalent…matures within 3 mo Investments……..longer focus

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

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

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

12. 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. 13 Risks  Credit risk Rating Agencies---AAA Not needed for obligations explicitly guaranteed by the U.S. Govt.

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

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

16. 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. 17 Other Points  Sweep Accounts Understand the account your money is swept into Internal control – document this understanding

18. 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. 19 Other Points  Outlying Cash Accounts Mainly resulting from debt issuances Allowable investments Reconciled monthly

20. 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. 21 Other Points  Electronic Payment SDCL 4-3-27 requires a policy Payroll, debt service, etc… Internal control Other statutory steps…..

22. 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. 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. 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. 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. 26 Contact  deene.dayton@state.sd.us  773-5932