1. Cash Management, Systemwide Accounting, Investments Austin Davis, Kelly Cox, Colleen Zenger CSU 101 Tuesday, March 10, 2009

2. Overview  Cash Management  Systemwide Accounting  Investments 2

3. Money Flow 3

4. 4 Cash Management Austin Davis Assistant Cash Mgmt Operations Officer (562) 951 4674 adavis@calstate.edu https://www.calstate.edu/financialservices/rmo Cash Management

5. 5 Topics  Following The Money  Wells Fargo Bank (WFB)  Cash Positioning  Our Cash Management Roles  Cash Forecasting  Campus Investment Earnings Cash Management

6. 6  The campus’ cash management is centralized by using one bank  Wells Fargo Bank (WFB)  The surplus cash at the bank is invested  Systemwide Investment Fund – Trust (SWIFT)  Campuses benefit from the availability of better banking and investment services  Lower Fees  Safety: Wells Fargo: Aa1/AA+ credit rating  Consistent reporting & service across all campuses Cash Management Following The Money

7. 7 Cash Management Following The Money

8. 8 Wells Fargo Bank  Each Campus has been assigned 3 WFB accounts  Deposit account  Checks, Currency, Coin  Wires  ACH  Electronic Disbursement account  Wires  ACH  Paper Disbursement account  Checks Cash Management

9. 9 Wells Fargo Bank  Deposit Account  A Campus may create sub-accounts to facilitate reporting and reconciliation  Campuses deposit currency and coin at local WFB Cash Vaults  Campuses are encouraged to use ACH debit blocks to restrict unauthorized account access Cash Management

10. Wells Fargo Bank  Disbursement Accounts  Electronic  Wires  ACH (Automated Clearing House)  Paper  Positive Pay File  Controlled Disbursement  Perfect Presentment  Full Account Reconcilement  Image Retrieval 14 Cash Management 10

11. 11 Bakersfield Channel Islands Chico Dominguez Hills East Bay Fresno Fullerton Humboldt Long Beach Los Angeles Maritime Monterey Bay Northridge Chancellor’s Office Pomona Sacramento San Bernardino San Diego San Francisco San Jose San Luis Obispo San Marcos Sonoma Stanislaus Systemwide CSURMA Bakersfield Channel Islands Chico Dominguez Hills East Bay Fresno Fullerton Humboldt Long Beach Los Angeles Maritime Monterey Bay Northridge Chancellor’s Office Pomona Sacramento San Bernardino San Diego San Francisco San Jose San Luis Obispo San Marcos Sonoma Stanislaus Systemwide CSURMA Chancellor’s Office Pomona Sacramento San Bernardino San Diego San Francisco San Jose San Luis Obispo San Marcos Sonoma Stanislaus Systemwide CSURMA Bakersfield Channel Islands Chico Dominguez Hills East Bay Fresno Fullerton Humboldt Long Beach Los Angeles Maritime Monterey Bay Northridge California State University Master Depository Account XXXX-XXXXXXX California State University Master ACH Disbursement Account XXXX-XXXXXXX California State University Master Paper Disbursement Account XXXX-XXXXXXX California State University Concentration Account XXXX-XXXXXXX Consolidation to the CSU the Concentration Account ZBA

12. 12 Cash Management Cash Positioning  Calculation of Surplus or Shortage of available money  WFB  Prior day closing balance  Intraday check presentment  Net system wide cash needs  ShortageRedemption from U.S. Bank  Surplus Investment to U.S. Bank  Daily communication RMO – Treasury – U.S. Bank  Target balance should provide safety cushion while maximizing invested funds for the CSU

13. Our Cash Management Roles  Cash Management at the Campus  Campus Cash Management Agents  Depository Agent  Disbursement Agent  Cash Management at the CO  Management of banking operations  Daily cash positioning  Calculating quarterly SWIFT earnings to campuses  Forecasting short term & long term cash requirements Cash Management 13

14. Cash Forecasting  Deposits  Generally occur on a scheduled basis  Student fees  Financial aid drawdowns Cash Management 14

15. 15 Cash Forecasting Deposits By Month $4.3 Billion Cash Mananagement

16. 16 Cash Forecasting Deposits By Type $4.3 Billion Cash Management

17. Cash Forecasting  Disbursements  Are generally known in advance  Vendor payments  Financial aid refunds  Payroll – April, May, June Cash Management 17

18. 18 Cash Forecasting Disbursements By Month $3 Billion Cash Management

19. 19 Cash Forecasting Disbursements By Type $3 Billion Cash Management

20. Campus Investment Earnings  Distribution  Each quarter, SWIFT investment earnings are allocated to each campus based on the campus’ share of SWIFT’s average daily balance  The earnings are net of fees such as investment services, indirect costs, and banking fees  Each campus’ allocation of earnings is posted to their SWIFT account via a Cash Posting Order  Campus’ then allocate earnings to individual funds based on local rules 20 Cash Management

21. 21 Systemwide Accounting Kelly Cox Manager, Systemwide Accounting (562) 951 4611 kcox@calstate.edu http://www.calstate.edu/acct/ Systemwide Accounting

22. 22 Topics  Money Flow  Cash Posting Order (CPO)  Accounting for Investment Earnings  Year-End Reporting  Bank of CSU Statement  Bank of CSU Website Systemwide Accounting

23. Money Flow 23 Systemwide Accounting

24. Cash Posting Order (CPO)  Mechanism to move SWIFT dollars between campuses and the CO  Examples: –Redemption/Investment in SWIFT (Cash Positioning) –Charge for a product or service –Reimbursement of expenditures –Systemwide Allocation Transfer (SWAT) –Request for Cash Transfer Order (RCTO) 24 Systemwide Accounting

25. Cash Posting Order (CPO)  CPO Document  Memo  Accounting entry or entries to be posted in the campus ledgers  CO contact for questions / issues  Transfer Amount Schedule  Shows the amount of the increase (decrease) to the campus SWIFT account  Charge Detail  Shows the detail of the charges being assessed  Campus Contacts  Campus personnel contacts who are affected by the transaction 25 Systemwide Accounting

26. Cash Posting Order (CPO)  Systemwide Allocation Transfer(SWAT)  Supplemental campus funding from the Priority Fund  SWATs may only be used for Operating Funds (CSU Fund 485)  Request for Cash Transfer Order (RCTO)  CO department (e.g. Academic Senate) transfers funds to a campus for additional support or reimbursement  RCTO may only be used for Lottery Funds (CSU Funds 481) and Operating Funds (CSU Fund 485)  RCTO replaces the Charge Detail and Campus Contacts pages in the CPO document 26 Systemwide Accounting

27. Accounting for Investment Earnings  Investment Earnings are allocated to the SWIFT campus accounts  Allocated on quarterly basis  Campus records allocation in Pooled Investment Fund (CSU Fund 541) based on the CPO instructions  Income is allocated internally within campus funds according to that campus’ allocation policy  Net Income in the Pooled Investment Fund is zero at end of fiscal year  “no fund balance”  GAAP entry will be made to record June earnings and classify appropriately Systemwide Accounting 27

28. Accounting for Investment Earnings  Quarters are:  First Quarter = Jun, Jul, Aug  Second Quarter = Sep, Oct, Nov  Third Quarter = Dec, Jan, Feb  Fourth Quarter = Mar, Apr, May  Note: Campuses will receive an ADNOAT to record June earnings for GAAP adjustment purposes.  Benefits:  To record all investment earnings consistently across all campuses  To record in a timely manner for legal basis close Systemwide Accounting 28

29. 29 Accounting for Investment Earnings  Campus investment earnings allocation are net of charges  Allowable Charges in the Pooled Investment Fund (CSU Fund 541)  Wells Fargo Bank charges  Investment Services  Chancellor’s Office Indirect support Systemwide Accounting

30. 30 Accounting for Investment Earnings  Campus Quarterly Earnings Accounting Entries 1)SWIFT allocation to Campus of $1,500,000  Credit Fund 541, Acct 508001, Income from External Investments $1,500,000  Debit Fund 541, Acct 108090, Investments $1,500,000 2)Wells Fargo Bank (WFB) charges to campus of $2,500  Debit Fund 541, Acct 660046, WFB Charges $2,500  Credit Fund 541, Acct 108090, Investments $2,500 3)CO Indirect Support charges to campus of $2,500  Debit Fund 541, Acct 660047, CO Indirect Support$2,500  Credit Fund 541, Acct 108090, Investments $2,500 4)Investment Services charges to campus of $10,000  Debit Fund 541, Acct 660049, Investment Services $10,000  Credit Fund 541, Acct 108090, Investments $10,000 Systemwide Accounting

31. 31 Accounting for Investment Earnings  Accounting Entries for campus allocation of interest to other funds 5)Campus investment earnings allocation to other funds $1,500,000 - $2,500 - $2,500-$10,000 = $1,485,000  Debit Fund 541, Acct 508001, Income from External Investments $1,485,000  Credit Fund 541, Acct 108090, Investments$1,485,000 Important! Fund Balance in CSU Fund 541 should be zero at year end  Debit balance in 508001 will equal the combined balance in 660046, 660047 & 660049 so fund balance will net zero.  No due to or due from entries are required Systemwide Accounting

32.  Accounting Entries for campus allocation of interest to other funds –con’t 6)In CSU Fund 485, CSU Operating Fund  Debit Fund 485, Acct 108090, Investments$700,000  Credit Fund 485, Acct 508001, Income from External Investments$ 700,000 7)Other CSU Funds in 0948  Debit to CSU funds, Acct 108090, Investments $ 785,000  Credit to CSU funds, Acct 508001, Income from Ext Investments $ 785,000 Important! Must record in special FNAT Key (127942) using FIRMS Project: INTAC RMP-Interest Income Activity Systemwide Accounting Accounting for Investment Earnings 32

33. Year-End  GAAP entry to record June earnings and classify appropriately  Campuses receive an ADNOAT July 27 th for their June net earnings  Balance in CSU Fund 541 should be zero  The CO will provide an Audited Investment Rollforward schedule to KPMG campus audit teams by August 19 th 33 Systemwide Accounting

34. Bank of CSU Statement  Campus WFB Balance and SWIFT Activity  For WFB Reconciliation  The WFB Statement is used for transactions reconciliation  The Bank of CSU is used for balance verification  For SWIFT Reconciliation  The Bank of CSU statement is used for both transaction and balance verification.  Distribution  CMO emails each campus their Bank of CSU statements by the 5 th business day of the following month 34 Systemwide Accounting

35. 35 Bank of CSU Website Systemwide Accounting  Your Campus SWIFT Balance  CSU Bank Statements  CPOs  ADNOATs  Allocation Orders  SWATs  SWIFT Earnings Report

36. 36 Bank of CSU Website Systemwide Accounting Monthly CPO Activity

37. 37 Bank of CSU Website Systemwide Accounting CPO Detail Save or Print Options

38. Investments Colleen Zenger Financial Manager Financing & Treasury (562) 951 4521 czenger@calstate.edu http://www.calstate.edu/FT/ Investments 38

39. Topics Investments  SWIFT (Systemwide Investment Fund – Trust)  Money Flow  Purpose and Background  Actors  Size and Performance  Portfolio Characteristics 39

40. Investments SWIFT  Money Flow 40

41.  Purpose  Priority of objectives: 1)Safety of Principal 2)Liquidity 3)Earnings / Return  Background  Established in July 2007  Invest in securities allowed by State government code  Investments further guided by the CSU SWIFT Investment Policy Investments SWIFT 41

42. Investments SWIFT  Actors / Roles  Custody Bank - US Bank  Hold assets in safekeeping  Manage deposits to and redemptions from SWIFT  Collects interest income from assets  Arranges settlement of buys and sells  Reports on assets 42

43. Investments SWIFT  Actors / Roles  Investment Managers - FAF Advisors and Evergreen  Manage assets  per Investment Policy  per ongoing communication with CSU 43

44. Investments SWIFT  Actors / Roles  Financing and Treasury - Chancellor’s Office  Review Investment Managers’ performance  Review SWIFT portfolio alignment with Investment Policy  Quarterly SWIFT Performance Report 44

45. SWIFT  Size and Performance  1.6 Billion as of June 2008  2.6 Billion as of January 2009  4.54% return -12 months ended June 30, 2008  2.69% return -12 months ended January 31, 2009 Investments 45

46. SWIFT  Portfolio Characteristics – January 2009  Highly Liquid  39% of portfolio matures in 3 months  74% of portfolio matures in one year or less  Quality / Safety  80% of securities are rated at the highest possible level: AAA/Aaa or A-1+ / P-1  55% invested in cash, U.S. Government or U.S. Agency securities  45% invested in high –grade corporate securities Investments 46

47. 47 www.calstate.edu