Transcript Course Presentation

FINANCE/TREASURER AND
PUBLIC FUND INVESTING
July 2013
Cindy R. Kendall,
Extension Specialist
Iowa State University/Iowa
League of Cities
515-290-1811
[email protected]
Cash Flow--Who Cares?

What happens if I do nothing?
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Cash is safe in the bank due to FDIC and State
pooling requirements
So what if I don’t get around to doing today’s
deposit?
What’s the big deal if I don’t get the water shut
off at that delinquent account today?
Purchase or credit cards get the bills paid, is
there any advantage to negotiating the fee and
schedule?
Cash Flow--Who Cares? (CON’T)

What are idle Funds?
–
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What is Cash Float?
–

Cash on hand (in checking or savings account) not
currently needed for expenses.
The balance in an account which has been pledged (a
check written) but not yet needed (the check has not
been presented to a bank for payment.
What is Cash Flow?
–
Cash flow is the activity of revenues and expenditures
though out any given period.
What is the purpose of using Cash Flow?
 Can it only pertain to Cash measurements?

Cash Flow Methods
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By Fund
By Date
By Type
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By Bank Account
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Revenue
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Taxes vs fees vs state
payments
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Expenditures
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By Program
By Department
By Cycle
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Electronic Banking
ACH-Automated Clearing
House used for debits and
credits against another
account.
Wires-same day debits or
credits on another bank
Sweep Accounts-account
which is cleaned out at 2:30
and returned the next day in
order to earn one day’s
interest
All of the Above
Cash vs. Investments

Liquidity
–

The availability of funds from an account or conversion
of an investment to secure cash.
What kind of money are you investing?
–
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Co-mingled Funds: A mixture of fund balances used to
create a larger balance without loosing identity of
ownership.
Pro Rated Interest: The allocation interest earned on an
investment or interest bearing account which is made
up of various funds. This allocation is usually based
upon ownership of balance.
Pro Rating Interest
Fund
General
Road Use Tax
Water
Sewer
Total
Amount
2,000
5,000
10,000
3,000
20,000
% of
Ownership
0.10
0.25
0.50
0.15
1.00
Interest
54.96
137.41
274.82
82.45
549.64
549.64
Cash vs. Investments

What kind of money are you investing?
(cont)
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Bond funds-watch those IRS regulations
 Arbitrage
 Penalties
 Bond
Covenants
 Iowa Code limitations
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State Treasurer’s Website
Helpful Methods for Investments
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Interest on Checking
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Negotiate banking services
Timing the length of your investment
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Banking Calendars
Cash flow charts
Discussions with Departments/Contractors
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Gantt Chart: A chart to show a schedule for a project.
Other information-electronic banking and Treasurer of
State Web Site
Flexible CDs
General Fund Cash Balance
1,600,000
ACTUAL
1,400,000
1401008.92
1,200,000
1134964.859
953184.7052
Year End Balance
1,000,000
966776
800,000
1023425.864
848979.806
601978.91
600,000
481449
400,000
465730.89
TREND
327955.31
264079.1
200,000
140954
0
0
93
-200,000
0
94
0
95
0
96
0
97
0
98
0
99
0
00
-80225
Fiscal Year
0
01
0
02
03
04
05
Charts and Graphs
Date Description Revenues Investments Expenses Balance
1-Jul
213,028.00
July
19,449.00
(43,687.00) 188,790.00
Aug
19,074.00
1,000.00
(22,453.00) 186,411.00
Sept
21,083.00
(1,000.00) (47,453.00) 159,041.00
Oct
297,414.00
(22,453.00) 434,002.00
Nov
20,283.00
(22,453.00) 431,832.00
Dec
20,483.00
(35,416.00) 416,899.00
Jan
21,458.00
(22,403.00) 415,954.00
Feb
20,158.00
(23,403.00) 412,709.00
March
277,914.00
(22,403.00) 668,220.00
April
40,695.00
(23,403.00) 685,512.00
May
20,233.00
5,000.00
(22,403.00) 688,342.00
June
19,908.00
(55,617.00) 652,633.00
Totals
798,152.00
(363,547.00)
Charts and Graphs (cont)
800000
700000
600000
500000
400000
300000
200000
100000
0
Cash Flow Chart
Investment Charts
Value in 1,000s
Types of Investments as of _______
160
140
120
100
80
60
40
20
Checking @interest
Time Certificates of
Deposit
T-Bills
Type
Pooled Investments
Investment Charts
Investments by Location
IPAIT
23%
WellsFargo
5%
USBank
72%
One Magic Formula
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How to determine liquidity (over the last two/three years is a good
idea):
Look at the lowest cash balance
+ Add the smallest amount of monthly revenue
– Subtract the highest monthly expense
Presto: $159,041. + 19,074. – 55,617. = $122,498.
Where does one start???
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Historical information-Get the big picture before
you look at the pieces
Magic formula for liquidity:
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2 yr history
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Find lowest balance over the last 2 yrs
+(add) the smallest monthly revenue amount in 2 yrs
-(subtract) the highest monthly expense in last 2 yrs
Discussions with Departments/Contractors
Discussions with Banker/Treasurer
Other Software Options
Other forms of spreadsheets
 Software as simple as MS Money or
Quicken
 IPAIT http://www.ipait.org
 Complex packages

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Trace your cash and investments
Help you forecast cash needs
 Patterns
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Know when you get what and when you’ll spend $$
DANGER!!! BEWARE!!!