New Mexico State Treasurer’s Office

Cash Management

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Cash Management Division

Charmaine Cook, State Cash Manager Charmaine.Cook@state.nm.us 505.955.1125

Cash Management can be defined as a systematic gathering of information about the State’s receipts, disbursements, and balances, and the use of that information to effectively manage the funds available to the State. The position of State Cash Manager was established in 1993 under 8-6-3.1 NMSA 1978 and its duties are defined to include: issuance of regulations to enforce the Cash Management Improvement Act; monitor State agencies’ cash activity and the balances on hand in financial institutions; monitor deposits and cash balances on hand to enable projection of short-term and long-term cash available for investment; determine and update warrant clearance patterns; and preparation of monthly written report to the State Treasurer’s Investment Committee and State Board of Finance of State fund balances in financial institutions.

Audit and Compliance Bureau

The Audit and Compliance Bureau is responsible for projection of the State’s short-term and long-term cash balance needs utilizing a model that was developed internally. Historical trends- together with information related to significant receipts and disbursements- are used as the primary indices to the model. The bureau coordinates with State agencies that have the largest inflows and outflows of funds to identify anomalies that could impact the daily cash position of the State Treasurer’s Office. The Cash Flow Model is updated monthly (or more frequently, if necessary) and a written report is issued to the State Treasurer’s Investment Committee and the State Board of Finance on a monthly basis.

The bureau also performs daily cash positioning to determine the State’s cash needs on an intra-day basis in order to meet its obligations. Cash positioning is a very critical function because errors can result in overdrafts or returned items at the fiscal agent bank.

The Audit and Compliance Bureau is also responsible for compliance with the Cash Management Improvement Act of 1990 (CMIA). Congress established CMIA to ensure efficiency, effectiveness, and equity in the transfer of funds between state and federal governments. CMIA addresses key federal funding issues such as funds drawn in advance of need, or late grant of award from the federal government. Major CMIA provisions require that federal agencies make timely fund disbursements and grant awards to states; state and federal agencies must minimize the time between the transfer of federal funds to states and the presentment of states’ checks, warrants, or settlement of electronic fund transfer payments for program purposes; and, with minor exceptions, that states earn interest from the federal government for the time the state advances its own funds for program purposes prior to federal reimbursement.

The bureau performs annual compliance audits of state agencies that receive federal funds exceeding an established threshold and for compliance with the CMIA and regulations outlined in the U.S. Treasury/State Agreement (TSA). This agreement, negotiated between New Mexico and the federal government, identifies the funding techniques utilized for covered programs. Audits begin at the end of the fiscal year and must be completed by mid-December. An annual report is submitted to the U.S. Treasury detailing State and/or federal government interest liability and any costs associated with the monitoring and reporting of CMIA compliance.

Banking Resources Bureau

The Banking Resources Bureau monitors all balances and activity related to State funds in financial institutions. Specific activities of this bureau include: development of regulations related to approximately 500 bank accounts; and approval, analysis, and authorization of these State agency bank accounts.

The bureau validates deposits and withdrawals into and out of the State’s fiscal agent accounts, including all adjustments to the accounts such as returned checks, stop payments, and other miscellaneous bank account transactions. The bureau compares fiscal agent bank accounts’ activity to transactions in the State’s enterprise accounting system (SHARE) daily. The bureau is also responsible for all Banking and Treasury Module configuration in the SHARE system.

Monthly reports are obtained from State agencies detailing funds from any source in the agency’s custody. The bureau authorizes State agency requests for depository bank accounts outside the fiscal agent bank; reports account balances in each financial institution to the State Board of Finance; verifies compliance with established bank account guidelines and reports any deviations to the agency and the State Board of Finance; and enforces laws and regulations that apply to financial institutions receiving State funds. This bureau also reviews the monthly fiscal agent account analysis for compliance with the agreement and to identify and prevent unauthorized use.

The bureau will continue to research and work with the State’s fiscal agent, other banking institutions, and other professional organizations in implementing modern cash management products to implement best practices and accelerate receipts for more effective cash management- and thereby maximize funds available for investment.

Collateral Management

The Collateral Manager ensures that adequate protection of State moneys is maintained in all State agency deposit accounts at all times. This is accomplished by requiring all qualified financial institutions to pledge collateral to secure public deposits. Risk assessment reports are analyzed to determine data accuracy, the institution’s financial condition, and the percentage of collateral required. The pledged collateral is constantly monitored and must comply with all State requirements and custodial agreements. Both proposed and current pledged collateral are continuously evaluated for compliance with all applicable statutes, policies, and depository and custodial agreements. Pledged securities are monitored to assure that acceptable, valid, and marketable instruments secure public funds at all times. Custodial banks are monitored to evaluate their strength and stability. The Collateral Manager provides monthly reports to the State Treasurer’s Investment Committee regarding compliance by all financial institutions. The Collateral Manager is also a member of the cash forecasting team.

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