FY21 Budget Overview Office S taff Deputy Treasurer Jason - - PowerPoint PPT Presentation

FY21 Budget Overview

Office S taff

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TREASURY STAFF

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Melissa Hull –Treasury Manager



Penni Almond –Assistant Treasury Manager

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Toni Kenefick –Aschoff – Finance Officer

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Jason Jares – Cashier Manager

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UNCLAIMED PROPERTY STAFF

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Lee DeJabet – Unclaimed Property Administrator

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Anissa Grambihler - Compliance/ Portfolio Manager

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Amy Ullmann - Claims Manager Deputy Treasurer – Jason Williams

Budget Overview

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FY21 Proj ected Budget Request: $29,643,583

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Treasury: $565,429 (General Fund)

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Unclaimed Property: $29,146,510 (Other - Informational)

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Treasury S taff: 5.2 FTE

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Unclaimed Property S taff: 3.8 FTE (2 new FTE onboarding)

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NOTE: Because Unclaimed Propert y is an informat ional budget , FTE can be

• verut ilized in 3202 if needed.

Treasury S ervices $565,429 (General Fund)

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The S tate Treasurer is the state's chief banking official. The state treasurer serves as the receiver and safekeeper of all public funds paid into the state

• treasury. The office manages the state's banking relationships and state fund
• transfers. Its primary responsibility is the depositor of all state public funds.

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BREAKDOWN

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Employee S alaries & Benefits $416,476

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Travel Expense $12,728

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Contractual S ervices $128,844 (Maj ority Bank Fees)

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S upplies & Materials $5,381

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Capital Outlay $2,000

Treasury S ervices Deep Dive (FY19)

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Total cash receipts processed: $5,432,710,861.00

• 4.4 %

increase from 2018 and 10% increase from 2015

• 545,172 checks deposited from state agencies

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Total cash disbursements: $5,742,068,667.00

• Maj ority sent via ACH, $4,786,298,334.00 in 2019 which is a 3.2 %

increase from 2018

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Veterinary student grants managed $232,669.00

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Public deposits managed: $2,212,455,674.00

• Total number of public depositories: 84

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Public Defender funds distribution to counties: $551,986.00

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Abused and neglected child fund: $92,410.10

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Interest earned on checking account: $81,405.00

Treasury S ervices Issues & S

• lutions

Issue: Much of our daily work is manual and dependent on basic software

• programs. Processing public funds can touch several sets of hands between other

state agencies and our office. When processes are mostly manual, there are opportunities for human errors and delays. Solution: OS T is working with BFM on a custom, in-house database that will mitigate the volume of work that is processed manually between other state agencies and our office. This solution will help ensure state agencies have a more efficient process to accurately account for funds for their respective agency and will aid our office to efficiently and accurately finalize transactions. We believe this will have an

• verall positive impact on the statewide financial system and accounting

processes. Outsourcing a custom program like this may be very cost prohibitive. Creating this in-house solution is the right way to look after taxpayer funds. Our goal is to have the new program fully functional and usable by all state agencies by the end of FY2020. Many thanks to BFM for assisting in this endeavor.

Unclaimed Property (Proj ected) $ 29,146,510 (Other - Informational)

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The S tate Treasurer is holding hundreds millions of dollars in unclaimed funds. The S tate holds these lost funds until they are claimed by either the original

• wner or their heirs. Important to note, these aren’ t tax payer dollars, the

funds that are receipted, belong to someone else, and in perpetuity.

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Employee S alary and Benefits: $452,812

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Operating Expenses: $28,693,698 (Maj ority is returning funds)

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Travel: $17,100

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Contractual S ervices: $647,698 (Maj ority is audit cost)

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S upplies & Materials: $26,900 (Postage $18,000)

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Capital Outlay: $2,000

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Estimated Unclaimed Property Payments: $28,000,000

Unclaimed Property Payments

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Increase of $207,713 in other fund expenditure authority to align with anticipated unclaimed property personal services and operating expenses in FY21.

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FY20 balances as of 12/ 31/ 2019 Receipts $67.7 m Claims Paid $12.8 m (FY19 - 10.0m) Unclaimed Property Trends

$75.2 $85.4 $82.0 $74.8 $67.7 $- $20.0 $40.0 $60.0 $80.0 $100.0 FY16 FY17* FY18 FY19 FY20

Unclaimed Property Receipts

in Millions of Dollars

$8.6 $12.7 $12.8 $10.0 $12.8 $19.4 $27.6 $27.2 $22.6 $28.0 $- $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 $40.0 $45.0 FY16 FY17 FY18 FY19 FY20

Claims Paid by Fiscal Year in Millions of Dollars

Unclaimed Property Audit

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Financial Institution Audit (Name Confidential)

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FY20 Audit Cost to date: $2,438,399.05

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FY21 Audit Cost estimate: $3,000,000

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Estimated conclusion of Audit: Mid FY2021

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Proj ected to be a one-time audit occurrence

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DETAIL: December 2016 a third-party audit was initiated by five key states due to the financial institution’s lack of corporate oversight. Many of these states have other business interests with the financial institution and wanted to ensure that the state laws were being adhered to. There are a total of 40 states in the audit.

Unclaimed Property FTE & Office Update

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UCP will onboard 2 FTE.

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FTE will focus on claims investigation and fraud mitigation along with foreign claims processing. Our funds are global and growing, thus threats and scams come from all over the world. Global threats along with a significant increase in claims in S

• uth Dakota and from abroad, present a real threat that we must mitigate
• against. Second FTE will focus on claims processing, outreach and holder
• education. A focus on holder education is critical.

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FTE’s are not a general fund expense. UCP has the authority to add FTE’s as needed, we want to be fully transparent with the legislature prior to taking action.

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A survey conducted by the National Association of S tate Treasurers at the request

• f S

D-OS T found:

• There are 5 states that receipt in between $65-$75m annually and also return $15-

$30m annually (similar to S

• uth Dakota). Average staff size of those states is 12

FTE’s. Of the midwestern states* in the survey, the average FTE size for an office was 18, the median FTE was 13. UCP is short-staffed and it’s affecting our ability to provide great service, conduct educational training and being effective with

• utreach for holder education.

* Midwestern states: Illinois, Michigan, Nort h Dakot a, Indiana, Minnesot a, Ohio, Iowa, Missouri, S

• ut h

Dakot a, Kansas, Nebraska & Wisconsin

UCP Historical Numbers

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Our original request when working with BFM this summer was 2FTE. The recommendation to OS T was 1 FTE, however we can’ t keep pace with 1 FTE, thus the reason we asked for 2FTE initially. When you look at the growth in work and that over the years we’ ve only tinkered with less than one staff being added. WE NEED TWO FTE!

10000 20000 30000 40000 50000 60000 FY08 FY09 FY10 FY18 FY19 FY20

Unclaimed Propert y Processed by Fiscal Year & Tot al Number

$- $20.0 $40.0 $60.0 $80.0 $100.0

F Y 0 8 F Y 0 9 F Y 1 0 F Y 1 8 F Y 1 9 F Y 2 0

UNCLAIMED PROPERTY RECEIPTS IN MILLIONS OF DOLLARS BY FISCAL YEAR

• FY20 UCP Claims (Jul – Dec): 14,253 six months of potential claims to go (this number

will grow). FY19 total claims 12,777.

• Email correspondence FY19 4,193 unique messages
• Through six months of FY20 3,588 unique messages as of 01/10. We estimate more

than 7,000 messages. Add in thousands of additional phone calls along with only 180 days to get financial securities back to their owners or they get sold at fair market value, we focus on those as we don’ t want to make investment decisions, not our role.

Unclaimed Property FTE & Office Update

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UCP office relocation

• 3 staff occupied approximately 422 sq. ft. on the 2nd floor of OS

T , plus a storage closet in the basement of the Capitol. There wasn’ t adequate space to add additional staff or place dividers to give staff privacy.

• No dedicated (private) location for constituents to work with staff on claims
• processing. 2nd floor is not ADA compliant. When working with claims we work

with sensitive information such as social security numbers and bank account information.

• UCP has relocated to 124 E Dakota Ave.
• This new location will allow staff adequate space to carry out our mission,
• nboard two additional employees and storage space to secure unclaimed

property that’s isn’ t able to be deposited into a financial institution or investment account.

• The lease started on December 15th, with UCP requesting $50k annually in

additional expenditure authority to cover rent and associated expenses. Theses funds DO NOT come from the General Fund.

Unclaimed Property FTE & Office Update

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We want to be as conservative as possible, we are entrusted by the people to carry out a specific mission. A lack of people and space are preventing us from getting the j ob done in a timely fashion or ramping up our efforts to find rightful owners. We also run an above average risk of be exposed from a scam due to lack of security training or a dedicated staff member to this issue.

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The non-returned funds annually is transferred to the General Fund which is approximately 40-50 million dollars. While the transfer of funds is important,

• ur top priority must always be to return as much as we can to rightful
• wners and education of holders.

Office Goals

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Treasury: Provide out st anding service t o agencies and const it uent s and implement t echnology advances t o ensure efficient processing of all t ransact ions.

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Ensure adequat e st affing levels t o complet e claims in a t imely manner, ensure we can adequat ely handle increases in phones calls, emails and in-person request s, mit igat e fraud and conduct out reach and educat ional event s bot h at our office and around S

• ut h Dakot a.

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5 Y ear Plan – Holder ret ent ion and recruit ment

• Maint ain and enhance relat ionships wit h holders who report unclaimed propert y. Ensure we

keep our holders who we consider part ners in S

• ut h Dakot a.
• Develop and implement recruit ment effort s t o bring more holders t o S
• ut h Dakot a. We have
• ne of t he best business and t ax climat es in t he nat ion, we can promot e t his t hrough new

relat ionships, specifically in t he financial services sect or.

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Unclaimed Propert y: It’s not how much we can transfer to the general fund, it’s about how much we can return to rightful owners (t his is what is required of our UCP t eam). Our goal is t o find met hods t o more efficient ly reach const it uent s and get t hem t heir asset s back.

Questions? S top or call any time!