Mitzi Baker Midland County Treasurer Where is the law on - - PowerPoint PPT Presentation

Mitzi Baker Midland County Treasurer

New Treasurers’ Seminar December 2018

 Where is the law on establishing a

Depository?

 Approaching the RFP process  Building a timeline  Collecting and providing information  The evaluation process  Approval process  Securities for funds held in depository

• Texas Local

Government Code

Chapter 116 for County Public Funds

• Texas Local

Government Code

Chapter 117 for Trust Funds and Registry Funds

• LENGTH OF CONTRACT §116.021
• Contract 2 years w/extension of 2 years
• Contract 4 years w/extension of 2 years
• Negotiate terms of extension by

Commissioners Court and approved by an authorized representative of the bank

• Commissioners Court must approve…
• Who will negotiate? The Treasurer?
• You must give yourself time to go out for a

new bid if negotiation fails. 116.021

• BUILDING A TIMELINE
• Establish when the new contract must

begin and work backwards

• Commissioners Court authorizes the

advertisement for bids in regular court session

• Information is collected on all bank

balances including registry accounts

• Bid packets are emailed or mailed to

prospective banks…and possibly at the same time

• BUILDING A TIMELINE continued….
• ….Notice is placed in the newspaper that

the Commissioners Court intends to receive applications from which to select a depository bank. It must be ran once each week for at least 20 days BEFORE the date to submit an application. A notice shall also be posted at the courthouse door of the county. 116.022

• BUILDING A TIMELINE continued….
• Establish a deadline to accept questions

from bidders.

• Establish when sealed bid packets are
• due. (116.023 states no later than 60th

day before expiration of existing depository contract)

• Giving time to evaluate, set approval

date in regular court session. 116.024

• BUILDING A TIMELINE continued….
• Establish 15 day deadline – Bond must

be filed and securities provided by bank depository 116.024(e)

• Give yourself time to get signature cards

done and checks and deposit slips

• rdered
• New contract begins with depository

• JANUARY 23, 2017 - C. COURT AUTHORIZES ADVERTISING
• FEBRUARY 17, 2017 – BANK BALANCES DUE FROM DEPTS.
• MARCH 3, 2017 – PACKETS ARE MAILED AND 1ST NOTICE
• MARCH 10, 2017 – 2ND NOTICE
• MARCH 17, 2017 - 3RD NOTICE
• MARCH 20, 2017 – QUESTIONS DUE FROM BIDDERS
• MARCH 31, 2017 – BID PACKETS DUE
• APRIL 10, 2017 – APPROVAL OF DEPOSITORY IN C. COURT
• APRIL 25, 2017 – 15 DAY DEADLINE FOR SECURITIES
• JUNE 1, 2017 – NEW CONTRACT BEGINS WITH DEPOSITORY

INTERNAL TEAM OPTIONAL

• Treasurer

Treasurer

• Auditor

Auditor

• Purchasing

Purchasing Agent/Manager Agent/Manager

• Attorney

Attorney

• Consultant

Consultant

• Tax Assessor

Tax Assessor

• County Clerk

County Clerk

• District Clerk

District Clerk

• Any office that is

Any office that is legally allowed to legally allowed to have a bank have a bank account account

 GENERAL REQUIREMENTS OF

GENERAL REQUIREMENTS OF THE BID THE BID

• Define exactly what you expect to receive from the

bidder including the Good Faith Guarantee and Resolution from the Board of Directors

• Define exactly when and where you expect to receive

the bid

• Define how they will be evaluated
• Define the laws that will govern the contract
• Identify the PFIA, the PFCA and what you accept as collateral in your

investment policy

• Give them the general specifications of the contract
• Define the security and collateral requirements

 SERVICE REQUIREMENTS

SERVICE REQUIREMENTS

• Define who you require as a contact person/persons daily
• Define services you require and request for costs
• Online Services
• Analysis Report
• Statements
• Payroll Direct Deposit
• ACH Transactions/Wire Transfers
• Positive Pay
• Disbursements/Deposits/Overdrafts
• Computerized Output

 SERVICE REQUIREMENTS continued…..

SERVICE REQUIREMENTS continued…..

• Expense Allowance incurred due to changing depository

banks

• ATM Services
• Other services ie: locked bags, checks & deposit slips,

endorsement stamps, coin wrappers, currency straps

• Ask the bank for other unspecified services that they may

provide

• Ask for their agreement with audit procedures and bank

confirmations

• Ask for no minimum balance requirements

(Trust/Registry Funds)

 SERVICE REQUIREMENTS continued…..

SERVICE REQUIREMENTS continued…..

• List your Structure of Accounts:

List your Structure of Accounts:

• #

# and current $ and current $ of Non-In

• f Non-Inte

terest Beari rest Bearing Checki Checking ng

• #

# and current $ and current $ of Inte

• f Interest Beari

rest Bearing Checki Checking ng

• #

# and current $ and current $ of Inte

• f Interest Bearing Savings

rest Bearing Savings

• # and current $ of CD’s

# and current $ of CD’s for Trust/Re for Trust/Regi gistry Funds stry Funds

• #

# and current $ and current $ of Mone

• f Money Market or

y Market or CD CD acco accounts at current s at current deposito depository ry

 SERVICE REQUIREMENTS continued…..

SERVICE REQUIREMENTS continued…..

• Optional:

Optional: Provide a bid worksheet whereby Provide a bid worksheet whereby using your current balances and number of using your current balances and number of transactions (from a transactions (from a current bank analysis current bank analysis sheet) they provide THEIR costs for those sheet) they provide THEIR costs for those services.

• services. This is an excellent tool for the

This is an excellent tool for the evaluation process. evaluation process.

 RECOMMENDED ITEMS YOU MAY REQUIRE

RECOMMENDED ITEMS YOU MAY REQUIRE BE INCLUDED BE INCLUDED

• Amount of bank’s paid-up capital stock

Amount of bank’s paid-up capital stock and and surplus surplus

• List of referenc

List of references es

• Quarterly Uniform Bank Performance Reports

Quarterly Uniform Bank Performance Reports

• Call Reports

Call Reports

• Financial Reports

Financial Reports

• Samples of analysis reports and statements

Samples of analysis reports and statements

 OK, THE RFP IS READY TO GET OUT THERE!

OK, THE RFP IS READY TO GET OUT THERE!

• Consider a “pre-RFP” meeting with potential

Consider a “pre-RFP” meeting with potential bidders bidders

• RFP Format:

RFP Format: PDF vs DOC and EXCEL PDF vs DOC and EXCEL

• Once the RFP is released, contact with potential

Once the RFP is released, contact with potential bidders is restricted bidders is restricted

• If you get a question, get it

If you get a question, get it in writing, then your in writing, then your response is to ALL bidders response is to ALL bidders

• In-house or Consultant
• Criteria should be for the “best” provider not

necessarily the “cheapest”

• People do business with PEOPLE, not services,

fee schedules or financial statements

• If unsure of a bidder’s response, submit

follow-up question(s) for clarification

• Optional: Consider inviting top candidates in

for presentations

BAN BANK #1 #1 BAN BANK #2 #2 BAN BANK #3 #3

Interest Interest-B

• Bea

eari ring Checki ng Checking ng Accn Accnts NOW rate + .25%/Floor of .70% .50% and tied to Fed Fund Target Rate changes Prior months avg T-Bill less 35 bps Money Money Market Sa Market Saving ngs Accn Accnts current deposit sheet rates .60% and tied to Fed Fund Target Rate changes Prior months avg T-Bill less 25 bps Inte tere rest B st Bearing S ing Savings vings Accn Accnts current deposit sheet rates .50% and tied to Fed Fund Target Rate changes The bank's published rate. EARNINGS C RNINGS CREDIT EDIT Current rate + .25% 0.75% T-Bill + 25 bps Less a Federal Reserve Requirement of 10% Locke Locked or

• r Seal

Sealable bag bags No Charge 20 free then $14 No charge One Saf One Safe Dep Deposit Box t Box No Charge Laser Che Laser Checks ks Bank Retail Initial Free then Bank Retail 1st $3500 free, then Bank Retail Che Checks ks (in (in boo books or

• r bind

binder ers) s) Bank Retail Initial Free then Bank Retail 2nd $3500 free, then Bank Retail Dep Deposit Sli t Slips No Charge Initial Free then Bank Retail 3rd $3500 free, then Bank Retail End Endors rsem ement Sta ent Stamps No Charge Initial Free then $15 No Charge Coin in W Wrappe ppers No Charge No Charge Bank cost Curr Currency ency Stra Straps ps No Charge No Charge Bank cost MAS MASTER ACC ACCOUNT MAI T MAINT T FE FEE $10 per account $9.45 per account $20.00 per account PAY PAYROL OLL DIRE L DIRECT DEP DEPOSIT YES YES YES AC ACH TRAN TRANSACTIONS $20 mo + $0.08 per item $20.25 mo + $0.0675 per item $15 mo + $0.15 per item WIR WIRE TRAN TRANSFERS $20 ea. $11.25 ea. $25 ea. POSITIV POSITIVE PAY PAY $125 per account/no item chg $33.75 per + $0.036 per item $40 per account/no item chg REMO MOTE TE DEPO DEPOSIT SERVI SIT SERVICE $100 + $0.10 per item $21.15 + $0.0675 per item $200 scanner/$0.07 per item STOP STOP PAY PAY $20 $6.75 $20 ET

• ETC. ET
• ETC. ET

ETC………….

BANK #1 BANK #2 BANK #2 BANK #3 BANK #3 NOTES NOTES SAMPLE BALANCE SUMMARY SAMPLE BALANCE SUMMARY FROM FROM LEDGER LEDGER BALANCES BALANCES GIVEN GIVEN AVG LEDGER BALANCE $13,997,602.00 $13,997,602.00 $13,997,602.00CD's excluded LESS AVG UNCOLL FUNDS (FLOAT)

• $213,761.00
• $213,761.00
• $213,761.00

AVG COLLECTED BALANCE $13,783,841.00 $13,783,841.00 $13,783,841.00 AVG NEGATIVE COLL BALANCE $0.00 $0.00 $0.00 AVG COLLECTED BALANCE $13,783,841.00 $13,783,841.00 $13,783,841.00 LESS INTEREST BEARING BALANCE

• $11,053,149.00

Int bearing bal NOT excluded AVG COLLECED BALANCE $13,783,841.00 $2,730,692.00 $13,783,841.00 LESS RESERVES REQUIRED (10%) $1,378,384.07 $0.00 $0.00 AVERAGE AVAILABLE BALANCE $12,405,456.63 $2,730,692.00 $13,783,841.00 LESS BALANCE REQUIRED $0.00 $0.00 $0.00No balance required NET AVAILABLE BALANCE $12,405,456.63 $2,730,692.00 $13,783,841.00 EARNINGS CREDIT ALLOWANCE (0.5125%) $5,399.77 (.75%) $1,739.42 (.77%) $9,014.25 January 31, 2017 LESS TOTAL SERVICE CHARGES

• $2,576.38
• $7,277.83
• $9,154.08

net of proposed discount EXCESS OR DEFICIT $2,823.39

• $5,538.41
• $139.83

BANK #1 BANK #1 BANK #2 BANK #2 Bank #3 Bank #3 Banks financial strength 4 4 4 Experien perience/ability to ce/ability to me meet service et service requir requirements ents 4 4 3 Responsiveness to County’s needs and initiatives 4 4 4 Value in terms of service and cost 4 2 4 Net rate of return on county funds 4 4 2 Electronic services offered and demonstrated 4 4 4 Any additional bank services offered 4 4 4 Convenience (ie. Location) 4 4 4 Cost of switching banks 4 3 3 TOTALS 36 33 32

• Commissioners Court must have entered into

the minutes of the Court all applications

• They must consider all applications
• Select the qualified applicant(s) that offer the

most favorable terms and conditions

• Immediately return the certified checks for

good-faith guarantee to the rejected applicants

• Immediately notify the selected applicant, and

within 15 days, the selected applicant must file a bond or other security as approved by the Commissioners Court. §116.024(e)

• Return the GFG check to the successful

applicant when they have executed and filed a bond or other security that is approved by the Commissioners Court

• Within 15 days after the new bank has been selected, the

bank must qualify as the depository by providing security for the funds to be deposited by the county by……

• Personal bond; surety bond; bonds, notes, and other

securities; first mortgages on real property; real property; CD’s, or a combination of these methods, as provided by this subchapter; or

• Investment securities or interests in them as provided by

law

• IN THE NEXT CLASS, WE WILL FURTHER DISCUSS

SECURITIES/COLLATERAL AND SAFEKEEPING SERVICES

Use Use this this opportunity

• pportunity to

to fully fully under understand and the the banking banking sy system fo for yo your Coun County ty. Yo You’re the the Tr Treasurer! Be Be the the “G “Go To To Pe Person” fo for banking banking in in yo your Coun County ty

Mitzi Baker Midland County Treasurer

New Treasurers’ Orientation December 2018

• Review Collateralization Rules and

Regulations and Where to Find Them

• Outline Collateral Documentation
• Outline Required Documents
• Highlight Security Settlement Procedures
• Discuss Safekeeping Services

Public Funds Investment Act – (PFIA) – CHAPTER 2256 TEXAS GOVERNMENT CODE Public Funds Collateral Act – (PFCA) – CHAPTER 2257 TEXAS GOVERNMENT CODE Chapters 116 and 117 – TEXAS LOCAL GOVERNMENT CODE

 (a) (4)…obligations fully guaranteed or insured by

the FDIC or by the explicit full faith and credit of the United States

 (a) (7)…guaranteed or insured by the FDIC and

NCUSIF…

 (a) (8)…or if deposits are invested through…

 (A) (i) Broker – main or branch office in this state  (A) (ii) Depository – main or branch office in this state  (B) Spreads to insured depositories  (C) Full amount of Principal and interest insured by the US  (D) Appoints Custodian

 (a) Certificates of Deposit

 Guaranteed or insured by the FDIC or NCUSIF  Collateralized by obligations described by 2256.009  Follows PFCA

 (b) (1) Additional Certificates of Deposit

 (A) Broker – main or branch office in Texas  (B) Depository – main or branch office in Texas

 (b) (2) Spreads to Insured Depositories  (b) (3) Fully Insured – Principal and accrued interest

• f each of the CD’S is insured by the US or an

instrumentality of the US

 (b) (4) Appoints Custodian

 2257.021 Collateral Required-Public Funds SHALL

be secured in the manner required

 2257.022 Amount of Collateral

 (a) (1)(2) …not less than principal and interest, LESS the amount FDIC insures the deposit  (c) The value of a surety bond is its face value  (d) The value of an investment security is its market value

 BEST PRACTICE IS NOT LESS THAN 102% OF

• DEPOSITS. YOU WANT TO COVER YOURSELF FOR

UNFORESEEN LARGE DEPOSITS.

 2257.023 Collateral Policy (written may include)

 “Security” of the institution that holds an investment security  Substitution or release of an investment security  Method by which an investment security used to secure a deposit of public funds is valued (Market Value)

 2257.024 Contract for Securing

• (a) A public entity may contract with a bank that has its

main office or a branch office in this state to secure a deposit of public funds.

 Possession of the collateral  Substitution or release of an investment security  Ownership of the securities of the bank used to secure  Method by which an investment security used to secure a deposit of public funds is valued (Market Value)

 2257.025 Records of Depository  2257.026 Change in Amount or Activity of

Deposits of Public Funds

 2257.041 Deposit of Securities with Custodian

 State or National Bank  Texas Treasury Safekeeping Trust Company  Federal Reserve Bank  Federal Home Loan Bank  Comptroller Designated

 2257.045 Receipt of Security by Custodian

• Shall immediately identify on its books the pledge of the

security to the public entity

• Issue and deliver a receipt either to the entity or to the

depository

 2257.046 Books and Records of Custodian;

Inspection

• Maintain a separate, accurate, and complete record for each

pledged security

• Provide a complete current list of all securities when the

entity asks for it

• During audit, they SHALL examine and verify pledged

investment securities and records maintained

 Commissioners Court and Bank must sign a

Collateral Agreement

 Bank Board or Committee Minutes giving

authority to make the Agreement

 LOC or Custodial Agreement with

Safekeeping Entity

 Collateral Receipt  Check Investment Policy Collateral

Language

 Delivery Versus Payment at Third Party

 Safest Way  Required by PFIA  Check Independence

38

Pu Public E ic Entity tity Safekeeping Ban keeping Bank Br Broker/

• ker/Dealer

ealer Clearing Ban aring Bank Safekeeping Agr keeping Agreem eement ent Comm Commit to to Tr Transaction ansaction Clearing Agr earing Agreement ement Securities Tr curities Transfer – ansfer – Fede Federal Rese Reserve or

• r

Depository T tory Trust t Compa Company Funds Funds Rel Release ased On Acceptance Acceptance