Office of the State Treasurer
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Office of the State Treasurer FMC Bank Policy Update September 20, 2021 Presented by: Scott Austensen Deputy Treasurer Investments and Banking
Bank Policy Update, Presentation Overview 1. New State Bank Policy update (approved 9/7/2021) 2. OST Banking Process Update 3. GF1 (LGIP) New Resolution Process Update 2
Bank Policy Update 1. Per O.C.G.A. 50-17-51: The State Treasurer shall serve as cash management officer for the state on behalf of the State Depository Board. Cash management policies and procedures prescribed by the Board shall be designed to maximize the efficient and effective utilization of state funds. State Entities may be required to submit reports and plans on such forms and at such times as the Board may prescribe to determine whether a State Entity is in compliance with the cash management policies and procedures prescribed by the Board 2. The OST Bank Policy establishes procedures for managing bank accounts and services. A new OST Bank Policy was approved by the Board on 9/7/2021 3. OST Bank Policy is located on the OST Website: https://ost.georgia.gov/ost-operating-policies (click on OST Bank Policy ) 3
Bank Policy Update New Bank Policy refers to 3 types of accounts: OST Bank Program Accounts (OST BP) - mostly operating and payroll accounts that collect or disburse state funds (fees paid by OST) A. Non-OST Bank Program Accounts (Non-OST BP) - other bank accounts managed by agencies (fees paid by agencies) B. De Minimis Accounts accounts that do not collect or disburse state funds and which have monthly fees of less than $500 and balances that do not exceed $25,000. (De Minimis Services are those under $500 / month) C. 4
Bank Policy Update What types of Banks may bid on accounts and services? Primary Banks are those banks which agree to statewide banking fee policies that are approved by the Treasurer and reported to the SDB Primary Banks may bid on all OST BP and non-OST BP Accounts Incumbent Banks Incumbent banks may bid on OST BP Accounts or non-OST BP Accounts (if requested) Other Banks that are not Primary or Incumbent Banks May be considered by OST for inclusion in bids for non-OST BP (if requested) All bids for banking services should include at least 3 banks 5
Bank Policy Update The new bank policy organizes account reviews by function: 1. State Entity requests for New Bank Accounts / New Services OST BP (De Minimis - N/A) Non-OST BP (De Minimis - Yes) 2. State Entity Banking Relationship Reviews OST BP (De Minimis - N/A) Non-OST BP (De Minimis - N/A) 6
Bank Policy Update The new bank policy organizes account reviews by function: 1. State Entity requests for New Bank Accounts / New Services OST BP (De Minimis - N/A) Non-OST BP (De Minimis - Yes) 2. State Entity Banking Relationship Reviews OST BP (De Minimis - N/A) Non-OST BP (De Minimis - N/A) 7
Bank Policy Update State Entity requests for New Bank Accounts / New Services For OST BP Accounts /Services contact OST Banking No consideration for De Minimis Accounts - OST will evaluate all bids For Non- OST BP Accounts /Services contact OST Banking For most accounts, OST will conduct the bid (State Entities may request certain banks) For De Minimis Accounts, the State Entity will conduct the bid (among qualified state depositories), must submit selection to OST for approval 8
Bank Policy Update The new bank policy organizes account reviews by function: 1. State Entity requests for New Bank Accounts / New Services OST BP (De Minimis - N/A) Non-OST BP (De Minimis - Yes) 2. State Entity Banking Relationship Reviews OST BP (De Minimis - N/A) Non-OST BP (De Minimis - N/A) 9
Bank Policy Update The State Entity banking relationship reviews involve evaluation of all the State Entity s bank accounts to ensure competitive service delivery and fee pricing OST has used these reviews to focus Primary Banks on providing lowest fees and services AND for moving state fund operating accounts into CTAS (a banks sweep structure that allows OST to invest idle funds) We wish to thank all Agencies that converted in recent years as approx. $344 million, in 54 accounts, at 14 Agencies have been transitioned CTAS migration of new accounts is now on hold 10
OST Bank Program 82% Reduction in Net Bank Fees over FY10-FY21* $10,000,000 Year FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Bank Fees $8,591,021 $6,385,129 $4,157,074 $3,723,568 $3,504,166 $3,439,503 $3,584,638 $3,585,708 $3,077,859 $2,964,305 $2,791,359 $3,023,606 ECR $0 Interest $481,190 $216,832 $488 $396 $34,830 $107,619 $110,157 $108,176 $312,017 $767,314 $1,006,277 $525,069 Total Earnings $481,190 $912,718 $1,408,350 $1,463,500 $1,467,243 $1,325,098 $1,552,015 $1,713,412 $2,646,494 $3,365,929 $3,303,762 $1,544,691 Net Bank Fees $8,109,831 $5,472,411 $2,748,724 $2,260,068 $2,036,923 $2,114,405 $2,032,623 $1,872,296 $431,365 $(401,624) $(512,403) $1,478,915 $695,886 $1,407,862 $1,463,104 $1,432,413 $1,217,479 $1,441,858 $1,605,236 $2,334,477 $2,598,615 $2,297,485 $1,019,622 $8,591,021 $8,000,000 $8,109,831 $6,385,129 $6,000,000 $5,472,412 $4,157,074 $3,723,568 $4,000,000 $3,584,638 $3,585,708 $3,504,166 $3,439,503 Bank Fees ($) $3,023,606 $3,077,859$2,964,305 $2,791,359 $2,748,723 $2,260,068 $2,036,923 $2,114,405 $2,032,623 $1,872,296 Total Bank Fees (65% Reduction over 11 Years) $2,000,000 $431,365 $1,478,915 $- $0 $(401,624) $(512,403) Total Bank Fees Net of Earnings (82% Reduction over 11 Years) $(2,000,000) $(4,000,000) FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 06/30/2021 *Report includes interest on CTAS account balances beginning FY18 11
Bank Policy Update State Entity Banking Relationship Reviews For OST BP Accounts, OST will establish bidding procedure with State Entity input No consideration for De Minimis Accounts OST will evaluate all bids For Non-OST BP Accounts, OST will establish bidding procedure with State Entity input For Non-De Minimis Accounts, OST will conduct the bid (State Entity may request other banks) 12
OST Banking Process Update OST will Schedule all agencies for relationship reviews, over a flexible 5- year period (State Entities may request a banking review early if desired) State Entities will receive information from OST prior to relationship reviews OST BP Accounts will receive primary emphasis The OST BEST system will be used to evaluate OST BP Accounts State Entities will participate in OST BP Account reviews with OST s Bank Evaluations for State Treasury (BEST) online program Non-OST BP Accounts will be managed through email communication 13
Georgia Fund 1 (GF1), New Resolution Process GF1 is the state s Local Government Investment Pool that allows State Entities to invest trust and certain other funds GF1 new accounts, and amendments to accounts, are directed by participants through GF1 Resolutions (available on the OST website) In the past, GF1 Resolutions have been transmitted by participants through U.S. mail. In the future, GF1 Resolutions will be completed and submitted to OST through a secure online system (DocuSign) Some enhancements to the GF1 Resolution process will be implemented with the new system 14
GF1, New Resolution Process The Office of the State Treasurer will be offering a secure, electronic method to submit new or amended GF1 Resolutions Highlights include: Secure signatures through DocuSign Electronic method will shorten processing time Banking information consolidated into one document GF1 Resolutions available by request at www.ost.ga.gov OST Webinar scheduled for September 29, 2021 (11:00 A.M.) 15
OST Banking Contacts: Rhen Cain Director of Banking Services Office of the State Treasurer 200 Piedmont Avenue, Suite 1204 West Tower Atlanta, GA 30334 Office: 404-656-2171 Rhen.Cain@treasury.ga.gov Jessica A. Smith Banking Services Officer Office of the State Treasurer 200 Piedmont Avenue, Suite 1204 West Tower Atlanta, GA 30334 Office: 404-232-7232 Jessica.Smith@treasury.ga.gov 16
