Cash Management and Investment Policy
Authority: Business Affairs
Date Enacted or Revised: Revised December 2004; January 2016; March 17, 2022
McNeese State University conducts investment activities under the authority provided from R.S. 49:327. The president has designated that the cash management and investment activities for the University are the responsibility of the vice president for business affairs and the comptroller.
To ensure that an adequate system of internal control over cash management and investments is maintained.
These policies and procedures are applicable to all University employees who participate in cash management and investment activities.
- To provide funds as needed for operations of the University;
- To generate maximum investment income with complete safety of investment;
- To centralize banking activities; and
- To provide information to meet management needs of the University.
University cash management and investments are subject to an audit anytime by the Office of Internal Audit.
The primary objective of our cash management system is to provide for day-to-day funding needs (liquidity) so that current transactional requirements and obligations can be met. To accomplish this objective, cash is maintained in interest-bearing checking accounts, and excess cash is reduced and made available to generate investment income.
Safety of University assets is also a principle concern of our cash management and investment program. Every effort is made to mitigate both credit risk and interest rate risk for all funds deposited or invested.
The use of centralized bank accounts, electronic funds transfer (EFT), and the Automated Clearing House System (ACH) has further enhanced our investment goals. McNeese State University has placed cash management as a major goal and has recognized the significant returns available from implementing our objectives.
Short-Term Cash Management (Less than 90 Days)
The University utilizes short-term cash forecasts to (1) determine cash needs for operations and (2) manage the investment of excess cash. The assistant comptroller coordinates and directs the University’s short-term cash management program and reviews cash balances monthly.
The following information is considered in maintaining the University’s cash management:
- Cash receipts anticipated (i.e., registration moneys, state appropriation funds, federal funds, maturing investments, and other larger receipts are monitored); and
- Cash disbursements anticipated – (i.e., payrolls, financial aid, debt service, utilities, retirement contributions, tax and insurance liabilities, and other large payments are identified).
McNeese State University has agreements with area banks for interest-bearing demand accounts so that all funds on deposit other than “clearing” accounts are invested. Interest rates on demand accounts may vary from bank to bank and in accordance with account activity.
The University’s central cash account management allows efficient deposit, collection, transfer, and investment of funds. For its disbursement account, the University utilizes a zero-balance account with funds transferred monthly from interest-bearing account to cover all checks clearing for that month. Transferring of funds electronically between accounts and banks has replaced checks for many large-dollar transactions in the University’s cash management system.
Coordination of cash receipts and disbursements are a primary goal in effective management of short-term investments. Comptroller personnel are made aware of our investment objectives and the specific procedures required to fulfill them.
Investments allowed include money market funds, time certificates of deposit, direct US Treasury obligations, and US government agency obligations.
Long-Term Investments (90 Days or Longer)
The cash forecasting information prepared for short-term cash needs is the basis for projecting funds available for longer-term investment opportunities. Time certificates of deposit with maturities not exceeding the terms outlined in (R 49:32.7B), money market funds, and direct US Treasury bills are the primary long-term investments used by the University. Additional investment options include US government agency obligations.
Asset Allocation and Investment Guidelines
Since the University’s primary focus is short-term cash management, available investment securities are limited to US Treasury bills, bank certificates of deposit, and US government agency securities. Bank certificates of deposit are purchased for periods not greater than 12 months and are secured by appropriate pledging from respective banks authorized by the Louisiana treasurer to receive such deposits. All banks having deposits for McNeese State University shall have adequate collateral pledged to cover such deposits including certificates of deposit as well as any other deposited funds. Banks are further required to meet the FIRREA regulations, including a security agreement, a bank board of directors, and resolutions authorizing specific bank offers to execute these agreements. For US Treasury securities and government agency securities purchased by the University, banks must provide safekeeping receipts, collateral agreements, custodial agreements, and a listing of the correspondent bank actually holding the security.
Performance Evaluation and Safety
University employees having responsibilities for cash management and investment activities are bonded through the Office of Risk Management. Certain University cash wire transactions require verification and authentication through the assignment of unique PIN numbers by various financial institutions and may require second-person verification.
The monthly reconciliation of all bank statements is verified monthly by an assistant comptroller and by the University’s internal auditor on a periodic basis.
Investment decisions and information are coordinated and communicated with the vice president for business affairs and periodically evaluated based on the University’s investment objectives.
Cash management at the University will continue to develop with new methods and procedures adopted to meet changes in the banking system and to address University needs and objectives.
This policy is distributed via the Administrative Advisory Council and the University Policies webpage.