The cash management operations (CMO) unit conducts a daily review of campus balances on deposit in State fund 0948 at the State Controller’s Office. State fund 0948 is a continuously appropriated CSU agency fund that is used to record various State-side expense transfers including payroll, inter-agency chargebacks, and other inter-fund transfers. The total cash balance in this fund earns interest at the SMIF rate. Campuses receive a quarterly distribution of interest based upon their share of the fund’s average daily balance (ADB). As needed, CMO initiates “transfers” of cash from the campus’ SWIFT account (101100) to a campus’ State fund 0948 account (305022) to fund expenditures and maintain minimum daily balances. These transfers DO NOT represent an expense to your campus.
In addition to providing a cash balance available to support CSU State-side operations, State fund 0948 is included in a group of funds indentified by the State Controller’s Office as “internal borrowable resources”. This means that the cash in these internal funds is available to be “borrowed” by the State to meet its short-term cash requirements in lieu of selling Revenue Anticipation Notes (RANs) on the open market. During FY 2010-11, the State will “borrowing” between $18 and $25 Billion from these internal resource funds.
Cash Planning During FY 2010-11
On March 1, 2010, the Governor signed special session legislation (ABX8_5) establishing a State cash management plan that includes provisions pertaining to the CSU during FY 2010-11. The legislation limits State support funding at 1/12th of the CSU appropriation per month until April, 2011, at which point the remaining balance of the appropriation becomes available. In addition, the plan provides flexibility to the Department of Finance (DOF) to “defer” State general fund support to the CSU up to $250M during the first two months of FY 2010-11. In subsequent discussions with DOF, the CSU was offered the option to maintain a minimum balance in State fund 0948 in lieu of the $250M State support deferral. The amount of the minimum monthly balance requirement would be determined by DOF “expectations” of monthly balance in State fund 0948 from prior year data. After consideration of the alternatives, the CSU agreed to the “minimum balance” concept beginning with the month of July, 2010. This agreement will be revisited each month by DOF as part of the State’s on-going cash planning review. Had the CSU chosen the “deferral” option, CSU campuses would have been required to fund the full July payroll from student fee revenues.
As agreed, DOF authorized a PFA transfer of $221M from the State general fund to support CSU payroll for the month of July, 2010. (For purposes of the 1/12th calculation, in the absence of an enacted FY 2010-11 budget, DOF used the May-Revise Governor’s Budget proposal) The amount authorized for each subsequent month is expected to be $221M until a final budget is in place when 1/12th value will be apply. Since the PFA provides for State-supported payroll only, individual campus PFA amounts are based upon the campus’ share of total FY 2009-10 Salaries and Benefits reported in FIRMS for CSU funds 485/499. To fulfill the CSU’s minimum balance requirement for July, CMO transferred a total of $380M from campus SWIFT accounts to campus State fund 0948 accounts. ($300M plus $80M to fund the non-State supported balance of the July payroll.)
For the months of August, 2010, through March, 2011, the DOF minimum balance requirement will fluctuate between $400M and $500M. During August, there will be two transfers: $25M on August 23rd and $160M on August 26. In future months, CMO will be initiate periodic transfers from campus SWIFT accounts to State fund 0948 as needed to sustain the minimum balance requirement as well as fund monthly non-State payroll.
Determining Monthly Campus Transfer Amount To State Fund 0948
The campus transfer amount is determined based upon a combination of factors:
Campus State fund 0948 balances will be monitored daily for variances to CMO planning assumptions.
It is important to remember that there is no loss or cost to your campus for these balances on deposit in State fund 0948. These monies earn SMIF interest and are only one component of a campus’ total available resources for university operations.
If you have further questions or need additional information, please feel free to call Sean Boylan at (562) 951 4619.