What Now?

What Now?

It’s confusing…will schools reopen for in-person learning, be online, or opt for a hybrid model?  No matter how much planning can or has been done over the summer, the outcome of “what’s around the corner?” has everyone wondering. This is when the patience of Job is going to really be tested. In addition, the impact of enrollment for higher Ed institutions is yet to be determined so late in the registration cycle. What all institutions are experiencing is unprecedented, and the impact will not only influence the 2020/2021 school year but many years in the future.

As students and parents determine the value of on-campus/in-person learning vs. online classes, the financial implications have rippling effects. While most think online learning provides institutions with a higher profit margin, the loss of room and board, facility rental, and bookstore revenue is significant, becoming major challenges now and in the future. This does not just apply to four-year institutions and graduate schools, but also to community colleges.

It’s interesting that the percentage of students that prefer in-person learning has not changed as a result of COVID-19; it remains steady at over 70%. While most students are open to some level of online learning, there is naturally a strong desire to socially interact with others. They see that as a key component of campus life. This is why most higher Ed institutions are pressing for a hybrid model, combining both in-person and online classes (if not prohibited by state guidelines). It should also be noted that once a decision is made, unsafe student behavior and other events may cause institutions to alter their plans. Over the past week alone, we’ve already seen a number of schools close their campuses due to a spike in positive coronavirus cases.

As higher Ed administrators look to understand all the implications, three+one®’s MC forecast model® is becoming a very valuable tool for them in determining short-term liquidity levels and needs. While historical data is used to determine future patterns, potential implications of the “unexpected or anomalies” can be incorporated to determine possible scenarios over the coming months. This information can be found to be extremely useful in evaluating the impact on cash reserve funds or the need to tap into lending facilities or potential emergency endowment funds.

COVID-19 poses challenges for every single public entity and higher Ed institution. Just know that three+one® is by your side to help you answer the question “What now?”

Grab an Oar and Pull

Grab an Oar and Pull

Pathway to Recovery® Series
Because we’re all in the same boat now.

Rowing a boat takes teamwork, especially during a storm. It requires people working together towards a common goal. If half of the rowers are determined to head north, while the other half are just as resolved to head south, nothing gets accomplished—no forward progress is made, and the boat will never reach the safe haven of land.  

COVID-19 is very likely to be the storm of our lifetime. It’s too early to say for sure, but there is some chance that history will describe it as our “Storm of the Century”.  Either way, it is a tempest that is rocking the very foundations of our economy and our society. We are all sitting together in a lifeboat now, heaving and swaying as the storm rages around us. And we all have a responsibility to grab an oar and do our part to help our neighbors and ourselves if we’re going to make it safely to shore. We have much to be thankful for—our “ship” is sound and our backs are strong—and we have a common goal.

We must recognize that there are a huge number of heroes who are already pulling with all their might on their oars, and trying their very best to keep us alive. They are our nation’s healthcare workers, medical professionals, public health officials, and emergency responders. They are straining and struggling, putting their very lives on the line for us and our families, day in and day out.  Their hands are blistered and their muscles are weary, and it is our duty and responsibility to man our own oars to try to take some of the burden off their shoulders.

three+one liquidity analysisSome oars are more powerful than others and the rowers who hold them can make enormous contributions to the success of our journey. Members of Congress must put aside their political differences and pull together as one to help us make it safely through this storm. We need them to recognize that when one side of the boat rows in one direction and the other side rows in the opposite direction, the ship is dead in the water.

One thing that everyone should be able to agree on is that local governments are going to need substantial financial assistance during this pandemic if we are to have any chance at all of a really full recovery within a reasonable time period.  

As a former disaster recovery coordinator for a county in upstate New York, I saw firsthand just how critical federal funding is to a community that is struggling to get back on its feet in the aftermath of a natural disaster. With significant federal help (in our case, almost $100 million), it still took my community almost 10 years to recover from a devastating flood. WITHOUT any federal assistance??  We would still be running county offices from rented garages and using second-hand folding tables as desks. We would also be driving our local government deeper and deeper into debt as we tried to deliver necessary services such as law enforcement, road and bridge repairs, and public health. And trying to do all that with a taxpayer base that was already tapped out. Our boat would be leaking, foundering, and in serious danger of actually sinking.

We at three+one® are also doing our part to pull on the oars.  We help local governments make the most of what they have, so they can collect that much less from the taxpayers. We provide data and financial forecasts on the funds that a county or municipality has on deposit. That information gives them the opportunity to maximize the value of that cash.  For example, New York’s Orange County has been using our liquidity analysis services since 2018. Last year they earned $2.0 million MORE than similar-sized counties! That represents $2.0 million of public services and infrastructure improvements that did not have to be paid for by their taxpayers.  Another great example is Lehigh County, Pennsylvania.  They earned about $489,000 annually in interest before partnering with three+one® in 2017.  Last year Lehigh County earned more than $2.0 million in interest on their available cash – despite the fact that interest rates have actually gone down!

Each and every one of us can make our own contributions to help our communities and our nation make their way through this disaster. Though we must certainly address the public health crisis of COVID-19, we must also address the financial aftermaths that this pandemic will surely have on our society over the next several years. It is critically important that local governments receive direct federal funding now—before it’s too late—if necessary public services are to be delivered without interruption.

After all, we are all in this same boat together. It will take the willingness of each and every one of us to grab ahold of an oar, plant our feet firmly on the deck, and then do our best to pull in the same direction as the person in front of us and the person behind us. Our journey will be challenging, full of surprises, and potentially dangerous. But in the end, if we can all just keep the distant shoreline in sight and pull together towards a common goal, we can and will make it through this storm.

The team at three+one® is proud to partner with NACo as we jointly assist the nation’s county governments during these challenging times. To learn more about NACo and how it works with three+one® to develop financially sound solutions, contact Kyle Cline at kcline@naco.org or by phone at (317) 502-7415).

Despite Job Title, You’re Already Acting Like a CFO

Despite Job Title, You’re Already Acting Like a CFO

If you are reading this, you are probably already an experienced professional who is respected in your field. Your expertise may be in business management, marketing and sales, law enforcement, health care, insurance, construction, public services, or any of a dozen other professions. But what you may not know is that in many ways, you are also an experienced “Chief Financial Officer” in your own right and you are likely employing many of the tools used by the best professional CFOs.

My personal field of expertise is in Public Administration, specializing in government finances. For 24 years, I served as the elected Treasurer of Schoharie County, a rural municipality in upstate New York with about 32,000 residents. As the county’s CFO, I oversaw an annual operating budget of about $80 million and my fiduciary responsibilities included cash management, budgeting, liquidity analysis, investing of funds, future financial projections, and fraud prevention.

You may not realize it, but you are probably performing every one of these functions on a daily basis as well. Do you log on to your bank account on a regular basis in order to check your balances and look at recent payments to protect yourself against fraud or identity theft? If so, you are using “liquidity analysis” as a tool in fraud prevention.

When you log on and check those bank balances as you are drinking your morning coffee, do you also calculate in your mind whether you have sufficient funds available for upcoming recurring expenses such as mortgage payments, car loans, or other regular disbursements? If so, you are doing “cash management” combined with “future financial projections.”

If you are considering refinancing your mortgage or consolidating other debt, then knowing your precise cash position and effectively managing that cash can be very beneficial in helping you earn the highest credit ratings and the lowest loan rates.

Having a clear picture of your cash position can also be an important tool in helping you (or your public entity or higher Ed institution) be prepared for an emergency or unexpected fiscal crunch.

And if your prudent fiscal management has resulted in a larger cash balance in your low-or-no interest checking account than you really need at the moment, you will probably consider shifting some portion of those funds into a money market account—or maybe a CD—in order to earn higher interest. You have now successfully combined “liquidity analysis” with “future financial projections” and “investing of funds.” Congratulations! You are using the data, information, and tools of a Chief Financial Officer.

At three+one®, we help county governments and other public entities use the best resources available to manage their cash effectively. Our patented cashvest® system accurately monitors a public entity’s liquidity and provides it with the tools and technology needed to most effectively manage the funds that flow both into and out of its numerous bank accounts on a day-to-day basis. We provide our clients with objective, analytical, and accurate financial data that helps them use their resources to the very best advantage, thus maximizing their returns.

In our daily lives, most of us already practice the key elements of being an effective chief financial officer, no matter what our actual job title is. As it turns out, you probably already employ tools like “liquidity analysis,” “cash management,” and “financial projections” with your family’s finances. And it all starts out with that quick, but very effective, glance at your personal bank balances.

Having access to key data about current liquidity is critical to every facet of financial management. It is the starting point for cash control, financial projections, fraud prevention, and effective investing of funds. When you do those things on a personal level, with only one or two bank accounts to deal with, the process is fairly straightforward. But when you are the CFO of a large public entity or higher Ed institution, it gets much more complicated.

That’s where three+one® comes in.

Dealing with dozens of bank accounts, separate highway and general funds, enterprise funds, reserve accounts, debt-service funds, and the millions (or even tens of millions) of dollars that flow through those accounts every day can be a real challenge. The first key component is knowing exactly how much cash you have on deposit, and where those funds are—that’s liquidity analysis—and here at three+one®, that is precisely what we do. We can help you get a clear, detailed picture of the public funds that you manage, just like the one you have for your personal finances. Regardless of whether interest rates are rising or falling, we can provide you with the tools and data you need to best manage those funds.

We serve large and medium-sized public entities throughout New York State as well as in many other states nationwide. If you are a manager of public funds, please give us a call. We are sure that you will be satisfied with the results.

The author served as a county legislator, a county treasurer, and as a disaster recovery coordinator in New York State and has always strived to maximize the impact of federal and state monies at the local level.