And the Awards Go To….

And the Awards Go To….

2020 cashvest® 90+ and National Leadership Award

three+one® is pleased to announce the public entities and higher Ed institutions that are the recipients of the 2020 prestigious 90+ cashvest® Award.

This award signifies the excellence in the implementation and management of all liquidity in the public marketplace set by three+one. To qualify for this award, an entity must have received a cashvest® score of 90% or above for four consecutive quarters.  It should be mentioned that multiple qualifiers are calculated into the cashvest® score to determine the rating. The five qualifying categories include:

-Percent of available funds providing value
-Liquidity proficiency
-Warnick rate indicator®
-Cashflow optimization
-Investment policy practices

A cashvest® score of 90+ signifies to the country, state, and taxpayers that these counties have achieved the highest value available on financial resources. The following counties have met the criteria to receive the cashvest® 90+ Award by achieving a score above 90 for four consecutive quarters. They are:

Counties:
Beaufort County, South Carolina; Hon. Maria Walls, CPA County Treasurer
Chautauqua County, New York; Ms. Kitty Crow, Director of Finance
Orange County, New York; Comm. Karin Hablow, Commissioner of Finance
Rensselaer County, New York; Mr. Mark Wojcik, Chief Financial Officer
Wayne County, New York; Hon. Patrick J. Schmitt, County Treasurer

Cities:
The City of Dublin, Ohio; Mr. Matthew Stiffler, Director of Finance
The City of Huber Heights, Ohio; Mr. James Bell, Director of Finance
The City of New Albany, Ohio; Ms. Bethany Staats, Director of Finance

Towns:
Town of Aurora, New York; Hon. James Bach, Supervisor
Town of Batavia, New York; Hon. Gregory Post, Supervisor
Town of Perinton, New York; Mr. Brian Dick, Director of Finance

Colleges/Universities:
Dickinson College, Pennsylvania; Mr. Sean Witte, Vice President for Financial Operations
Jefferson Community College, New York; Mr. Daniel Dupre, Vice President for Finance
University of Redlands, California; Dr. Ralph Kuncl, President

In addition, this year’s National Leadership cashvest® Award recipient is the Honorable Scott D. German, Treasurer of Genesee County, New York. This prestigious award recognizes and acknowledges the leadership that Scott has demonstrated, both statewide as well as nationally, in establishing and practicing the highest possible standards of financial governance and liquidity management.

Treasurer German has been a leading advocate for the implementation of best practices in identifying and managing all levels of cash as a revenue-generating asset. The new innovations he has adopted in treasury services have strengthened the protection of taxpayer monies entrusted to him while also significantly increasing interest revenues for his county.

Congratulations to this year’s cashvest® award recipients!

Reevaluate Your Baskets

Reevaluate Your Baskets

Pathway to Recovery® Series
Sometimes, You Have to Reevaluate Your Baskets

We all know the old adage cautioning us not to put all of our eggs in one basket. That saying has survived all these years because it imparts a great deal of financial wisdom in just a few brief words. We can all appreciate that simple logic, yet there still may be times when we become a bit too comfortable or complacent with the assortment of baskets that are available to us.

If you serve as the CFO of a county, town, city, public education institution, or public authority, then you are responsible for a lot of “eggs.” In order to protect and effectively manage the assets that are in your care, you need to have at your disposal a diverse and strategic selection of “baskets” in which to deposit the funds for which you are responsible.

Though protection of principal is certainly the primary goal, earning the highest-available interest on those dollars is also a very important consideration. One size definitely does NOT fit all when it comes to banks, money-market accounts, CDs, municipal pools. and the range of interest rates they offer on any given day. The most successful public sector CFOs are being proactive by seeking out the most advantageous interest rates for the funds in their care. That can mean earning an additional 25 or 50 basis points on their available cash. Higher interest earnings directly equate to increased revenues for your public institution.

As municipalities struggle to deal with new economic challenges, we are seeing more and more public-sector CFOs being asked to find additional non-tax revenue streams. One way to do that may be to add more banking options and more investment choices to your portfolio. That simple strategy will provide you with two direct benefits: first, it adds more baskets in which to diversify (and thus safeguard) your eggs. And second, having more baskets to choose from will give you a wider variety of options when selecting the one that offers the highest-possible return for the specific timeline that you expect to have those funds on deposit.

You may also be aware that, in some states, financial-oversight agencies are looking more closely at whether the municipalities under their jurisdiction are being too passive when it comes to cash management. Even in this low-rate interest environment, some CFOs and their legislative boards are being criticized for not proactively soliciting interest rate quotes in order to maximize the value of their cash. It’s no longer good enough to just park most of your cash in a money-market account or pool and then stop looking for other (perhaps better) options. Public entities are also being required to prepare cash-flow forecasts in order to determine the optimum amount of funds that they have available for investment right now as well as in future months.

Having access to precise liquidity data allows CFOs to know how much total cash they have on deposit. By using forecasting models, they can also determine when that cash will be needed.  This creates a clear window of opportunity that can be used to maximize the interest earnings on that cash, and to deposit it over the longest possible timeline. Reliable forecasting opens up the possibility of using 6-month, 12-month, or even 18-month fixed-rate CDs and US Treasuries to lock in higher earnings for longer time frames. In this era of extreme scrutiny of all taxpayer-funded organizations and government agencies, employing proactive cash-management techniques and liquidity-analysis practices is simply good policy.

We already know not to put all of our eggs in one basket. Now we have reliable, accurate fintech tools to help us evaluate all of the available baskets, and to then select the ones that best serve our particular public entity’s needs.

The author served for a total of 38 years in local government at the village, town, and county levels, including 24 years as a County Treasurer/CFO responsible for investing public funds. He can be reached by phone at 585-484-0311 or through our website at https://threeplusone.us. Fintech tools from three+one® include cashvest®, MC Forecast®, and rfpPrep®, all of which provide public entities with the kind of accurate, reliable cash-management data that they need in order to make the best financial decisions for the funds in their care.

Hitting the Road (Virtually)

Hitting the Road (Virtually)

cashvest® by three+one® was honored to present last week to the GFOA of South Carolina, and to sponsor this incredible virtual conference of public finance officials. Our team provided data-driven insights on maximizing value on public dollars during & after COVID-19.

We invite you to share in this presentation and learn more about getting your public or higher-ed entity on the financial Pathway to Recovery®.

As an industry leader in FinTech, three+one® was thrilled to share our key tools & resources via virtual booth with public entites this year at GFOA-SC.

“It is so important to link liquidity data together with marketplace opportunity.”
– Garrett Macdonald, three+one® Senior Vice President

Election Day is Finally Here

Election Day is Finally Here

Pathway to Recovery® Series
Election Day is Finally Here

Regardless of which party comes out on top after today’s Presidential election and Congressional races, we must all now find ways to work together in the best interest of our nation. We have to find ways to build bridges with our neighbors and fellow Americans. Why? Because when the dust of this election settles, old-fashioned catchphrases like “cooperation,” “collaboration,” and “partnership” will be the best pathway to recovery for our nation, our communities, and for ourselves.

On some things, we should speak with one strong voice. That should certainly be the case when it comes to advocating for more federal aid to help states and local governments, of all sizes, to deal with the economic impacts of Covid-19. Fortunately, we have effective public policy advocates like the National Association of Counties (NACo) and many elected and appointed officials working on our behalf.

Where else can we find common ground? Perhaps with one of the most basic, common-sense principles that we all agree on: the fundamental premise that taxpayer dollars are sacrosanct and must be safeguarded, protected, and used in the most efficient, cost-effective ways possible. All Americans, regardless of political affiliation, want to see their tax dollars handled with care.” A big part of that process is the implementation of effective cash-management techniques.

If you work in the finance office of any public entity, effective cash management includes the following prerequisites:

  • That the funds entrusted to you are safe and secure;
  • That those funds are earning reasonable rates of return that are comparable to best-available market-interest rates; and,
  • That you are forecasting just how much cash you will have available in the future in order to put that money to “work” maximizing interest income.

Even in these challenging times of historically low interest rates, public officials are still expected to fulfill their due diligence requirements by maximizing the value of all available cash entrusted to their care.

As proof of those expectations and professional standards, the New York State Comptroller’s Office recently issued a cash-management audit of a public entity in which their findings stated that “Officials did not formally solicit interest-rate quotes or prepare cash-flow forecasts to estimate the amount of funds available for investment.” This is especially important for public finance officials to be aware of, because none of us wants to be the subject of a critical audit that says that our finance office should, or could, have done things better.

The Comptroller’s written audit report then went on to say that municipalities and school districts should do the following:

  • Solicit interest-rate quotes from multiple financial institutions;
  • Ensure that available funds are invested within legal limits to maximize interest earnings; and
  • Prepare monthly cash-flow forecasts in order to estimate the amount of funds that are available for investment.

At three+one®, we provide our clients with liquidity data and cash-flow projections that can help bring their overall financial pictures into sharper focus. Important for public finance officials, our data will also satisfy the cash-management demands and recommendations made by the New York State Comptroller’s Office. And, if states and local governments do receive additional federal funding to offset the impacts of Covid-19, our cash-management tools can help public entities maximize and increase the value of those funds.

Our clients have access to a broad range of financial technology tools including our cashvest® liquidity-management system and the MC Forecast® cash-flow modeling tool which provides accurate, reliable financial forecasts for municipalities and higher-Ed institutions. And, when it comes to evaluating banking services, our innovative rfpPrep® software makes it easier than ever before to compare options and procure the best-performing and lowest-cost options that fit one’s particular banking needs.

Why not give three+one® a call today or check us out at https://threeplusone.us? We welcome the opportunity to tell you more about how we can provide real, measurable financial benefits to your municipality or higher-Ed institution. Our mission is to provide public entities with the kind of accurate, reliable cash-management data they need in order to make the best financial decisions for every taxpayer dollar in their care.

Now that is the kind of common-sense, common-ground principle that we can ALL vote for!

 

Sales Tax Revenue Projections

Sales Tax Revenue Projections

Pathway to Recovery® Series
Sales Tax Revenue Projections

If there ever was a year with unexpected twists and turns, 2020 wins the prize! In my mind, all economic forecasts (mine included), from last year and into the first quarter of 2020, were way off base and found to be out of whack. I suspect that will continue into 2021 as well.

One interesting forecast has been on the topic of sales-tax revenue. While the picture was rosy coming out of strong 2019 retail sales, the outlook took an ugly twist, given the economic shutdowns necessitated by the COVID-19 pandemic.

Across the board, all sales-tax projections turned upside down, with average revenue projections off by 30% or more, year over year. During the pandemic’s first wave—with so much of the country in a lockdown—many pundits assumed consumer spending would come to a halt as malls and shopping centers became ghost towns.

To a large extent, that’s what happened.

That, however, is an oversimplification and not the full picture. Here are just a few of the trends that developed over the last six months:

  • Curbside dining became a new fad and boom in the restaurant industry. While inside dining is most preferred, the staff level and profitability of curbside dining exceeded expectations. This will be a trend that will only grow going forward, as it may be a long time before a sufficient number of Americans are vaccinated against COVID-19.
  • Similarly, home delivery of restaurant-prepared meals, groceries, and other goods took off, as people avoided going inside so many establishments.
  • Home renovations went through the roof—literally. While staying home to protect against the coronavirus, homeowners realized the number of projects they could do on their own or what needed to be done when contractors became available. All types of home improvement products escalated in price and in sales, leading to unexpected strong sales-tax revenue from June 2020 on.
  • Internet sales rose significantly during the months of March through June. As individuals stayed home and spent far more time on their computers, they often drifted over to Amazon and other sites and made purchases by the boatload. The number of packages being left at front doors nationwide was staggering.
  • Pent-up demand is already leading to a pickup in retail sales at shopping centers and malls and strong holiday retail sales are expected. This effort is being led by the big box stores in particular. This should carry over well into 2021.
  • While air travel and cruise vacations are down significantly, hotels are seeing a lift as are auto repair and family-car travel. With more people on the road again, we’ve seen a rebound in gas-sales-tax levels.

These trends are showing positive signs that a recovery is underway. How strong the recovery will be is yet to be determined, but the outlook for sales-tax revenue is looking brighter for the fourth quarter and the year ahead. This should come as good news in determining next year’s budget.

While I think it may take a couple of years to exceed pre-pandemic sales-tax levels, the worst-case scenarios seem less likely. What might have been a projected 25% annual cut, year over year, will more likely be 10% or less in 2021.

Return to $ender

Return to $ender

Pathway to Recovery® Series
Return to $ender

No state or local official wants to send any of their CARES Act money back to the federal government, but they must act quickly or those funds could soon be marked “Return to Sender.” The rules for using the money are pretty straightforward: (1) the expenses must have been necessary to meet immediate needsrelated to the COVID-19 outbreak; (2) the expenditures should not have been included in the adopted 2020 municipal budget (with the exception of payroll expenses); and (3) the expenses must have been incurred during the period of March 1, 2020 through December 30, 2020.

Given all of the financial challenges presently facing states and local governments, returning millions of dollars in unused Coronavirus Relief Fund (CRF) money back to Washington, D.C. seems like blasphemy. I suspect that state and local officials may be trying to find “creative” ways to use their allocations of the $150 billion CRF funds rather than being forced to return any unused dollars. But unless Congress amends the CRF guidelines, these municipalities have until December 30th of this year to spend that money. Stockpiling of goods to be used beyond the end of this year is not permitted, nor is paying for services that extend past December 30th. The money must be spent in strict accordance with the law because ineligible expenditures will almost certainly be identified during future audits and those moneys could be “recouped” by the feds or be subject to a claw-back.

Clearly, officials are struggling with COVID-related revenue shortfalls and ever-increasing operating expenses. Many of them are eliminating vacant positions from their 2021 budgets and considering layoffs which will have a negative impact on public services. As of mid-October, no one knows if there will be another round of coronavirus-related financial aid approved by Congress, nor can we predict whether the rules adopted under the CARES Act will be relaxed prior to December 30th. Furthermore, we have no way of knowing whether the deadline will be extended into 2021.

According to a U.S. Treasury report, many of the states and local governments with populations of more than 500,000 people that did receive CRF money still have large unspent portions of their allocations tucked safely in their coffers. I can understand why states and large municipalities would want to hang onto their CRF money. They have been hearing political pundits and elected officials say that the December 30th deadline for the CARES Act might be extended, or that the CRF rules might be altered to allow the funds to be used to fill revenue shortfalls. But for now, the most prudent pathway to recovery for state and local governments that received direct CRF funding is to comply with the rules as they are currently written and as they are administered by the U.S. Treasury and the Office of the Inspector General (OIG).

We recently received some very good news, however. The U.S. Treasury issued updated guidance on September 2nd, and the OIG followed up on September 21st, saying that 100% of the salaries and benefit costs of every “public safety” employee will now be eligible for CRF funding. This means that states and local governments will be able to use CRF funds to pay for TEN FULL MONTHS of the salaries and benefits of every police officer on their payroll. This includes the salaries of all State Police officers, County Sheriffs, deputies, firefighters, EMS responders, corrections officers, jail guards, and dispatchers. Local governments will no longer have to certify that these public safety employees’ work schedules were “substantially dedicated” to addressing COVID-19.

The same thing goes for “public health” employees. The list of medical and health services includes all municipal employees of any public health department that is “directly engaged in matters related to public health” including all supervisory personnel. Similar to public safety employees, the OIG is assuming that every single public health employee will spend 100% of his/her worktime between March 1st and December 30th being “substantially dedicated” to addressing the pandemic.  The U.S. Treasury should be commended for this lenient interpretation of the CARES Act because it opens up the door for billions of CRF dollars to remain in the hands of local governments rather than being sent back to Washington, D.C. at the end of this year.

What does this mean? It means that states that received CRF funding should immediately pass the unused remainder of that money down to lower levels of government to be used to offset the salaries of local police, fire, and public health employees.

Take New York State for example. The state received $5.1 billion in CRF funding in April, but as of late August, they had only spent about $2.2 billion of that money. Keep in mind that there are 52 counties, 931 towns, 61 cities, and 534 villages in New York State that did not receive one cent of direct federal CARES Act aid! Imagine how many police officers, deputy sheriffs, and paid firefighters work for those hundreds of municipalities. New York State should quickly implement a plan asking every municipality within the state’s boundaries to submit a voucher showing the total of all salaries and benefits of their public safety and public health employees for the period of March 1st through December 30th. The state should then use its remaining CRF funds to reimburse local governments for those expenses. If the vouchers submitted exceed the total amount of CRF money still available, then distributions could be prorated whereby every municipality receives, for example, 80% or 90% of the amount claimed.

By adopting this model, local governments would get some badly needed breathing room; taxpayers would see direct relief and continuity of public services; and, best of all, states would not have to write huge checks back to the U.S. Treasury that are marked “Return to Sender.”

The author served for a total of 38 years in local government at the village, town, and county levels, including 18 years as a county Budget Officer and eight years as a Disaster Recovery Coordinator. As Director of Public Partnerships for three+one®, he can be reached at 585-484-0311 or by email at: wec@threeplusone.us