Los Angeles Municipal Accountants

and Auditors Association

INNOVATIONS IN

TREASURY MANAGEMENT

Presented by: Crista Binder, CTP

Assistant Treasurer

Office of the City Treasurer

May 22, 2008

Agenda

1. Overview of Treasury Operations

2. New Cash Management System

3. Banking Services RFP

4. Virtual Treasury Management

What are the Responsibilities of the City Treasurer?

Manage the receipt and disbursement of over $60 billion

annually.

Portfolio manager for the City’s Core, Reserve and Special

Fund portfolios ($7.0 bilion).

Manage the issuance of special assessment district

financing.

Maintain proper accounting for cash and investments.

TREASURY ORGANIZATION

Executive Division:

Joya C. De Foor, CTP City Treasurer

Crista Binder, CTP Assistant Treasurer

Renee Fletcher Executive Administrative Assistant III

Elizabeth Orneals Executive Administrative Assistant II

Cash Management Division:

Vacant Director of Cash Management Services

Mark Granado Senior Cash Manager

Investment Division:

Harold Nachtrieb, CFA Chief Investment Officer

Accounting Division:

Victoria Santiago Departmental Chief Accountant IV

Debt Management Division:

Vacant Financial Manager I

Systems Division:

Gene Clarkson Senior Systems Analyst II

Personnel Division:

Lorena Valdez Senior Personnel Analyst I

5

OFFICE OF THE

TREASURER

BondholdersGeneral Public

Investments$ 7.5 billion

Portfolio Management

City Depts.

Incoming Cash Flow $ 29 billion

Outgoing Cash Flow $ 30 billion

20,500 Cash Receipts7,400 Bad Check Collections

1.5 billion Bonds/Coupons Paid

Bond Proceed Investment

Bond RedemptionDebt Service Payment

Services

99+% of Available Cash Funds

Est. Revenue: $ 229 million ($37 General Fund)

Banking198,000 Bank Deposits

3,700 Wires & ACH TransfersCity’s Cash Disbursement

Banking RelationshipsCitywide Banking Services

AccountingInvestment Accounting

Gen. & Debt Accounting Cash & Bank Recon.

DebtDebt Coordination

GIC’sAdditional Revenue

The Office of the Treasurer, through its Cash Management

Division, establishes Citywide banking policies, manages

relationships with various financial institutions, provides City

departments with banking services such as opening new

accounts, lockbox services, credit card acceptance, armored

carrier and courier services, etc. so that our client

departments can more effectively service their customer base.

On top of handling over $60B cash flow annually, the Cash

Management Division also processes over:

122,000 bank deposits

3,700 wires and ACH transfers

CASH MANAGEMENT DIVISION

INVESTMENT DIVISION

This Investment Division is responsible for the management of the City’s

$6 billion general investment pool portfolios and over $1.5 billion in

special fund portfolios. Other responsibilities include daily cash flow

forecasting, revenue projections, investment strategy development,

trade execution, credit review and compliance activities.

The City’s investment pools are comprised of:

General Pool

1. a. Core – provides for at least 6 month liquidity. Benchmark is 91-

day TBills.

b. Reserve – provides for longer term growth. Benchmark is 1-5

year Government or Commercial Papers

2. Special Pool

Ex: Wastewater, MICLA, Harbor

ACCOUNTING DIVISION

The Accounting Division is responsible for the timely and accurate accounting for:

•$7billion average cash balance, including $195million in daily cash receipts and

disbursements, investments and debt service payments.

•Ensures that effective internal control systems and procedures are observed.

•Prepares year-end reporting to comply with disclosure requirements.

•Assists in drafting potential or amendments to legislation affecting control of the

City’s cash and investment activities.

•Monitors effective collection of returned items.

•Allocates investment earnings to various members of the General Pool

•Prepares timely, accurate and meaningful financial information for the Treasurers’

Monthly Report.

DEBT MANAGEMENT DIVISION

The Debt Management Division is responsible for:

•Administration of the Street Improvement Bond Issuance

Program.

•Monitoring and tracking of bond redemption and interest

payments.

•Escheatment of unclaimed bonds and interest and other

citywide unclaimed bonds.

•Municipal bond registration and paying agent services.

TREASURY WORKSTATION

1. What is a Treasury Workstation?

• A Treasury Workstation is a cash management system that gathers

and distributes bank information for the purpose of financial

analysis and decision-making in short-term cash flow forecasting,

trend analysis and general ledger posting.

• Treasury Workstation software typically comes packaged in

modules. The primary module is the cash management module.

Other modules can be added such as investment, debt

management and banking relationship management which rely

upon the cash management module for the source of bank

information.

• The City of Los Angeles Treasurer’s Office developed their own in-

house cash management module to retrieve and compile bank

information.

Deposit

Data

Spreadsheet

Cash

Receipt

Cash

Position

Worksheet

AccountingTreasury Ops

FMIS

(GL)

Funds

Ledger

System

Hard

Copy

Data

Input

Data

Input

Hard

Copy

Data Input

Data InputData Input

Intranet

Deposit

Data

Deposit

Data

Deposit

Data

CITY DEPOSITS

BREL

Current Process

Bank

Sub Bank Accounts

ConventionCenter

Treasurer PublicWorks

Building &

Safety

Finance

Cash Concentration

FMIS

(GL)

eTreasury Deposit

Data

Deposit

Details

Cash

Receipt

Reports

Cash

Position

Worksheet

Other

Inquiries

Other

Reports

City

Deposits

New Process

Bank

New Tools

Cleaner Data

Fewer Un-identified Items

Returned Items

Claim Deposits Online

Switch Unit Numbers

Improved Reporting Tools

Treasury Workstation Rollout Plan

Phase 1 Phase 2 Phase 3

Business Process

ReviewSystem Development

And Testing

Beta Department

Implementation

CompleteConv. Ctr

Nov. 1On-going

Beta

Convention Center

Treasurer

Group 1

Public Works

Group 2

Transportation

Rec & Parks

Finance

Building & Safety

Group 3

Animal Services

Library

Housing

Airports

DWP

Group 4

Police

Fire

Planning

Personnel

Group 5

GSD

Cultural Affairs

City Clerk•Mayor

•Council

El Pueblo

City Attorney

Zoo

Aging

Lacers

CAO

Controller

Group 6

Ethics

Coliseum

CSOW

CDD

CCYF

ITA

EPD

ERB

Environmental Affairs

Harbor

DONE

Human Relations Comm.

Fire & Police Pension

Disability

Sub Bank Account Rollout Plan

BANKING SERVICES RFP

•Why go out to bid?

•Vision for RFP – Create a virtual bank

•Chronology – January 2008 through April 2008

•Selection process – Bank overview, product

demonstrations, follow-up

•RFP panel included stakeholders – ITA, Controller, LAWA,

Port of Los Angeles, DWP, Finance, Treasury

BANKING SERVICES RFP

•Major considerations in choosing a new bank – Strategic

consultant, price, technology solutions, resources

•Link to our website about RFP – www.lacity.org/treasurer

•Successful respondents and why? – Wachovia and Wells

Fargo

•Impact on current projects specifically technology/systems

VIRTUAL TREASURY

MANAGEMENT

Vision Statement

Eliminate the use the checks as a primary means of receipting funds to

the City and making payments to vendors, agencies and employees.

Goal and Objective

•Create a citywide policy that endorses electronic receipts and payments

as the preferred processing option for City funds.

•Develop an Action Plan to Make Electronic Payments to City Suppliers.

•Develop an Action Plan to Create One Point of Access for Customer

Payments.

VIRTUAL TREASURY

MANAGEMENT

Available Solutions

• Electronic payment options – purchasing cards, electronic

invoicing such as US Bank’s Powertrack, payment files,

positive pay, outsourcing check production, etc.

•Electronic receivables options – lockbox, layering on bank

technology for improved customer service, remote deposit

capture.

CONCLUSION

Stay focused on best practices.

Redefine your work force and get educated.

Be creative.

Understand the impact of changing your operations

to the City as a whole.

Go for it!!!

Q & A

Questions & Answers