CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

Return to CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

SUBSECTION 4.3.6.1
GENERAL POLICIES

4.3.6.1.1

Purpose

Effective Date:

August 1, 1996

This section contains the policies, regulations, and procedures for cash management practices of state agencies. These are the minimum requirements for cash management and apply to all state agencies. An agency may expand these policies and procedures to better meet the agency’s unique needs. Such expanded requirements are not to interfere with meeting the minimum standards set in this section.

This section is not intended to encompass investment authority granted by statute to agencies.

The purpose of good cash management is to:

Accelerate collections;

Pay bills close to the due date unless vendor discounts are greater than potential interest earnings;

Minimize uninvested cash balances; and

Increase the use of credit cards, debit cards, electronic fund transfer, and other electronic and technological means to pay bills or receive revenues when it is economically feasible to do so.

4.3.6.1.2

Authority

Effective Date:

August 1, 1996

4.3.6.1.2.a

Chapters 43.88 and 43.41 RCW require the Office of Financial Management (OFM) to adopt the rules necessary to manage the cash flow of public funds. RCW 43.08.015 assigns certain cash management responsibilities to the Office of State Treasurer (OST).

4.3.6.1.2.b

RCW 43.41.180 states that:

The office of financial management is authorized to approve the use of electronic and other technological means to transfer both funds and information whenever economically feasible, to eliminate paper documentation wherever possible, and to provide greater fiscal responsibility. This authorization includes but is not limited to the authority to approve use of electronic means to transfer payroll, vendor payments, and benefit payments and acceptance of credit cards, debit cards, and other consumer debt instruments for payment of taxes, licenses, and fees. The office of financial management shall adopt rules under RCW 43.41.110(13) to specify the manner in which electronic and other technological means, including credit cards, are available to state agencies. No state agency may use electronic or other technological means, including credit cards, without specific continuing authorization from the office of financial management.

4.3.6.1.2.c

The provisions of 43.88 RCW are outlined in Subsection 2.1.1.1.

4.3.6.1.2.d

The Cash Management Act under RCW 43.08.015 states that:

The state treasurer shall take actions as necessary to ensure the effective cash management of public funds. The cash management shall include the authority to represent the state in all contractual relationships with financial institutions. The state treasurer may delegate cash management responsibilities to the affected agencies with the concurrence of the office of financial management.

4.3.6.1.3

Applicability

Effective Date:

August 1, 1996

4.3.6.1.3.a

This section applies to all agencies of the state of Washington, unless otherwise exempted by statute. The Budget and Accounting Act defines the term "agency" to mean and include "every state office, officer, each institution, whether educational, correctional or other, and every department, division, board and commission, except as otherwise provided."

4.3.6.1.3.b

Agencies may request a waiver from complying with specific requirements of this section. The request must be in writing and approved in writing by OFM before the waiver may take effect. Such waivers automatically expire at the end of the fiscal biennium for which they were granted and must be reapproved in writing to remain in force. To assure timely approval of waivers, agencies should submit waivers to OFM no later than 10 days before the proposed effective date.

4.3.6.1.4

Roles and Responsibilities

Effective Date:

August 1, 1996

4.3.6.1.4.a

The role of agencies is to manage the cash flow in their accounts to:

Provide security for the assets of the account;

Minimize the costs of collection for the account;

Ensure timely payment of vendors;

Minimize cash flow operations processing costs;

Ensure that agency procedures deter fraud and abuse; and

Minimize the cost of disbursing funds from the account.

4.3.6.1.4.b

The role of OFM is to:

Develop accounting and administrative policies and procedures for cash management for state agencies.

Approve, prior to implementation, the acceptance of credit cards, debit cards and electronic and technological means to transfer both funds and information whenever economically feasible as required in Subsection 4.3.6.4.

Provide technical assistance to agencies in preparing an Economic Feasibility Plan as outlined in Subsection 4.3.6.4.

Work with OST to provide fiscal committees with progress reports, as needed, on the implementation of the Cash Management Act.

4.3.6.1.4.c

The role of OST is to:

Represent state agencies in negotiating banking agreements with financial institutions or other vendors providing similar services. This responsibility may be delegated to agencies with OFM’s concurrence.

Agencies that intend to seek OST assistance in banking negotiations or delegated authority to negotiate banking services are strongly encouraged to contact OST early in the process. This will give OST sufficient time to provide agencies with a timely response.

Normally, the following documents are required for OST’s review to ensure that resulting contractual arrangements reflect sound business practices at minimized costs, utilizing economies of scale to negotiate favorable fees, while insuring prompt payment and reducing liability:

Draft of the Request for Proposal (RFP) or Request for Information (RFI).

Draft of the Banking Contract.

Pay, at its discretion, for purchased banking services for treasury and treasury trust accounts from the investment income accounts. OST’s reimbursement for purchased banking services is generally limited to amounts above an agency’s funding for the activity.

Work with OFM in implementing sound cash management policies, procedures, and applications which include, but are not limited, to the following:

Expand utilization of Electronic Fund Transfers (EFT) for both revenue collections and disbursements

Management of cash receipts/deposits within state agencies and field offices to ensure that money is concentrated and invested as soon as possible (e.g., network collection).

Electronic benefit transfer (EBT) to eligible clients.

Credit and debit card, and Point of Sale (POS) applications.

Advise agencies of new cash management techniques, practices, procedures and other efficient methods of collecting and disbursing state money.

Assist agencies by increasing their knowledge of applicable depository and investment statutes.

4.3.6.1.5

Definitions

Effective Date:

August 1, 1996

4.3.6.1.5.a

Administering Agency - An agency designated by OFM to provide general oversight of financial accounting activity. An administering agency is responsible for the cash management of the funds it administers. (Refer to Subsection 2.1.2.2.6 for the role of the administering agency.)

4.3.6.1.5.b

Automated Clearing House (ACH) - An electronic processing and delivery system that provides for the distribution and settlement of debits and credits among financial institutions. Used by the state for the distribution of payroll, retirement benefits, withholding taxes, industrial insurance benefits, and revenue to local governments, as well as for the receipt of revenues into the Treasury.

4.3.6.1.5.c

ACH Manager - Personal computer software which allows OST to settle accounts through ACH electronic transfers of funds between bank accounts. ACH Manager provides an alternative to settling accounts by wire transfers.

4.3.6.1.5.d

Debit Card - A card that draws funds directly from a deposit account.

4.3.6.1.5.e

Disbursements - Payments by cash, warrant, check, journal voucher, EFT, or any other OFM approved technological payment method. (Refer to Section 2.2.3 for policies and procedures regarding disbursements.)

4.3.6.1.5.f

Drawdown - A process whereby a state receives federal funds.

4.3.6.1.5.g

Electronic Benefit Transfer (EBT) - The electronic transfer of government benefit funds to individuals through the use of automated card technology and ATM (Automated Teller Machine) and POS (Point of Sale) Terminals.

4.3.6.1.5.h

Electronic Data Interchange (EDI) - A computer-to-computer exchange of information that is both computer-readable and computer-processable.

4.3.6.1.5.i

Electronic Fund Transfer (EFT) - Any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephone instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution or other financial intermediary to debit or credit an account.

4.3.6.1.5.j

Lock Box - A post office box opened in the name of the depositor but accessed and serviced by a remittance processor. Banks and other nonbank processors offer lockbox services to process incoming mail and prepare a customer’s deposits at a time of day and in a manner that accelerates the availability of funds to the state.

4.3.6.1.5.k

Money owed by the state - These are primarily moneys the state owes for goods and services purchased, payroll costs, and contractual payments. These moneys also include fiduciary type payments made by the state on behalf of others, such as child support payments to the custodial parent.

4.3.6.1.5.l

Money owed to the state - These are primarily moneys such as taxes, fees, licenses, federal reimbursements, and amounts due to the state under contracts. These moneys also include fiduciary type collections received by the state on behalf of others, such as child support payments from a noncustodial parent.

4.3.6.1.5.m

Point of Sale (POS) - The place in a merchant location where consumers pay for goods and services.

4.3.6.1.5.n

Purchased Banking Services - Standard depository services that a financial institution provides an agency for a demand deposit account such as monthly maintenance charge, credits posted, debits posted, cash deposited/purchased, returned items, redeposited items, basic balance reporting capabilities, and checks deposited. Accounting related services such as, "DEPOSIT SOURCE REPORTING," are not considered regular purchased banking services and are the responsibility of the state agency requesting this type of service.

4.3.6.1.5.o

Receipts - Receipts are any moneys received by the state. These include cash, checks, warrants, credit or debit card amounts, EFTs, or debt offsets. (Refer to Section 2.2.2 for policies and procedures regarding cash receipts.)

4.3.6.1.5.p

Wire Transfer - A type of electronic fund transfer that guarantees immediate available funds or same day settlement.

4.3.6.1.6

Responsible Agency Official

Effective Date:

August 1, 1996

Each agency head is responsible for managing the agency’s financial affairs, including effectively managing its cash flows. The agency head may designate, in writing, one or more individuals who are responsible for the maintenance of cash flow procedures for the agency.

Return to CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

	This section contains the policies, regulations, and procedures for cash management practices of state agencies. These are the minimum requirements for cash management and apply to all state agencies. An agency may expand these policies and procedures to better meet the agency’s unique needs. Such expanded requirements are not to interfere with meeting the minimum standards set in this section.
	This section is not intended to encompass investment authority granted by statute to agencies.
	The purpose of good cash management is to:
	Accelerate collections;
	Pay bills close to the due date unless vendor discounts are greater than potential interest earnings;
	Minimize uninvested cash balances; and
	Increase the use of credit cards, debit cards, electronic fund transfer, and other electronic and technological means to pay bills or receive revenues when it is economically feasible to do so.

4.3.6.1.2.a	Chapters 43.88 and 43.41 RCW require the Office of Financial Management (OFM) to adopt the rules necessary to manage the cash flow of public funds. RCW 43.08.015 assigns certain cash management responsibilities to the Office of State Treasurer (OST).
4.3.6.1.2.b	RCW 43.41.180 states that:
	The office of financial management is authorized to approve the use of electronic and other technological means to transfer both funds and information whenever economically feasible, to eliminate paper documentation wherever possible, and to provide greater fiscal responsibility. This authorization includes but is not limited to the authority to approve use of electronic means to transfer payroll, vendor payments, and benefit payments and acceptance of credit cards, debit cards, and other consumer debt instruments for payment of taxes, licenses, and fees. The office of financial management shall adopt rules under RCW 43.41.110(13) to specify the manner in which electronic and other technological means, including credit cards, are available to state agencies. No state agency may use electronic or other technological means, including credit cards, without specific continuing authorization from the office of financial management.
4.3.6.1.2.c	The provisions of 43.88 RCW are outlined in Subsection 2.1.1.1.
4.3.6.1.2.d	The Cash Management Act under RCW 43.08.015 states that:
	The state treasurer shall take actions as necessary to ensure the effective cash management of public funds. The cash management shall include the authority to represent the state in all contractual relationships with financial institutions. The state treasurer may delegate cash management responsibilities to the affected agencies with the concurrence of the office of financial management.

4.3.6.1.4.a	The role of agencies is to manage the cash flow in their accounts to:
	Provide security for the assets of the account;
	Minimize the costs of collection for the account;
	Ensure timely payment of vendors;
	Minimize cash flow operations processing costs;
	Ensure that agency procedures deter fraud and abuse; and
	Minimize the cost of disbursing funds from the account.
4.3.6.1.4.b	The role of OFM is to:
	Develop accounting and administrative policies and procedures for cash management for state agencies.
	Approve, prior to implementation, the acceptance of credit cards, debit cards and electronic and technological means to transfer both funds and information whenever economically feasible as required in Subsection 4.3.6.4.
	Provide technical assistance to agencies in preparing an Economic Feasibility Plan as outlined in Subsection 4.3.6.4.
	Work with OST to provide fiscal committees with progress reports, as needed, on the implementation of the Cash Management Act.
4.3.6.1.4.c	The role of OST is to:
	Represent state agencies in negotiating banking agreements with financial institutions or other vendors providing similar services. This responsibility may be delegated to agencies with OFM’s concurrence. Agencies that intend to seek OST assistance in banking negotiations or delegated authority to negotiate banking services are strongly encouraged to contact OST early in the process. This will give OST sufficient time to provide agencies with a timely response. Normally, the following documents are required for OST’s review to ensure that resulting contractual arrangements reflect sound business practices at minimized costs, utilizing economies of scale to negotiate favorable fees, while insuring prompt payment and reducing liability:
	Draft of the Request for Proposal (RFP) or Request for Information (RFI).
	Draft of the Banking Contract.
	Pay, at its discretion, for purchased banking services for treasury and treasury trust accounts from the investment income accounts. OST’s reimbursement for purchased banking services is generally limited to amounts above an agency’s funding for the activity.
	Work with OFM in implementing sound cash management policies, procedures, and applications which include, but are not limited, to the following:
	Expand utilization of Electronic Fund Transfers (EFT) for both revenue collections and disbursements
	Management of cash receipts/deposits within state agencies and field offices to ensure that money is concentrated and invested as soon as possible (e.g., network collection).
	Electronic benefit transfer (EBT) to eligible clients.
	Credit and debit card, and Point of Sale (POS) applications.
	Advise agencies of new cash management techniques, practices, procedures and other efficient methods of collecting and disbursing state money.
	Assist agencies by increasing their knowledge of applicable depository and investment statutes.

4.3.6.1.5.a	Administering Agency - An agency designated by OFM to provide general oversight of financial accounting activity. An administering agency is responsible for the cash management of the funds it administers. (Refer to Subsection 2.1.2.2.6 for the role of the administering agency.)
4.3.6.1.5.b	Automated Clearing House (ACH) - An electronic processing and delivery system that provides for the distribution and settlement of debits and credits among financial institutions. Used by the state for the distribution of payroll, retirement benefits, withholding taxes, industrial insurance benefits, and revenue to local governments, as well as for the receipt of revenues into the Treasury.
4.3.6.1.5.c	ACH Manager - Personal computer software which allows OST to settle accounts through ACH electronic transfers of funds between bank accounts. ACH Manager provides an alternative to settling accounts by wire transfers.
4.3.6.1.5.d	Debit Card - A card that draws funds directly from a deposit account.
4.3.6.1.5.e	Disbursements - Payments by cash, warrant, check, journal voucher, EFT, or any other OFM approved technological payment method. (Refer to Section 2.2.3 for policies and procedures regarding disbursements.)
4.3.6.1.5.f	Drawdown - A process whereby a state receives federal funds.
4.3.6.1.5.g	Electronic Benefit Transfer (EBT) - The electronic transfer of government benefit funds to individuals through the use of automated card technology and ATM (Automated Teller Machine) and POS (Point of Sale) Terminals.
4.3.6.1.5.h	Electronic Data Interchange (EDI) - A computer-to-computer exchange of information that is both computer-readable and computer-processable.
4.3.6.1.5.i	Electronic Fund Transfer (EFT) - Any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, which is initiated through an electronic terminal, telephone instrument, or computer or magnetic tape so as to order, instruct, or authorize a financial institution or other financial intermediary to debit or credit an account.
4.3.6.1.5.j	Lock Box - A post office box opened in the name of the depositor but accessed and serviced by a remittance processor. Banks and other nonbank processors offer lockbox services to process incoming mail and prepare a customer’s deposits at a time of day and in a manner that accelerates the availability of funds to the state.
4.3.6.1.5.k	Money owed by the state - These are primarily moneys the state owes for goods and services purchased, payroll costs, and contractual payments. These moneys also include fiduciary type payments made by the state on behalf of others, such as child support payments to the custodial parent.
4.3.6.1.5.l	Money owed to the state - These are primarily moneys such as taxes, fees, licenses, federal reimbursements, and amounts due to the state under contracts. These moneys also include fiduciary type collections received by the state on behalf of others, such as child support payments from a noncustodial parent.
4.3.6.1.5.m	Point of Sale (POS) - The place in a merchant location where consumers pay for goods and services.
4.3.6.1.5.n	Purchased Banking Services - Standard depository services that a financial institution provides an agency for a demand deposit account such as monthly maintenance charge, credits posted, debits posted, cash deposited/purchased, returned items, redeposited items, basic balance reporting capabilities, and checks deposited. Accounting related services such as, "DEPOSIT SOURCE REPORTING," are not considered regular purchased banking services and are the responsibility of the state agency requesting this type of service.
4.3.6.1.5.o	Receipts - Receipts are any moneys received by the state. These include cash, checks, warrants, credit or debit card amounts, EFTs, or debt offsets. (Refer to Section 2.2.2 for policies and procedures regarding cash receipts.)
4.3.6.1.5.p	Wire Transfer - A type of electronic fund transfer that guarantees immediate available funds or same day settlement.