July 6, 2007 Vermont Municipal Advisory Commission offers counsel on cash management policies Officials Urge Towns to be Prudent with Cash
Contact: Tom Salmon, CPA, Vermont State Auditor July 3, 2007
Tel. 802-828-2281 Cell: 802-376-6101
MONTPELIER -- State Auditor Tom Salmon and members of the Vermont Municipal Advisory Commission isued advice today for towns receiving some of the $135 million coming from the State of Vermont this week for homeowners in the Homestead Property Tax Income Sensitivity Program.
Instead of direct checks to eligible individuals as in the past, the State is wiring payments directly to cities and towns, along with a file of eligible individuals and their property tax credit amount, and also sending a notice to the affected taxpayer about that payment.
Cities and towns will be able to deposit and invest their payments until they transfer funds to school districts.
"Receiving a significant one-time payment highlights the need for clear cash-management policies and procedures," Salmon noted. "The more reliable and accurate your reporting system is, the more knowledge you’ll have about how much you can invest and for how long a period," he added.
Members of the Vermont Municipal Advisory Commission, a group organized in February by Salmon, have advised Treasurers to adhere to simple guidelines:
1) Safety, liquidity and yield should be your priorities, in that order.
2) Have a written policy for managing cash for the highest benefit in a secure, transparent manner.
3) Review your dates of payment to schools so you know what your window of investment opportunity is.
4) Evaluate whether this money can prevent short term borrowing.
5) Call 3 or 4 banks and shop around to see where you can invest the money for the best gain and/or look at other short-term money market instruments consistent with safety considerations. Collateralization of public deposits should be an important concern.
6) Develop and maintain a flexible cash management system with sustained attention.
For more information, people can contact Commission member John Cushing jcushing@town.milton.vt.us or may log onto State Treasurer Jeb Spaulding’s link to Short Term Investing Guidelines at: http://www.vermonttreasurer.gov/documents/misc/shortTermInvestGuidelines.pdf.
The Government Finance Officers Association web site also has a section on best practices for cash management that may be helpful at: http://www.gfoa.org/services/rp/cash.shtml.
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