View the entire newsletter for more articles: 2023 – NJAC County Biz – April
by William Cherry, Director Public Partnership for three+one
Public officials who are responsible for the safety and security of taxpayer funds that are entrusted to their custody can sometimes find it difficult to get a good night’s sleep—even in the best of times! That is especially true right now, given the most recent upheavals in the banking industry and financial markets.
three+one was founded by public officials and designed for public officials to provide them with the tools, knowledge, data, and confidence they need to effectively manage—and protect—the liquidity and cash they are responsible for.
Our team of financial professionals has the depth and experience to provide you with the data and information you need to help you through any unexpected financial event or crisis. We have seen it all, from the banking crisis of the 1980s to the financial collapse and major recession of 2008, and right up through the revenue and cash-flow concerns resulting from the Covid-19 pandemic of 2020-2021. Having that knowledge, expertise, and critical data at your fingertips can mean the difference between a good night’s sleep or hours of fretful tossing and turning.
The three key factors are:
#1) ACCURATE INFORMATION: Having a clear, concise, and easy-to-understand picture of where ALL of your public entity’s cash and liquidity is presently situated—and that includes bank accounts as well as all investments. You need to know, at a glance, precisely how much cash you have on deposit across dozens, or even hundreds of separate accounts, spread across six, seven, or sometimes even more, banking institutions.
#2) DIVERSIFICATION: It is very important that a significant portion of your investable cash is diversified in a series of varying length CDs, U.S. Treasuries, and other 100% secure, government-backed, fixed-term securities. State-sponsored investment pools are another useful tool for a measured share of your short-term cash. Obviously, you need to have cash available in your general operating accounts to pay for operating expenses, both anticipated as well as unexpected. But having too much cash on hand can be worrisome as well. Furthermore, that readily available cash often underperforms benchmarks for optimum interest earnings, and that means suppressed revenues. Diversification of funds through an intersecting and overlapping gridwork of guaranteed fixed-term investments ranging from 30 days up to 12 months (or even longer) is crucial to safety and security as well as to generating maximum returns.
#3) BANKING BENCHMARKS: It’s important to know exactly how your banks are valuing your accounts: How much is being charged in transaction fees? What Earnings Credit Rate (ECR) is being applied to your funds while they remain on deposit? Are the bank’s compensating balance requirements fair and equitable, given the size of your public entity’s assets and transaction history?
When all the facts and financial data are right at your fingertips, it’s a lot easier to get a good night’s sleep. You can rest assured knowing that the investment and banking decisions you’ve made are sound, practical, and based upon the most accurate information. And that the funds entrusted to your care and custody are safe, secure, diversified—and bringing in the maximum returns for your taxpayers. If all that doesn’t bring sweet dreams to a public-entity’s CFO, nothing will.
William Cherry served for 24 years as a county chief financial officer responsible for safely managing and investing public funds, and for 20 years as a county budget officer. He now serves as the Director of Public Partnerships for three+one, and can be reached by phone at 585-484-0311, ext. 709 or by email at wec@threeplusone.us