Cash Management Plan

WHEREAS, P.L. 1983, Chapter 8, Local Fiscal Affairs Law; N.J.S.A. 40A:5-2, has been amended to require that each Local Unit designate a Cash Management Plan for the deposit of each Local Unit’s monies,

A. DESIGNATION OF OFFICIAL DEPOSITORIES:

1. Amboy National Bank
    First Jersey National Bank
    Freehold Savings
    Hudson City Savings & Loan
    Investors Savings & Loan
    Merrill Lynch
    Sovereign Bank
    State of NJ Cash Management
   TD Bank
   The Town Bank
   Wachovia Bank


2. Designated official depositories are required to submit to the Director of Finance of the Middlesex County Municipal Joint Insurance Fund a copy of the State of New Jersey, Department of Banking, Governmental Unit Deposit Protection Act Notification of Eligibility, which must be filed semiannually in the Department of Banking as of June 30th and December 31st of each year.

3. Designated official depositories are required to submit to the Director of Finance a copy of Institution’s “Annual Report” on an annual basis.

B. DEPOSIT OF FUNDS:

All funds shall be deposited within forty eight (48) hours of receipt in accordance with State Statute N.J.S.A. 40A:5-15.

  1. Operating funds shall be deposited into interest bearing accounts to maximize interest earnings.
  2. Trust funds may be deposited into interest bearing accounts. Non-interest bearing accounts should be regularly monitored for availability of funds for investment except where either State or Federal Laws prohibit the earning of interest on such funds.
  3. All receipts of funds must be entered in a Cash Receipts Book.
  4. Security of all funds until deposit to the proper depository should always be employed.
  5. Adequate control must be maintained over the handling of bad checks.
  6. All mail should be opened by someone other than the bookkeeper and endorsed immediately.

C. DESIGNATION OF ALLOWABLE INVESTMENT INSTRUMENTS:

The Insurance Fund may permit deposits and investments in such depositories as permitted by N.J.S.A. 40A:10-38 and N.J.S.A. 40A:10-10 and other instruments specified below:

  1. United States Treasury Bills (T-Bills)
  2. Commercial Bank Deposits and Certificates of Deposit (CDs)
  3. Repurchase Agreements (REPOs)
  4. Savings and Loan Association Deposits
  5. United States Government Agency
  6. State of New Jersey Cash Management Fund


D. DEFINITION OF ACCEPTABLE COLLATERAL AND PROTECTION OF INSURANCE FUND ASSETS:

  1. All designated depositories must conform to all applicable State Statutes concerning depositories of public funds.
  2. All depositories shall obtain the highest amount possible F.D.I.C. and/or F.S.L.I.C. coverage of all Insurance Fund assets (demand and certificate of deposit).
  3. Collateral will be required for all deposits and investments of the Insurance Fund, except for those in the State Cash Management Fund, collateral must have a market value of not less than 100 percent of all deposits and investments.

E. REPORTING PROCEDURES:

  1. MONTHLY REPORTING: A detailed listing of all investments purchased shall be maintained. The Investment Register shall specify the amount, interest percent, number of days, period of investment and maturity date, interest amount of maturity and financial institutions with which investment is placed. This report shall be broken down by fund.
  2. Investment Register should be reconciled to the General Ledger on a monthly basis,
  3. The Director of Finance shall prepare a schedule of outstanding investments for the independent Auditors as of December 31st of each year and at other such times required by the Auditors.

F. DIVERSIFICATION REQUIREMENTS:


The Director of Finance shall closely examine investments to guard against the effects of a Financial Institution going into default. This may be accomplished through the practice of spreading the investments around in various designated official depositories.

G. MAXIMUM MATURITY POLICY:

Investments shall be limited to a maturity not to exceed one year on all operating funds unless a longer maturity is permitted within the provision of regulation promulgated by either the Federal or State Governments.

H. INVESTMENT PROCEDURES:

  1. Bids for Certificates of Deposit and Repurchase Agreements will be solicited from at least 3 designated depositories.
  2. Telephone bids will be solicited of designated depositories by the Director of Finance or his/her designated staff member.
  3. The depository shall specify the principal amount of the investment bid on, interest rate and number of days used to calculate the interest to be paid upon maturity.
  4. Interest paid shall be from the date the bid was awarded to the day of maturity.
  5. All bidders may request the results of the bid after the bid is formally awarded.
  6. A check or wire transfer of funds will be made available to the winning bidder the same business day the bid is awarded.
  7. Each disbursement of funds shall be based upon proper written authorization. If the authorization is initially given verbally, there should be written confirmation to the depository.
  8. Each quotation shall be documented to record the date and time of quote, the parties in the discussion, the instrument(s), maturities and rates. A bid form of the Insurance Fund may be used.

 

I. CONTROLS:

When possible, the internal controls should provide for a separation of the investment placement functions and the accounting activity. Controls must be designed for telephone orders, wire transfers and securities safekeeping. Only specifically designated personnel of the Department of Finance shall be allowed to conduct this part of the transactions, and all activity should be subject to immediate written confirmation by the designated depository. The Director of Finance shall review each day’s activity.

J. BONDING:

Officials to be bonded in accordance with the regulations governing Self Insurance Funds and as recommended by the independent Auditor.