Cash Management Policies

Current Cash and Investment Policy

The library currently maintains the following accounts for the purposes described below:

1. General operating account for receiving deposits and disbursing payments for accounts payable and payroll.
2. Athens-Clarke County Library Endowment Funds, Inc. checking account for receiving donations and disbursing payments.
3. Construction checking accounts for Oconee and Bogart Library for receiving deposits and disbursing payments.
4. Certificates of Deposit designated for library equipment replacement, Endowment, and Friends of Athens-Clarke County Library.

The balance in the general operating account decreases throughout the quarter as the Library’s operating expenses are incurred.

The amounts invested in the certificates of deposit remain fairly constant with increases resulting from interest earned.

Cash Flow of Library Funds

At the beginning of each quarter, the Library receives draws from the Boards of Commission, Boards of Education, and Cities designated as funding agents for expenditures for operating expenses and salaries. In addition, funds are received quarterly from the State for expenditures related to materials, maintenance and operations, travel, and salaries.

The Business Manager prepares a detailed report of each quarter’s receipts and expenditures which is given to each county’s library board. A quarterly report for the region is also given to the Regional Library Board.

Legal Authorization for Investment of Surplus Funds

The Official Code of Georgia Ann. 36-83-4(1993)authorizes the governing authority of a unit of local government to invest surplus funds until needed for operations. This authority may be delegated to a financial officer charged with the custody of the funds.

Authorized Investments of Surplus Funds

The Official Code of Georgia Ann. 36-83-4(1993) allows investment in the following:

1. obligations of the State of Georgia and of other states;
2. obligations issued by the United States government;
3. obligations fully insured or guaranteed by the United States government or a United States government agency;
4. obligations of any corporation of the United State Government;
5. prime bankers’ acceptances
6. local government investment pool
7. repurchase agreements;
8. obligations of other political subdivisions of the State of Georgia

Certificates of deposits of banks which have deposits insured by the Federal Deposit Insurance Corporation are also allowed. (Official Code of Georgia Ann. 36-80-3, 1993)

Proposed Cash Management Plan

Authorize the Director and her appointed representative to evaluate the current cash position of the Library and determine the amount of funds to be invested, length of time, and authorized investment alternative that is most beneficial to the Library.

Proposed Investment Alternatives

1. Repurchase agreements:

Under a repurchase agreement, the Library enters into an agreement with a financial institution to purchase government securities and agencies, and the financial institution agrees to repurchase the securities and agencies at a specified rate on an agreed upon date. The rate earned on the investment would differ depending on market conditions and the length of time of the investment.

This investment is considered to be low risk because if the financial institution becomes insolvent, the securities underlying the agreement are owned by the library and can be liquidated to provide needed cash flows.

2. Open Ended Repurchase Agreements

The open ended repurchase agreement is the same as the repurchase agreement described above; however, the Library is not obligated to specify a date for the investment to mature. Instead, the Library invests in the repurchase agreement until the funds are needed. The original repurchase agreement is then closed, and a new repurchase agreement may be entered for excess cash on hand until further notice.

The rate of open-ended repurchase agreement would approximate an overnight repurchase agreement rate because of the convenience of availability of funds.

3. Treasury Notes and Treasury Bills

Treasury Notes and Treasury Bills, direct obligations of the U.S. Government, are investment alternatives to certificates of deposit for long term cash reserves.
Proposed Procedure for Investing Surplus Funds
The individual appointed by the Director will determine the surplus cash for investment after calculation of current cash needs.

This individual will contact the participating financial institution for rate quotes for each of the authorized investments.

After analyzing the alternatives, the investment yielding the highest return to the Library and satisfying cash flow requirements would be selected.

4/15/99