 |
The State Treasurer's Office performs two general functions. It manages banking services for state government, clearing and reconciling transactions; and it invests short-term funds. The managed funds are temporary in nature, originating from three major sources: revenue collected by the state awaiting disbursement, legislative appropriations, and proceeds from bond issues invested short-term until disbursed for legislatively-authorized capital projects. Because the funds could be called on short notice, the Treasurer’s Office must give priority to safety and liquidity. Once those criteria are met, maximum yield is sought.
In support of these activities are legal, accounting, and information technology services. Given the large amount of funds invested as well as the large volume of transactions, it is imperative that financial controls be rigorously maintained. As further assurance, the State Treasurer has added a fulltime Compliance Officer to ensure compliance with New Mexico laws, administrative code, State Treasurer’s policies and procedures, directives from oversight agencies, proper internal control procedures, and other management directives. Ongoing compliance reviews in conjunction with external annual and quarterly audits and State Board of Finance oversight will assure that the Office's operations are accurate, timely, efficient, legally compliant, and fully transparent to the taxpayers of New Mexico.
– INVESTMENT SERVICES –
The funds held for investment fall into three general categories. The General Fund houses operating moneys held for the benefit of various state agencies. The Bond Proceeds Investment Pool is comprised of the proceeds from state bonds issued by the State Board of Finance for capital projects. The New MexiGROW Local Government Investment Pool invests various funds for participants such as counties, cities, school districts, tribes, special utility districts, and other local government units that have elected to let the State Treasurer invest on their behalf.
The Chief Investment Officer invests money in the custody of the State Treasurer that is not immediately needed for the operations of state government. In accordance with this fiduciary responsibility, all investments made by the State Treasurer's Office must follow three fundamental principles: safety, liquidity, and yield, prioritized in that order. All investments are made in accordance with the State Treasurer’s Investment Policy, a document that sets investment guidelines for all Treasury investments, as approved by the State Treasurer’s Investment Committee and the State Board of Finance. This policy was opened to public comment and revised three times to effect over 300 changes in fiscal year 2006.
The types of investments that the State Treasurer may make with state funds are statutorily defined: U.S. Government and Agency obligations, commercial paper, corporate bonds, money market mutual funds, certificates of deposit, overnight repurchase agreements, and asset-backed obligations. Maturities in these investments are restricted to a maximum of five years. Types and terms of investments are determined by the State Treasurer’s Investment Advisory Committee and reported monthly to the State Treasurer’s Investment Committee. Investments are purchased by the investment officers for the General Fund and the New MexiGROW Local Government Investment Pool. All investment purchases are cleared and accounted for through the Investment Accounting Bureau.
The State Treasurer also invests a pool of funds on a daily basis in an overnight repurchase agreement. This pool consists of moneys from the Public Employees Retirement Association, State Investment Council, Educational Retirement Board, New MexiGROW Local Government Investment Pool, Bond Proceeds Investment Pool, and the General Fund.
By state statute, the Treasurer must make a portion of the General Fund money available for investment in time certificates of deposit in New Mexico banks, savings and loan associations, and credit unions. Time deposits are made with a preference to financial institutions in economically-challenged communities.
The State Treasurer’s Office also is responsible for investing bond proceeds from the issuance of general obligation bonds, severance tax bonds, and supplemental severance tax bonds, which are long-term obligations issued by the state of New Mexico to fund various infrastructure projects on behalf of the state of New Mexico. The State Treasurer’s Investment Accounting Bureau is responsible for making all scheduled debt service payments to the designated paying agents on these bonds and for tracking the investment income to assure compliance with arbitrage restrictions and rebate requirements in accordance with the Federal Tax Reform Act of 1986.
Collateral ensures adequate protection of state money deposited by agencies in local banks, the state’s fiscal agent account, and ancillary receivership deposits. The State Treasurer’s Collateral Section reviews, tracks, and reconciles collateral pledged by financial institutions to secure public deposits. Both proposed and current pledged collateral are continuously evaluated for compliance with all applicable statutes, policies, and depository and custodial agreements; pledged securities are monitored to assure that acceptable, valid, and marketable instruments secure public funds at all times; risk assessment reports are analyzed to determine data accuracy, the institution’s financial condition, and the percentage of collateral required; and custodial banks are monitored to evaluate their legal acceptability.
– CASH MANAGEMENT SERVICES –
Cash management for the state of New Mexico involves the systematic gathering of information about the state’s collections, disbursements, balances, and the use of that information to manage effectively the funds available to the state. The forecasting and cash management expertise offered by the State Treasurer's Office are necessary to ensure the availability of sufficient funds to cover state obligations while optimizing investment earnings.
The banking function of the State Treasurer's Office includes accepting money for deposit, processing withdrawals, reconciling all bank transactions and balances, and managing securities used as collateral in accordance with Federal Reserve requirements. The State Treasurer’s Office acts as the state’s bank and records the receipt and disbursement of all state moneys defined by statute as being in the custody of the State Treasurer or payable to the State Treasurer.
The Office obtains state agency reports of all money and deposits from all sources in the agency’s custody. It also performs a daily reconciliation between the fiscal agent bank account and the agency deposits using SHARE to determine a cash component for investment purposes.
In addition, staff authorizes state agency requests for non-fiscal agent depository bank accounts; reports account balances in each financial institution to the State Board of Finance; determines compliance with established guidelines and reports any deviations to the agency, the State Board of Finance, and the Legislative Finance Committee; and enforces requirements for financial institutions holding state funds.
Other banking services are provided to state agencies such as both incoming and outgoing wire transfer services, and distribution of interest to agencies with statutory authority or a federal mandate to receive interest earnings on fund balances. Also, the State Treasurer is the paying agent for state-issued bonds and is required to make all debt payments on scheduled maturity dates to designated payees.
- SUPPORT SERVICES -
The investment and cash management operations at the State Treasurer’s Office receive support from several Budget/Finance and Operations bureaus which provide human resources, procurement, contracting, accounting, budgeting, auditing, inventory control, records management, compliance control, and information technology services to the Agency. The support of these groups is essential to the efficient operation of the Agency.
|
 |