Cash Management Division
In 1949, the California Legislature amended Government Code Section 16305 to create the Centralized Treasury System (CTS) thereby requiring agencies of the State to deposit their money in trust with the Treasurer. This legislation requires the Treasurer to safeguard the money and make safe and prudent investments. It has since become the responsibility of the Cash Management Division (CMD) to oversee all banking aspects of the CTS.
The goal of the CTS is to have all State money invested each day. This goal is accomplished by: (1) forecasting agency revenue collections and disbursements and their impact on the Treasurer's Pooled Money Investment Portfolio and; (2) using compensating balances to allow for the variances in cash flow that are a natural consequence when forecasting the movement of cash.
In 1955, the Legislature created the Pooled Money Investment Board (PMIB), giving the Board the responsibility to designate the amount of money available for the investment in securities, bank deposits and loans to the General Fund. The CMD is responsible for creating long-term, medium-term, and short-term forecasts of cash flow that assist the PMIB in meeting its responsibility.
In order to safeguard the State's money on deposit with the depository banks, it is CMD's responsibility to assure that all collected funds on deposit are collateralized 110 percent, or in accordance with Sections 16520 through 16533 of the Government Code.
The State Treasurer maintains demand bank accounts with seven statewide banks for the purpose of providing necessary depository coverage for the remittance of funds collected by the various state agencies. Currently, the State Depository Banks are:
- Bank of America
- Bank of the West
- Citibank
- Union Bank of California
- U. S. Bank
- Wells Fargo Bank
- WestAmerica Bank
Disbursements from these accounts are made by drawing checks or wire transfers in payment of warrants, agency checks or vouchers. A daily report of these disbursements is required by law to be made to the State Controller.
Additionally, the CMD keeps these accounts at the monthly average balance prescribed by the PMIB as compensation to the banks for services provided and uncollected funds deposited.