The BOI should work with the Legislative Auditor's Budget and Fiscal Affairs Division to develop annual projections of daily cash flow for the General Revenue Fund for the upcoming fiscal year. Thereafter, the BOI [IMB] will develop these projections on its own. These 12 month projections should then be made available to advisors every month.
Level of Compliance:Non-Compliance
The intent of this recommendation was to encourage the development of long-term daily cash flow projections that would indicate appropriate amounts to be invested at various maturities. This would help maximize investment earnings for the state. Currently, the agency is able to make daily cash-flow projections for relatively short periods, such as a few days. At the conclusion of the original review, in July 1995, the agency agreed with the recommendation and acknowledged the need for better long-term cash flow data. In the third compliance update of the original review, the Legislative Auditor reduced the level of compliance from planned compliance to non-compliance because of the considerable amount of time to work on the recommendation.
Since the elimination of the Board of Investments and the creation of the Investment Management Board (IMB), the IMB and the State Treasurer's Office have had a Memorandum of Understanding in which the Treasurer's Office provides portfolio accounting services to the IMB. The Treasurer's Office has taken on the responsibility of developing daily cash flow data. While the Treasurer's Office acknowledges the need for long-term daily cash flow projections, it is unable to project revenues and expenses on an annual basis at this time and for the foreseeable future. There are several problems associated with obtaining these projections which are discussed in Appendix A. Essentially, projections for the General Revenue fund can be achieved, however, since the General Revenue fund is only one-third of all state funds it is important to also include Federal funds and Special Revenue funds in the projections. The data on these latter two sources are more difficult to obtain and require the cooperation of state agencies. There are also some programming limitations in which historical data for all state agencies will require time to develop.
The Legislative Auditor is satisfied that the Investment Management Board and the State Treasurer's Office have made a sincere effort to comply with this recommendation. However, it appears that the recommendation cannot be complied with in the foreseeable future. The Treasurer's Office continues to work towards the goal of developing long-term daily cash flow data. It has requested that each agency receiving federal funds complete a survey to provide information to develop patterns of receipts (See Appendix B), and efforts are being made to overcome the programming limitations that prevent the development of historical data.