Governor  Dannel P. Malloy
 

Cash Management

Frequently Asked Questions

  1. How does the Treasurer's Office manage the state's cash?
    The goal of our cash management program is to, first, safeguard the state's cash resources, and, second, make the most prudent and productive use of those resources through short-term investments in safe and liquid investments. Bank balances are consolidated daily, and funds not needed to cover disbursements are invested in various short-term vehicles or maintained in bank accounts based on relative interest and earnings credit rates and projected cash flows.

  2. What is a bank's "earnings credit rate?"
    Banks calculate credits for our bank balances based on negotiated rates or formulas. These credits offset bank service fees. On a daily basis, we calculate whether it is to the state's advantage to (a) keep funds in the bank and earn such credits or (b) invest those balances elsewhere and then pay for fees with hard dollars out of the investment income.

  3. What is the common cash pool?
    The common cash pool contains the state's operating cash of its many funds and accounts. The cash is pooled in order to make most effective and efficient use of aggregate balances and to allow positive balances in one fund to offset negative balances in other funds.

  4. What are interfund transfers?
    On occasion, if the common cash pool balances run low, we temporarily transfer monies in bond fund investment accounts to the common cash pool in conformance with the State's long-standing and sanctioned procedures for managing fluctuations in the flow of cash to and from separate funds. Those transferred funds are returned to the bond fund investment accounts when other cash balances improve. This is the most efficient and cost-effective way of meeting the state's obligations to municipalities, vendors, program recipients, employees and bond holders. We make full use of available internal resources rather than borrowing in more expensive external credit markets.

  5. What is STIF?
    The Treasurer's Short-Term Investment Fund (STIF) is an investment pool of high-quality, short-term money market instruments. Operated in a manner similar to money market mutual funds, STIF is rated AAAm by Standard & Poor's, and has an average maturity of under 60 days. Created in 1972, STIF serves as an investment vehicle for the operating cash of the State Treasury, state agencies and authorities, municipalities, and other political subdivisions of the State.

  6. What is the advantage of investing in a pool such as STIF?
    STIF allows the complete, same-day liquidity of an overnight investment with the yield of longer-term securities. A pool such as STIF also provides diversification of securities and maturities, which reduces risk. STIF assets have ranged from $3.7 billion to $6.7 billion the last several years and provide individual investors with the benefits of its substantial purchasing power.

  7. What is the Community Bank and Credit Union Investment Program?
    The Treasurer's Community Bank and Credit Union Initiative was established to support Connecticut's community banks and credit unions and to enhance their ability to promote the economic and social health of the communities they serve. Under the initiative, community banks and credit unions, with assets not exceeding $500 million and domiciled in Connecticut, are invited to compete for a targeted pool of investments that the Treasury will make in certificates of deposit.