County Upgrades Cash Management

County Upgrades Cash Management

The Lackawanna County commissioners took a major step Wednesday to upgrade the county government’s cash management and increase its investment income.

In a unanimous vote, Commissioners Bill Gaughan, Matt McGloin and Chris Chermak hired the financial firm three+one of Rochester, N.Y., which will implement its cashVest program to help the county increase income and save on banking-related costs.

Several other Pennsylvania counties use cashVest. According to Gaughan, Lycoming County increased its revenue by a total of $6.5 million from 2018 through 2021 through a combination of increased revenue and reduced fees after a cashVest analysis, and Franklin County increased its income and savings by a combined $2 million in a single year.

County Chief Financial Officer David Bulzoni and Treasurer Angela Rempe Jones recommended the program, and Bulzoni predicted that it will generate revenue and savings well in excess of its $41,000 annual cost.

In a memo, Bulzoni noted that the county general fund, the largest of the 77 accounts that the county uses to conduct business, was maintained as a non-interest-bearing account following the Great Recession, when banks paid negligible rates on such accounts. The county failed to adjust as rates increased, Bulzoni reported, so that the general fund account remained non-interest-bearing in 2022, when the average Fed Funds rate was 4.33%. Failure to adjust the rates resulted in what Bulzoni called an “opportunity cost” of about $520,000 in non-realized potential investment revenue, even though the treasurer managed to increase that revenue in 2023.

The cashVest program will provide:

  • A daily consolidated view of the county’s cash position including all of its accounts.
  • A review of all banking services and costs to ensure a fair, market-competitive fee structure and maximum earnings credits.
  • Weekly cash-balance projections for better financial forecasting.
  • Liquidity projections and cash-flow data to help the county improve its credit rating, which Standard & Poor’s recently reduced one position to BBB from BBB+.

The decision to use cashVest is the latest in a series of initiatives that the commissioners have undertaken to improve county finances and financial operations.

They have entered the county in the state government’s Strategic Management Program. With a $100,000 grant from that program, the commissioners have hired Philadelphia-based financial consultant PFM to devise a financial plan for the remainder of 2024 and a five-year strategic management plan to increase the efficiency and accuracy of county operations and budgeting.

Also, the commissioners have adopted priority-based budgeting, under which a consultant will help the commissioners construct a budget based on current needs rather than historical practices.