Cash Management Proposal
Issue: UVU currently invests all “working capital
cash” in Utah State Treasurer’s Pool. Cash is liquid
and safe but only earns at the lowest “short
term” rates.
 Proposal: That UVU take some of its not used
and available “working capital cash” and invest it
in “Intermediate-Term Investments,” enhancing
earnings on cash (approximately four times the
rate), while following all Utah Money Management
Act requirements, in prudent investments in CDs,
Treasuries, Agency Bonds and high-rated
Corporate Bonds.

Cash Management Proposal
Enhance earning on cash
 Diversify portfolio
 Ladder investments for liquidity
 Continued compliance with the Money
Management Act

Jun-02
Oct-11
Jun-11
Feb-11
Oct-10
Jun-10
Feb-10
Oct-09
Jun-09
Feb-09
Oct-08
Jun-08
Feb-08
Oct-07
Jun-07
Feb-07
Oct-06
Jun-06
Feb-06
Oct-05
Jun-05
Feb-05
Oct-04
Jun-04
Feb-04
Oct-03
Jun-03
Feb-03
Oct-02
HISTORY OF UVU'S CASH BALANCE
PTIF LOW BALANCES BY MONTH
120,000,000
100,000,000
80,000,000
60,000,000
AMOUNT
40,000,000
20,000,000
0
Cash Balances
Cash Funds
30-Jun-11
30-Jun-07
$22,790,000
$615,000
Self-Insurance, Payroll Liabilities
20,142,000
401,000
Education and General
17,652,000
25,580,000
Gear-Up Grant and Other
Scholarships
7,811,000
3,433,000
Plant Maintenance & Repairs,
Debt Retirement
7,154,000
3,652,000
Continuing Education
4,968,000
245,000
Auxiliary Enterprises
4,771,000
2,089,000
Student Activities
3,783,000
1,365,000
Service Enterprises
2,775,000
1,233,000
Grants, Agency, other
2,188,000
3,850,000
Aviation
1,862,000
4,198,000
Institutional Interest Income
1,136,000
3,000
$97,032,000
$46,664,000
Plant and Equipment Projects
Total
Cash Management Strategy

Safety of principal
 UVU currently deposits all its “cash” with the Utah
State Treasurer’s Pool. (Safe, but all cash with single
entity)

Need for liquidity
 This “pool” is very liquid

Yield on investment
 PTIF has a low yield
UVU follows the State Money Management Act criteria for investing
Proposal to Increase Yield
All investments strictly follow the Utah
Money Management Act
 Purchase intermediate-term high grade
investments
 Investments will be laddered for liquidity
 All investments are held in the name of
the University

Money Management Act

Investing may only be done through approved
Certified Dealers and Advisors
Dealers
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
◦
Barclays Capital Inc.
Cortview Capital Securities LLC
George K. Baum & Co.
Jeffries & Co
JP Morgan Securities, LLC
LPL Financial LLC
Merrill Lynch, Pierce, Fenner & Smith
Morgan Stanley Smith Barney
Raymond James & Associates, Inc.
RCB Capital Markets Corp.
Sterne, Agee & Leach, Inc.
UBS Financial Services Inc.
Wells Fargo Advisors LLC
Wells Fargo Securities, LLC
Advisors
Cutwater Asset Management
Morgan Stanley Smith Barney
Yellowstone Partners LLC
Zions Wealth Advisors DBA for
Contango Capital Advisors Inc
Certified Dealers: Recognized by the
Federal Reserve Bank of New York
Certified Advisors: Registered under
Section 203 of the Investment
Advisers Act of 1940
Money Management Act

Requires liquidity
◦ Laddering investments allows for liquidity

Outlines approved investment instruments that are
rated "A" or higher or the equivalent of "A" or higher,
by two nationally recognized statistical rating
organizations one of which must be Moody's
Investors Service, or Standard and Poor's;
◦
◦
◦
◦
◦
CDs
Repurchase Agreements
Commercial Paper (Commercial Bonds)
US Treasury Obligations
Other obligations of Federal and State Governments.
Short-Term Investments (Cash)
Risks
How to mitigate the risks
Market risk- Rise in interest Rate
Hold to maturity
Headline risk- Bad press in a segment
Diversification <5% in each segment
Liquidity risk- Sell before maturity
Ladder the investments
Administrative
Use Certified Dealers only
General market risk
Follow recommendations given by
Certified Dealer and Advisor’s
research teams
Yield
Reward vs Liquidity Risk
Short-term
Investments

Bank
Deposits

Money
Markets

Overnight
Funds
Intermediate-term
Investments

CDs

Treasuries

Agency Bonds

Corporate
Bonds
Possible additional yield
By actively layering liquidity over time
Time
What are other Universities doing
for Cash Management?
U of U
USU
WSU
SLCC
UVU
SNOW
DIXIE
SUU
% in PTIF
10-13%
<10%
50%
25%
100%
34%
100%
66%
% of time
spent
managing
investments
10-15%
30%
10%
10%
0%
15%
0%
5%
<5
Years
<5
Years
<5
Years
<2 Years
Liquid
<5 Years
Liquid
<3 Years
Wells
Fargo
Wells
Fargo
Wells
Fargo
Zions &
Wells
Fargo
PTIF
Zions &
Wells
Fargo
PTIF
Wells
Fargo
Wells
Fargo
Zions,
Wells
Fargo,
George
K Baum,
Smith
Wells
Fargo
Zions,
Wells
Fargo,
George K
Baum
N/A
Zions,
Wells
Fargo
N/A
Wells
Fargo,
George
K Baum
How far
out–
Maturity
dates
Safekeeping
Certified
Dealers and
Advisors
(Brokers)
What are other Universities doing
for Cash Management?
U of U
USU
WSU
SLCC
UVU
SNOW
DIXIE
SUU
Dedicated
Cash
Investment
Manager
NO
NO
NO
NO
NO
NO
NO
NO
Background?
Finance
Acc
Econ
Acc
Acc
Acc
Acc
Acc
Short-term
investment
amount ?
$1 B
$285 M
$100 M
$85 M
$100 M
$20 M
$20 M
$60 M
State &
US
Local
Bank CDs,
Bank CDs,
Bank CDs,
Treasuries,
Bank
government
Corporate
corporate
corporate
Types of
Federal
CDs,
bonds,
floaters,
bonds,
PTIF only
bonds, PTIF only
investments? agencies,
Federal
Federal
Federal
corporate
corporate
repurchase
agencies
agencies,
Agencies
floaters
floaters
agreements
corporate
bonds
What are other Universities doing
for Endowments?
Dedicated
Endowment
Manager?
% of Job
U of U
USU
WSU
SLCC
UVU
SNOW
DIXIE
SUU
Yes
No
Yes
No
No
Small
Endowment
No
Yes
15%
5%
Part of (all with U,
95%
Director of ½ basis (Entry level
Acct Duties point Accounting)
100%
50%
Endowment,
<20% of
CM,
Time
Foundation
charge)
Options Available
Options
Costs
Continue with current PTIF Strategy
Opportunity Costs- $500,000-600,000
Hire an Investment Manager
$75,000 + 31,365 + 30,000 = $136,000
Salary + Benefits + Bonding
*Use Wells Fargo as part of our
current banking contract
Fees + Commission deducted before yield
is computed
Request for proposal (RFP)
Opportunity Costs- 4-6 months
*Administration recommends using Wells Fargo and one other
Certified Dealer, following the State Money Management Act
“We haven’t looked at entertaining the use of an (in-house)
advisor because it is difficult under the limitations of the Act to
get a return large enough to cover the cost of the hiring of an
(in-house) advisor.” - Mel F. Smith, Manager – Banking &
Operational Investment, University of Utah