NO.: 00-12-OMB

ORIG AGENCY: OFFICE OF MANAGEMENT AND BUDGET

EFF DATE: 6/1/00

EXP DATE: INDEFINITE

SUPERSEDES: 93-02-OMB

SUBJECT: BANKING SERVICES

ATTENTION: ALL DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS

FOR INFORMATION CONTACT: CONNIE MASON
PHONE: (609) 633-2164

As a continuing requirement, all units of State Government requiring any
form of new banking services or any changes in existing banking services
must submit their requests to:

Department of the Treasury
Office of Management and Budget
Cash Management Unit
PO Box 221
Trenton, New Jersey 08625-0221

The Office of Management and Budget is the only State office authorized
to:

• Deal directly with banks in establishing or changing banking
  services
  
  
• Negotiate or contract for the payment of banking services

The responsibility of the Office of Management and Budget, in addition
to new accounts, also encompasses and supersedes any unauthorized
arrangements that any unit of State Government may have previously made
for accounts or services with any bank or similar financial institution.
All existing account relationships are subject to Office of Management
and Budget review and change. This responsibility extends to any State
account in a commercial bank, savings bank, savings and loan, or other
financial institution.

An account is considered a State account regardless of the source or use
of funds, and whether it is "Under" or "Not Under" the control of the
State Treasurer. Further, for the purpose of monitoring banking
relationships, an account is considered to be a State account if that
account is under the control of a State employee for official State
business and/or fiduciary responsibility.
In order to ensure continuity and compliance with this circular letter
and adequate departmental internal controls for all banking service
requests, each State Department's Director of Administration or Chief
Fiscal Officer must place all banking service requests through one
central Departmental Administrator to serve as the contact point with the
Office of Management and Budget, Cash Management Unit. All banking
requests must be pre-approved by this designated Departmental
Administrator prior to any formal request to the Office of Management and
Budget, Cash Management Unit. The Cash Management Unit must be notified
of any changes to the designated Departmental Administrator within one
month of the change.

It is the requesting Department's responsibility, combined with the
Office of Management and Budget, Cash Management Unit's direction and
final approval, to:

• Determine the need for the account
  
• Provide an explanation as to why an existing account cannot be used
  
• Ensure that adequate internal controls, including signing authority
  responsibility, are in place
  
• Limit the number of bank accounts requested to those absolutely
  necessary for the operation of the agency, and
  
• Not use interest bearing bank accounts for investment purposes

Banking services include, but are not necessarily limited to:

• Opening and closing of accounts (see numbers 1 and 2 below for
  procedures)
  
• Changes in authorized signature for the withdrawal of funds (see
  number 3 below for procedures)
  
• Removal of service charges - Direct charges to non-interest bearing
  bank accounts for services are not accepted by the State and must be
  reversed whenever they occur. (see number 4 below for procedures)
  
• Ordering of First Union National Bank and Fleet Bank General Fund
  Deposit Tickets (see number 5 below for procedures), and
  
• Establishment or renewal of banking service requirements under a
  Request for Proposal (RFP) such as lockbox processing, credit card
  services, processing of electronic payments and receipts, collection and
  disbursement services, custody services, bank reporting, reconcilement,
  messenger services, etc. (see number 6 below for procedures)

The following are procedures for the more typical banking service
requests such as opening and closing of accounts, removal of service
charges, and signatory changes. Other types of banking services may
require additional review and analysis prior to placement. Also included
is the required procedure for reporting unauthorized accounts and banking
services, as well as the procedure for requesting the use of credit
cards.

1. Establishing an Account
The requesting Department Administrator submits a written request to
the Office of Management and Budget, Cash Management Unit, to open a
new account. The request must contain the following information:

• Explanation as to why an existing account cannot be used
  
• Purpose of account and estimated level of activity, i.e., number of
  deposits, number of checks written, balance levels, etc.
  
• Name and address of using agency
  
• Name and address of bank requested
  
• Funding source, i.e., State appropriated funds, non-appropriated
  source, etc.
  
• Requirements for deposit tickets (usually one year's supply), etc.
  
• Name, address, and phone number of individual to receive signature
  cards, bank statements, and related documents
  
• Number of individuals required to sign checks (usually two), and the
  names of the individuals authorized as signatories for the account

2. Closing an Account

The requesting Department Administrator submits a written request to
the Office of Management and Budget, Cash Management Unit, to close
the account, together with a copy of the most recent bank statement
showing a zero balance for the account. The request must contain
the following information:

• Name and address of State agency
  
• Bank account name and number
  
• Bank name and address (or, bank branch and address)

3. Requesting Signature Changes

The requesting Department Administrator submits a written request to
the Office of Management and Budget, Cash Management Unit,
requesting a signature change on an account. The request must
contain the following information:

• Name and address of State agency
  
• Bank account name and number
  
• Bank name (and branch address) utilized by agency
  
• Names of signatories to be deleted
  
• Names and titles of signatories to be added
  
• Number of individuals required to sign checks (usually two)
  
• Original signature card signed by all authorized signatories

4. Removal of Service Charges

The requesting Department Administrator submits a written request to
the Office of Management and Budget, Cash Management Unit,
requesting the removal of service charge(s) on an account. The
request must contain the following information:

• Name, address, and phone number of State agency
  
• Bank account name and number
  
• Copy of the bank statement showing the service charge (debit)
  against the account

5. Ordering General Fund Deposit Tickets

The General Fund bank accounts in First Union National Bank and
Fleet Bank have the capability of using encoded information, which
permits those performing bank reconciliations to identify which
State agency made each deposit.

When it becomes necessary to order new deposit tickets, the
following information should be included in a written request to the
Office of Management and Budget, Cash Management Unit:

• Name, address, and phone number of State agency, along with the name
  of the individual to receive the tickets
  
• Bank account name and number
  
• Copy of the current deposit ticket used or the re-order form
  provided with the current deposit tickets, and
  
• Number of deposit tickets requested (usually one year's supply)

6. Development of a Request for Proposal (RFP)

If at any time the Office of Management and Budget, Cash Management
Unit, identifies specific account(s) or banking service(s) for RFP
issuance and contract development, or an existing banking service
contract is targeted for renewal, Cash Management will lead the
development of a RFP with full using agency participation. The
using agency will be required to participate as follows:

• Meet with the Cash Management Unit to discuss/outline the project,
  disseminate pertinent data, and provide exhibits when needed
  
• Coordinate with Cash Management to establish an attainable timetable
  of events
  
• Assist in the evaluation selection process including the development
  and weighting of the evaluation criteria, reviewing all vendor
  proposals, attending evaluation committee meetings, and providing
  input into the evaluation report
  
• Oversee the implementation process when required
  
• Review the monthly invoices for banking services in a timely manner,
  when necessary

7. Disclosure of Unauthorized Account(s) or other Banking Services

If there are any unauthorized accounts in existence as of the date
of this circular letter, the Department Administrator must submit a
written statement containing the below information within thirty
days to the Cash Management Unit, Office of Management and Budget,
Department of the Treasury, PO Box 221, Trenton, NJ 08625-0221. If,
at any time after issuance of this circular letter, the Department
Administrator becomes aware of an unauthorized account, the
Department Administrator must again submit a written statement
containing the following information:

• Name, address and phone number of the State agency
  
• Account name, number, and bank name
  
• Date account was established
  
• Name, title, and address of the individual that opened the account
  
• Signatories to the account and the number of individuals required to
  sign checks
  
• Purpose of account, i.e., depository, disbursement, investment,
  etc.
  
• Date account was last audited by any jurisdiction, and a copy of the
  audit findings
  
• Explanation of why the State procedures were ignored in opening the
  account, and
  
• Copy of the last three (3) months bank statements for the account

8. Requesting Credit Card Services

The use of credit cards to accept payment for licenses, services,
materials and goods must be requested through the Department
Administrator to the Office of Management and Budget, Cash
Management Unit. A cost benefit to the State of New Jersey by
offering the use of credit cards must be demonstrated, and the
following information must be submitted:

• Description of current operations
  
• Benefits of offering payment by credit card
  
• Effect on any Legislation or Administrative Code
  
• Estimated cost of operation under payment by credit card versus
  current operations without credit card
  
• Estimated volume of transactions for payment by credit card

The above items are not necessarily all inclusive, and additional
requirements may be identified to meet the needs of each specific banking
service.

State agencies should not invest directly in financial institutions.
Instead, all permissible investments must be placed through the State of
New Jersey, Division of Investment. The Division of Investment, in
addition to handling specific term investments, operates the State of New
Jersey Cash Management Fund, which is the State operated money management
fund. This fund provides account holders daily access for contributions
and withdrawals, and should be used together with a bank demand account
as an alternative to an interest bearing account. Compliance with
related executive orders and applicable investment regulations is
required.

It is important that each State Department ensure that copies of this
Circular Letter are distributed to every location in the Department
currently utilizing banking services.