Finance Division General Information: (503) 378-4633
Banking Fax: (503) 373-1179
Customer Solutions Fax: (503) 378-2870
The Finance Division provides cash management services to all Oregon state agencies and hundreds of Oregon local government entities, including cities, counties, schools and special districts. The division also administers public funds collateralization requirements governed by ORS chapter 295. The division manages nearly 15 million financial transactions annually - including cash deposits, electronic fund transfers and check issuances - with more than $236 billion flowing in and out of the division each year.
House Bill 2779 (2017) directed the State Treasurer to convene a work group to study and develop a report on provisions of state law relating to depositories of public funds (ORS chapter 295). Treasury requested this direction in order to consider changes to state law to improve processes for transfer and deposit of public funds while protecting public funds against loss. The work group includes representatives from Treasury, state agencies, local governments, and depositories. The State Treasurer will submit a report on the work group’s activities and findings to the 2019 Legislative Assembly.
Work Group Kick-off Presentation
About Public Funds Law
ORS chapter 295 outlines requirements surrounding the deposit and collateralization of public funds. Public funds are defined as funds that a public official has custody of or controls by virtue of office. The law provides that a public official may deposit public funds up to the amount insured by the FDIC or NCUA in any insured financial institution with a head office or branch in Oregon. Public funds deposits that exceed the insurance limits must be held in a qualified public funds depository. Compliance with public funds law requirements relieves a public official of personal liability for the loss of public funds in the official’s custody or control.
State Agencies and Public Funds Law
Oregon law (ORS 293.875) designates the State Treasurer as the sole banking and cash management officer for the state. Via that designation, Treasury contracts with private banks and financial services providers to deliver a variety of cash management services to state agencies. Via our negotiations with our partners, we work to ensure that all public depository and other regulatory requirements for these services are met.
State agencies may choose to use other vendors to obtain certain limited cash management services as long as their normal contracting process is followed and all public funds and regulatory requirements are met. For more information, see Treasury Policy FIN 214 Third Party Vendor Requirements.
Local Governments and Public Funds Law
Local governments should work with their legal counsel to ensure that all public depository and other regulatory requirements are met for cash management services obtained from vendors. Additionally, local governments are subject to the requirements of the Oregon Public Funds Collateralization Program. For more information, see Public Funds Requirements.
Cash Management / Banking
Through its Cash Management Program, the Oregon State Treasury (Treasury) develops strategies and takes actions to administer and invest the cash of Oregon state agencies and local governments in order to effectively meet their strategic and operational goals and objectives.
Transactions totaling more than $236 billion moved through the Cash Management Program during calendar year 2017. Costs are recovered through investment administrative fees and banking transaction fees. The program includes four primary areas of cash management activity for state agencies: Short- and intermediate-term investment of cash, central banking operations, cash management improvement activities, and information infrastructure and security activities. Services for local governments include: short-term investment of cash and certain information infrastructure and security activities.
While these activities aren’t inclusive of all OST Cash Management responsibilities, and are certainly not as neatly segregated from an operational perspective as they are represented here, they generally represent the primary program obligations.
Centralized Banking Services: Through relationships with commercial banking institutions, Treasury provides centralized banking services for state agencies. Treasury procures and administers the State's banking contracts and manages day-to-day operational issues including reconciliation of commercial bank and agency activity, provision of statements to agencies detailing account activity, and calculation and payment of interest to accounts authorized by statute to retain interest earnings.
Cash Management Improvement Activities: Treasury works to address agencies’ needs for more cost-effective and efficient transaction processing (automated clearing house transactions, wires, merchant bankcard transactions, etc.) and delivery of services (electronic commerce readiness, prepaid card programs, lockbox services, remote deposit, etc.).
Information Infrastructure and Security Activities: Treasury purchases, develops, maintains, and supports an automated and secure cash management technology infrastructure to serve the needs of state agencies and partner banking institutions. Treasury also advises and assists agencies with respect to their own cash management system needs, including as they relate to security and risk management, as well as certain related industry compliance issues.
Short-Term Investment of Cash: Treasury operates the Oregon Short Term Fund (OSTF) as a short-term cash investment vehicle for state agencies’ idle cash. The primary objectives of the OSTF, in priority order, are preservation of principal (safety), liquidity, and return on investment (yield). The Investment Division manages the investment of funds while the Finance Division provides administrative and operational support activities. For more information on the OSTF click here.
Short-Term Investment of Cash: Treasury operates the Local Government Investment Pool (LGIP), a part of the OSTF, as a short-term cash investment vehicle for local governments’ idle cash. The primary objectives of the LGIP, in priority order, are preservation of principal (safety), liquidity, and return on investment (yield). The Investment Division manages the investment of funds while the Finance Division provides administrative and operational support activities. For more information about the LGIP click here.
Information Infrastructure and Security Activities: Treasury purchases, develops, maintains, and supports an automated and secure cash management technology infrastructure to serve the needs of local governments and partner banking institutions. Treasury also advises and assists local governments with respect to their own cash management system needs, including as they relate to security and risk management.
ORS chapter 295 governs the collateralization of Oregon public funds and provides the statutory requirements for the Public Funds Collateralization Program (PFCP). Depositories qualified under this program are required to pledge securities as collateral against any public funds deposits in excess of deposit insurance amounts. This provides additional protection for public funds in the event of a depository failure or loss. ORS chapter 295 sets the specific value of the collateral, as well as the types of collateral that are acceptable. ORS chapter 295 creates a shared liability structure for participating depositories, better protecting public funds though still not guaranteeing that all funds are 100 percent protected.
The Finance Division administers the Public Funds Collateralization Program via an application that facilitates depository, custodian, and public official compliance with ORS chapter 295. For more information on PFCP click here.