Cash Management Policies to Yield More Than $500,000 Annually

BATON ROUGE, LA – State Treasurer John Kennedy announced today that the State Treasury and the Department of Public Safety (DPS) have implemented new financial deposit procedures that will earn the state an additional $500,000 each year.

During a cash management audit of DPS, the State Treasury learned that monies received by Public Safety’s Office of Motor Vehicles (OMV) from license and registration fees could be deposited in a more cost-effective manner. By reducing the time between the receipt of revenues and their deposit in interest earning accounts, Treasury and DPS officials have now ensured that the funds will earn additional income for the state.

Kennedy said DPS was averaging about 10 days between the time of collecting the fees and depositing them in the bank. That deposit time has now been reduced to 5 and one-half days.

The new cash management policy directs 50 Office of Motor Vehicle locations throughout the state to immediately deposit funds they collect to the state’s account at the Bank One branch where the OMV office is located. Bank One is the state’s central depository bank. The remaining 59 locations that are not near a Bank One branch will deposit their funds in another local bank, which using a special software program, will immediately transfer the money to the state’s account at Bank One. Before the new cash management policy, DPS was using professional couriers to gather checks from all local Office of Motor Vehicle offices and then transport them to Baton Rouge for deposit. This procedure was phased out by June 30.

We estimate that Louisiana can earn more than $50,000 for each day that monies collected by the Department of Public Safety are invested. So, gaining five extra days means nearly $250,000 of new earnings per year, said Kennedy. Eliminating Public Safety’s courier expenses, which are no longer needed, saves another $246,000 per year.

Kennedy said DPS has also discontinued microfilming checks to save another $25,000 annually.

And in addition to monetary savings, he said new procedures at Public Safety will no longer require employees to manually replicate reports that are being generated by computer programs, thereby freeing up more than 110,000 work hours that employees can spend on other projects, he said.

Change is never easy, but the Department of Public Safety was eager to improve its cash management policies. Working together, Treasury and Public Safety were able to make such significant improvements because of Public Safety’s own push for efficiency, said Kennedy.

We appreciate the opportunity to forge this partnership between two service-oriented agencies. The Treasurers staff has been great to work with in implementing effective business practices long used by private industry, said Nancy Van Nortwick, undersecretary for the Department of Public Safety.

Kennedy said he anticipates greater savings to be realized at DPS as officials work to further reduce the deposit time for funds and improve Internet and phone procedures for registration and license renewals.

Contact:
Delia Taylor, Communications Director
(225) 342-0010