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A Review of CashA Review of CashManagement IssuesManagement Issues

Presented by

Mark WashingtonMark Washington

Office of Student Financial Assistance

Program Development Division

July 9-12, 2000


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Cash Management EssentialsHCash Management

101 (The Basics)

HCash Managementin a World ofTechnology

HThe Challenges ofReturning Funds

HThe Future of CashManagement


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Cash Management 101HWhat IS Cash Management?

H

Show Me The MoneyHThe Truth About Disbursements

HNotices and Authorizations

H

Excess Cash: Its Not the LottoHFFEL Program Funds

HTimelines


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What IS Cash Management?


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True or False?Cash Management IS:

HIdentifying the resources necessary tofund your award packages.

HJuggling carryforwards and carrybacksbetween FWS and FSEOG.

HThe body of regulations found in 34

CFR, Subpart K.HDetermining what to do with the Lotto

money you just won.


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3 Major Objectives ofCash Management

HTo promote the use of sound cashmanagement techniques inadministering the Title IV programs

HTo minimize administrative costs spentby the Federal Government in making

Title IV funds available to studentsHTo minimize the costs absorbed by

students using Title IV loan programs


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Show Me The Money...

HRequesting

FundsHMaintaining and

Accounting forFunds

HHandling InterestIncome Earned


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Methods for Obtaining

Title IV FundsHAdvance Payment

Method

HReimbursementMethod

H Just-in-Time Method

HCash MonitoringMethod


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Advance MethodHSchool requests funds needed to pay

eligible students.

HApprovals are followed by funds sentdirectly to schools account, via EFT.

HSchool must disburse the funds

received ASAP, but not later than threebusiness days after receipt.


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Reimbursement Method

HSchool must make disbursement toeligible students before beingreimbursed for those program

expenses.HBoth cash payments and crediting a

students account count asdisbursements.

HMust document actual payments andstudent eligibility per student or parent.


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Just-in-Time Method

HSchool transmits payment requests foreach eligible student or parent.

HED sends funds EFT on per transactionbasis, on or before a schools intendeddisbursement date.

HSchool may disburse funds based on

eligibility determined at time it maderequest for funds. Must report anyadjustments to previously acceptedrecords.


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Cash Monitoring MethodHSchools must make disbursements to

students or parents before requestingadvance payment method orreimbursement payment method.

HRequest for funds may not exceed

actual disbursements made.HWe may modify the documentation

requirements and review procedures.


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Show Me The Money...HRequesting Funds

HMaintainingand

Accounting

for FundsHHandling Interest

Income Earned


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Maintaining & Accounting for

FundsHTitle IV funds must

be kept in Federallyinsured bank or

investment accountsH Identify Fed Funds

HNotify bank aboutTitle IV funds andfile a UCC-1statement (exceptpublic institutions)

HSeparate a/c fornoncompliance

H Interest-bearing a/c

HAccounting andinternal controls

HMaintain financials in

accordance with 34CFR 668.24

HDue diligence andfiduciary care


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Show Me The Money...HRequesting Funds

HMaintaining and

Accounting forFunds

HHandling

InterestIncomeEarned


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Handling Interest IncomeHCannot retain more

than $250 in interest

income earned onTitle IV funds.

HMust identifyearnings on Title IV

funds maintained inbank or investmentaccounts.


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The Truth About

Disbursements


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disdis--brsmntbrsmntHA disbursement occurs by crediting a

students account or paying the student

or parent directly with--

funds received from ED;

funds received from a lender under

the FFEL Programs; or institutional funds used in advance ofreceiving Title IV program funds.


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More Truth...HThe 10-day Rule (Early Disbursement)

HThe 30-day Prohibition

HThe Cohort Default Rate Exception

HPayment Period Requirement

HLate Disbursement


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Making Direct PaymentsHReleasing FFEL proceeds from a lender

HIssuing checks

HInitiating an EFT transaction

HDispensing cash (signed receiptrequired)


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Crediting A Students AccountHSchool may credit

account to satisfy

charges withoutauthorization for--

HTuition and fees;

HRoom, if contracted

with school; and

HBoard, if contractedwith school

HSchool must haveauthorization to

credit account for--HAdditional current

charges incurred foreducationally related

activitiesHMinor prior year

charges < $100


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Credit BalancesHMust pay ASAP but

no later than 14

days after theoccurrence, if after1st day of classes or

HNo later than 14

days after 1st day ofclasses in pmt. per.if occurred before1st day of classes.


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Notices and Authorizations


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Award NotificationHSchool must notify

student of amount

of funds to expectbefore disbursement

HDetail how andwhen funds will be

paidHSpecify types of

loans


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If School Credits Loan FundsHIndicate date and amount of payment

HInform of right to cancel all or portion

HSpecify procedures for cancellation

HSchool must send no earlier than 30days before and no later than 30 day

after crediting the account

HNotice may be written or electronic


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To Cancel a LoanH Student or parent must

inform school of intentto cancel

H If notice of cancellationis received from studentor parent, school mustreturn proceeds within

14 days after it sendsnotice or by the 1st dayof the payment periodand confirm outcome


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Student/Parent AuthorizationsHFor direct payment

to bank account

HFor payment ofcertain current andminor prior yearcharges

HFor holding excessstudent funds

HCannot coerce toobtain

HCan be modified orcanceled at any time

HMust clearly explainhow wishes will beimplemented

H Limited duration

HExcess funds due tostudent/parent aftercancellation


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Excess CashHDefinition

HTolerances

HConsequences

HProcedural


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FFEL Program Funds &

TimelinesHRequesting Funds

HInitial Period

HConditional Period

HReturn Period

HOther Factors


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The Challenges of Returning

FundsHExcess Cash

HClosed Awards

HAudits & ProgramReviews

H Interest Earned

H

Idle Cash (DL)HRefunds (DL)

HUnidentifiable CreditBalances


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Cash Management in a World

of Technology


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The Future of Cash

Management


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Footnotes1 - If an electronic notice is sent, the school must

require the recipient of the notice to confirm receiptof that notice, and must maintain a copy of thatconfirmation.

2 - If a the school disburses DL funds by crediting astudents account, it must credit those funds tocurrent and authorized charges first.

3 - Prior year charges may exceed the threshold, butcurrent charges must be paid first, and other chargesshould still be minor in scope and amount.


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ResourcesH34 CFR, Subpart K

HThe Blue Book

HFiscal OfficersTraining Guide

HGAPS Payee Guide

H

SFAAudit Guide

forSchools

H IFAP/SFA Coach

description: tags: review-cash%20management

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