Banking Services
The Treasurer's authority as the Constitutional Officer responsible for the deposit and disbursement of State funds is found under Article VI, Section 3 of the State Constitution and Titles 6 and 7 of the State Finance and Procurement Article of the Annotated Code of Maryland.
Missions of the Banking Services Division
The primary mission of Banking Services is to manage and control banking relationships for all banking needs for the State of Maryland and to anticipate agency needs and respond timely to agency requests.
The Banking Services Division (BSD) is directly responsible for procuring and managing the banking needs for all agencies of the State of Maryland. This includes:
- Agency-specific depository accounts - Individual depository accounts are maintained for all State agencies, and balances are consolidated at the end of each day into the State's main depository account. This allows for accurate agency-level transaction reporting with automatic concentration of funds for cash management effectiveness
- Disbursement accounts for vendor payments, payroll, and income tax refunds
- Lockbox services
- Merchant account services (credit and debit card receipts)
- Agency working fund, trust, and escrow accounts
- All other agency banking needs
In FY 2010 the Division assisted the Maryland Transit Administration in obtaining banking services for the CharmCard® initiative that it recently launched. The BSD worked with the University of Maryland Dental School and the Maryland Institute for Emergency Medical Services Systems to set up lockbox accounts to create efficiencies in their check collection processes. We also completed setup of an account structure for the Department of Health and Mental Hygiene's Pharmacy Rebate Program. The new account structure will enhance DHMH's tracking and reporting of an estimated $145 million in annual pharmacy rebates from drug manufacturers.
Two primary responsibilities of the Banking Services Division of the Maryland State Treasurer's Office are the accurate and timely recordation of State funds, and the reconciliation of the State's bank accounts to the State's R*STARS accounting system. The Division must account for the receipt of all warranted deposits and the disbursement of all warranted payments. The Division's comprehensive daily cash reconciliation allows the Treasurer's Office to be proactive in identifying and solving agency banking issues. As volume and transaction numbers increase, the processes and controls developed by the Banking Division continue to result in a timely, accurate, and completely documented reconciliation of the State's cash accounts. Maintaining pace with changes in the banking environment also necessitates continual refinement of the reconciliation processes and ensures maximum efficiency in the balancing of bank information and the R*STARS accounting system.
For FY 2010, total cash receipts and disbursements each exceeded $120 billion. The State's bank accounts are reconciled daily to the State's general ledger. In FY 2010 there were no un-reconciled differences.
On behalf of State agencies, the Banking Services Division performs daily operations functions that are critical to the movement of funds into and out of the State's bank accounts. These include:
- Processing the drawdown of funds from federal programs and grants
- Initiating FedWire payments
- Initiating and managing foreign currency transactions
- Processing check stop payments, cancellations, and reissues as well as requests for photocopies of paid checks
- Providing transaction research assistance to State agencies
- Managing the Unpresented Check Fund and the Undeliverable Check Fund
- Processing of all bank adjustments
Total Receipts and Disbursements
Fiscal Year 2010
Follow the link to view the
Receipt & Disbursement
Table for Fiscal Year 2010
In FY 2010, the BSD worked with the Maryland Department of Disabilities to enable it to draw funds from a federal Medicaid Infrastructure Grant. The BSD has also continued its efforts to convert recurring vendor check payments to electronic payments, increasing efficiencies in the disbursement process. In addition, the BSD's Deposit Products team continues to work individually with agencies to ensure that the general ledger posting of the electronic receipt of funds is automated to the extent possible.
The Division ensures protection of State funds on deposit through monitoring of account and collateral balances.
Section §6-209 of the State Finance and Procurement Article (SFP) of the Annotated Code of Maryland requires that State money on deposit with financial institutions must have collateral pledged to the State that equals or exceeds the amount on deposit not covered by the Federal Deposit Insurance Corporation. The collateral must be held by a third party custodian and be of the types enumerated in §6-202 of SFP.
The Banking Services Division monitors collateral for over 1200 depository, disbursement, and registered agency working funds accounts, many of which are used for trust and escrow account services. Account balance and collateral data is submitted monthly by financial institutions and custodians and is entered into an automated collateral monitoring system. The data is analyzed to ensure that the pledged collateral is sufficient to cover the applicable bank balances. If the collateral is insufficient, the financial institution is required to increase the collateral. The collateral reported by the custodian must match the collateral reported by the financial institution.
In FY 2010, the collateralization process for the bank holding the State's main disbursement, payroll, and tax refund accounts as well as numerous agency working fund accounts was moved to a third party provider. This allows Banking Services the capability to independently monitor daily collateral and aggregate account balances held by that bank.
The collateral balance for all State bank accounts at June 30, 2010, was $518,911,838.
Banking Services serves as the State's authority for the development, control, and maintenance of statewide policies and procedures for banking products and services.
The Division makes every effort to remain at the forefront of the constant changes in banking products and services offered. The Division will continue to explore new financial products and improved data delivery methods that will increase its capabilities to provide efficient cost-saving banking services to the Maryland State agencies in response to operating agency and taxpayer needs. In the current tenuous financial environment, the Division's priority must be to enhance the ability to recover in the event of a disaster and to change banks if required by market conditions or the procurement process. In addition, the Division must anticipate the future banking needs of the State to maintain its capacity to contain costs while accommodating the growth, diversity, and complexity of banking transactions.
Some of the BSD's efforts during FY 2010 included working with the accounting office of the Department of Labor, Licensing and Regulation to begin the use of BSD's depository bank's remote deposit product, which resulted in significant cost savings through the elimination of their armored courier service. The BSD worked closely with the University of Maryland at Baltimore in its conversion of almost 80% of tuition refunds from checks to electronic payments. The BSD assisted Towson University in its implementation of a costs saving tuition collection process and has also been working with several other universities to create efficiencies in their tuition and refund processing. The BSD actively works with agencies to develop and strengthen their internal processes and promote efficient banking services.
It is the overall mission of the Banking Services Division to provide efficient, accurate, and timely banking services to all State agencies and external customers.
