Capital Projects Cash Management

The cash for capital projects funded from general obligation bonds is disbursed from the proceeds of bond sales, currently held twice a year (spring and fall) by the State Treasurer's Office (STO). While the final state budget provides bond authority for an appropriation for a project, cash must be available to cover the anticipated cash flow needs in order for the project to proceed under contract. This is the fundamental difference between having spending authority for a project yet not having cash to cover the cost to proceed.

Since December 17, 2008 when the Pooled Money Investment Board (PMIB) ceased to issue loans from the Pooled Money Investment Account (PMIA) to fund state appropriated projects between bond sales, the CSU is tasked with managing the cash for general obligation bond funded projects. This responsibility includes providing cash flow project data to the Department of Finance in order to size future bond sales appropriately to cover anticipated costs and reporting back to the STO on an annual basis of dollars spent per project per upfront bond proceeds account.

The November 2, 2010 memorandum, Certifying Project Claims per Budget Letter 10-09, documents the process established by the Chancellor's Office (Capital Planning, Design and Construction) to comply with this responsibility. A certification letter is issued by Capital Planning, Design and Construction (CPDC) that tabulates the available budget, claims to date, and new claim amount for each upfront bond proceeds account. Certification letters are processed by CPDC upon receipt of a Capital Claims Submittal Form completed by campus accounting staff per claim/plan of financial adjustment. The certification letter is for campus records only.

Certification letters should be requested from CPDC before campus submits claim schedule or plan of financial adjustment to the State Controller's Office (SCO) for payment. Receipt of the certification letter insures that cash is available from the correct account. The SCO does not verify accuracy of sub funds; it only takes action if there are insufficient funds to process a claim.

Flavor of cash: To date the CSU has received bond proceeds in two flavors: 1) Build America Bonds, federally subsidized, and 2) Tax Exempt. While the tax exempt cash is unrestricted in that it can be used for any appropriate expense for the project, Build America Bonds (BABs) can only be used for capital expenditures or direct costs not indirect costs. This information is conveyed to the campuses either through the original allocation order or subsequent communications of newly available cash.

Direct costs: includes design and planning costs; architectural, engineering, surveying, soil testing, environmental, and similar costs incurred in the process of acquiring, constructing, improving or adapting the property.

Indirect costs: fees charged by the campus for project personnel (reimbursed positions) and other overhead costs, and fees charged by the Chancellor's Office for project administration. Contracted project managers can be charged to BABs.

Capital Claims Submittal Form: This form is used by campus accounting staff to request certification letter from CPDC certifying that there is adequate cash in specific upfront bond proceeds account for the referenced project. This form is updated and uploaded by CPDC as new bond sales occur and projects are added.

Cash Transfer Forms: These forms are specific to each fund/sub fund for disbursement of bond proceeds. The Chancellor's Office creates the cash transfer forms after each bond sale and uploads them to the website. It is critical that the selected cash transfer form submitted to the SCO matches the fund/sub fund on the certification letter issued by CPDC.

Capital Project Claims and Cash Allocation by Fund: This is a snapshot of the database used by CPDC to manage bond proceeds across all campuses and projects. It shows the cash budget allocated to each project by fund/sub fund and details the expense activity processed against the sub fund. Allowing for time delays, this report should match up with campus records and the SCO accounts. The snapshot is updated on a monthly basis. For more up to date information contact Jarelle de Sais, jdesais@calstate.edu.

Note: This process applies to all capital outlay projects funded from general obligation bonds. It does not apply to projects funded from lease revenue bonds or systemwide revenue bonds.