IPTIP Direct Deposit — Your Cash Management Advantage By JERRY COSENTINO, Illinois State Treasurer

The demand for more and more government services during a period of declining tax dollars has placed tremendous pressure on public treasurers in recent years. This pressure has led to a greater emphasis on the time value of money as public officials attempt to find additional sources of revenue. This emphasis has also resulted in greater interest in the use of electronic funds transfer (EFT) to accelerate the availability of funds.

Since distributive funds from the State comprise a major source of revenue to Illinois local governments, the potential use of EFT in the distribution of "revenue-sharing" type funds has generated much interest in the last few years. Although current state law does not provide for general EFT disbursement of state funds, the State Treasurer offers a facility through the Illinois Public Treasurers' Investment Pool which results in the same availability of funds, as well as aggressive rates of return on deposited funds. IPTIP was created in 1975 by the Illinois General Assembly to offer Illinois local governments access to higher rates of return through fully guaranteed investments.

Under a cooperative agreement with various state agencies, the State Treasurer currently offers the direct deposit of state distributive funds (motor fuel tax, sales tax, and income tax) into interest earning accounts in the Pool. Availability of funds to local governments is accelerated through the elimination of both "mail float" and "bank processing float." Under the traditional method of disbursing distributive funds, state warrants are mailed to local governments from the State Comptroller's Office. Depending on the geographic location of local governments, these warrants may not be received for 2 or 3 days. Assuming that it takes another day to deposit warrants to a local bank for collection, and that the collection process takes another 2 to 3 days, funds may not be available for use by local governments for up to a week after warrants are released by the Comptroller.

Under the State Treasurer's IPTIP Direct Deposit Program, funds are received by local governments, earning interest, and available to support local programs the same day warrants are released by the Comptroller. Here is how the program works.

Several days prior to the statutory distribution date, the state agency prepares a payment voucher for presentation to the Comptroller's Office. When the voucher is released to the Comptroller, copies are sent to the IPTIP custodian, and to the State Treasurer's Banking Division. The agency also sends "pre-distribution notifications" to local governments showing a breakdown of funds. These documents are forwarded on the average 4 to 6 days prior to the release of warrants by the Comptroller. However, since the Comptroller has up to 10 working days to process vouchers, the timing of actual distribution may vary.

When the warrants are released by the Comptroller, they are delivered directly to the State Treasurer's Banking Division and presented for payment. The Treasurer then wires funds to each local government's account for immediate credit. When funds arrive at the custodian, a transaction confirmation is generated and mailed to each participant notifying him/her of the deposit. From the time of "pre-distribution notification" to confirmation by the IPTIP custodian, up to a week may elapse. Therefore, in order to verify receipt of funds deposited directly to their accounts, and to realize the full advantage of the direct deposit program, the Treasurer recommends that IPTIP participants contact the custodian via the toll free IPTIP hotline (1-800-252-1774) when receipt of funds is anticipated.

The State Treasurer's IPTIP Direct Deposit Program can be a significant advantage for Illinois public treasurers who receive distributive funds from the State. As of the current date, public treasurers may receive immediate credit in their IPTIP account for distributions of motor fuel tax, sales tax, and income tax. As soon as funds are released by the State, public treasurers may begin using funds for their general operating needs, instead of waiting for the mail to be delivered. Immediate access to state distributive funds is just a phone call away. If you want to improve your money management, earn a competitive rate of return for your investments, and have the comfort of knowing that your funds are safe, call the State Treasurer's toll free IPTIP information line at 1-800-346-7414 today. •

Page 8 / Illinois Municipal Review / January 1990