Cash management in Florida's public schools

The purpose of this study was to analyze descriptively cash management practices in Florida's public school systems and to adapt analytical cash management procedures to develop a model which would benefit all public school systems. Data were collected through a questionnaire which was returned by all systems in the state. In addition, the Hernando County School System was used as the base system from which internal financial data were gathered.

A review of literature revealed that cash management was a process consisting of four elements--cash forecasting, cash flow management, bank relations, and investment of idle funds. In addition, while it was found that larger, wealthier districts are more likely to have better developed programs, there is no reason why any school district should not effectively manage its cash assets. Other primary factors contributing to the success of cash management programs included the supportiveness of school boards and the level of training of investment officers.

Major findings from the questionnaire were:

1. Only 58 percent of all systems had adopted a cash management policy, and only five used outside consultants.

2. Sixty four of 67 systems reported that one person was responsible for the cash management program. All but three of those responsible were lower level district administrators.

3. Sixty one systems reported using some method of cash fore-casting, while 13 of those 61 systems used a combination of methods.

4. More systems (46 percent) reported approving claims for payment once each month, while more systems (39 percent) reported actually paying claims twice each month.

5. Only four systems reported that their boards had adopted policies defining bank relationships.

6. Five banks reported paying fees to compensate banks.

7. Generally, most Florida school systems used an excessive number of banks and kept too many demand accounts.

8. Most systems (72 percent) reported that an appointed officer made investments within prescribed guidelines.

When information from the Hernando County School System was manipulated using procedures from the Jones and Howard (1973) model, it was found that idle funds could be increased. Also, periods of deficit were avoided.

Finally, one recommendation was made. That recommendation consisted of a cash management model based on the data that were presented.