Snohomish County currently serves as the District’s custodian of funds. The County maintains cash and an investment accounts on behalf of the District. The District maintains both a depository account and a disbursement account at Bank of America (BOA) to conduct normal business operations such as depositing revenue and issuing accounts payable and payroll checks and/or EFTs.
Both the District and the County incur the costs charged by banks for moving funds, either by wire transfer or EFT, between the County and BOA accounts. Accounting for those transfers in both agency financial systems also requires extra steps and staff time.
The District provides a copy of its check registers to the County for the purpose of oversight and to document the amount of the cash moves from the County to the District disbursement account to cover issued checks and/or EFTs.
The District’s financial system currently is maintained with the proper internal controls to protect the District’s assets, and check registers are approved monthly by the District’s Board of Health for oversight purposes.
Additionally, the movement of cash back and forth between the County accounts and the District’s BOA accounts makes it difficult for the District to maximize its use of excess cash either by maintaining higher compensating balances at Bank of America to offset bank charges or by investments with Snohomish County.
Proposed Change:
The District will serve as its own custodian of funds and will be responsible for all aspects of its normal fiscal operations and related internal controls. The movement between the District’s BOA accounts and the County cash account is eliminated except for investment activities, thereby reducing the number of transactions and wire/EFT fees.
The District’s Board continues to provide oversight by approving check registers.
Pros
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Eliminates the risk that the disbursement account is overdrawn due to either the timing of the incoming County transfer or staff oversight in advising the County of the necessity of a transfer.
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Relaxes sometimes very tight deadlines associated with processing payroll and providing totals to the County to move cash to cover disbursements.
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Eliminates the need for the District to write itself a check on the disbursement account to deposit funds into the depository account to cover payroll EFTs that are drawn on the depository account.
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Reduces the number of transactions between the County and the District, saving staff and transaction costs.
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Increases ability for the District to maximize its use of excess cash.
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Allows the District to choose to combine its depository and disbursement accounts into one account with BOA or change the disbursement account to a “zero balance account” where transfers from the depository account to cover checks happen automatically as checks clear.
Cons
Attached as Exhibit A is the summary of Health District bank accounts. Below is RCW 70.46.082, which authorizes a health district to act as a custodian of funds. Exhibit B is draft Res. 20-09 approving the Snohomish Health District to serve as its own custodian of funds.
RCW 70.46.082 District health funds—Health district as custodian.
(1) A health district, with the consent of the county legislative authority, the county treasurer, the county auditor, and the health district board, may act as custodian of funds, may keep the record of the receipts and disbursements, and may draw and may honor and pay all warrants or checks, which shall be approved before issuance and payment as directed by the board.
(2) The county may not charge a health district that does not utilize the option in subsection (1) of this section for those services provided.