R543, Commercial Banking Services

R543, Commercial Banking Services

R543-1. Purpose

To establish policies and procedures for the selection and retention of commercial banking services at all of the institutions within the System.

R543-2. References

2.1. Utah Code §53B-7-101(9) (Each Institution Handles Financial Affairs Under General Supervision of the Board)

R543-3. General Policies

3.1. Deposits - Only qualified depositories of the State of Utah may be used for primary banking services of member institutions. The institutions are encouraged to deposit all public funds, excluding duly authorized imprest bank accounts, into a single checking account if investment sweep services are not available. This will facilitate the investment on a daily basis of funds available in excess of immediate needs. A separate payroll account at the same bank as the general checking account is acceptable.

3.2. Requests for Proposal - Institutions shall conduct at least every six years an internal evaluation of the banking services provided by its current primary bank to determine that the service capabilities and costs of service remain competitive. If the institution determines that the service capabilities and/or the cost of service provided by its current primary bank may not be competitive or for any other reason as determined by the institution, requests for proposal should be solicited from banking institutions meeting (a) the requirements of the State Money Management Act, (b) the specific criteria established by the institution and (c) the requirements set forth in this policy.

3.3. Institutional Policy - Each institutional board of trustees should adopt its own written policy relating to details of banking procedures within the parameters of this policy.

R543-4. Qualifications for Selection and Retention to Provide Banking Service

4.1. Minimum Requirements - In order to be eligible to be selected or retained to provide an institution's primary banking service, a bank should satisfy the following minimum qualifications:

4.1.1. It must be a qualified depository of the State of Utah.

4.1.2. The cost of services provided by the bank shall be competitive with costs charged by other banks for similar services. Costs associated with changing banks shall be a factor in determining cost competitiveness.

4.1.3. The bank selected must maintain a banking office readily accessible to the institution with the capability of providing all normal commercial banking services, as well as investment assistance and advice for the institution.

4.2. Service Capabilities - It is recognized that the institutions within the System have varying needs for service capabilities of banks. Listed below are some capabilities which an institution may require of a candidate bank.

4.2.1. Provide the number of checking accounts requested by the institution, and to process all deposit items received and checks issued.

4.2.2. Provide for the currency and change requirements of the various auxiliaries and other departments.

4.2.3. Provide compatible data processing service for prompt reconciliation of all bank accounts, and other data processing requirements related to maintenance of institution accounts.

4.2.4. Provide investment services for the institution in the management of its short-term funds, including provision for:

4.2.4.1. transfer of funds on a DVP (delivery versus payment) basis for the purchase of securities.

4.2.4.2. safekeeping of securities by a custodial bank or trust company.

4.2.4.3. repurchase agreements on a daily basis with securities as pledged collateral.

4.2.4.4. assistance with the purchase and transfer of commercial paper, time certificates of deposit, bankers acceptances, and other money market investments.

4.2.4.5. transfer of funds from one bank to another by wire transfer or other electronic transfers through the banking system.

4.2.5. Provide daily reports of account activity by electronic interface or other means.

4.2.6. Issue savings bonds in connection with payroll withholdings.

4.2.7. Act as depository for federal withholding and payroll taxes.

4.2.8. Provide periodic financial consultation.

R543-5. Criteria for Selection and Retention of a Banking Service

5.1. Fee for Service - The bank shall be compensated on a fee for service basis.

5.2. Primary Criteria - The primary criteria for bank selection and retention shall be its ability to provide the required banking and short term investment services at a reasonable cost and/or competitive rates to the institution.

5.3. Investment Bidding - Bids for the investment of institutional funds, excluding short term investment services, shall not be a part of the process of selecting a banking service.

(Adopted May 20, 1980, amended September 12, 1996.)