At the American Deposit Management Co. [ADM], we believe that local schools – and the referendums that help fund them – are vital to community development. That’s why we have created specialized services to help Districts manage the labor-intensive process of bond proceed management.
Our Director of Government and Institutional Funds, John Major, says it best:
“Capital referenda can be a generational investment into a community. Voter approval is only the beginning and continued financial stewardship is key to making the most of these pivotal moments.”
If you are planning a referendum, be sure to check out our whitepaper 5 Ways to Prepare for Your Upcoming Referendum which includes a step-by-step guide and tips to help you avoid common mistakes. Additionally, consider the following ways that our company can help you effectively manage the funds you receive from issuing debt.
5 Ways ADM Helps School Districts Manage Bond Proceeds
Our Signature Bond Proceeds Program was specifically designed to help public entities effectively manage their cash, so they can focus on creating the most value for taxpayers. We begin by ensuring that all cash is safe from bank failure. Then, we help you manage liquidity, capture nationally competitive rates of return, and remain in compliance with federal laws.
1. We Keep Taxpayer Money Safe
You may think that depositing bond proceeds in an FDIC insured bank is sufficient to keep them safe, but this is usually not the case. It is true that insurance from the FDIC provides the most robust protection for cash, but coverage is limited to $250,000 per ownership category at each bank. This standard limit is often far below the amount of a bond and can leave millions of dollars at risk of bank failure.
To combat this issue, we use our proprietary network of over 400 financial institutions to provide access to extended deposit protection. By spreading cash across our national network, each account is under the applicable government limit and all funds are covered by FDIC or NCUA insurance.
2. Liquidity Matched to Your Spending Schedule
In addition to safety, bond proceeds must be available to spend as your project expenses come due. That is why we developed solutions to accommodate differing liquidity schedules.
Cash that you need for short-term expenses or operations can be invested in a liquid account. This account offers full government insurance, next day liquidity, and simple transfers to your local bank.
We can also develop a customized CD ladder to help you capture higher rates of return and ensure your cash is working while it’s idle and available when invoices come due. Like our liquid account, CDs provide full government protection.
3. Competitive Returns on Your Idle Cash
Our network of banks and credit unions compete for your cash by offering returns that are often well above the national average. Since our network is nationwide, you can take advantage of differences in geographical and bank-specific needs to capture nationally competitive returns.
The additional income you gain from returns on cash reserves can be vital to combatting inflation, especially if your project will take several years to complete. However, there are government regulations that cap the total interest you can earn relative to the interest rate of your bond. We help you comply with these regulations as well.
4. Compliance With Arbitrage Rebate Rules
School bonds are subject to Arbitrage Rebate Rules – which limit the amount of income you can earn from investing bond proceeds. If your investments earn more than the bond yield, you are required to pay a “rebate” to the U.S. Treasury. We help you avoid these additional payments – and the paperwork that comes with them – by performing ongoing tests of arbitrage and rebate rules to ensure you remain in compliance.
5. Automated Payments and Regulatory Filings
Bond funded projects are typically massive in scale and require payments to dozens of vendors. If you miss one of these payments, it can harm your reputation and your credit rating. Fortunately, we have the tools to ensure you meet all your obligations without placing an undo burden on your staff. Our vendor payments program automates required payments while increasing your financial control, saving you valuable time, and providing transparent activity reports.
In addition to simplifying vendor payments, we also automate your regulatory filings. Our solutions ensure you never miss a Depository Trust Company interest payment or IRS filing – helping you avoid penalties, bad publicity, and additional work.
Our bond proceed management solutions were developed in conjunction with School Districts like yours. We have tailored our services to provide you with unparalleled safety, nationally competitive returns, and customized investment plans to match your construction schedule while reducing work for your team.
Partner with ADM To Earn More, Risk Less® with Your School Bond Referendum
At ADM, we have the experience and innovative technology to help your school district get the most from bond proceeds. We have partnered with public entities to manage over 80 project funds totaling more than $1.79 billion. Take advantage of our experience to minimize work for your employees and maximize value for your community. To speak with one of our experienced cash consultants about your bond referendum, use the chat box at the bottom of your screen or give us a call.
*American Deposit Management Co. is not an FDIC/NCUA-insured institution. FDIC/NCUA deposit coverage only protects against the failure of an FDIC/NCUA-insured depository institution.