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NYS Comptroller

THOMAS P. DiNAPOLI

The Academy for New York State's Local Officials

Cash Management: A Tutorial for Local Governments and School Districts

Module 3: Maximizing Interest Earnings

Success Stories: Revenue Enhancements Experienced by Local Governments

As mentioned previously, the potential for local governments to increase interest earnings varies widely. Local governments, implementing some of these opportunities recommended by our office, have reported the following results:

  • Interest-Bearing Checking:
    • After switching non-interest-bearing accounts to interest-bearing accounts, a town increased annual interest earnings by $3,286 and one city increased interest earnings by $3,726 over a three-month period.
  • Compensating Balances/Other Techniques:
    • By commingling reserve fund cash balances, one county increased annual interest earnings by $61,550.
    • By reducing the compensating balances in various bank accounts and investing these balances in higher earning investments, one school district increased annual interest earnings by approximately $17,000.
    • By consolidating bank accounts and using the bank's automated reporting system, one city reduced the compensating balances required to be on deposit and increased annual interest earnings by $17,335.
    • Another city increased annual interest earnings by approximately $10,000 by combining the city's available cash balances and investing these balances in higher yielding investments.
    • Lastly, one city increased annual interest earnings by $21,813 by reducing the compensating balances and investing these balances in higher yielding investments.

  Next: Module 3 Recap