Policy on Banking Operations, Accounts and Associated Fees

The university maintains a centralized management approach for all of its Treasury Services. The Treasurer’s Office is responsible for the optimization of cash flow and security of all funds collected, managed, and disbursed by the university. All banking and treasury services are approved by the Treasurer’s Office (SPG 519.01). This arrangement is beneficial to units in the following:

• Institutional monitoring/oversight of the account to reduce cost and risk
• Tax benefits of any charitable contributions
• Treasurer and EVPFO as authorized signers help assure university access to funds

This central management approach also has the ability to leverage banking services based on volume and consistency of process. The risk of fraud (hacking into U-M accounts) is also reduced due to corporate account features applied to U-M accounts. Standard features include:

• Disbursement accounts will have positive pay capabilities to reduce risk.
• Controlled disbursement will be used when applicable to maximize cash position.
• Account features will be required to maximize cash positioning, reporting, analysis and minimize risk. These features include but are not limited to Account Reconciliation, Zero Balance Accounts, and Web reporting.
• Secure transportation and/or transmission to/from bank (armored car or insured carrier, bank file encryption)

These principles will be incorporated into the university’s banking structure and most costs absorbed centrally. Fees associated with special requested collecting methods (lockbox, credit card, courier), disbursement (special checking accounts) and/or Electronic Funds Transfers (wires, ACH) are charged directly to the unit receiving the benefit The following are estimates of the type of service and cost[1].

• Lock Box Fees
  • Account Maintenance, Imaging ($200/mo)
  • Per item charges (vary depending on services < $1 to $25)
• Credit Card Fees (Transaction Fee 2-3%, Equipment Purchase $500)
• Special Checking Account Fees (Est. $200/month + volume)
  • General Account Services ($120/Mo)
  • Per item depository services ($ .10/transaction)
  • Disbursement Services (Per item checks, imaging, positive pay ($1.60 per item), Stop Payments ($10-$25/item)
  • Reconciliation Services ($80/mo + .10/item)
  • Reporting Services ($40/month)
• Insured courier service - $10 local pickup (Metro delivery)
• Endorsement stamps $10 + shipping & handling
• Deposit bags & tickets $20/200

The result should be the highest services, and security for an appropriate price. In doing so, a framework of best practices and internal controls in cash management are incorporated into the establishment of bank accounts, features and the related services.

Opening/closing of a bank account

All activities related to the opening and closing of any financial institution account with regards to the University of Michigan shall be the sole responsibility of the Treasurer’s Office. University units and their staffs should not deal directly with any financial institution regarding the opening or closing of a bank account except as authorized in writing by the Treasurer.

A financial institution account is defined as any account (checking, saving, depository, money market, etc.) opened at a financial institution that uses the name of the University of Michigan, Regents of the University of Michigan or any derivation thereof, uses the University of Michigan tax identification number, or receives the deposit of or disburses university funds.

To open a financial institution account requires appropriate approval by the Board of Regents. Additionally, the Treasurer’s Office will need to know the business need for the account, whether it is to be a deposit or disbursement account (or both) and the appropriate structure/features for the account (zero balance basis, controlled disbursement, positive pay, etc.) The business need for the account might be satisfied by integrating the need with an existing account structure.

Unless otherwise directed by the Treasurer’s Office, all statements for any accounts for the university shall be mailed to Banking and Transaction Services to allow for prompt account reconciliation. Additionally, all account analysis statements (showing charges for services rendered) for any accounts shall be sent to the Treasurer’s Office.

Accounts no longer active or no longer needed should be closed. The closure process requires written authorization to close the account from the business unit utilizing the account. The Treasurer’s Office will then contact the appropriate institution and request the account be closed and provide information as to the dispensation of any remaining funds left in the account. Additionally, the Treasurer’s Office will provide information regarding the closing of the account to the appropriate personnel in Banking and Transaction Services. The Treasurer’s Office will notify the business unit to confirm the completion of the account closure process. The business unit is solely responsible for the proper destruction of any and all remaining check stock and/or deposit ticket inventory previously utilized for the account. Check and deposit ticket items should be destroyed securely and within 5 business days of receipt of the account closure confirmation. Any costs associated with the proper destruction of these items shall be borne by the business unit.

If you have any questions, please contact the Treasurer’s Office at (734) 763-1299.

[1] These figures are provided as estimates for budgeting purposes. Actual costs will vary depending on the bank providing the service and current fee structure.