Request for Proposal of Banking Services

Transcription

1 Request for Proposal of Banking Services Dover Area School District 101 Edgeway Road Dover, PA Belinda M. Wallen, Business Manager/Board Secretary Jennifer Benko, Director of Accounting

2 INDEX FOR BANKING PROPOSAL Cover Sheet Section I Introduction Background and Objectives Length of Contract Selection Criteria Terms and Conditions Section II Scope of Banking Services Collection Services Disbursement Services Monthly Reporting Electronic Services Investment Services Section III Bank Credit Evaluation Section IV Banking Service Fees Section V Proposal Instructions Questions Regarding Proposals Responding to the Proposal Bidder s Ethics and Collusion Response to Proposal One Year Estimate of Banking Services Attachment A Proposed Fee Schedule Attachment B

3 SECTION I INTRODUCTION Sealed Proposals for banking services will be accepted by the Dover Area School District (the District ), Belinda M. Wallen, Business Manager, Dover Area School District Administration Office, 101 Edgeway Road, Dover, PA 17315, until February 19, 2014, at 10:00 a.m. The sealed proposals must be in the possession of the Business Manager or Director of Accounting at that time. An electronic copy of the proposal must also be ed to Jennifer Benko, Director of Accounting Services (JBenko@doversd.org). To obtain an electronic version of this proposal, please contact Jennifer Benko, Director of Accounting Services. All proposals will be opened on February 19, 2014 at 10:00 a.m. You or your representative is cordially invited to attend the opening. Service implementation target date: July 1, BACKGROUND AND OBJECTIVES The Dover Area School District is a local governmental unit created by the Commonwealth of Pennsylvania to provide public education to the residents of Dover Borough, Dover Township, and Washington Township. We are governed by nine (9) elected school directors, at large. Our Board of School Directors meets twice monthly to conduct that month s business agenda. The Dover Area School District operates its education program of four (4) elementary (K-6) schools, one (1) intermediate (7-8) school, and one (1) high (9-12) school, food service program, student activity, construction and capital reserve programs funded by the District, the Commonwealth of Pennsylvania, and the Federal government. The Dover Area School District also participates in the York County School of Technology and the Lincoln Intermediate Unit. In all, the Dover Area School District has an operating budget in excess of $53 million and employs over 500 full time, part-time, and substitute employees. We currently operate three (3) central bank accounts. The first is the concentration account with an average balance of approximately $4 million. All deposits, as well as ACH transactions occur within this account. The second account is used for payroll transactions. Funds are transferred from our concentration account to our payroll account, and all payroll checks and direct deposits are made from this account. The third account is our general fund account. This account performs cash disbursements for payments to vendors. We operate multiple other accounts with less significant balances and the District presently offers Lock Box services for collection of taxes for residents of Washington Township. The objectives of this request for proposal are to identify the banking institution that can offer the highest quality service at the lowest cost to our organization. As you will see when you review this proposal, we are interested in obtaining the best mix of services to meet our specific banking needs. 3

4 Another important aspect of this proposal is to obtain market rates (federal funds rate) of interest on all funds held in our accounts with limited associated risks. The Dover Area School District is both authorized and limited to the investment of excess funds by the Pennsylvania School Code of Also, the school code allows the Board of School Directors to authorize the collateralization of our funds to be pooled with the collateral of other public bodies in accordance with Act 72 of 1971 and the United States Circular No. 92. We expect that all funds in excess of the FDIC insurance level will be collateralized at least equal to 102% and in accordance with Act 72. Our interest in exploring the concept of changing banks is economic, as we feel this is a good time to competitively evaluate other banking options that are currently available within our locale. LENGTH OF CONTRACT The Dover Area School District is interested in establishing a stable relationship with the successful organization. To do this, we would like to develop an agreement with the term of three (3) years with an option to renew for additional years. After the initial three years, fees can be re-negotiated should this be deemed necessary. The projected timeframe to implement this contract is July 1, 2014 following board approval on March 3, The contract year will be July 1, 2014 through June 30, Either party may terminate the contract with a 60-day written notice. Should the bank prematurely terminate the contract, all school district s costs to establish a new banking agreement will be the responsibility of the terminating bank. Also, the District can terminate the agreement immediately should in its sole opinion information be received to the declining creditworthiness of the bank or adverse changes to the portfolio collateralizing the District s funds held by the bank. SELECTION CRITERIA The District will evaluate each proposal received based on the following criteria: Creditworthiness Investment of funds Cost and flexibility of services Ability to provide services efficiently and effectively through automation Funds deposited and collateralized in accordance with all Federal, State, and Local laws, and in accordance with the further limitations in this request as they relate to collateralization requirements. References from other governmental clients Bank branch proximity to District Office 4

5 All banks submitting proposals must have a branch geographically located in the district OR within a 5 mile radius of district boundary lines. Interest rate and/or earnings credit rate paid on all time deposit accounts Overall best value for the District as determined by the District TERMS AND CONDITIONS Please be aware that this is a request for professional services, and not a competitive bid, therefore is not required to be conducted in accordance with the laws governing Pennsylvania School District s competitive bidding requirements. The terms and conditions of this proposal process are as follows: 1. The District reserves the right to reject any or all proposals, in whole or in part; 2. The District may waive any irregularities or informalities and select the best proposal in the opinion of the School District; 3. The District may render the proposal invalid due to unauthorized modifications of specification forms or terms. SECTION II SCOPE OF BANKING SERVICES This section describes the services the District intends to use as a bank customer. There are questions embedded in this section that are repeated in the proposal instructions. Our objective in requesting services is to more effectively and efficiently operate our cash management system. The District may use additional services if the District believes there would be a beneficial cost/benefit relationship. Should you determine that additional services would be beneficial, please include these additional services in your response and any related costs should the District wish to use this benefit. COLLECTION SERVICES Collection Services are those services related to the acceleration of the availability of funds for investment or disbursement. 5

6 Wire Transfers In The District uses wire transfers to move funds between the District s financial institutions for investment and debt service purposes. The District intends to consider these incoming wire transfers as available for investment either by the District or by the bank through the concentration/general account investment vehicle. If necessary, adjustments will be made for any lost interest or charges resulting from a fail to consummate an investment transaction. Lock Box Tax Collection Consideration will be given to the scope of service available for a lock box tax collection system. The District collects all school district taxes through a lock box arrangement administered by the depository. The arrangement should include same day deposit of funds into our account with the bank generating a file for use in updating our tax collection system. Please include the lock box fees in the proposal along with the scope of services provided with your lock box system. The lock box approach should also allow for payment of taxes at bank branches, an option which provides marketing benefits and perhaps leads to discounted processing fees on mail-in processing. Receipts with questions are returned to the District for further follow up and then deposited directly by District staff. The District will look favorably upon guaranteed turnaround time between receipt of taxes in lockbox and deposit to school district account. The agreement should include adjustments for any lost interest or charges resulting from these delays by the banking institution. ACH Deposits The District also receives ACH deposits. All deposits received via ACH should be available for withdrawal immediately. Over The Counter Deposits The District provides various educational services for which cash and checks are received for payment. A staff member prepares and deposits these funds a minimum of two times per week or as needed. The check-clearing time is vital in an effective cash management system. Uncollected funds are not available for immediate investment. With the understanding that most checks received by the District are drawn on local banks, we require same day availability of all On Us and local banks deposits received by the bank. Please provide us with your check-clearing method and policy for checks that are drawn on other than local banks to identify the time it will take for the deposited funds to become collected and available for investment. (See Response to Proposal - question 2) 6

7 DISBURSEMENT SERVICES Disbursement services are those relating to the disbursement of funds from the bank. Wire Transfers Out Wire transfers are initiated by the District to transfer funds from our bank accounts to other financial institutions for investment and debt service purposes. Most outgoing wires will be repetitive in nature and the Districts will not accept the requirement of going to a local branch to initiate a wire transfer. ACH Debits The District makes payment of federal and state withholding taxes with ACH debit from the General Fund account. Payroll Services The District pays its employees on a bi-weekly and semi-monthly basis. The District s payroll is prepared in-house by District employees. The payroll is prepared by Wednesday 3 pm, and the District pays its employees on Friday for bi-weekly payroll and on the 15 th and 30th of each month for the semi-monthly payrolls. The District direct deposits payroll to all employees, excluding the pre-check process for new employees. Information is sent to our financial institution for processing two (2) business days prior to the transfer date. The District requires the following for direct deposit: No funds may be withdrawn from the account prior to the effective date. The District will not utilize any bank provided software for any part of the payroll process, since the District can produce standard ACH files. Please indicate the communication methods and technology necessary for the District to transmit direct deposit information to the bank. Response must include any deviation from the District requirements. (See Response to Proposal - question 3). Zero-Balance Sweep Accounts The District currently utilizes a zero-balance account structure to provide the mechanism to have the total amount of our float fully invested at all times. It is extremely important that our funds continue to be fully invested at market rates. This overnight investment rate is generally based on the current federal funds rate. The District would be interested in interest bearing checking accounts to eliminate the need for multiple accounts. Please provide information for both account scenarios. 7

8 The District is also considering any proposal related to controlled disbursement checking to maximize our investment returns. Account Reconciliation/Check Disbursement Services The District requires a system that the bank provides that will allow us to obtain an electronic listing of cleared checks from the bank via the internet. The information transmitted must include check number, account, amount cleared, date paid, and an image (hard copy or electronic) of both sides of the check. This would allow us to simplify our bank reconciliation process by electronically preparing our outstanding checklist. MONTHLY REPORTING The financial institution will, on a monthly basis, provide the District with a detailed statement of activity listing each transaction and ending daily bank balance. Also, a listing of the cleared checks in numerical order must be provided. This listing should include the check number, check clearing amount, and the date the check was cleared. Also, this report must include a total of cleared checks for the month. The District should receive these reports no later than the fifth (5 th ) business day of the following month with an end of the month cutoff. The District also requires an Account Analysis Report including all per item fees and earnings credit calculations on a monthly basis. ELECTRONIC SERVICES In addition to addressing all services previously described, the District wishes to evaluate how business may be conducted through the bank via electronic services. Please describe your financial institution s ability to provide the following services via a secure internet site: Previous day and historical balance and transaction reporting Current day reporting of all electronic transactions (wire and ACH) and check presentment reports on a Controlled Disbursement Account Reporting on returned deposits, returned ACH s, returned wires and Notification of Charges (NOC s) Initiation of repetitive Fed wires, and non-repetitive Fed wires Maintenance of repetitive book and Fed wire instructions Submission of stop payment Review of previous day or historical check images Bank Automated Interchange (BAI) or other file type downloads of paid checks Included with this information should be complete details of fees and prices for such services. It is anticipated that significant savings on stop payment and transaction initiation could be achieved by utilizing such systems. (See Response to Proposal question 5) 8

9 INVESTMENT SERVICES The effective and efficient cash management system accelerates receipts of funds, delays disbursement of funds, and minimizes idle cash balances. Each of these objectives has been discussed in detail previously within this section of the Request for Banking Services. A truly exceptional system, however, should be measured on the full investment of cash at market rates with very little or no risk associated with the program. Investment of excess funds will be in accordance with the Pennsylvania School Code. The School District reserves the right to make investment decisions with any institution we choose. Since banks have many different investment products, please provide us with your detailed suggestions relating to the investment vehicle you could provide us for our approximately $13.4 million average annual investments, ranging from a high of approximately $25 million in the fall to approximately $6.8 million in the summer. These suggestions must include the following information: 1. The method used to fully collateralize our account balance in excess of FDIC. Should a repurchase agreement be considered, please explain the type of investment, which will be used in this buy/sell agreement. Also, describe the safekeeping arrangement for the investments held. All collateral must be held and valued by third parties. 2. Explain the calculation of the daily interest rate including the specific interest index and source of information (i.e. Wall Street Journal). 3. Explain the calculation of interest earned on a monthly basis (i.e day basis, average daily balance, average monthly interest rate, calculated daily based on daily rate and daily balance). 4. Provide description of the amount of cash balance on which the interest calculation is based such as collected funds and reserve amounts. 5. Any additional information you deem necessary for the District to fully understand your suggested investment vehicle. The District, by policy, is extremely conservative and adverse to risk. However, a welladministered cash management system can provide market rates of return without exposure to risks. The District reserves the right to separate banking services and investment services through separate institutions. 9

10 SECTION III BANK CREDIT EVALUATION Although properly structured collateral offers the District very good insurance against financial institution credit problems, the District would be remiss in not evaluating the prospective bank s creditworthiness. Although this will not be the primary evaluating criteria, it will be used to include a financial institution in our proposal process. The District will utilize the standard rating services to evaluate your financial institution. Should you be rated unfavorably by this rating system, the District will notify you of this fact and allow you to respond accordingly. Additionally, please provide your audited financial statements for our review. (See Response to Proposal - question 6). SECTION IV BANKING SERVICE FEES Banking services can be paid for by one of two methods. The District requests that your proposal response include both the compensating balance and the direct charge methods. The District reserves the right on an annual basis to choose either the compensating balance or the direct charge method. This document includes a listing of the number of transactions used during a normal year for each banking service. It is understood that the direct service fees are fixed for the period of this proposal. Please provide us with per item cost and annual cost for each service. (See Response to Proposal question 7, Attachment A, and Attachment B) Also, please provide us with your compensated balance calculations and your policies relating to the evaluation of this established balance. (See Response to Proposal question 8) 10

11 SECTION V PROPOSAL INSTRUCTIONS QUESTIONS REGARDING PROPOSALS All questions regarding this proposal need to be ed to Jennifer Benko, Director of Accounting at JBenko@doversd.org. Please all questions no later than February 14, 2014 at 4:00 pm. All questions will be answered and ed back to all participating banking institutions. RESPONSING TO THE PROPOSAL See Response to Proposal, and Attachments A and B. Please complete the Response to Proposal and Attachment B. Should additional space be necessary for a complete response, please attach a sheet of paper, and return accordingly. BIDDER S ETHICS AND COLLUSION Conflict of Interest: Any bank that knows of any District official having a material direct or indirect financial interest in such bidder s banking institution shall be required to submit a written statement, along with the Form of Proposal, detailing such interest. Failure to disclose a known such financial interest shall result in the bank s disqualification from further consideration of award of this contract. Bribery Any banking institution that attempts to influence a District official to award this agreement to such banking institution by promising to provide or be providing to such District official any gratuity entertainment, commission, or any other gift, in exchange for a promise to award the contract to such banking institution, shall be disqualified from further consideration of award of this contract and shall be subject to any applicable penalties under the law. Collusive Proposals Any banking institution that submits more than one proposal in such a manner as to make it appear that one of the proposals submitted is competitive with that of a different banking institution, or any two or more banking institutions that agree to fix their respective proposals in such a manner as to be awarded the contract shall be disqualified from further consideration of award of this contract and shall be subject to any applicable penalties under the law. 11

12 RESPONSE TO PROPOSAL In response to this proposal, please provide the following information along with Attachment B NAME OF BANK: CONTACT PERSON: STREET ADDRESS: CITY/STATE/ZIP: TELEPHONE NUMBER: FAX NUMBER: ADDRESS: 1. Please indicate any deviations from the conditions relating to banking services contained in section ii scope of banking services. 2. Provide the check clearing method and policy to identify the time deposited items become available for (a) investment, and (b) disbursement. 3. Provide an explanation of your financial institution s capabilities relating to transmitting direct deposit data along with suggestions for specific implementation including delivery requirements and realistic timetable. 12

13 4. Describe the different reconciliation services including the associated fees offered to the District. 5. Describe the bank s electronic reporting capabilities to include: balance and transaction inquiry; transaction limitation (both intra-bank and ach and fed wire system); and stop payment initiation. Include time of day the information is made available and deadlines for transfers. Also include price list for various services discussed. 6. Credit criteria: Please include copies of your last three (3) years audited financial statements. The successful bank is required to provide the District with subsequent annual audit reports as they become available. Each bank will submit with its proposal the following statistics based on information contained in the uniform bank performance reports, or in similar reports for calendar years 2010, 2011, and 2012, based upon Federal Reserve Bank definitions: a. Primary capital to total assets b. Equity growth to asset growth c. Loan loss reserve to total loans d. Total relationships or accounts with deposits in excess of $1,000,000. Each bank will disclose whether it has ever been under management supervision of the resolution trust corporation, FDIC, federal savings and loan insurance corporation, federal home loan bank board, or other similar current or former federal or state regulatory agencies. Each bidder will disclose whether it was acquired, did acquire, or will be acquired or acquiring another banking institution (if so, specify the institution, date of acquisition, and amount of assets acquired) within the past two years. 13

14 Include the names, addresses and phone numbers of at least three (3) current business clients, preferably school districts, and other governmental units as references. 7. Complete service fees summary (Attachment B). A. Check images returned with statement? Yes / No B. Permit redeposit of NSF checks? Yes / No C. Assess FDIC insurance cost? Yes / No D. Assess 10% reserve requirement? Yes / No E. Provide lock deposit bags free of cost? Yes / No F. Provide 2 part deposit tickets free of cost? Yes / No 8. Using the service fees summary, prepare the calculation of the compensating balance. Also, provide your policies relating to the evaluation of this established balance. 9. Explain the calculation of the earnings credit rate, and provide monthly earnings credit rate, and basis of rate. Please list the index by which the earnings credit rate will be benchmarked. 10. Describe any incentives offered by your bank to District employees for direct deposit pay, as well as any other services and / or benefits offered to the District under this proposal. 11. Describe other services and appropriate fees provided by your bank, ie: lock box service, cash link services, and check scanning capabilities. Please provide associated costs with other services on Attachment B The Proposed Fee Schedule. 14

15 ATTACHMENT A - One year estimate of Banking Services Service Description General Cafeteria Student Payroll Fund Activity Type of Account Demand Demand Demand Demand Zero Balance Service Yes Yes Yes Yes (Yes/No) Check Deposits Deposit Tickets Deposited Items Returned Deposited Items Other Collection Services Wire Transfers Received 60 ACH Credits Requested 50 Lockbox 2653 Check Writing Checks Issued Stop Payment Requests Direct Deposit Payroll Payments Processed Other Disbursement Services Wire Transfers Sent - Repetitive 80 Wire Transfers Sent - Non Repetitive 15 15

16 RFP FOR BANKING SERVICES ATTACHMENT B DOVER AREA SCHOOL DISTRICT PROPOSED FEE SCHEDULE Instruction 1 Based on the Estimated Annual Activity provided, please estimate the annual cost for each listed service. Instruction 2 Based on the Earnings Credit Rate, please also calculate the Compensating Balance Required to cover the Estimated Annual Cost of each item. Instruction 3 If no activity is listed for a service description, please insert the cost of the service should the District desire the service. 16

17 Estimated Unit Cost Estimated Balance Service Description Annual Activity Annual Cost Required GENERAL SERVICES Demand Deposit Account Maintenance Special Statement Handling Account Maintenance CHECK WRITING Check Stock Basic Service Maintenance Controlled Disbursement Service Maintenance Image Service Maintenance Checks Paid Checks Imaged Stop Payments Overdrafts Additional Charges CHECK DEPOSITS Deposit Tickets Deposited Items - On Us/Local Deposited Items - Other Fed Deposited Items - Other Return Deposited Items Insurance Charges Remote Deposit Services Check Scanning Services Additional Charges 17

18 Estimated Unit Cost Estimated Balance Service Description Annual Activity Annual Cost Required ACH AND WIRE SERVICES Wire Transfer In Book Transfer Received Wire Transfer Out Repetitive Wire Transfer Out Non-Repetitive Book Transfer Out ACH Credits Received ACH Debits Received Additional Charges DIRECT DEPOSIT PAYROLL Monthly Maintenance # of Files Transmitted # of Items Transmitted Notifications of Change Additional Charges ELECTRONIC REPORTING # of Accounts Previous Day # of Accounts Current Day Previous Day Reports Created Current Day Reports Created Debit Items Reported Credit Items Reported Additional Charges Other (describe) TOTALS 18