What is the GeFONSI and how is it used?

GeFONSI is an acronym for General Fund and Other Non-segregated Investments, it is one of several investment pools managed by the Treasury Division in the Department of Revenue. Treasury invests funds that the Legislature and the AG has determined do not need to be segregated in the GeFONSI. Treasury pools these various participant balances with the General Fund balance for investment purposes to create the GeFONSI pool. This pooling method reduces the liquidity needs overall and allows Treasury to invest these funds more aggressively than would be possible if each fund were held separately. Participants hold an equity value in the GeFONSI pool. The GeFONSI pool balance is then invested and holds an equity value (shares) in two fixed income pools managed by Treasury staff: the Short-term Fixed Income Pool and the Intermediate-term Fixed Income Pool. For more information about these pools, including asset allocation and permitted investments, please see Treasury's Investment Policy and Procedure's Manual.

Do all participants earn interest on their GeFONSI balances?

No, Treasury operates under a Memorandum of Understanding with the Department of Administration. The Department of Administration, Division of Finance is responsible for determining which participants receive investment earnings.

What is the expected rate of return on the GeFONSI?

Based on Callan's (Treasury's investment consultant) ten year capital market assumptions, the GeFONSI's median ten-year expected rate of return is 2.38%, actual returns may vary. Capital market assumptions are reviewed and revised each March. The expected return is derived from market assumptions associated with the underlying investment pools the GeFONSI is invested in.

How are Participant earnings calculated?

Treasury calculates participant earnings by multiplying the participant's daily cash balance in the GeFONSI by the GeFONSI's actual daily rate of return. Interest is compounded daily. This methodology and the general process, is outlined in the MOU between Treasury and the Department of Administration.

How is the daily rate of return calculated?

Our custodian bank, State Street Bank and Trust, calculates the GeFONSI daily rate of return by dividing the GeFONSI's current day earnings by the GeFONSI's prior day total net asset value. Daily rates are shown on the monthly earnings report distributed to participants receiving interest (see Question 7 below).

How does Treasury determine your daily cash balance in the GeFONSI?

Daily balance data is obtained from the Integrated Resource Information System (IRIS). Treasury pulls balances each day from IRIS for those invested in the GeFONSI (fund class 8001). The balances in account 1031 (Contribution to Pool) are the balances of the participants at the end of each day. This is the balance used in the interest calculation process.

Changes to the balance on the last day of the month may occur if a transaction is processed for a prior month. However, these changes are not taken into account retroactively in the interest calculation process as the change did not occur in the investment pool until after the transaction was posted.

When are earnings distributed?

Treasury calculates daily earnings at the end of each month. These earnings are posted on or before the 10th business day following month end. This entry is posted to the prior month as it represents an allocation of earnings in the GeFONSI pool.

How do I obtain a monthly earnings report?

We distribute monthly earnings reports via the Web no later than the 10th business day following month end. In addition, we notify the agency contact via email and provide the site address immediately after the report is available. The report shows your daily balance in the GeFONSI, the daily rate of return, daily earnings, plus any undistributed (i.e., accrued) earnings. If for some reason you can not access this report, please contact the Accounting & IT Section of the Treasury Division.

Why are the daily rates zero on weekends and certain holidays?

The accrual for weekends and holidays is included in the previous business day's rate.

Why is income for a particular day (or month) negative?

As described in Question 1, the GeFONSI participates in three fixed income investment pools. The investments held in the pools are marked to market (i.e., priced) daily by our custodian bank. The rate of return for a particular day may be negative due to a downturn in the market (unrealized losses). The cumulative effect over several days may result in a loss for the month.

What controls exist surrounding the GeFONSI and the earnings distribution process?

Aside from accounting system controls associated with IRIS, Treasury staff have established investment policies and accounting procedures for the GeFONSI which includes reconciling the balance reported by the custodian with that recorded in IRIS. The GeFONSI pool is included in the annual audit performed by external independent auditors. You may view the audited financial schedules on our Annual Investment Reports page.

For More Information

If you have further questions, please do not hesitate to contact the Accounting & Information Technology section.