with the brick buildings and right by the water
in a way, it kind of reminds me of like Port
Townsend. It has that sort of feel that's right
next to the water. Welcome to County Connection.
the official podcast of the Washington State
Association of Counties, where we dive into the
legislative issues shaping the future of our
communities. From budgets to public safety, infrastructure
to elections, we'll break down what's happening
in Olympia and how it impacts counties from across
the Evergreen State. Stay informed, stay engaged,
and join us as we amplify the voice of Washington's
39 counties. Welcome back to County Connections,
the podcast dedicated to navigating the ever
-evolving world of county government in Washington.
I'm Derek Young, Executive Director of WASEC.
Today, we're tackling a crucial yet often daunting
topic, managing your cash flow. WASEC members
across the state are deep in budget discussions,
and a consistent theme has emerged. Decisions
by the legislature and courts have had catastrophic
consequences on county budgets. That's why we're
laser -focused on finding solutions that reduce
your costs, increase revenue, and improve efficiency.
We're incredibly fortunate to have Michael Albowich,
Vice President of Client Servicing and Implementation
at our partner 3 Plus 1 joining us. Mike brings
a wealth of experience and expertise in public
finance and cash management strategies. 3 Plus
1 is renowned for its innovative approach to
optimizing cash and investment returns, and its
product CashVest exemplifies its commitment to
providing tangible value to clients. CashVest
is a revolutionary service designed to help public
agencies maximize their liquidity and earnings
potential. In this economic client, every dollar
counts, and CashVest offers a comprehensive solution
to ensure organizations are making the most of
their available funds. I think you'll find Mike's
background in our conversation interesting. So
let's dive in. Thanks for having me. Appreciate
it. Well, I appreciate you joining us. We've
been wanting to do this for a little while now.
You know, 3 Plus 1 is one of our trusted partners,
we call them. They're companies that we advocate
for along with our partners at the National Association.
And it's because of your cash fest. product that,
you know, we want to talk about today, but I'm
really interested about how you came to, to,
to cash best, because I think that story tells
a lot about, you know, why I think this is important
for our members to know about and kind of where
your career has led you, how your career led
you here. So many years ago. So I've been at
this working in public financial management for
quite a while, um, going on, you know, 30, over
30 years and about. In the early, I don't know,
early 2000s, when I was serving as state treasurer,
I met Joe Rulison. And at the time, he was working
on a similar product at Bank of America, if I'm
not mistaken, and had a chance to meet him. We
actually worked with his team on a product that
was similar to CashFest for a little while when
I was treasurer. And I'd always kept up with
Joe over the years and sort of stayed connected
and chatted from time to time. And then after
a while, when I was thinking about leaving the
Treasury and moving on to something else and
actually moving back to New Hampshire, so at
the time I was living in D .C., we sort of had
a conversation about kind of what was going on
at 3 Plus 1, how it was growing, and had a conversation
about joining. And part of the reason why I'd
always... I mean, I'd always thought about doing
something similar. So it was a great opportunity
for me. In public financial management for many
years, you know, municipal advisors have helped
state and local governments with their debt issuance,
right? And trying to navigate the world of investment
banking and bank kind of banking services on
that side, on the debt management side. And I
always thought that there was a role. for a trusted
advisor, so to speak, on the cash and liquidity
management side. And so the things that 3plus1
were doing was really appealing to me for two
reasons. One, I had been doing a lot of technical
assistance prior when I worked at the federal
treasury, which is really about helping clients
and coaching clients on implementing change and
new ideas. But The idea of combining like the
sort of the technical assistance and the sort
of trusted advisor approach on the liquidity
side sort of really appealed to me because there's
a lot of things that as, you know, finance director
or treasurer, you're not forced to deal with,
but you're like are dumped into your lap. Some
you know a lot about, some you don't know as
much about. And so to be able to have a trusted
advisor, particularly on the cash side, cash
and banking side. Again, that really appealed
to me. And so when I had a conversation with
Joe, you know, became like, OK, let's, you know,
let's give this a try. So I joined 3 Plus 1 about
three and a half years ago. It's been great.
Been a wonderful experience. Always fun to work
with the clients. And, you know, that's exactly
why I was particularly interested in what you
all were doing when I first started this role.
Prior to my time in county government, I had
a finance background. And so that separating
that inherent conflict that is created by the
the bank that, you know, you're holding your
deposits in also advising always struck me as
a little difficult. And so the idea of having
a fiduciary or I guess not a fiduciary advisor
that is giving information to you that doesn't
have a an investment in your decision. and only
advising you on the best course of action for
the public. That was exciting for me. We were
at my state executive's conference, and my ears
immediately perked up when I heard about what
you all were doing. It's a good point. It's really
interesting. At 3 Plus 1, we're not a bank. We
don't sell investments. We're simply advisors.
We're trying to give people the best advice,
but also based on the data that comes from you
as the client. You know, we analyze all of our
clients' data to make sure that we understand
and can help them understand where is all my
cash and sort of how is it doing? Is it my earning
1%, 5%, 0 .1%, right? So the first thing is just
taking a step back and making sure you understand
all the big, the sort of the big picture. And
then if you have multiple institutions that you're
working with, being able to help. Our clients
like look critically at each one and critically,
not necessarily in a negative way, but gain insights,
right? So, okay, this bank's really good. They
have great technology. They're doing a good job
for me. But this other over here, maybe I could
be earning more interest. So how should I be,
you know, optimizing my cash to make sure I'm
getting the best return possible? But also when
we say the best return possible, also mindful
naturally of risk. You know, how long can I invest
for? How much can I invest for? So that's a big,
that's a, you know, sort of the core of what
we do is helping people look at their liquidity
and then figure out how to kind of optimize where
their balances are. That's really exciting to
me because, you know, I mentioned before that,
you know, our members are facing. really extraordinary
budget times. I mean, this is true across the
country. As we enter this, you know, as I've
heard Matt Chase, and I think you as well, talk
about the big shift where we've got the federal
government is devolving responsibility to the
states and the states to the local governments.
In Washington, we have a particular crisis that's
around our criminal justice system, which is
always based, you know, chronic underfunding
has now got a real crisis. So our members are
desperate to find quarters under rocks, you know,
that anything that's available. And this really
seemed to me like an exciting opportunity where.
Without changing any real policy decisions, they
could potentially, you know, save taxpayers additional
dollars and earn extra interest income. So, you
know, I've described CashFest as a, you know,
as a fintech application. But let's tell people
what it's really doing so that they can get a
sense of if they partner with CashFest, what
they'd be buying. Here's the simplest way. So
if let's just pretend that we're at a barbecue.
Right. So it's the end of summer. We're at a
barbecue. We're chit chatting. We're having whatever
our favorite our favorite beverage kind of happens
to be. And what I when someone says to me, oh,
what do you what do you do at three plus one?
Well, the example I would give is I ask you,
OK, do you have a checking account? Most people
have a checking account. I say, OK, does the
bank ask you to pay fees or no fees? And. What
I'm trying to get to is that the bank might say,
all right, if you keep picking over $1 ,000 deposit,
$1 ,000 minimum deposit, we will waive all the
fees. And you might say to yourself, oh, that
seems like a really good deal, right? $1 ,000,
I'll keep that minimum. That'll be great. But
if you don't use any bank fees, that $1 ,000
is worth zero, right? Now, if you use a lot of
bank fees, let's say you used, and my math is
not going to be super quick, but if you use $50
a year in bank fees. then that $1 ,000 is worth
$50 divided by 1 ,000. So it's worth 5%. So that
would be a really good deal, right? Because that
means that 1 ,000 is worth 5%. Don't use any
fees, it's worth zero. Now take those numbers
and multiply times 10 or times 100. And that's
akin to kind of what we do with CashFest. That's
one of the things that we'll do is we'll sit
down and we'll say, okay, the bank's telling
you, you need to keep a million dollars on deposit
or $10 million on deposit. For the benefit of
keeping that million dollars on deposit, earning
zero, there's free checking. And a lot of times
our clients will say, well, this is what the
bank has told me. And this is kind of what we've
been doing. And we'll say, well, how much in
fee? What are the fees that you're actually using?
Like, what is it that you're actually getting
value for here? And so that's a small example
of where we'll kind of try to dig through and
to figure out, well, is that really the best
deal? Similarly, we have plenty of clients who
will say, well, the banks offer to pay me X on
my deposits. We know that down the street or
across the street, there's plenty of other institutions
willing to pay, for example, Y on those, maybe
those same deposits. Similarly, we... We work
with a lot of clients who keep, you know, a certain
amount of cash on deposit because that makes
them feel very comfortable that they won't bounce
checks. But we'll also kind of work through with
them to figure out, you know, we could probably
keep a smaller balance on deposit, maybe put
that extra cash someplace else and earn more.
So those are just little examples of how we use
their data to look in and to figure out, OK.
Here's how we can maybe make some changes in
business processes. Here's how we could negotiate
something different with the bank to kind of
get more out of that cash that you have on deposit.
So it's really just about making sure that your
cash is working as hard as possible, but using
data to kind of back up your decision making.
You know, and I, yeah, that data point is critical.
Using it to help you decide what do you really
need in there? Because, you know, I think. Our
members, you know, they know this because they
understand that counties work, but they may not
think about what it means that basically we get
our largest tax receipts in two big lumps. Correct.
And that's true of all the junior taxing districts
that they manage their treasury. And so there's
a lot of cash sitting there for a significant
period of time that could be earning more. And,
you know, are they maximizing their returns?
You mentioned another interesting aspect to it
that I didn't think about. It's more the fee
side of things. I always tell people, because
they get confused about how banks make their
money. And I always tell them, flip what your
normal experience with a business is. Because
for them, deposits are a liability and loans
are an asset. So they are trying to reduce the
amount of costs that you're... checking and savings
have to them while also increasing their interest
rates. So that part's a little easier to get.
But, you know, people, you know, maybe I'm aging
myself here, but free checking was an innovation
not that long ago. Like before, the fees were
really transparent. Now they've kind of hidden
things a bit within, you know, various other
mechanisms. So this kind of basically it helps
tease all of that out. Well, it's funny you sort
of mentioned that. I mean, we've had the experience
recently where, you know, institution will say,
well, there's no fees. So there's kind of like
nothing to see here, move along, right? But we've
actually found that by asking your bank, well,
show me exactly what you think my fees would
be, because I'd like to know. And maybe my taxpayers
also want to know like what I'm paying for here.
It's actually become like reverse psychology
because once you ask some institutions, some
are very, very, I'll say transparent and very
forthright. Others are not, I'm not saying that
they're not transparent, but their business model
has been, I'm going to give you free checking.
But then when you start to ask, well, okay, what
if I just wrote you a check for those fees? What
would it cost me? It adds a new layer to the
conversation and it allows you to look at different
options that you might not have looked at before
in terms of how you pay for those fees. So it
just, It's sort of like I said, it's funny, reverse
psychology of, well, show me what the fees would
be, and then I can decide how best to pay them.
I think the other thing that's also super important
is even though we're talking about, you know,
kind of maximizing or optimizing interest income,
and we're also talking about, you know, challenges
that counties face. both in Washington state,
you know, uniquely, but then sort of across the
country with a changing sort of federal traditional,
let's say federal state local partnership on
different, you know, social service infrastructure.
It's also critically important that when we go
to taxpayers and ask them, look, we want to raise
taxes and no one wants, no one wants to do that.
But when we go to them and we ask them to pay
more, I think it's also nice to then. On the
same side, be able to say, look, we respect that
you're going to pay more, but let me show you
the other things that we're doing over here,
right? We're optimizing our balances. Maybe we
did an RFP for bank services and we're doing
something different. We're going to offer you
more ways to pay online or we're going to start
to offer accepting payments by Venmo or PayPal.
We're going to try some new and innovative things.
And I think that's a really important. piece
of the story, right? It's not just about doing
better, but then connecting that to, okay, we're
going to do better. Hopefully we're going to
earn more income, but we also want to be able
to demonstrate to taxpayers that we are, you
know, we're doing the right thing. And we're
also benchmarking ourselves. That's another big
part of what we provide to clients is because
we work with people all throughout the country.
We can usually say, you know, this rate looks
good. This cost. maybe doesn't look so good.
This is how kind of you stack up against, you
know, some of your peers, not just here in Washington
state, but maybe, you know, another county, similar
size in New York state. Here's the, here's some
things that they're doing. So we're able to bring
some of that to the table as well in terms of
the ideas and, and help them kind of benchmark
themselves both sort of formally and informally.
against their peers across the country. That's
terrific. I really like, you know, not only being
able to take a look, you know, our members, you
know, are always talking to each other. So there's
a little bit of that going across board, including
with the appointee level. But being able to look
around the country, I think is critical because
every once in a while, you know, I feel like
we have pretty, you know, high standards in Washington
for local and state government. But every once
in a while, I'll hear something from a colleague
in another place and just think, wow, they've
really got this figured out and we got to figure
out how to bring this back to Washington. You
know, we've spent a good amount of time kind
of explaining the technical details of how this
works. But I think a lot of our members will
want to know, you know, obviously. how it works,
but also how other counties have done and maybe
other jurisdictions around the country. Can you
give us some examples of successes that they've
had working with CAFNIST? If you go to our website,
we have different testimonials and different
case studies from our clients about the success
that they've had. One of the more recent case
studies that we've done and videos that we've
done that are on the website. is from Kauai County,
Hawaii. And if you look, Kauai is a decent size,
when I say decent size, pretty big size county
in terms of population and sort of cash on hand.
Since we started working with them about two
years ago, they've earned, now just follow me
here for a minute. They've earned about 14 million
in earnings. Now that's not incremental. They've
earned a cumulative 14 million. Of that 14 million,
two. million were really from sort of focusing
on the data, focusing on how some of their accounts
were structured to be able to use some new banking
products. And basically that two million comes
from kind of here's how we used to do business.
Here's how we did business. And the difference
between kind of what we were earning and what
we started earning because of those changes worth
about in that particular case. has been worth
about $2 million. So that's a case study that
we have that's a pretty good one. And that's
one of the clients that I work with in particular.
So it's sort of like near and dear to my heart,
I guess. I think it's an instructive example,
too, because not that I am familiar with the
size of Kauai County. Just to be clear, I quickly
Googled it when you brought it up. But it has
a population of 73 ,000 people. So a couple million
dollars. And a county that size, you know, that's
relatable to a lot of our members. Yeah. Because
I think some of them have thought, well, I'm
a small county. This won't make that big of a
difference. But really, this solution scales
pretty well. You know, again, one of the things
that's also exciting for me, right, working with
different clients in different jurisdictions
is you do see things that are comparable and
then things that are different. And so in their
particular case, if you look at their population,
they do have probably more cash on hand than
someone's similar population. Similarly, for
example, we were talking about like me being
from New Hampshire in New Hampshire counties.
A lot of municipalities in New Hampshire don't
carry very much cash at all on their balance
sheets. In Washington, one of the things that's
quite unique about Washington is the relationship
between counties and junior taxing districts.
And so there are counties in Washington state
that do have pretty significant balances, but
it's not just, of course, it's just not county
money, but it's junior taxing district money
as well. And that are sort of like mixed in,
use that term of quotations, right? And managed.
As a group. With that said, too, I also wanted
to mention, so I'm lucky enough to have worked
with some of our clients in Washington State.
And it is exciting because you mentioned how,
you know, county officials and different municipal
officials, they do talk to their peers. The thing
that's fun about the county treasurers in Washington
State is they're super professional and they
do talk. They each of them knows kind of what
the other is doing. I think that they have a
good network of being able to share successes
and very, you know, a real like good group of
professionals, but also quite inquisitive, too.
And so like the things we're talking about, I
think, appeal to them because they're also wondering,
OK, we've heard about this, but OK, what's what?
Like you said, like, what does this mean to me?
Is this, you know, how would this make sense
for me? And that's why it's always interesting
to go and talk to them at their conferences,
have the opportunity to talk with them. And I
think some of them are starting to come around
to think, oh, maybe there's something here that
you know about, Mike, that I could learn, you
know, maybe I could learn from. So that's just
also part of the fun part of sort of being in
this business is, you know, having the chance
to talk to folks and then sort of slowly kind
of bring them along, so to speak, and make, you
know. allow them the opportunity to say, yeah,
I wonder if this could be applicable for me.
I wonder if there's something we could partner
together on. It's interesting because the type
of person you want running for treasurer is also,
you know, tends to be fairly conservative and,
you know, isn't rushing to adopt the first, you
know, high optimization, you know, kind of whiz
bang thing because you want caution. You know,
the type of person that runs for treasurer isn't
seeking glory. because it's not a glorious job.
It's an incredibly important, high fiduciary
kind of job. So that tends to be the type of
person that runs. But yeah, I can see that they
aren't. wants to rush to judgment on something
either. And so it's, it's definitely something
that I both appreciate. And I, uh, you know,
want to work with our members and their members
and kind of bring everybody along to see for
sure. You know, I, I, I don't think this is a
threat. This seems like an opportunity that we
should be. taking a closer look at. Now, maybe
you're doing something in your county that, you
know, like you said, there's there were similar,
you know, kind of products that, you know, maybe
a bank was offering or something. But but I like
the fact that in this case, you don't have that
same conflict of interest between the advice
that, you know, the cash best product is providing
you with and the folks that are investing your
money, because that does create some challenges
that. I think are difficult. And often, you know,
the person you're talking to at the local level,
if you're invested, for example, if you have
deposits with a very large bank, you know, my
little town had Bank of America. And at one point,
I don't know if they still do, but the person
that bid on that contract. to have those deposits
is probably several layers of decision -making
removed from where all of our debt decisions
were being made, what the fees were. So they
may not even have been aware of what the actual
cost to us as a town were. So how do we get that
information from them? So we're coming to an
end here. Okay. I am curious, is there anything
that you, there's something that you think our
members should know? So when they go back to
talk to their staff and their treasurers, that
they should say, here's why I think we should
take a look at this. I think the question is,
do you know where all your cash is? And is your
cash working as hard as possible for you and
your taxpayers? That's a great response. I mean.
Not only should the public servants be working
as hard as they can for you, your cash should
be working as hard as they can for the public.
That's great. At our municipalities, right, in
our counties, you know, our number one asset
is our human resources. And we know that, you
know, we always invest in our human resources
and we're trying to get the best folks working.
you know, taking care of taxpayers, delivering
services. And maybe I would argue our second
most valuable asset is our cash, right? Because
that's my business. But our second most valuable
asset is those financial assets like cash and
investments. And again, are they working as hard
as possible? And are we giving them the care
and attention kind of that they need to yield,
you know, yield benefits for taxpayers and stakeholders?
That's terrific. That's a great place to stop.
Mike, thank you for joining us. This was a tremendous
help. to help me understand what you're all doing.
And I thank our members as well. So appreciate
your time. And maybe I'll run into you here in
New Hampshire soon. We'll be looking for you.
Thanks for having me on. I appreciate it. Thanks.
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