Requirements
Annual Assessment
As required by the Texas law that established the Pooled Collateral Program, the Comptroller will impose an annual assessment each year on participating financial institutions to cover the costs of administering the program. Public entities will not receive an assessment for participation in the program.
Each depository institution's assessment will be based on their participation in the program, and will be calculated by a specific formula based on factors set out in the law. Since the assessment is based on program participation, it is an equitable way to distribute the costs of operating the program, and there is no need to prorate an assessment if a depository institution has been in the program for less than a year.
Assessment Formula
The three factors identified by law for determining the amount of the assessment are:
- the number of transactions a participating institution conducts;
- the number of public entity accounts a participating depository institution maintains; and,
- the depository institution's aggregate average weekly deposits of public funds collateralized in the program during that year.
Using these factors, the Comptroller will determine the amount of the assessment with a formula that is the sum of: a collateral transaction fee, a public entity account maintenance fee, and the depository institution's average weekly deposits fee based on its share of the total average weekly deposits of public funds collateralized in the program.
Transaction Fee and Account Maintenance Fee
The collateral transaction fee will be $5.00 per pledge or withdrawal of collateral, and the account maintenance fee will be $50.00 per month per public entity.
Aggregate Average Weekly Deposits Fee
Each depository institution's average weekly deposits fee will be based on its level of participation in the program. This level of program participation will be represented by the depository institution's percentage share its program deposits represent of the total average weekly deposits of the program. The Comptroller will determine this on a weekly basis, calculating what percentage each depository institution's public deposits in the program represent of the total of all public deposits in the program. An average of all these weekly averages will be the aggregate average weekly deposits for the year.
The Comptroller will apply each depository institution's percentage share of average weekly deposits to the remaining program administration costs to obtain each depository institution's average weekly deposits fee. The remaining program administration costs will be determined by subtracting all collateral transaction fees and public entity account maintenance fees from the total program administrative costs for the year. For example, assume the total program costs for the year were $70,000. If the total collateral transaction fees were $4,000 and the total account maintenance fees were $16,000, then the remaining program costs would be $50,000.
| $70,000 total program costs | |
| - | $ 4,000 total transaction fees |
| - | $16,000 total account maintenance fees |
| $50,000 remaining program costs |
The aggregate average weekly deposit fee would then be calculated by the Comptroller by multiplying each depository institution's aggregate average weekly deposit percentage by the remaining program costs. Therefore, if a depository institution's average was 10%, their fee would be 10% of $50,000, or $5,000.
Average Weekly Deposit Fee Exemption
However, depository institutions with average weekly deposits of less than one million dollars over the year will be excluded from that fee, but will still be assessed the collateral transaction fee and the public entity account maintenance fee.
Examples
For example, if during the year a participating depository executed 20 collateral transactions, had deposits from six public entities in the program with average aggregate weekly deposits that were 5% of the total average weekly deposits in the program, the amount of their annual assessment would be:
| 20 collateral transactions x $5.00 | = | $ 100 |
| 6 public entities x $50/month x 12 months | = | $ 3,600 |
| 5% x remaining program costs of $50,000 | = | $ 2,500 |
| TOTAL ANNUAL ASSESSMENT | $ 6,200 |
Or in another example, if during the year a participating depository executed 80 collateral transactions, had deposits from fifteen public entities in the program with average aggregate weekly deposits that were 20% of the total average weekly deposits in the program, the amount of their annual assessment would be:
| 80 collateral transactions x $5.00 | = | $ 400 |
| 15 public entities x $50/month x 12 months | = | $ 9,000 |
| 20% x remaining program costs of $50,000 | = | $10,000 |
| TOTAL ANNUAL ASSESSMENT | $19,400 |
Or in a third example, if during the year a participating depository executed 15 collateral transactions, had deposits from 3 public entities in the program with average aggregate weekly deposits that were less than $1 million, the amount of their annual assessment would be:
| 15 collateral transactions x $5.00 | = | $ 75 |
| 3 public entities x $50/month x 12 months | = | $ 1,800 |
| 0% x remaining program costs of $50,000 | = | $ 0 |
| TOTAL ANNUAL ASSESSMENT | $ 1,875 |
Large Costs
When appropriate the Comptroller will spread unusually large costs, like start up costs, over a period of multiple years.
Assessment Notification
The Comptroller will send a notification of their assessment amount to each participating depository financial institution after the close of the state fiscal year. The state fiscal year ends on August 31st.
Payment
The depository institution has 45 days after the receipt of the assessment notification to remit payment by ACH credit according to the instructions that will be provided by the Comptroller.