Mission Focus - Treasury continues to strive to achieve its mission to ensure excellence in the management and administration of its diverse financial programs and services through innovative fiscal management, fiduciary oversight, and instill these values in its leadership, financial professionals, and staff.

Data Analytics Project - Treasury will continue to develop data analytics utilizing available tools that allow management to integrate, gather, present, and analyze internal and external data from disparate sources.  Treasury management will utilize data analytics applications to make data more readily available and timely providing insight into Treasury’s performance related to daily operations and long-term deals. Real-time data will allow management to monitor both agency and division-level performance and facilitate fact-based decision-making.  Mid-level management will continue to improve the data analysis currently in place to be able to track progress against performance measures and goals in real-time, improving the ability to proactively manage the operations.  Treasury will continue to improve the agency’s ability to monitor numerous regulatory requirements, including those related to the cash and investments programs, using data analytics. In the next phase, Treasury would like to implement a public facing dashboard to promote transparency and openness with Commonwealth citizens and stakeholders.  

Treasury continues to aggressively pursue innovation and efficiency through the work of our Information Technology team.  Some highlights of Treasury's current and future products are summarized below: 

Legacy Applications - Treasury has strategically embarked on an effort to migrate legacy flagship applications to modern, state of the art, SaaS solutions. Treasury recently completed the shutdown of the legacy accounting application APS2 in December of 2021. This VITA major project is closed and under maintenance as we work with the vendor to migrate to the Commonwealth SSO solution for improved identity and account management.

Treasury Unclaimed Property System Upgrade – Treasury’s new Unclaimed Property SaaS Solution Project, KAPS, was rolled out in August 2022. This project has been a testament to the utilization of market leading technologies and improved efficiencies as Treasury greatly improves the rate at which we process Unclaimed Property, while no longer requiring paper processes from claimants. In addition, this new solution has added audit and fraud alert capabilities.

Risk Management Information Systems Upgrade – Treasury is planning to replace our legacy Risk Management Information Systems: VAPS and VACCS. Currently, three separate applications written in older, more vulnerable ASP.NET technology, the migration to a unified SaaS solution will improve system maintainability and accessibility as well as operational efficiencies by centralizing member data, accounts, and administration in one system. Improved overall reporting and analytics will significantly improve DRM's ability to produce quality and more timely reports for the actuary thereby facilitating Treasury's ability to meet state budget deadlines.

Funds Management System (FMS) Upgrade – CMI will initiate several tweaks to its Funds Management System (FMS) to include enhancements to account administration, Trade Ticket integration with our new BroadRidge Financials (APS2 Replacement) system, Wire Automation with our existing COTS Frontier Bank Reconciliation Program, and Wire Transfers to Custodian Banks.

Bond Requisition Process Systemization – Debt Management has initiated an effort to replace the manual, legacy, spreadsheet driven processes that currently support the bond requisitions process. This project will automate processes today that are limited to the knowledge of a small number of existing staff.  With the advent of possible retirements, an automated system will greatly aid in succession planning. In addition, this system will remove several manual processes and enable a new customer “portal” for those needing to do business with Treasury.

Internal Systems - Treasury continues to use two legacy applications for Access Control and Project Documentation. Centralized Access Database (CAD) and WorkSpaces are both over 10 years old, surpassing their useful lives. IT will be reviewing options to enhance or replace/modernize these services.

Cloud Computing – Treasury has several initiatives under way during this planning cycle that will drive improved effectiveness through technology. The proper management and control of “technical debt” is critical to the Agency's need to maintain business continuity and availability with our partners and customers. The underlying server infrastructure for Treasury has migrated from physical servers to virtual “private cloud” servers over the past 2 years. Treasury is now performing a detailed assessment in an effort to migrate to a Cloud (Azure) environment. This exponentially improves our ability to quick scale our infrastructure and platforms to meet ever changing needs and demands, while also realizing true efficiencies with our ability to only pay for infrastructure resources when in use. Treasury is targeting to move to a Cloud operating environment within 1 year of this writing.
 
Return to Microsoft Email Platform – Treasury, like all Executive Branch Agencies, will transition back to a Microsoft Email Platform. This is a VITA initiative for which Agencies will have additional platforms available with the email solution. This includes Microsoft SharePoint, Teams and Power-Automate, a tool to allow for the creation of automated workflows and approval routing. Treasury is targeted to migrate to the new email platform April of 2023.

Adoption of VITA’s “ePen” DocuSign Solution – In an effort to reduce or eliminate Treasury’s “paper processes” and dependencies, Administrative Services is working with IT to integrate VITA’s “ePen” DocuSign solution into the agency workflow/automation projects using our existing Document Management System, PaperVision.

Security for Public Deposits Act (SPDA) - In support of greater Transparency, the Treasury is scheduled to incorporate required enhancements to the SPDA program, adding additional levels of oversight regarding public depositors. The on-line system is designed to automate the monthly reporting of public deposits.  The system requires upgrades which enhance customer support and meet the current business needs of the agency. The improvements will also provide operational efficiencies for Treasury staff.

Digital Equity and Inclusion - Treasury acknowledges the importance of Digital Equity and Inclusion and is exploring options to promote digital equity on Treasury public facing websites. This should include expanded accessibility, usability and outreach, ensuring our services align with Executive Order One and the One Virginia initiative, while fulfilling our legislative responsibilities as custodians of Commonwealth finances.

Federal Government Uncertainty - Due to Virginia's proximity and economic dependence on federal employment, actions (or inactions) such as sequestration, furloughs, and budget shutdowns could have a detrimental impact on Virginia’s economy.  In addition, regulatory, congressional, and other actions by the federal government could negatively impact Commonwealth bond ratings.

Build America Bonds (BABs) - The American Recovery and Reinvestment Act of 2009 provided an incentive for state and local governments to invest in infrastructure improvements.  Rather than being issued as tax-exempt bonds, the bonds were issued as taxable bonds and either featured federal tax credits for bondholders, or they were structured for the federal government to pay 35% of each interest payment made by the issuer.  Shortly after the issuance of BABs, federal sequestration caused there to be haircuts to the 35% subsidy anticipated.  Such haircuts have reduced the amount anticipated by as much as 8.7% in the federal fiscal year (FFY) 2013 to 5.7% in FFY2022.  The IRS had released in FFY2020 that the future sequestration rate through FFY2030 would remain at 5.7% unless any changes were implemented.  As a result of the American Rescue Plan, federal support of this program is currently at risk and Congress will need to waive the Pay as You Go Act by December 2023 in order to protect future federal subsidies for this program from being at risk.  If this is not done, it is thought that Congress will not take action in the future to restore the subsidy.  Should Congress not agree to protect the interest subsidy, Treasury will have to revise the Treasury Board budget to reflect the full cost of the interest payments being carried by the Commonwealth; thereby requesting more general fund monies.  In addition, if a decision is made by the federal government to not provide for the subsidy payments, the Commonwealth will most likely determine it is in the best interest of the Commonwealth to refund its BABs, which unfortunately is coming during a period of higher interest rates and interest rate pressure.

Literary Fund Assets Availability - Constitutionally, the Literary Fund is required to maintain an $80 million asset balance.  Available cash balances beyond that amount may be used for K-12 school purposes.  This has typically taken the form of loans to localities for school construction and payments for teacher retirement.  In recent years, the Literary Fund has not been making new loans.  The 2022-2024 Appropriation Act, however, authorized up to $200 million in school construction loans in each of the first and second years.  The Appropriation Act also made changes to the terms of Literary Fund loans to make them more attractive to localities.  While there has been a significant influx of cash from the Unclaimed Property program to the Literary Fund in recent years due to various one-time stock sales and similar activities, it is expected that this source of income to the Literary Fund will dwindle. Finally, increased outreach claim efforts are returning a higher percentage of unclaimed properties, leaving less available income to the Literary Fund, further exacerbating the declining asset balance situation.

VaRISK- Constitutional Officers plan; Jails – Over the past several years there have been concerted efforts by a few area private insurers to provide liability coverage to regional jails.  They have been successful in entering agreements with a handful of the lowest risk facilities. This has resulted in shrinking the pool of jail facilities participating in VaRISK, and leaving higher risk facilities with more substantial loss histories in the Plan. This has contributed to increased costs for the remaining facilities.  The Division of Risk Management (DRM) has no ability to deny coverage for any state agency/constitutional officer/regional jail/local government. DRM is statutorily required to provide liability protection options no matter how high the risk or how negative the loss history.

Sovereign and Qualified Immunity - Treasury's Division of Risk Management administers several risk management plans and programs that protect Virginia's constitutional officers, including sheriffs and regional jail officers, and localities from financial loss.  The Commonwealth utilizes sovereign immunity and qualified immunity to reduce claim liability and costs.  Recent legislative efforts to limit or eliminate these defenses would increase the cost of these programs significantly.

Cyber Insurance - As authorized by the 2020 Appropriations Act (Chapter 1289, Item 285 H), the Division of Risk Management (DRM) purchased Cyber Insurance coverage for Executive Branch agencies. This coverage was purchased to help transfer financial risk in the event of a significant data breach or business disruption caused by incidents such as a denial of service attack, data breach or a ransomware attack. Over the past two years the Commonwealth has seen increases in Cyber insurance premiums due to market conditions. The cost of cyber insurance is based in part on the frequency, severity, and cost of cyberattacks, all of which have been increasing. The uncertainty about future threats also plays a role, and insurers have become more selective about who and what gets covered. Insurers have also tightened policy terms and conditions to reduce unexpected losses from cyberattacks. These changes translate into fewer coverage options, stricter standards, and more exclusions.

Concentration of Pending Retirements - While Treasury has been fortunate to have many long serving employees, one division within Treasury has several key positions with employees who are eligible for retirement.  This includes a division director and managers of trust accounting, check processing, and bank reconciliation. Treasury has struggled to attract adequate replacements in this area and will need to continue to focus on succession planning before a vast amount of institutional knowledge retires.

In FY 2022, Treasury managed investments totaling $37.7 billion in state and local government funds, issued or participated in financing $1.9 billion in debt obligations, processed 1.8 million checks, collected $ 252.3 million in unclaimed property revenue, returned $68 million of unclaimed property to rightful owners, and transferred $220 million to the Literary Fund for public education purposes.  In addition, Treasury provided liability and property insurance for the Commonwealth, its agencies and institutions, and local officials and employees in over 500 political subdivisions and non-profit organizations.  Treasury also manages the Commonwealth’s banking through a statewide network of four concentration and twenty-eight regional banks, accelerating the deposit and availability of state funds received from approximately 300+ regional depositing locations.