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Group of General Test articles

Pay for Performance

RFP Information

RFP Notice: Please note that responses to both RFPs must be received by 4:00 pm CT on December 21, 2012. A different time was inadvertently noted in the State Register notice.

RFP Question & Answers

Can the organization that provides the Third Party Management Services also serve as a service provider? Or are those roles mutually exclusive?

Under the Collaboration section of the RFP (Section V, C-2 on page 17 of each RFP) we do state that the third party contractor must have a clearly defined role that cannot include service provision or evaluation.

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General Questions

When will the Evaluation RFP be issued?

The date of issuance for the evaluator RFP has not been determined. We will first contract with a third party contractor and work with that entity to determine the timing of an evaluator RFP.

Can the organization that provides the Third Party Management Services also serve as a service provider? Or are those roles mutually exclusive?

Under the Collaboration section of the RFP (Section V, C-2 on page 17 of each RFP) we do state that the third party contractor must have a clearly defined role that cannot include service provision or evaluation.

If performance outcomes are met, will the third party contractor be reimbursed from the state for only administrative costs or will the third party contractor also be eligible for additional payments based on the return on investment percentage?

The RFP requires that the third party contractor provide the financing/funding for their services (see Part IV, Section D). This requirement was based on our assumption that financing the third party contractor out of bond proceeds (with the subsequent requirement that the ROI cover the debt service on the bonds) would result in an ROI that may not be achievable. If a responder would like to propose otherwise, please identify the strategy and the impact on the ROI and payments in responses for Part V, Section A:1, and Part V, Section B.

Can a third party contractor that funds the third-party service provider (in terms of administrative and operational costs) also invest in the working capital and get a return on their working capital investment?

Based on the terms outlined in the RFP (Part V, Section A:3), nothing precludes a third party contractor from investing in a working capital fund. Terms on the investment, including rates of return, should be provided in the RFP response.

In MMB’s award decision, to what degree does the proposed rate of return from the third party contractor factor into the selection criteria?

We do not have a predetermined ROI requirement. Please see Part II, Section G for scoring criteria.

Does MMB have any concerns regarding the possibility of a private enterprise acting as the third party contractor and earning a profit should target outcomes be met?

Proposals will be evaluated based on the criteria outlined in Part II, Section G.

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Appropriation Bonds/Proceeds

It is our understanding that the Minnesota Supreme Court approved the use of appropriation bonds in a manner consistent with the purpose of the Pay for Performance Pilot Program. Please clarify the information on Page 5, Part 1: Introduction A. Overview that states “The applicability of this decision to the pay for performance appropriations bonds requests legal review and analysis. Depending on the outcomes of this analysis, the issuance of appropriation bonds and the implementation of phases of the pay for performance pilot program, including performance-based contracts with services providers, may be delayed or prevented.” Our understanding is that the Minnesota Supreme Court approved the use of appropriation bonds for purposes consistent with the Pay for Performance Pilot Program.

The Minnesota Supreme Court ruled that refunding general fund appropriation bonds to refinance the tobacco settlement refunding bonds would not be “public debt”. We are working with our legal advisors to determine if we can interpret this ruling to apply to appropriation bonds for the Pay for Performance pilot. We do not anticipate an answer to this question prior to the RFP due date of December 21st.

What is the expected interest rate for the bonds to be sold? What is the expected debt service needed to repay the bonds?

Interest rates will depend on market conditions at the time of sale; we cannot project today what they will be. For planning purposes only, we can provide two conservative estimates for a $10 million taxable bond issue structured over 10 years. The taxable market is more sensitive than the tax exempt market. a. Assuming an average coupon/interest rate of 2.50%, the annual debt service is $1,143,000. This is about 75 basis points above current market conditions. b. Assuming an average coupon/interest rate of 1.95% (just under 2%), the annual debt service is $1,112,000. This is about 25 basis points above current market conditions.

The current statute stipulates that bonds should be sold by June 30th, 2013. What is the anticipated timeline for launch of the pilot?

The launch date for the pilot will be coordinated with the third party contractor (see Part IV, Section A:8).

What is the expected success payment schedule from the States’ perspective?

Performance payments will be made based on the performance criteria established by the third party contractor, in collaboration with the state.

On page 14, Part IV, D, the RFP states “Because the Pay for Performance Act of 2011 does not designate funding for the third party contractor, the contractor must provide funding for the third party services to be provided under this solicitation.” However, based on our reading of the legislation, the Pay for Performance Pilot Program statute language [16A.94] does not specifically preclude the bonding proceeds from being used for third party services. Would the State reconsider the eligible uses of the bond proceeds to include third party services necessary to implement the Pilot Program?

The RFP requires that the third party contractor provide the financing/funding for their services (see Part IV, Section D). This requirement was based on our assumption that financing the third party contractor out of bond proceeds (with the subsequent requirement that the ROI cover the debt service on the bonds) would result in an ROI that may not be achievable. If a responder would like to propose otherwise, please identify the strategy and the impact on the ROI and payments in responses for Part V, Section A:1, and Part V, Section B.

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Working Capital/Funding

On Page 6, it says “the contractor must also demonstrate that they have access to non-state funding to provide the third party services...” How will the State interpret “demonstrated access”? What level of commitment is sufficient to meet the State’s expectations at this point?

For the third party contractor, see Part V, Section B:2. For the working capital fund, see Part V, Section A:3 (iii). For evaluation criteria, see Part II, Section G.

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Data

Page 13, Part IV. B. Service Provider Evaluation states that the third party contractor will “Arrange data access with entities possessing data.” What is the State’s level of commitment to assisting with the making state owned data accessible for the purposes of the Pilot Program? More specifically, how will the State work to ensure that the necessary data from the various state agencies is available to the third party and evaluator?

The state is committed to making data available for this pilot. At the same time, we recognize the complexity of this task. Part V, Section A:4 outlines the competencies we are looking for in a third party contractor to facilitate this process.

What is the State’s capacity and commitment to integrate and cross reference data across systems, in particular data between Department of Human Services and Department of Corrections?

The state’s capacity for this pilot is to make the data available. Any integration or cross referencing that is not embedded in the data will be the responsibility of the third party contractor and/or evaluator.

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Evaluation

What type of evaluation design does the State consider to be the standard for the Pilot Program?

We anticipate defining the evaluation design with the third party contractor at a later date. At this time, we are expecting a quasi-experimental research design with the ability to control for variables.

Will direct collection of data from participants be required or will administrative data analysis be sufficient where data can be made available?

This will be dependent on the final ROI and evaluation methodology selected. However, our goal would be to use existing data first.

Are the goals of evaluation focused on understanding the State’s economic return on investment, or does the State anticipate a broader evaluation that will include a process/implementation analysis, clarification of program elements, or additional outcomes such as health and quality of life?

The primary goal of the evaluation is to focus on the state’s economic return on investment.

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Evaluator

What role does the third party play in the selection of the evaluator and how much involvement will the third party have in the selection of the evaluator? What is the selection process and timeline for the evaluator?

The state will issue and select a third party evaluator under a separate RFP. The third party contractor will assist the state in developing the evaluator RFP, but the state will make the selection of the evaluator.

At what point in the program development and contract negotiations will the evaluator be an active partner?

The evaluator will be an active partner once they have been selected. The selection timeline has not been determined, but will be set in collaboration with the third party contractor.

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Clarification of Roles

Page 6, Part I, B says, “The Act also requires MMB, after consulting with the oversight committee, to establish a methodology for calculation the state’s return on investment.” However, below that in Section C, it states that the third party contractor is expected to do the following nine items including “8. Design and develop the return on investment goal, methodology and calculation.” Please provide additional information and clarification on the role of the state and the role of the third party around establishing, designing and developing the return on investment goal, methodology and calculation.

Any ROI goal, methodology or calculation design needs to be approved by the state.

What is the line between evaluator and third party management? What are the expected role distinctions of the intermediary versus the evaluator specific to matters such as data collection agreements, and design of data collection protocols?

The RFP does not clearly articulate the role of the evaluator; it will depend on the third party contractor and will be clarified with the evaluator RFP (see the responses to questions 18 and 19). We anticipate the evaluator’s role will focus on data analysis.

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Committee Information

State Bond Ratings

  • Moody's  Aa1
  • Standard & Poors  AA+
  • Fitch  AA+

Cash Management Primer

What is a warrant?

A "warrant" is issued by the state and is payable on the state's Treasury. A "check" is payable on the banking institution at which the account is held. Generally, warrants and checks function the same way.

 

Who issues the warrant or "writes the check"?

An agency pays a bill by requesting Minnesota Management & Budget to issue (print) a warrant, which is payable to the person or organization to whom the bill is owed.

Where can I cash a warrant?

A warrant can be presented for payment to any financial institution in the United States. The financial institutions must then present the warrants to the State Treasury for payment. The Treasury Division is essentially the banker for Minnesota state government.

How can I tell if my State warrant has been cashed?

Contact the agency that may have issued the warrant.

What if I lost my warrant?

You should contact the agency that would have most likely issue the warrant or actual payment. If you have questions, contact Minnesota Management & Budget. You will be required to complete an “Affidavit of Lost Warrant.”

Who makes sure there is enough money in the bank to honor the warrant?

The Treasury Division is responsible for the State’s cash management and makes sure there is enough money in the State’s bank accounts to honor all state payments.

Who makes sure not too much money is spent?

Before issuing a warrant, Minnesota Management & Budget must insure there is money in the agency’s budget to pay the bill. This is accomplished by not allowing any agency to incur an obligation before first requiring the agency to encumber (obligate) money in one of the agency’s accounts at Minnesota Management & Budget. Minnesota Management & Budget is responsible to insure that the sum total of all accounts for each agency does not exceed the amount the governor and the Legislature have authorized for that agency. Minnesota Management & Budget also performs the State’s accounting function.

Who should I contact regarding state payments?

You must contact the state agency with which you are dealing. For example, if you are waiting for a tax refund, you would contact the Department of Revenue. If you are wondering about a general assistance or child support payment, you would contact the Department of Human Services. If you are asking about a payment for goods and services, contact the agency directly for which the goods and services were provided.

Who requests a bill to be paid?

In general, the state agency that created the obligation is responsible for paying the bill.

Who invests the state’s funds?

The Minnesota State Board of Investment (SBI) is established by Article XI of the Minnesota Constitution to invest all state funds.

How much collateral is required for depositories holding state funds? 110% of the amount on deposit.

What is escheated property?

Escheated property referred to anything of value belonging to an individual who dies leaving no will and having no heirs thereby becoming property of the state.

If I don’t have a will, does all my property get turned over (escheated) to the state?

No! If you die without leaving a will, but you have heirs, then in effect the state will write a will for you.

What happens to escheated property when the state receives it?

Cash left in bank accounts or other places is deposited into the state’s General Fund. All personal property is sold and the sale proceeds are deposited into the General Fund. Real property is either sold and the proceeds are deposited into the General Fund or the property is managed by the applicable state agency and becomes part of the assets of the state.

 

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Emergency Meeting- Tobacco Securitization Authority

This is to announce the date and time for an emergency meeting of the Tobacco Securitization Authority.  The meeting will be held on Monday, November 5, 2012, from 9:00AM to 9:30AM in the St. Croix Room, second floor of the Centennial Building, 658 Cedar Street, St. Paul, Minnesota.

The purpose of this meeting is to call the $756,955,000 Tobacco Securitization Authority Minnesota Tobacco Settlement Revenue Bonds, Series 2011B.  MMB Staff will provide an update on the transaction.

Treasury Overview

The Treasury Division of Minnesota Management & Budget has two sets of responsibilities: Cash Management and Debt Management

Cash Management

Overview

The Treasury – Cash Management is responsible for managing the state’s daily cash flows.  Responsibilities include receipt and warrant processing, regular reconciliation of state bank accounts, assurance of effective banking services to state agencies, bi-monthly payment of state aids to school districts, and payment of the payment of the debt service on the state’s bond issues, including its general obligation bonds.

 

Core Functions of Cash Management

  • Daily Cash Management
    • Incoming monies and disbursements are monitored and calculated to determine how much money to invest on a daily basis
  • Warrant and Electronic Fund Transaction (EFT) Processing
    • State warrants are processes and agency EFT expenditures are approved and wire transfers are initiated.
  •  Receipt Processing
    • The Treasury Division maintains approximately 600 bank accounts (state depositories) in various banks throughout the state.  All moneys received by state agencies are deposited into these accounts.  Through the Treasury Division banking systems, balances in state bank accounts are withdrawn and invested on a daily basis.
  • Debt Service Payments
    • After bonds are sold, the debt service principal and interest schedule for each bond issue is entered into a database that records all bond sales, including the state’s general obligation bonds.  Debt service payments, both principal and interest, are paid to the state’s paying agency who ensures that bond holders get paid.
  • Investments
    • Daily information from investment transactions provided by the State Board of Investment (SBI) is verified to ensure that the State received the correct amount of principal and interest.  Collateral pledged to state funds is also monitored to protect the state against loss. 
  • County Receipt Collections
    • Minnesota statutes require that all Minnesota counties collect various fees, fines and surcharges through the court systems as well a local county officers and forwards these moneys to Treasury – Cash Management.  These are funds are credited to the state’s general fund or to dedicated funds as prescribed by law.
  • Electronic Government Service (ESG)
    • Treasury Division – Cash Management oversees and develops processes related to financial transactions conducted electronically within state government.
  • Payroll Tax Withholding
    • Treasury Division – Cash Management reports withholding information as well as makes payments on a timely basis to the Internal Revenue Service and the State of Minnesota Department of Revenue for state, legislative and military affairs payroll, as well as to various other states for Department of Revenue employees.

 

Debt Management

Text to come

 


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Subcategories

  • Media- Press Releases

    If you have questions, please contact:
    John Pollard, Legislative and Communications Director
    Minnesota Management and Budget
    (651) 201-8039

    Press Releases