Cash, Investments & Banking
CSU 101 January 2014 San Francisco
Kelly Cox Associate Director of Accounting Office of the Chancellor
Lorlie Leetham
Assistant Vice President, Fiscal Services & Aux Reporting
Cal Poly San Luis Obispo
Cash, Investments & Banking From the Chancellor’s Office
Kelly Cox Associate Director of Accounting Office of the Chancellor
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Agenda
• Agenda – Bank of CSU Overview – CSU Investments – Daily Cash Positioning – Bank of CSU online & Statements – Cash Posting Orders (CPO) Process – Consolidated Investment Earnings – The Team
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• Objectives—In Order of Priority 1) Safety of Principal 2) Liquidity 3) Earnings / Return
• Background Established in July 2007 Invests in securities allowed by State government
code Investments further guided by the CSU SWIFT
Investment Policy
SWIFT (Systemwide Investment Funds – Trust)
Investments
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Investments
• Roles Custody Bank - US Bank
Hold assets in safekeeping Manage deposits to and redemptions from
SWIFT Collect interest income from assets Arrange settlement of buys and sells Report on assets
SWIFT
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Investments
• Roles Investment Managers
– US Bancorp Asset Management – Wells Capital Management
Manage Investments—Buy/Sell decisions – per Investment Policy – per ongoing communication with CSU
Contributions/Redemptions split 50/50
SWIFT
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Investments
• Roles –Financing and Treasury - Chancellor’s Office
• Review Investment Managers’ performance • Review SWIFT portfolio alignment against
Investment Policy • Performance Reporting Quarterly SWIFT Investment Reports Annual Investment Report to Board of Trustees
SWIFT
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Investments
• Size and Performance – $2.5 Billion as of June 30, 2013 – $3.0 Billion as of September 30, 2013 – 0.40% return -12 months ended June 30, 2013 – 0.42% return -12 months ended September 30, 2013
SWIFT
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Investments
• Portfolio Characteristics – September 30, 2013 – Liquidity
• 10% of portfolio matures within 3 months – Quality / Safety
• 68% of securities are rated at least AA/Aa2 or A-1+/P-1
• 54% invested in cash, U.S. Government or U.S. Agency securities
• 39% invested in high – grade corporate securities
SWIFT
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Investments
• Size and Performance – $344 Million as of September 30, 2013 – 0.27% return -12 months ended September 30, 2013
SMIF
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ACCOUNTING FOR INVESTMENT EARNINGS • Investment Earnings are allocated to the SWIFT
campus accounts Allocated on quarterly basis Campus records allocation in Pooled Investment
Fund (CSU Fund 541) based on the CPO instructions Income is allocated internally within campus funds
according to that campus’ allocation policy Net Income in the Pooled Investment Fund is zero at
end of fiscal year • “no fund balance”
GAAP entry will be made to record Q4 earnings and classify appropriately
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Investment Earnings
ACCOUNTING FOR INVESTMENT EARNINGS • Campus investment earnings allocation are net
of charges Allowable Charges in the Pooled Investment Fund
(CSU Fund 541) • Wells Fargo Bank charges • Investment Services • Chancellor’s Office Indirect support
Investment Earnings
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• Consolidated Distribution of Earnings – Includes the earnings from SWIFT and SMIF
• Quarterly interest distributions – 1St Quarter = July, August & September – 2nd Quarter = October, November & December – 3rd Quarter = January, February & March – 4th Quarter = April, May & June
• Distribution is made on or about the 20th of the month following the quarter end.
Investment Earnings
ACCOUNTING FOR INVESTMENT EARNINGS
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The campus’ cash management is centralized by using one bank Wells Fargo Bank (WFB)
The surplus cash at the bank is invested Systemwide Investment Fund – Trust (SWIFT)
Campuses benefit from the availability of better banking and investment services Lower Fees Safety: Wells Fargo: Aa3/AA- credit rating Consistent reporting & service across all campuses
Banking
Banking
Banking
Each Campus has been assigned 3 WFB accounts
Deposit account
• Checks, Currency, Coin
• Wires
• ACH
Electronic Disbursement account • Wires • ACH
Paper Disbursement account • Checks
WELLS FARGO BANK
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WELLS FARGO BANK
Banking
Deposit Account A Campus may create sub-accounts to facilitate
reporting and reconciliation Campuses deposit currency and coin at local
WFB Cash Vaults Campuses are encouraged to use ACH debit
blocks to restrict unauthorized account access
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WELLS FARGO BANK
Banking
• Disbursement Accounts Electronic
• Wires • ACH (Automated Clearing House)
Paper • Positive Pay File • Controlled Disbursement • Perfect Presentment • Full Account Reconcilement • Image Retrieval
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Bakersfield Channel Islands Chico Dominguez Hills East Bay Fresno Fullerton Humboldt Long Beach Los Angeles Maritime Monterey Bay Northridge
Chancellor’s Office Pomona Sacramento San Bernardino San Diego San Francisco San Jose San Luis Obispo San Marcos Sonoma Stanislaus Systemwide CSURMA
Bakersfield Channel Islands Chico Dominguez Hills East Bay Fresno Fullerton Humboldt Long Beach Los Angeles Maritime Monterey Bay Northridge
Chancellor’s Office Pomona Sacramento San Bernardino San Diego San Francisco San Jose San Luis Obispo San Marcos Sonoma Stanislaus Systemwide CSURMA
Chancellor’s Office Pomona Sacramento San Bernardino San Diego San Francisco San Jose San Luis Obispo San Marcos Sonoma Stanislaus Systemwide CSURMA
Bakersfield Channel Islands Chico Dominguez Hills East Bay Fresno Fullerton Humboldt Long Beach Los Angeles Maritime Monterey Bay Northridge
California State University Master Depository Account
XXXX-XXXXXXX
California State University Master ACH Disbursement Account
XXXX-XXXXXXX
California State University Master Paper Disbursement Account
XXXX-XXXXXXX
California State University Concentration Account
XXXX-XXXXXXX
CONSOLIDATION TO THE CONCENTRATION ACCOUNT
ZBA ZBA ZBA
Banking
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Banking
CASH POSITIONING
Calculation of Surplus or Shortage of available money Wells Fargo Bank Prior day closing balance Intraday check presentment
Net systemwide cash needs Shortage Redemption from US Bank Surplus Investment to US Bank Daily communication Treasury Operations – US
Bank Target balance should provide safety cushion
while maximizing invested funds for the CSU
OUR CASH MANAGEMENT ROLES
• Cash Management at the Campus Campus Cash Management Agents
• Depository Agent • Disbursement Agent
• Cash Management at the CO (Treasury Ops.) Management of banking operations Daily cash positioning Calculating quarterly SWIFT earnings to campuses Forecasting short term & long term cash requirements
Banking
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CASH POSTING ORDER (CPO)
• Mechanism to move SWIFT dollars between campuses and the CO
• Examples: – Redemption/Investment in SWIFT (Cash Positioning) – Charge for a product or service – Reimbursement of expenditures – Systemwide Allocation Transfer (SWAT) – Request for Cash Transfer Order (RCTO)
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Cash Posting Orders (CPO)
BANK OF CSU STATEMENT • Campus WFB Balance and SWIFT Activity For WFB Reconciliation
• The WFB Statement is used for transactions reconciliation
• The Bank of CSU is used for balance verification For SWIFT Reconciliation
• The Bank of CSU statement is used for both transaction and balance verification.
Distribution • Campuses receive Bank of CSU statements by the
5th business day of the following month
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Online and Statements
Campus SWIFT Balance
CSU Bank Statements
CPOs
ADNOATs
Allocation Orders
SWATs
SWIFT Earnings Report
BANK OF CSU STATEMENT Online and Statements
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Robert Eaton, Senior Director, Financing and Treasury ([email protected]) Colleen Zenger, Senior Financial Manager
([email protected]) – Investment Management and Reporting – Cash Management/Banking program administration – Pooled investment earnings distribution
Lisa Tran, Assistant Manager ([email protected]) – Investment Operations
Open position – Banking Operations
Financing and Treasury General Phone Number: (562) 951-4570
The Team
Treasury Operations www.calstate.edu/FT
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Kelly Cox, Associate Director, Financial Services Accounting ([email protected])
Andre Eubanks, General Accounting Manager ([email protected])
– Primary Campus Contact – CPO Administrator – Bank of CSU Accounting Responsibilities
June Cacho, Trust Fund Accountant ([email protected]) – Systemwide General Fund and Trust Fund Responsibilities
Terri Porter, Assist Trust Fund Accountant ([email protected])
– CPO Processing
The Team
Financial Services - Accounting Team www.calstate.edu/acct/
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Cash, Investments & Banking - a Campus Perspective
Lorlie Leetham Assistant Vice President, Fiscal Services & Aux Reporting Cal Poly San Luis Obispo
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General overview Wells Fargo CEO Cashiering Office, cash and banking Accounts Payable and payment processing Student Financials, receipts and payments Bank reconciliation – not your mama’s bank
account! Campus investment distribution – IDA Summary
Agenda Agenda
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Centralized banking and investments Campus does not need dedicated cash or
investment manager Exceptions: auxiliaries for endowments, other special
cases Sweep handles move of cash to SWIFT and back
Campus cash is fully invested Campus does need to review cash balances,
understand cash flow, investment balance trends
Campus overview
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Wells Fargo CEO portal
Wells Fargo CEO • CEO stands for Commercial Electronic Office • On-line web tool for bank account
administration, transactions and reporting
• Self-Administration for controlling access and ensuring segregation of duties
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Wells Fargo CEO portal
Wells Fargo CEO Campus designated administrators: Create and disable users Assign and adjust product access using secure
tokens and dual approval Set dollar limits for wire transfers, reset passwords,
and more Event messaging for critical transaction information
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Wells Fargo CEO portal
Wells Fargo CEO • CEO provides specific access and control over:
– ACH deletes and reversals, fraud filters, or inquiry – Cash Vault – Event Messaging – Image Positive Pay – Statements and Notices – Treasury Information Reporting – Wire Transfers
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Cashiering Office
Campus Cashiering Office: Previous day composite report or intra-day
report for daily reconciliation process Critical due to multiple system feeds, EFT activity Resolve discrepancies quickly
Search images function – very useful! Cash Vault - Place cash orders to replenish
petty cash or for change funds
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Cashiering Office
Cashiering Office and campus cash: Cashiering functions have to be authorized by
campus CFO, or designee Satellite cashiering Oversight responsibility retained centrally
Security in custody and transfer is important Transfer receipts or logs used
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Cashiering Office
Cashiering Office and campus cash: Example: Parking meter coin From parking meter to deposit bags in cashiering
without being touched. Transported to bank by armed courier Counted at bank
On-campus deposits transmitted with two people in locked bags. Over $500, must be brought to cashiers daily Campus policy
Over $2500, police escort required CSU policy.
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Accounts Payable Office
Accounts Payable and payment processing: At Cal Poly – medium sized campus: $140 million a year in AP disbursements Check Cycle twice a week Two different cycles: Regular and EFT Almost all EFT disbursements through AP are
employees Exception: U.S. Bank pre-payments (Pro-card)
Some campuses may have setup EFT for regular vendors
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Accounts Payable Office
Accounts Payable Office and payment processing: Non-payroll EFT for employees: Staff expense reimbursements, travel advances, travel
claim reimbursements Employee sign up is through the campus portal
Campus mod
Payment hits bank account quickly EFT payment cycle process is more efficient than the
regular check cycle Employees love it –
No check to pick up or deposit Email notification generated
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Accounts Payable Office
Accounts Payable Office, positive pay file: Regular Paycycle Includes CSU Positive Payment step Generates file for transmission to Wells Fargo
EFT Paycycle includes transmission of an EFT file to Wells Fargo No positive pay file step needed
Positive pay file advises the bank of specific pieces of check information
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Accounts Payable Office
Accounts Payable Office, positive pay file: Discrepancies on file cause exception when
check is presented at bank for payment. Bank notifies campus of exceptions daily Campus personnel review exceptions in CEO
and determine whether to reject or accept. Cancelled check/stop payment information
also transmitted on positive pay file
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Accounts Payable Office
Accounts Payable Office, payments and banking CEO sends email notifications and alerts to campus
banking personnel Positive pay file notification after paycycle
completes and bank receives file Daily transaction totals email Exception alert email, with rejects and stops
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Accounts Payable Office
Accounts Payable Office, payments and banking: In CEO, electronic payments can be made via wire
transfer. Security for wire initiation and approval segregated Payment information recorded in PeopleSoft AP
separately. CEO direct wire not integrated into the PS AP module.
Wires useful for foreign vendor payments such as international travel
Notification is sent to the CMO for electronic disbursements in excess of $200k
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Accounts Payable Office
Accounts Payable Office, payments and banking: Wires transfers At Cal Poly, we wire cash weekly to auxiliary for
student dining payments Free form or wire templates vary by domestic or
international Limits set by administrator, with dual approval
required to change Email notifications sent to all administrators
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Accounts Payable Office
Accounts Payable Office and CEO tools: Check status, to see if a check has cleared Wire reports with date ranges, other criteria Exception reports and review Daily transaction reports On-line EFT reversal. 47
Student Financial Services
Student Financials and payments: Majority of payments received are from student
activity Disbursements to students are done through ACH
and AP checks Electronic payments-in account for 88% of
transactions, 75% of those are ACH (echeck) ACH payments-out (Direct Deposit) to students
account for 80% of transactions Notification is sent to the CMO for electronic
receipts or disbursements in excess of $200k
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The Bank Reconciliation
Campus Bank Reconciliation – “Not your momma’s bank recon” Complex due to volume of activity and varied types of
inflows and outflows 27 plus distinct types of feeds or inflows, thousands of
transactions 10 plus distinct types of disbursements or outflows,
thousands of transactions Cal Poly bank reconciliation checklist currently has 46
major steps, many with multiple sub-steps
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The Bank Reconciliation
Campus Bank Reconciliation – “Not your momma’s bank recon”
• Separate accounts for different types of transactions
facilitates reconciliation • Cal Poly has twelve sub-accounts, in addition to the
three primary WFB accounts
• Debit blocks are also utilized to restrict unauthorized access
• Bank reconciliation can take up to one full week to complete
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The Bank Reconciliation
Campus Bank Reconciliation Begins with Wells Fargo bank file load, for checks only. Rest of activity is reconciled using PS queries,
spreadsheets, WF bank statements, Bank of CSU info 12 different PeopleSoft queries used in the bank recon
process, plus ad hoc when needed Reconciling factors related to receipts are typically the
most difficult to resolve Manual journal entries can also wreak havoc
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Campus Investments
Campus role in investment process Operating bank account funded according to
checks presented that day for payment Movement between investment and operating
account managed at systemwide level Campus accounting personnel manage
investment distribution according to campus policy CSU developed mod in PS allows for flexibility
in distributing investment earnings
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Campus Investments
Campus investment distribution Campus SWIFT earnings distributed via CPO Posted to CSU Fund 541, Pooled Investment
Fund WF bank charges, investment fees, and CO
CMO costs paid with earnings Net amount available for distribution by
campus
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Campus Investments
Campus investment distribution Campus earnings distributed and spent
according to campus policy, with some caveats: Fund 485 earnings must be recorded in unique
FNAT in 485 Certain funds must receive benefit of earnings, by
CSU or other policy Other
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Campus Investments
Investment Distribution Allocation module Calculates average daily cash balance in a
fund Allows for distribution of earnings to the fund
that earned them, or to a beneficiary fund. Campus administrative charge can be taken
off the top and the net earnings distributed. Endowments can designate their earnings to a
particular scholarship fund.
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Campus Investments
Investment Distribution Allocation module Earnings available for spending can be limited creation of excess/minus reserve
Module uses industry standard for Average Daily Balance (ADB). Example, endowment fund cash balance used
for ADB calculation receives investment earnings revenue transfers earnings out to scholarship fund
Scholarship fund records transfer in
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Campus Investments
Investment Distribution Allocation module IDA generates file for the accounting entries in
order to record the interest distribution. Can be run without posting to test and look at
the results Ensure all new funds are setup and that setup is
correct Ensure funds are inactivated timely
Allows for considerable flexibility at the campus level
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Campus Specific: Investment Report
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M onth:Average Dai ly Cash Balance Rate of Return
M onth ly SM IF Earn ings
M onth ly SWIFT Earn ings
SWIFT Earn ings
Adj Tota l CSU FundCam pus
Fund Fund Descrip tionAvg Dai ly
Cash Balance
4th Qtr Earn ings
DistributionYTD Earn ings
Distribution
Jul-12 159,465,152 0.0819% 6,518.52 124,129.25 - 130,647.77 403 MB001 Perkins Loans 2,085,961 3,080.85 14,000.27
Aug-12 163,646,143 0.0803% 6,400.42 124,941.77 - 131,342.19 431 MH% & MI% Campus Scholarships and Grants Trust 3,330,219 4,918.55 33,839.94
Sep-12 189,317,623 0.0762% 6,904.67 137,403.97 - 144,308.64 433 MJ% Campus Student Loans Trust 1,899,820 2,805.93 15,196.90
Oct-12 175,278,726 0.0823% 6,318.22 137,905.85 - 144,224.07 435 NK% Miscellaneous Financial Aid - Unrestricted 35,404 52.29 277.45
Nov-12 167,447,372 0.0859% 6,243.84 137,558.24 - 143,802.08 441 MK% Extended Education 6,198,410 9,154.71 38,411.66
Dec-12 180,699,924 0.0783% 6,644.77 134,779.73 - 141,424.50 452 ML% Facility Revenue Fund-Health Services Fees 1,717,809 2,537.11 13,054.25
Jan-13 195,650,115 0.0796% 5,416.67 150,329.95 - 155,746.62 461 MN% Associated Student Body Trust 5,480,712 8,094.71 40,567.86
Feb-13 193,271,177 0.0678% 4,983.10 126,687.51 (551.29) 131,119.32 463 MO% Instructionally Related Activities Trust 3,881,330 5,732.51 31,202.54
Mar-13 204,514,475 0.0787% 5,462.56 155,459.04 - 160,921.60 466 MQ% Endowment Trust 3,597,216 5,312.89 28,365.25
Apr-13 196,872,300 0.0723% 5,513.51 136,811.37 - 142,324.88 471 MS% Parking Revenue Fund-Fines and Forfeitures 4,225 6.24 60.46
May-13 187,973,659 0.0548% 5,370.13 97,731.25 - 103,101.38 472 MT001 Parking Revenue Fund-Parking Fees 11,060,392 16,335.59 81,169.11
Jun-13 172,011,028 0.0417% 5,337.15 66,438.21 - 71,775.36 481 MY% Lottery Education Fund 843,105 1,245.22 5,796.03
485 SL% & MR% CSU Operating Fund 65,642,671 96,950.61 443,859.73
491 MW% Special Projects Fund-Special Projects 24,234,810 35,793.48 211,071.19
496 MX% Miscellaneous Trust 2,327,257 3,437.23 23,845.17
531 NC% Housing-Operations and Revenue 38,256,281 56,502.42 295,640.92
534 NH% Campus Union-Operations and Revenue 21,459,087 31,693.89 164,136.82
542 NG% Capital Project Management 2,762,798 4,080.50 21,575.97 Total: 0.8798% 71,113.57 1,530,176.13 (551.29) 1,600,738.41 541 MZ200 Pooled Investment Fund 194,817,508 287,734.73 1,462,071.52
YTD Annualized Rate of Return: 0.8798% Total Investment Earnings, Less:
Wells Fargo Bank Charges 41,160.90 CO Cash Management 31,758.01 Investment Services' Charges 65,747.98 Total 12-13 Net Investment Earnings 1,462,071.52 Total 1st Quarter (Jul, Aug, Sep) Distributio (370,198.60)
Total 2nd Quarter (Oct, Nov, Dec) Distributi (394,050.65)
Total 3rd Quarter (Jan, Feb, Mar) Distributi (410,087.54)
Total 4th Quarter (Apr, May, Jun) Distribution 287,734.73
YTD Investable Trust Cash 4th Quarter (April, May, June) Distribution
Summary
Campus cash, banking and investments • Cash and investments managed centrally
– Campuses need to monitor cash overall and at the fund level, know their trends
• Wells Fargo CEO streamlines bank account administration, access and reporting
• Bank account reconciliation process can be complex
• Earnings distribution according to campus policy – PeopleSoft IDA module provides flexibility to meet
campus needs
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Contact Info
• Kelly Cox • [email protected] • (562) 951-4611 • Lorlie Leetham • [email protected] • (805)756-5421
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