We’re trying to demystify some of the work Oregon State Treasury does behind the scenes, especially related to our banking and finance program. Today’s topic: protecting public funds.

Across Oregon, public bodies of all types collect money to fund government services. When these public funds are deposited at banks and credit unions, they are protected through federal deposit insurance and Treasury’s Public Funds Collateralization Program.

Under the program, banks and credit unions that hold public funds in excess of federal deposit insurance limits must pledge collateral. This collateral is pooled among all participating banks and credit unions to spread risk and increase protection. If a participating bank or credit union were to fail or suffer a loss of funds, Treasury would use this collateral to repay affected public bodies.

Treasury works with the Oregon Department of Consumer and Business Services to monitor the financial health of participating banks and credit unions and to set the required amount of collateral. We also work with other institutions to monitor the value and quality of collateral.

Public officials responsible for public funds must report to Treasury where funds are deposited and ensure that any funds in excess of federal deposit insurance limits are deposited only at participating banks and credit unions. If public officials fail to follow the program’s requirements and funds are lost, they can be held personally liable for repayment.

While Treasury has never had to access collateral due to the failure of a participating bank or credit union, program staff work constantly to make sure the public’s money is safe.

For more information about the program, and to view the list of participating banks and credit unions, visit www.oregon.gov/pfcp.