Fiscal Year 2002 _RTF_ - Mainegov.rtf by shenreng9qgrg132

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									CASH MANAGEMENT IMPROVEMENT ACT
 (Agreement with the State Pursuant to Section 5
             of Pub. L. 101-453)

                AGREEMENT

                   Between
              The State of Maine
                     And
        The Secretary of the Treasury,
     United States Department of Treasury

      July 1, 2001 Through June 30, 2002




                       1
                                       Table of Contents



       Purpose                                                                   3

1.0    Agents of Agreement                                                       3

2.0    Authority                                                                 3

3.0    Term                                                                      3

4.0    Programs Covered                                                          3

5.0    Entities Covered                                                          5

6.0    Funding Techniques                                                        6

7.0    Clearance Patterns                                                        13

8.0    Interest Calculation                                                      15

9.0    Reverse Flow Programs                                                     18

10.0   Direct Costs                                                              18

11.0   Noncompliance                                                             19

12.0   Signatures of Authorized Representatives of the State and the Secretary   20

       Exhibit I – Funds Request & Receipt Times Schedule                        21

       Exhibit IIA-Average Clearance Pattern for CFDA 93.558, Temporary          22
                   Assistance to Needy Families

       Exhibit IIB-Average Clearance Pattern for General Disbursement            23
                   Account

       Exhibit IIC-Average Clearance Pattern for Payroll Disbursement            24

       Exhibit IID-Estimated Clearance Pattern for Unemployment Insurance        25

       Contract Table Summary                                                    26




                                                2
Purpose

This agreement between the Secretary of the Treasury, United States Department of the Treasury
(hereafter “Secretary”), and the State of Maine (hereafter “State”) is to set forth the terms and
conditions agreed to in implementing the requirements of the Cash Management Improvement Act
of 1990 (hereafter the “Act”) (Section 5, Pub. L.1 101-453). The purpose of the Agreement is to
achieve greater efficiency, effectiveness and equity in the transfer of Federal funds as required by
the Cash Management Improvement Act of 1990.

1.0    Agents of Agreement

The Assistant Commissioner, Federal Finance, Financial Management Service (FMS), U.S.
Department of the Treasury, shall act as the Secretary’s representative in all matters concerning
the Agreement. The Treasurer State of Maine shall act as the State’s representative in all matters
concerning this Agreement. All functions and duties undertaken pursuant to this Agreement shall
be performed in accordance with the Act and the regulation and procedures prescribed thereunder.


2.0   Authority

The authority for this Agreement is the Cash Management Improvement Act of 1990 (Public Law
101-453), as amended by the Cash Management Improvement Act Amendments of 1992 (Public
Law 102-589) as codified at 31 USC 6501 and 31 USC 6503.

The rules and procedures contained at 31 CFR Part 205, incorporated by reference herein, apply to
all transfers of funds between the State and the Federal Government and to all matters pertaining
to this Agreement, unless otherwise specified within the Agreement.

In the event of any inconsistency between this Agreement and the regulation codified at 31 C.F.R.
part 205, the regulation shall govern.

3.0    Term

This agreement shall take effect on July 1, 2001, and shall remain in effect until June 30, 2002
unless amended or negotiated by the Secretary or the State.

This Agreement may be amended at any time by written mutual consent of the State and FMS.
Not withstanding the above, FMS may unilaterally amend this agreement at any time to
incorporate additional programs and the entities which administer these programs when FMS
requires them to be covered in accordance with the provisions of Subpart B of 31 CFR Part 205.

This Agreement may be terminated by either party with 30 days written notice. If this Agreement
is terminated, FMS will prescribe the funding techniques, clearance patterns, and methods for
calculating interest liabilities to be used by the State.



4.0    Programs Covered

All major Federal assistance programs that meet or exceed the calculated State threshold shall be
covered by this Agreement, unless otherwise specified in the Agreement.

                                                 3
4.1     The State’s major program determination or threshold based on the FY2000 Expenditures
is $4,900,000 (per Audit’s Schedule of Expenditures of Federal Awards). This calculation
complies with OMB Circular A-133, section .520. The following programs met or exceed the
State’s threshold and are subject to the Act for the Fiscal Year ending June 30, 2002.

4.2    CFDA                        Program
       10.551               Food Stamps
       10.555               National School Lunch Programs
       10.557               Special Supplemental Nutrition Program for WIC
       10.558               Child Care and Adult Care Food Program
       10.561               St Admin Matching Grants for Food Stamp Program
       10.664               Cooperative Forestry Assistance
       12.401               National Guard Military Operations and Maintenance Projects

       14.228               Community Development Block Grants / State’s Program

       16.586               Violent Offender Incarc & Truth in Sentencing Incentive Grants

       17.207               Employment Services
       17.225               Unemployment Insurance
       17.255               Workforce Investment Act

       20.205               Highway Planning and Construction

       83.544               Public Assistance Grants

       84.010               Title I Grants to Local Educational Agencies
       84.027               Special Education – Grants to States
       84.048               Vocational Education – Basic Grants to States
       84.126               Rehabilitation Services –Vocational Rehab Grants to States
       84.340               Class Size Reduction

       93.558               Temporary Assistance to Needy Families
       93.563               Child Support Enforcement
       93.575               Child Care and Development Block Grant
       93.596               Child Care Mandatory and Matching Funds of Child Care/Dev
       93.658               Foster Care – Title IV-E
       93.659               Adoption Assistance
       93.667               Social Services Block Grant
       93.767               State Children’s Insurance Program
       93.778               Medical Assistance Program
       93.959               Block Grants for Prevention & Treatment of Substance Abuse
       96.001               Disability Insurance




                                              4
4.3    The following programs exceeded the State’s threshold but have been excluded from
coverage for the reasons indicated:

       CFDA           Program                                Grounds for Exclusion

       10.551        *Food Stamps (included above)           Non-Cash

       *Food Stamps will transition to EBT in FY 2003 and will then need to be included.

5.0   Entities Covered

       State Agency                CFDA              Federal Agency
                                   No.
       Conservation                10.664            Agriculture
       Corrections                 16.586            Justice
       DECD                        14.228            HUD
       Defense                     12.401            Defense
       Defense                     83.544            FEMA
       Education                   10.555            Agriculture
       Education                   84.010            Education
       Education                   84.027            Education
       Education                   84.048            Education
       Education                   84.340            Education
       Human Services              10.551            Agriculture
       Human Services              10.557*           Agriculture
       Human Services              10.558            Agriculture
       Human Services              10.561            Agriculture
       Human Services              93.558            Health & Human Services
       Human Services              93.563            Health & Human Services
       Human Services              93.575            Health & Human Services
       Human Services              93.596            Health & Human Services
       Human Services              93.658            Health & Human Services
       Human Services              93.659            Health & Human Services
       Human Services              93.667            Health & Human Services
       Human Services              93.767            Health & Human Services
       Human Services              93.778            Health & Human Services
       Human Services              96.001            Social Security Admin
       Labor                       17.207            Labor
       Labor                       17.225            Labor
       Labor                       17.246            Labor
       Labor                       17.250            Labor
       Labor                       17.255            Labor
       Labor                       84.126            Education
       OSA                         93.959            Health & Human Services
       Transportation              20.205            Transportation

As set forth in 31 CFR Part 205, all fiscal agents of the State, defined as any organization that
pays, holds, or collects Federal funds on behalf of the State in furtherance of a Federal program,
are considered part of the State for the purposes of the Act and are subject to this Agreement. All
depository financial institutions that receive Federal funds on behalf of the State are fiscal agents
of the State.

                                                 5
The following organization administers a major Federal assistance program on behalf of the State
as a fiscal agent of the State:

       Organization                                  Program

       First State Marketing Corporation             WIC, CFDA 10.557

All other federal grants will be received by Peoples Heritage Bank, ABA # 211274450, account #
7999060327.

6.0     Funding Techniques
Funding techniques are procedures to minimize the time between the transfer of funds from the
federal government and the payment of funds for program purposes by a State. The request for
funds shall be made in accordance with the appropriate Federal agency cut-off time as specified in
Exhibit I. Funds will be drawn down to ensure compliance with established funding techniques.

In instances where the receipt of Federal funds is scheduled for a Saturday, the State shall request
funds for deposit on Friday. In instances where the receipt of funds is scheduled for a Sunday, the
State shall request funds for deposit on Monday. In instances where the receipt of Federal funds is
scheduled for deposit on a day when the State is not open for business, the State shall request
funds for deposit on the day following the scheduled day. In instances where the receipt of
Federal funds is scheduled for deposit on a day when the Federal government is not open for
business, the State shall request funds for deposit on the day prior to the scheduled day.




6.01   Estimated Clearance (see Exhibit II-A)

The State shall request funds such that they are deposited by ACH in a State bank account in
accordance with the check clearance pattern specified in Exhibit II. After program disbursements,
requests for federal funds are made based on daily check clearance percentages derived from a 90-
day sample from February, March and April 2001.

The estimated clearance pattern is currently used only by Labor’s CFDA #17.225 Unemployment
Insurance in drawing down federal funds to pay beneficiaries. Since all payments are isolated
within one bank account, the clearance patterns have been obtained from this account from a 90-
day sample from February, March and April 2001 as displayed in Exhibit II-D.




6.02   Average Clearance (see Exhibit II-B and C)

The State shall request funds such that they are deposited by ACH on the dollar-weighted average
day of clearance for the disbursement, in accordance with the clearance pattern specified in
Exhibit II-B and C. The amount of the request shall be for the amount of the disbursement after
adjustment for prior variances.



                                                 6
Clearance patterns for the State’s General Disbursement and Payroll Disbursement accounts have
been compiled by the State’s bank. The data used was from February, March and April 2001.
EFT activity, isolated in separate accounts for general and payroll electronic disbursements, have
been melded into the Clearance II-B and C patterns.

Grant recipients would utilize the clearance pattern drawn from the General Disbursement
Account to guide reimbursement schedules for payments to vendors, providers, etc. The clearance
pattern compiled from the Payroll Checking account would be used for the Payroll component of
their contracts.


              Average Clearance Funding (Weekly Billing)

The State shall request funds once a week for deposit on the dollar-weighted average number of
days required for checks to clear after the dollar weighted average day of issuance for the
disbursements of the billing period. The amount of the request will also include funds for prior
administrative costs incurred since the last billing date.

              Prorated Drawdowns

The State shall draw down bi-weekly 1/26th of the administrative cost, or 1/6th or 1/7th of the
quarterly grant award for administrative cost, for deposit on the average day of clearance for the
State payroll.


              Bi-Weekly Drawdowns

The State shall draw down personal services bi-weekly for deposit on the average day of clearance
for the State payroll.


6.03   Pre-Issuance

The State shall request funds such that they are deposited in a State account not more than two
days prior to the day the State makes a disbursement. The amount of the request shall be the
amount the State expects to disburse. The State of Maine has developed an automated report
which draws data from the State’s accounting system to track interest liability on a monthly basis
for programs using pre-issuance funding.

The State’s accounting system discourages other types of drawdown techniques through a cash
control feature that requires cash funds be received and available prior to making disbursements.
Agencies are being encouraged to work with the State’s accounting office in establishing an
accrual journal (in the approximate amount of their largest drawdown) in order to permit check
issuance prior to receipt of federal funds.




                                                7
6.04   Proportionate Shares

The State shall draw down for indirect costs once a month, on the last business day of the month,
according to each approved indirect cost allocation plan. The amount of each draw shall be
determined by applying an approved indirect cost rate to the appropriate direct costs of the prior
month.



6.2    Applications of Funding Techniques to Programs
State Agency recipients of federal program funds shall receive a copy of this agreement from the
State Treasurer’s Officer by July 1, 2001. A statement of agency compliance with stated
techniques or fully described exceptions/refunds affecting liability to the State or the Federal
government will be required by the State Treasurer’s Office prior to reporting liability status due
December 31 to the federal government.

National School Lunch Program, CFDA 10.555
      Agency:      Education
      Component: Payments to Local Education Agencies (LEAs)
      Technique:   Average Clearance


Special Supplemental Nutrition Program for WIC, CFDA 10.557
       Agency:       Human Services
       Component: Payments to Vendors
       Technique:    Pre-Issuance Funding
       Description: The State shall draw funds as needed and transfer them to the fiscal agent
                     on the same day via EFT.
       Fiscal Agent: First State Marketing Corporation


       Component:     All Administrative Costs
       Technique:     Bi-Weekly Drawdowns
       Description:   The State shall draw down Personal Services bi-weekly for deposit on the
                      average day of clearance for the State payroll.


Child Care and Adult Care Food Program, CFDA 10.558
      Agency:      Human Services
      Component: Payment to Providers
      Technique:   Average Clearance

       Component:     All Administrative Costs
       Technique:     Bi-Weekly Drawdowns
       Description:   The State shall draw down Personal Services bi-weekly for deposit on the
                      average day of clearance for the State payroll.




                                                8
St. Administrative Matching Grants for Food Stamp Prog, CFDA 10.561
      Agency:       Human Services
      Component: All Administrative Costs
      Technique:    Prorated Drawdowns
      Description: The State shall draw down bi-weekly 1/6th or 1/7th of the quarterly grant
                    award for administrative costs for deposit on the average day of clearance
                    for the State payroll.

Cooperative Forestry Assistance, CFDA 10.664
      Agency:       Conservation
      Component: Payments to Vendors
      Technique:    Average Clearance

National Guard Military Operations and Maintenance Projects, CFDA 12.401
      Agency:       Defense
      Component: Payments to Vendors
      Technique:    Average Clearance


Community Development Block Grants/State’s Program, CFDA 14.228
    Agency:      DECD
    Component: Payment to Service Providers
    Technique:   Average Clearance

Violent Offender Incarc & Truth in Sentencing Incentive Grants, CFDA 16.586
       Agency:      Corrections
       Component: Payments to Vendors
       Technique:   Average Clearance

Employment Services, CFDA 17.207
     Agency: Labor
     Component: All Non-Personal Services Costs
     Technique:   Pre-Issuance Funding

       Component:     All Personal Services Costs
       Technique:     Prorated Drawdowns
       Description:   The State shall draw down bi-weekly 1/26th of the administrative cost for
                      deposit on the average day of clearance for the State payroll.

Unemployment Insurance, CFDA 17.225
     Agency:      Labor
     Component: Payment to Beneficiaries (State Portion and FECA, BUCA)
     Technique:   Estimated Clearance

       Component:     All Non-Personal Services Costs
       Technique:     Pre-Issuance Funding

       Component:     All Personal Services Costs
       Technique:     Prorated Drawdowns
       Description:   The State shall draw down bi-weekly 1/26th of the administrative cost for
                      deposit on the average day of clearance for the State payroll.

                                               9
Workforce Investment Act, CFDA 17.255
     Agency:      Labor
     Component: All Non-Personal Services Costs
     Technique:   Pre-Issuance Funding

       Component:     All Personal Services Costs
       Technique:     Prorated Drawdowns
       Description:   The State shall draw down bi-weekly 1/26th of the Administrative cost for
                      deposit on the average day of clearance for the State payroll.

Highway Planning and Construction, CFDA 20.205
     Agency:       Transportation
     Component: All Costs
     Technique:    Average Clearance Funding (Weekly Billing)
     Description: The State shall request funds once a week for deposit on the dollar-
                   weighted average number of days required for checks to clear after the
                   dollar weighted average day of issuance for the disbursements of the billing
                   period. The amount of the request will also include funds for prior
                   administrative costs incurred since the last billing date.

Public Assistance Grants, CFDA 83.544
       Agency:      Defense
       Component: Grants to Municipalities, Counties, and State Agencies
       Technique:   Average Clearance

Title I Grants to Local Educational Agencies, CFDA 84.010
        Agency:      Education
        Components: Payments to Local Education Agencies (LEAs) and Direct Costs
        Technique:   Average Clearance

       Component:     Indirect Costs
       Technique:     Proportionate Shares
       Description    The State shall draw down for indirect costs once a month, on the last
                      business day of the month, according to each approved indirect cost
                      allocation plan. The amount of each draw shall be determined by applying
                      an approved indirect cost rate to the appropriate direct costs of the month.

Special Education – Grants to States, CFDA 84.027
       Agency:      Education
       Component: Direct Costs
       Technique:   Average Clearance

       Component:     Indirect Costs
       Technique:     Proportionate Shares
       Description:   The State shall draw down for indirect costs once a month, on the last
                      business day of the month, according to each approved indirect cost
                      allocation plan. The amount of each draw shall be determined by applying
                      an approved indirect cost rate to the appropriate direct costs of the month.



                                               10
Vocational Education – Basic Grants to States, CFDA 84.048
      Education:    Education
      Component: Payment to Vocational Education System and Direct Costs
      Technique:    Pre-Issuance Funding

      Component:     Indirect Costs
      Technique:     Proportionate Shares
      Description:   The State shall draw down for indirect costs once a month, on the last
                     business day of the month, according to each approved indirect cost
                     allocation plan. The amount of each draw shall be determined by applying
                     an approved indirect cost rate to the appropriate direct costs of the prior
                     month.


Rehabilitation Services – Vocational Rehab Grants to States, CFDA 84.126
      Agency:        Labor
      Component: All Non-Personal Services Costs
      Technique:     Pre-Issuance Funding

      Component:     All Personal Services Costs
      Technique:     Prorated Drawdowns
      Description:   The State shall draw down bi-weekly 1/26th of the administrative cost for
                     deposit on the average day of clearance for the State payroll.

Class Size Reduction, CFDA 84.340
       Agency:      Education
       Component: Payments to Local Educational Agencies (LEA’s)
       Description: Pre-issuance Funding


Temporary Assistance to Needy Families (TANF), CFDA 93.558
     Agency:       Human Services
     Component: Payments to Clients
     Technique:    Average Clearance

      Component:     Direct Administrative Costs
      Technique:     Bi-Weekly Drawdowns
      Description:   The State shall draw down personal services bi-weekly for deposit on the
                     average day of clearance for the State payroll.

      Component:     Allocated Costs
      Technique:     Proportionate Shares
      Description:   The State shall draw down for indirect costs once a quarter according to
                     each approved indirect cost allocation plan. The amount of each draw shall
                     be determined by applying and approved indirect cost rate to the appropriate
                     direct costs of the prior quarter.

Child Support Enforcement, CFDA 93.563
       Agency:     Human Services
       Component: All Costs (100% Administrative)
       Technique:  Prorated Drawdowns

                                              11
      Description:   The State shall draw down bi-weekly 1/6th or 1/7th of the quarterly grant
                     award for administrative costs for deposit on the average day of clearance
                     for the State payroll.

Child Care and Development Block Grant, CFDA 93.575
      Agency:      Human Services
      Component: Payments to Service Providers
      Technique:   Average Clearance

      Component:     All Administrative Costs
      Technique:     Bi-Weekly Drawdowns
      Description:   The State shall draw down personal services bi-weekly for deposit on the
                     average day of clearance for the State payroll.

Child Care Mandatory and Matching Funds of Child Care/Dev, CFDA 93.596
      Agency:     Human Services
      Component: Payments to Service Providers
      Technique:  Average Clearance

Foster Care – Title IV-E, CFDA 93.658
       Agency:       Human Services
       Component: Payments to Service Providers
       Technique:    Average Clearance

      Component:     Direct Administrative Costs
      Technique:     Prorated Drawdowns
      Description:   The State shall draw down bi-weekly 1/6th or 1/7th of the quarterly grant
                     award for administrative costs for deposit on the average day of clearance
                     for the State payroll.

      Component:     Indirect Costs
      Technique:     Proportionate Shares
      Description:   The State shall draw down for indirect costs once a quarter. The amount of
                     each draw shall be determined by applying an approved indirect cost rate to
                     the appropriate direct costs of the prior quarter.

Adoption Assistance, CFDA 93.659
      Agency:       Human Services
      Component: Payments to Providers
      Technique:    Average Clearance

      Component:     All Administrative Costs
      Technique:     Average Clearance

Social Services Block Grant, CFDA 93.667
       Agency:       Human Services
       Component: Program Costs
       Technique:    Average Clearance

      Component:     All Administrative Costs
      Technique:     Bi-Weekly Drawdowns

                                                12
       Description:   The State shall draw down personal services bi-weekly for deposit on the
                      average day of clearance for the State payroll.

State Children’s Insurance Program, CFDA 93.767
       Agency:       Human Services
       Component: Payments to Providers
       Technique:    Average Clearance

       Component:     All Administrative Costs
       Technique:     Pre-Issuance Funding

Medical Assistance Program (Medicaid), CFDA 93.778
      Agency:       Human Services
      Component: Payments to Service Providers
      Technique:    Average Clearance

       Component:     All Administrative Costs
       Technique:     Bi-Weekly Drawdowns
       Description:   The State shall draw down personal services bi-weekly for deposit on the
                      average day of clearance for the State payroll.

Blk Grants for Prevent. & Treat. Of Substance Abuse, CFDA 93.959
      Agency:       Office of Substance Abuse
      Component: Payments to Service Providers
      Technique:    Pre-Issuance Funding

Disability Insurance, CFDA 96.001
       Agency:       Human Services
       Component: Payment to Service Providers
       Technique:    Average Clearance

       Component:     All Administrative Costs
       Technique:     Pro-rated Drawdowns
       Description:   The State shall draw down bi-weekly 1/6th or 1/7th of the quarterly grant
                      award for administrative costs for deposit on the average day of clearance
                      for the State payroll.

7.0    Clearance Patterns

Clearance patterns are used to schedule the request for transfer of federal funds to the State and to
support the calculation of interest.

Changes to the proposed clearance patterns may be made during the term of this Agreement upon
mutual consent of the State and the Secretary.

The National Clearance patterns developed for FMS are used by the State except for those
programs and bank accounts where the State has developed its own clearance patterns.




                                                 13
7.1    State Clearance Patterns

The State has worked with its primary banking provider in presenting updated clearing patterns
using check issuance and check presentation data for the calendar days of February 1 through
April 30, 2001. The following bank accounts have been reviewed and updated for the contract
beginning July 1, 2001:
                                   Rounded Day of
       Account                         Clearance                Description
Primary Disbursement Account #335           4           Primary vendor checking account for
                                                        majority of State issued checks (to
                                                        vendors and providers)
EFT Disbursement Account #400             N/A           Disbursement account for State issued
                                                        electronic      payments      (activity
                                                        combined into #335 data)
Payroll Checking Account #343               1           Checking account disbursing State
                                                        employee payroll checks.
EFT Payroll Disbursement #434             N/A           State ACH Payroll disbursement
                                                        account (activity combined into #343
                                                        clearance data).
Unemployment Compensation #369              6           Labor’s Unemployment Benefits
                                                        Disbursement Account

Recipients of federal funds may apply more than one funding technique and/or clearance pattern
dependent upon how a program is divided—(ie. Payments to Vendors would use the General
Disbursement Account clearance pattern; Payroll costs would be guided by the clearance pattern
of the Payroll bank account). Program components and funding techniques for each CFDA are
provided in Section 6.2.

Steps involved in the revised bank clearance pattern by individual bank accounts are:

        Determine range of check numbers for checks issued during specified 90-day time
         period.
        Determine total number of payments and total amount of payments during time period.
        Identify total of daily checks presented that fall within the predefined check number
         range.
        The bank’s query measured the number of days from the date of issue by the State to
         the day the dollars were removed from the State’s bank account. Calculate the
         percentage of daily checks presented (number and amount) against the total issuance of
         the period.
        Obtain dollar-weighted factor by applying percentage against number of days before
         check presentation.
        The sum of dollar-weighted factors represents the average amount of time for a check
         to be presented for payment to the bank after the check issuance date.




                                                14
7.2 Temporary Assistance to Needy Families (TANF)

It is important to use a separate clearance pattern for this program because payments are made
directly to clients as opposed to vendors or service providers. Clients tend to cash their checks
quicker than other payees. TANF payments were distinguished from other payments out of the
State’s general account based on check number. A total of 47,018 payments issued to clients over
a two-month period were used to establish the current pattern. This pattern, unlike the others,
relies upon data previously submitted, but will be updated in the near future.

The rounded day of clearance is 2.


8.0    Interest Calculation

All interest calculations for the State shall be presented by program for both State and Federal
liabilities.

8.1    State Incurred Interest Liability

                           Components Using Pre-Issuance Funding

Program components using Pre-issuance Funding shall incur an interest liability for the State. The
interest calculation shall be performed on a per-draw basis for each program and summed over the
number of draws. No sampling shall be used for the calculation of interest for the State of Maine.
The number of days for which the State incurs an interest liability shall be calculated by adding
the number of average clearance days for that program to the number of pre-issuance days. The
number of pre-issuance days shall be the number of days from the crediting of Federal funds to a
State account until the issuance of payments.

The interest rate used to calculate the dollar amount of interest shall be equal to the average daily
13-week Treasury Bill rate in effect during the month. The Financial Management Service shall
provide this rate.

(# Pre-Issuance Days + Average Clearing Days) * Daily Interest Rate * Dollar Amount of
Draw)=        State Incurred Interest Liability

The State of Maine has developed an automated report which draws data from the State’s accounting
system to track interest liability on a monthly basis for programs using pre-issuance funding.


                       Components Using Estimated Clearance Funding

Program components using Estimated Clearance Funding shall draw down funds according to the
pre-determined clearance patterns listed in section 6.2 and shall not incur an interest liability so
long as the described procedures are complied with.




                                                 15
                         Components Using Average Clearance Funding

Program components using Average Clearance Funding shall draw down funds on the average
clearance day as pre-determined by the clearance patterns listed is section 6.2 and shall not incur
an interest liability so long as the described procedures are complied with.


                        Components Funded Using Proportionate Shares

Program components funded using Proportionate Shares shall draw down funds based on
approved cost allocation plans using approved indirect cost rates and shall not incur an interest
liability.




                        Components Funded Using Prorated Drawdowns

Program components funded using Prorated Drawdowns shall draw down a prorated amount of
the program administrative costs, for deposit on the average day of the State payroll. Programs
with a separate administrative cost grant shall not incur an interest liability for the prorated funds.

Programs with a designated administrative grant award, but not a separate administrative cost
grant, shall incur an interest liability from the time the funds are credited to the State account
(State payday) until the time the funds are paid out.

The interest rate used to calculate the dollar amount of interest shall be the annualized rate equal to
the average equivalent yields of 13-Week Treasury Bills auctioned during the State’s fiscal year.
This rate will be provided by the Financial Management Service.

Average Clearance Days * Daily Interest Rate * Dollar Amount of Draw =
                                                                     State Interest Liability

In the event that the interest neutral funding techniques are not complied with, the State shall be
liable for interest on Federal funds from the date Federal funds are credited to a State account until
the date those funds are paid out for program purposes.

To determine the time Federal funds are held, the State shall measure the time between the date
Federal funds are received and credited to a State’s account and the date those funds are debited
from the State’s account.


8.2 Federally Incurred Interest Liability

The Federal Government shall incur an interest liability to the State if the State pays out its own
funds for program purposes with valid obligated authority under Federal Law, Federal Regulation
or Federal-State Agreement, as defined in 31 CFR Section 205.11. A Federal interest liability
shall accrue from the day a State pays out its own funds for program purposes to the day Federal
funds are credited to a State account.



                                                  16
Each State agency shall manually track and document all transactions in which the State pays out
its own funds for program purposes prior to receiving Federal funds. The State shall maintain
documentation regarding the amount and dates of program-related issuance, determination of the
amount to be drawn, and the date funds are requested and credited to the State’s account. A
separate ledger shall be maintained for each program identifying: 1) the amount of the
disbursement for which the State paid out its own funds, 2) the Federal percentage of the
disbursement, if a Federal-State matching program, 3) the date of issuance for the disbursement,
4) the date Federal funds are requested, 5) the date Federal funds are deposited in a State account,
and 6) the cause of the Federal interest liability (late appropriation, late grant, quarterly shortfall,
deferral, prior years claim, etc.).

The interest rate used to calculate the dollar amount of interest shall be the annualized rate equal
to the average equivalent yields of 13-Week Treasury Bills auctioned during the State’s fiscal
year. This rate will be provided by the Financial Management Service.



The amount of the interest liability shall be calculated as follows:

 (Date Federal funds are credited to the account – Date funds are paid out for program
purposes)*Daily Interest Rate * Dollar Amount of Draw =
                                                        Federal incurred Interest liability



8.3 State Interest Liability on Refunds

The State shall apply a $10,000 refund transaction threshold, below which the State shall not incur
or calculate interest liabilities on refunds. The State shall use the following method to calculate
interest on refund transactions equal to or above $10,000.

Each State agency shall manually track and document refunds, which shall be offset against
subsequent drawdowns of Federal funds, rather than returned to the Federal Government.

With programs to which Estimated Clearance and Average Clearance shall be applied, the State
shall determine the actual amount of refunds received during the State fiscal year for each program
using the information in its standard Federal financial status reports. For each program, the State
shall estimate the number of days that refunds are held prior to being offset against a subsequent
deposit of Federal funds by calculating the average number of days between drawdown deposits
by dividing the total number of drawdowns into 365, and assuming that all refunds are received at
the midpoint of the average number of days between drawdowns.

With programs to which Pre-issuance shall be applied, each State agency shall maintain a separate
ledger identifying 1) the date the refund is deposited to a State account, 2) the date the refund is
offset against a subsequent deposit of Federal funds, 3) the check issue date for the disbursement
related to the subsequent deposit of Federal funds, 4) the amount of the refund. For all refunds,
interest shall be calculated based on the difference in whole days between the date the refund is
deposited in a State account and the date the refund is paid out for program purposes.




                                                  17
8.4 State Interest Liability on Fiscal Agents

The State uses a fiscal agent for the WIC program. The WIC Program shall draw down funds
through Pre-Issuance Funding and shall therefore incur an interest liability. The drawdowns shall
be deposited directly in the account of the fiscal agent, who shall calculate the Average Daily
Balance. The interest rate used to calculate the dollar amount of interest shall be equal to the
average daily 13-Week Treasury Bill rate in effect during the month. This rate shall be provided
by the Financial Management Service. The interest liability shall be calculated as:

    Monthly Interest Liability = (Number of days in month * Average Daily Balance * Daily
                                        Interest Rate)

8.5 State Interest Liability for Unemployment Insurance

The State shall use the following method to calculate State interest liabilities for the benefits
portion of the Unemployment Insurance program, or those funds withdrawn from the several
accounts in the Federal Unemployment Trust Fund (UTF). Unemployment insurance revenues are
collected from Maine taxpayers and remitted to the Federal Unemployment Trust Fund. Both
federal and state funds are subsequently drawn down from the Federal Unemployment Trust Fund
to fund the Unemployment Benefits disbursement account. Funds are requested on a daily basis
from the Maine Unemployment Trust Fund into the Benefit Disbursement account to cover all
unemployment checks disbursed utilizing the estimated clearance pattern (see exhibit II-D).

The State shall determine the actual interest earnings and the related banking costs of its
unemployment compensation benefit payment account for its fiscal year based on statements
provided by its financial institution. Both earnings and costs shall be distributed on a prorated
basis to the State, FECA and EUCA accounts (31 CFR section 205.13 (I)). The state portion shall
be drawn down utilizing Estimated Clearance. The State portion of the average daily balance, and
therefore the actual interest earnings and related banking costs, shall be 100%.

On funds withdrawn from the State account in the UTF, the State is liable for the actual interest
earned less related banking costs.

                   Interest on funds withdrawn from the FECA and EUCA

No interest liability shall be incurred on the FECA (Federal Employment Compensation Act) or
EUCA (Emergency Unemployment Compensation Act) portions of the UTF, as long as the
described procedures are complied with. The FECA and EUCA portions shall be drawn down in
accordance with the Estimated Clearance Funding technique. Accordingly, the Federal prorated
share of the State’s average daily balance and related banking costs are zero.

9.0 Reverse Flow Programs (Not applicable)

10.0   Direct Costs

As set forth in 31 CRF 205, costs of implementation are defined as those necessary for the
development and maintenance of clearance patterns and those costs necessary to perform actual
calculation of interest liabilities.




                                                18
The State expects the following types of direct costs of implementation:

                                     FY 2001 (est.)         FY 2002 (est.)

Development of check patterns        $37,500                $37,500

Interest calculations                $37,500                $37,500

Training                             $ 3,600

The State shall submit all claims for reimbursement of direct costs with its Annual Report in
accordance with 31 CFR Part 205.

11.0    Noncompliance

In the event of non-compliance with the terms of this agreement, the provisions of 31 CFR 205.17
shall apply.




                                                19
12.0   Signatures of Authorized Representatives of the State and the Secretary

For State of Maine                               For Secretary of the Treasury



                                   
Holly A. Maffei, Authorized Official                Bettsy H. Lane, Authorized Official

Deputy State Treasurer                           Assistant Commissioner, Federal Finance
Title                                            Title



                                  
Date                                             Date




                                            20
                                        EXHIBIT I

                  CMIA TREASURY-STATE AGREEMENT 2002
                        Funds Request and Receipt Times Schedule

                                                Request           Receipt Window
      Federal Agency       Payment Type       Cut-Off Time      (Bank Business Days)
Agriculture                    ACH             3:00 pm, EST           Next Day
Agriculture-FNS                ASAP             5:45 pm, EST         Same Day
                                               11:59 pm, EST         Next Day
Commerce-NOAA              ACH and ECS          2:00 pm, EST         Next Day
Education                     Fedwire          2:00 pm, EST          Same Day
                               ACH             3:00 pm, EST          Next Day
Energy                         ECS             4:00 pm, EST          Next Day
EPA                            ACH             2:00 pm, EST          Two Days
FEMA                           ACH             7:30 pm, EST        Early Next Day
HHS                           Fedwire          3:00 pm, EST          Same Day
HUD                            ACH             6:00 pm, EST          Two Days
Interior-FWS                  Fedwire          3:00 pm, EST          Same Day
Interior-OSM                   ECS             3:00 pm, EST           Next Day
Justice                        ACH             2:00 pm, EST          Two Days
                               ECS             2:00 pm, EST          Two Days
Labor-UTF                   ACH-Fedwire        3:00 pm, EST          Same Day
Labor-Non-UTF                 Fedwire          3:00 pm, EST          Same Day

National Science             ACH-ECS            8:00 pm, EST         Two Days
Foundation (NSF)           ASAP-Fedwire         5:45 pm, EST         Same Day
                            ASAP-ACH           11:59 pm, EST          Next Day
                              Fedwire           5:45 pm, EST         Same Day
                               ACH             11:59 pm, EST          Next Day
Social Security Admin         Fedwire           5:45 pm, EST         Same Day
                               ACH             11:59 pm, EST          Next Day
Transportation (FTA)           ACH            12:00 Noon, EST         Next Day
Transportation (FAA)           ACH              2:00 pm, EST          Next Day
Transportation (FHWA)          ACH            12:00 Noon, EST        Three Days
                              Fedwire         12:00 Noon, EST        Same Day
Veterans Admin                 ACH             12:00 pm, EST         Three Days
Army National Guard            ACH            12:00 Noon, EST         15 Days
Air National Guard
                               ACH            12:00 Noon, EST         15 Days

                                      Prepared: June 2001




                                              21
                                        Exhibit II

                       A.      Clearance Pattern – Average Clearance

                93.558 – Temporary Assistance to Needy Families (TANF)

                  Day After            Percentage
                  Issuance             Of Issuance           Factor
                       0                  0%                   --
                       1                  23%                 .23
                       2                  38%                 .76
                       3                  26%                 .78
                       4                  6%                  .24
                       5                  3%                  .15
                       6                  1%                  .06
                       7                  1%                  .07
                       8                  1%                  .08
                       9                  0%                  .00
                      10                  1%                  .10
                                          100

      Average Day of Clearance                        Rounded Day of Clearance
               2.47                                             2


Certified as to accuracy by:   ____________________________________
                                  Name

                               ____________________________________
                                  Title

                               ____________________________________
                                  Date




                                           22
                                        Exhibit II

B. Clearance Pattern General Disbursement Account #335




                 Day After     Percentage     Dollar-
                 Issuance      of Issuance   weighted
                                              Factor
                      0           22%          .0000
                      1           10%          .0983
                      2           11%          .2200
                      3            7%          .2020
                      4            7%          .2680
                      5           10%          .4950
                      6           10%          .6030
                      7            9%          .5990
                      8            4%          .3520
                      9            2%          .1560
                     10            9%         1.5050
                                 100%


       Average Day of Clearance                         Rounded Day of Clearance
               4.4987                                             4




Certified as to accuracy by:   ____________________________________
                                  Name

                               ____________________________________
                                  Title

                               ____________________________________
                                  Date




                                             23
                                        Exhibit II

C. Clearance Pattern Payroll Disbursement Account #343




                 Day After     Percentage     Dollar-
                 Issuance      of Issuance   weighted
                                              Factor
                      0           74%         .0000
                      1           14%         .1379
                      2            6%         .1135
                      3            0%         .0000
                      4            0%         .0000
                      5            3%         .1470
                      6            2%         .0866
                      7            1%         .0457
                      8            0%         .0295
                      9            0%         .0179
                     10            0%         .2077
                                 100%


       Average Day of Clearance                         Rounded Day of Clearance
                .7859                                             1




Certified as to accuracy by:   ____________________________________
                                  Name

                               ____________________________________
                                  Title

                               ____________________________________
                                  Date




                                             24
                                        Exhibit II

D. Clearance Pattern Unemployment Compensation Disbursement Account #369

                               17.225 Unemployment Insurance




                 Day After       Dollar-
                 Issuance       weighted
                                Clearance
                               Percentage
                               of Issuance
                      0             0%
                      1             0%
                      2             5%
                      3            15%
                      4             8%
                      5            14%
                      6            22%
                      7            15%
                      8             6%
                      9             3%
                     10            12%
                                  100%




Certified as to accuracy by:   ____________________________________
                                  Name

                               ____________________________________
                                  Title

                               ____________________________________
                                  Date




                                             25

								
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