84.010 Title | Grants to Local Education and Workforce |3.00 |Administrative Costs Average Clearance 6 Days
Educational Agencies Development Cabinet
84.027 |Special Education — Education and Workforce |99.0 | Program Benefits Average Clearance 6 Days
|Grants to States Development Cabinet 0
84.027 |Special Education -- Education and Workforce |1.00 |Administrative Costs Average Clearance 6 Days:
Grants to States Development Cabinet
84.126 |Rehabilitation Services — | Education and Workforce |54.0 |Program Benefits Average Clearance 4 Days
Vocational Rehabilitation |Development Cabinet )
Grants to States
84.126 |Rehabilitation Services — |Education and Workforce |46.0 |Administrative Costs Average Clearance 4 Days
Vocational Rehabilitation |Development Cabinet ()
Grants to States
93.558 | Temporary Assistance for|Cabinet for Health and | 8.00 |Administrative Costs Actual Clearance, ZBA- |0 Days
Needy Families Family Services Same Day Payment
93.558 | Temporary Assistance for|Cabinet for Health and 42.0 |Program Benefits Actual Clearance, ZBA- {0 Days
Needy Families Family Services ) Same Day Payment
93.558 [Temporary Assistance for|Cabinet for Health and | 42.0 |Program Benefits Average Clearance 4 Days
Needy Families Family Services ()
93.558 | Temporary Assistance for|Cabinet for Health and | 8.00 |Administrative Costs Average Clearance 4 Days
Needy Families Family Services
93.563  |Child Support Cabinet for Health and [66.0 | Program Benefits Average Clearance 4 Days
Enforcement Family Services 0)
93.563 {Child Support Cabinet for Health and —_|34.0 | Administrative Costs Average Clearance 4 Days
Enforcement Family Services 0
93.568 {Low-Income Home Cabinet for Health and 100. |Program Benefits Average Clearance 4 Days
Energy Assistance Family Services co
93.575 | Child Care and Cabinet for Health and 78.0 |Program Benefits Average Clearance 4 Days
Development Block Grant |Family Services 0
93.575 |Child Care and (Cabinet for Health and = |22.0 |Administrative Costs |Average Clearance 4 Days
Development Block Grant|Family Services (
93.658 Foster Care -- Title 1V-E |Cabinet for Health and |62.0 |Program Benefits Average Clearance 4 Days
Family Services oO
93.658 Foster Care -- Title IV-E |Cabinet for Health and |38.0 |Administrative Costs Average Clearance 4 Days
Family Services 0)
93.659 |Adoption Assistance (Cabinet for Health and | 96.0 | Program Benefits Average Clearance 4 Days
Family Services i)
93.659 Adoption Assistance Cabinet for Health and | 4.00 |Administrative Costs Average Clearance 4 Days
Family Services
93.767 |Children's Health (Cabinet for Health and 95.0 |Program Benefits Average Clearance 4 Days
Insurance Program Family Services Lt)
93.767 |Children's Health Cabinet for Health and [5.00 |Administrative Costs Average Clearance 4 Days
Insurance Program Family Services
93.778 |Medical Assistance Cabinet for Health and | 49.0 | Program Benefits Actual Clearance, ZBA- |0 Days
Program Family Services it} Same Day Payment
93.778 Medical Assistance Cabinet for Health and =| 1.00 |Administrative Costs Actual Clearance, ZBA- |0 Days
Program. Family Services [Same Day Payment
93.778 |Medical Assistance Cabinet for Health and | 1.00 |Administrative Costs Average Clearance 4 Days
Program. Family Services
93.778  |Medical Assistance (Cabinet for Health and | 49.0 |Program Benefits Average Clearance 4 Days
Program Family Services 0
86.001 | Social Security — (Cabinet for Health and |25.0 |Program Benefits Average Clearance 4 Days
Disability Insurance Family Services 0)
96.001 Social Security — (Cabinet for Health and | 75.0 |Administrative Costs Average Clearance 4 Days
Disability Insurance Family Services

| hereby certify that an authorized State official has certified at least every five years that the "Rounded Days of Clearance" listed in

Exhibit 2 of this Treasury-State Agreement:

Page 19 of 20



8.4 Refund Liabilities

8.4.1 The State shall be liable for interest on refunds from the date the refund is credited to a State account until the date
the refund is debited from the State account for program purposes. The State shall apply a $50,000 refund transaction
threshold below which the State shall not incur or calculate interest liabilities on refunds. A transaction is defined as a
single deposit.

8.4.2 For each refund, the State shall maintain information identifying:

(1) date a refund is credited to a State account

(2) date of the subsequent deposit of Federal funds against which the refund is offset
(3) amount of the refund

8.4.3 The State shall use the following methodology to calculate interest liabilities on refunds:

Refunds Deposited to Interest Neutral Programs:

With programs to which applicable interest neutral funding techniques are applied, the State interest liability shall be
based on the difference in whole days between the date the refund is deposited in a State account and the date the
refund is offset against a subsequent deposit of Federal funds.

8.5 Exemptions

8.5.1 Where more than one State agency is a recipient of Federal funds under a program, a particular State agency's
funding may be excluded from interest calculation procedures if the State agency receives an amount of funds less than 5
% of the State's threshold for major Federal assistance programs. Notwithstanding this potential exemption, however, in
no case shall less than 90% of a program's total funding be subject to interest calculation procedures.

Proration of calculations: If less than total program funding is subject to interest calculation procedures, the resulting
interest liability calculations shall be prorated to 100% of program funding.

8.6 State Interest Liabilities

8.6.1 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.

8.6.2 The State shall use the following method to calculate State interest liabilities on Federal funds:
8.6.2.1 Measuring Time Funds Are Held

Deposit to Issuance; Issuance to Clearance:

To determine the total time Federal funds are held, the State shall separately measure two time periods: (1) the date
Federal funds are deposited to the date checks are issued; and (2) the date checks are issued to the date funds are
debited from the State's account.

8.6.2.2 Source of Data

Clearance Patterns:
The time period from issuance of funds to the date funds are debited from the State's account shall be determined by the
appropriate clearance pattem specified in Exhibit II.

Page 14 of 20


Actual Clearance, ZBA - Same Day Payment

The State shall request funds the same day it pays out funds, in accordance with the appropriate Federal agency cut-off
time specified in Exhibit |. A Federal agency will deposit funds in a State account the same day as requested. The amount
of the request shall be for the amount of funds that clear the State's account that day. This funding technique is interest
neutral.

Average Clearance

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 pattem specified in Exhibit Il. The request shall be made in
accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The amount of the request shall be for
the exact amount of that disbursement. This funding technique is interest neutral.

6.2.2 The following are terms under which funding techniques for administrative costs shall be implemented for all
transfers of funds to which the funding technique is applied in section 6.3.2 of this Agreement.

There are no funding techniques listed in Section 6.2.2

6.2.3 The following are terms under which miscellaneous funding techniques shall be implemented for all transfers of
funds to which the funding technique is applied in section 6.3.2 of this Agreement.

There are no funding techniques listed in Section 6.2.3

6.2.4 The following are terms under which State unique funding techniques shall be implemented for all transfers of funds
to which the funding technique is applied in section 6.3.2 of this Agreement.

There are no funding techniques listed in Section 6.2.4
6.3 Application of Funding Techniques to Programs

6.3.1 The State shall apply the following funding techniques when requesting Federal funds for the component cash flows
of the programs listed in sections 4.2 and 4.3 of this Agreement.

6.3.2 Programs
Below are programs listed in Section 4.2 and Section 4.3.

10.551 Supplemental Nutrition Assistance Program
Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 100.00

Component: Program Benefits

Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

10.553 School Breakfast Program

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 100.00

Component: Program Benefits

Technique: Average Clearance

Page 5 of 20


1. Have been prepared in accordance with the standards provided in 31 CFR 205.20;
2. Accurately represent the flow of Federal funds under the Federal assistance programs to which they apply;
3. Reflect seasonal or other periodic variations in the clearance activities; and,

4. Are auditable.
Date: 4S wo we DS
Printed Name Lap ae Cc A 2S

Certifying Signature:

Title: Cate the k

Page 20 of 20


Exhibit | - Funds Request and Receipt Times Schedule
Commonwealth of Kentucky

Federal Agency Payment Type |Request Cut-Off Time Receipt Window
Agriculture-FNS. (ACH 11:59 PM 1 day
Agriculture-FNS Fedwire 5:45 PM 0 day
Agriculture-FS ACH 3:00 PM 1 day
Air National Guard |ACH 12:00 PM 15 days
Army National Guard ACH 12:00 PM 15 days
Commerce-NOAA |ACH 2:00 PM 1day
Dept of Homeland Security (FEMA) Fedwire 2:00 PM 0 day
Dept of Homeland Security (ODP) ACH 2:00 PM 2 days
Dept of Homeland Security (ODP) Fedwire 2:00 PM 2 days
EPA ACH 2:00 PM 2 days
EPA Fedwire 2:00 PM O day
Education ACH 3:00 PM 1day
Education Fedwire 2:00 PM 0 day
Energy ACH 4:00 PM 1 day
Energy Fedwire 3:00 PM 0 day
HHS ACH 6:30 PM 1 day
HHS Fedwire 3:00 PM O day
HUD ACH 5:30 PM 2 days
HUD Fedwire 3:00 PM 0 day
Interior-FWS ACH 11:59 PM 1day
Interior-FWS Fedwire 5:45 PM O day
Interior-OSM ACH 3:00 PM 1 day
Interior-OSM Fedwire 5:45 PM O day
Justice ACH 11:00 PM 6 days
Justice Fedwire 2:00 PM 2 days
Labor-Non-UTF ACH 3:00 PM 1day
Labor-UTF ACH 3:00 PM iday
Labor-UTF Fedwire 3:00 PM O day
National Science Foundation (NSF) ACH 8:00 PM 1day
National Science Foundation (NSF) Fedwire 5:45 PM O day
Social Security Administration ACH 11:59 PM 1 day
Social Security Administration Fedwire 5:45 PM 0 day
Transportation (FAA) ACH 2:00 PM 1day
Transportation (FHWA) ACH 12:00 PM 3days
Transportation (FHWA) Fedwire 12:00 PM O day
Transportation (FTA) ACH 2:00 PM 1 day
‘Veterans Administration ACH 12:00 PM 3 days

Page 17 of 20


Average Day of Clearance: 4 Days

93.658 Foster Care -- Title IV-E

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 38.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 62.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.659 Adoption Assistance

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 4.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 96.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.767 Children's Health Insurance Program
Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 5.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 95.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.778 Medical Assistance Program

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 1.00

Component: Administrative Costs

Page 10 of 20


Technique: Average Clearance
Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 20.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

17.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs
Recipient: Education and Workforce Development Cabinet

% of Funds Agency Receives: 8.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 92.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

17.225S Unemployment Insurance —- State Benefit Account
Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 100.00

Component: Program Benefits

Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction
Recipient: Transportation Cabinet

% of Funds Agency Receives: 22.00
Component: Administrative Costs
Technique: Average Clearance

Average Day of Clearance: 6 Days

Recipient: Transportation Cabinet
% of Funds Agency Receives: 78.00
Component: Program Benefits
Technique: Average Clearance
Average Day of Clearance: 6 Days

84.010 Title | Grants to Local Educational Agencies
Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 3.00

Page 7 of 20


Average Day of Clearance: 6 Days

10.555 National School Lunch Program

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 100.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 6 Days

10.557 Special Supplemental Nutrition Program for Women, Infants, and Children
Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 3.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 47.00

Component: Program Benefits

Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 3.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 47.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

10.558 Child and Adult Care Food Program

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 100.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 6 Days

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program
Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 80.00

Component: Administrative Costs

Page 6 of 20


Exhibit Il - Commonwealth of Kentucky
LIST OF STATE CLEARANCE TIMES

(Rounded Dollar-Weighted Average Day of Clearance)
Clearance Times Where the Timing of A Draw Down Is Based on A Clearance

Pattern
CFDA} Program Name Recipient % Component Technique Round
ed
days

10.551 | Supplemental Nutrition | Cabinet for Health and 100. | Program Benefits ‘Actual Clearance, ZBA- |0 Days
Assistance Program Family Services 00 Same Day Payment

10.553 | School Breakfast Education and Workforce |100. |Program Benefits Average Clearance 6 Days
Program Development Cabinet 00 -

10.555 |National School Lunch —_| Education and Workforce |100. | Program Benefits Average Clearance 6 Days
Program Development Cabinet 00

10.557 | Special Supplemental Cabinet for Health and |47.0 | Program Benefits Actual Clearance, ZBA- |0 Days
Nutrition Program for Family Services 0 Same Day Payment
Women, Infants, and
Children

10.557 | Special Supplemental Cabinet for Health and 3.00 |Administrative Costs Actual Clearance, ZBA- |0 Days
Nutrition Program for Family Services Same Day Payment
Women, Infants, and
Children |

10.557 | Special Supplemental Cabinet for Health and 3.00 |Administrative Costs Average Clearance 4 Days
Nutrition Program for Family Services
Women, Infants, and
Children

10.557 |Special Supplemental {Cabinet for Health and |47.0 |Program Benefits Average Clearance 4 Days
Nutrition Program for Family Services 0
‘Women, Infants, and
Children

10.558 — |Child and Adult Care Education and Workforce | 100. |Program Benefits Average Clearance 6 Days
Food Program Development Cabinet _|00 a

10.561 | State Administrative Cabinet for Health and 20.0 | Program Benefits Average Clearance 4 Days
Matching Grants forthe |Family Services 0
Supplemental Nutrition
Assistance Program

10.561 | State Administrative Cabinet for Health and 80.0 |Administrative Costs Average Clearance 4 Days
Matching Grants forthe |Family Services 0
Supplemental Nutrition
Assistance Program _

17.225F |Unemployment Insurance |Education and Workforce |92.0 | Program Benefits Average Clearance 4 Days
-- Federal Benefit Development Cabinet 0
Account and
Administrative Costs _

17.225F |Unemployment Insurance | Education and Workforce |8.00 |Administrative Costs Average Clearance 4 Days
-- Federal Benefit Development Cabinet
Account and
Administrative Costs ee

17.2258 |Unemployment Insurance | Education and Workforce |100. |Program Benefits Actual Clearance, ZBA- |0 Days
-- State Benefit Account [Development Cabinet _|00 Same Day Payment

20.205 |Highway Planning and | Transportation Cabinet |22.0 |Administrative Costs | Average Clearance 6 Days
Construction ie)

20.205 [Highway Planning and | Transportation Cabinet |78.0 |Program Benefits Average Clearance 6 Days
Construction 0 _ :

84.010 | Title | Grants to Local Education and Workforce |97.0 | Program Benefits Average Clearance 6 Days
Educational Agencies Development Cabinet ie}

Page 18 of 20



Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 8.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 42.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.563 Child Support Enforcement

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 34.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 66.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.568 Low-Income Home Energy Assistance
Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 100.00
Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.575 Child Care and Development Block Grant
Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 22.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 78.00

Component: Program Benefits

Technique: Average Clearance

Page 9 of 20


“ Cash Management Improvement Act Agreement
between
The Commonwealth of Kentucky
and
The Secretary of the Treasury,
United States Department of the Treasury

The Secretary of the Treasury, United States Department of the Treasury (hereafter 'Secretary’), and Commonwealth of
Kentucky (hereafter ‘State’), in order to implement Section 5 of the Cash Management Improvement Act of 1990, as.
amended (hereafter ‘Act'), agree as follows:

1.0 AGENTS OF THE AGREEMENT

1.1 The Authorized Official(s) for the Commonwealth of Kentucky shall be the Secretary, Finance and Administration
Cabinet in all matters conceming this Agreement.

1.2 The Assistant Commissioner, Revenue Collections Management, Bureau of the Fiscal Service (Fiscal Service), U.S.
Department of the Treasury, shall act as the Secretary's representative in all matters conceming this Agreement.

2.0 AUTHORITY

2.1 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 of 1992 (Public Law 102-589), codified at 31 U.S.C. 6501 and 31
U.S.C. 6503.

2.2 The regulations codified at 31 CFR Part 205 shall apply to all matters Pertaining to this Agreement, and are
incorporated herein by reference. In the event of any inconsistency between this Agreement and 31 CFR Part 205, the
regulations shall govern.

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS
3.1 This Agreement shall take effect on 07/01/2017 and shall remain in effect until 06/30/2018.

3.2 This Agreement may be amended at any time by written, mutual consent of the State and the Fiscal Service. This
Agreement shall be amended annually to incorporate new programs that qualify as major Federal assistance programs
and remove programs that no longer qualify as major Federal assistance programs. A State must notify the Fiscal Service
in writing within 30 days of the time the State becomes aware of a change that involves additions or deletions of programs
subject to Subpart A, changes in funding techniques, and/or changes in clearance patterns. The notification must include
a proposed amendment for review by the Fiscal Service.

3.3 Notwithstanding section 3.2, in the event of Federal or State non-compliance with Subpart B of 31 CFR, Part 205, the
Fiscal Service may amend this Agreement at any time to incorporate additional Programs and the entities that administer
those programs.

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

Page 1 of 20


7.2 The following shall develop the State's clearance patterns:
The Finance and Administration Cabinet shall develop all of the Commonwealth's clearance patterns.
7.3 The sources of data the State shall use when developing its clearance patterns are as follows:

The source of data the Commonwealth shall use when developing its clearance patterns is the actual expenditures of
Federal cash as recorded in the Commonwealth's central accounting system. The Commonwealth shall append to this
data the date each expenditure was presented for payment or otherwise culminated. For expenditure transactions
executed by check or EFT, the source for presentment dates shall be data obtained indirectly from the Commonwealth's
bank through the State Treasurer.

7.4 The State shall use the following methodology when developing its clearance patterns:

For all clearance patterns developed by statistical sampling, the State shall randomly sample checks to ensure, at a
minimum, a 95% confidence interval for a .25 weighted-day level of precision for the checks in the sample. The State
shall track at least 99% of the funds disbursed, from issuance to clearance, in the sample period.

7.5 The State shall identify for each check or warrant (hereafter, check) in the population: (1) the date the check was
released for payment; (2) the date the check was debited from the State’s account, and, (3) the amount of the check.

7.6 The State shall use the following method to calculate the dollar-weighted average day of clearance:

To determine the number of days each check was outstanding (clearance time), the issue date shall be subtracted from
the date the check cleared the State's account.

To determine the percentage of the disbursement paid out each day following issuance, the amount of the checks that
clear the State's account each day shall be summed and then divided by the amount of the total disbursement.

For each day following issuance, the clearance time of the checks paid out that day shall be multiplied by the percentage
of the total disbursement those checks represent. This product is the clearance factor.

The dollar-weighted average day of clearance for the disbursement shall be determined by summing the clearance factor
of each day following the disbursement.

7.7 The State shall adjust each clearance pattern to reflect the dollar-weighted proportion of funds paid out by EFT/Direct
payroll, with the following exceptions:

Not Applicable

The State shall also adjust each clearance pattern to reflect:

Not Applicable

7.8 Each of the State's clearance pattems is calculated in calendar days.

7.9 An authorized State official shall certify that each clearance pattern developed by the State accurately corresponds to
the clearance activity of the programs to which it is applied. This certification shall be provided to the Fiscal Service prior
to the effective date of the Agreement. The State shall recertify its clearance patterns at least every five years.

Page 12 of 20


Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 49.00

Component: Program Benefits

Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 1.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 49.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

96.001 Social Security -- Disability Insurance
Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 75.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 25.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:
Not Applicable

7.0 CLEARANCE PATTERNS

7.1 The State shall develop separate clearance patterns for each of the following:

Functional Payment. The Commonwealth shall develop separate clearance patterns for each agency or instrumentality
listed in Section 5.1 of this Agreement. The clearance pattern for each agency or instrumentality shall be derived from the
transactions applicable to the programs for which each entity is responsible.

Page 11 of 20


Component: Administrative Costs
Technique: Average Clearance
Average Day of Clearance: 6 Days

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 97.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 6 Days

84.027 Special Education -- Grants to States

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 1.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 6 Days

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 99.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 6 Days

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 46.00

Component: Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Education and Workforce Development Cabinet
% of Funds Agency Receives: 54.00

Component: Program Benefits

Technique: Average Clearance

Average Day of Clearance: 4 Days

93.558 Temporary Assistance for Needy Families
Recipient: Cabinet for Health and Family Services

% of Funds Agency Receives: 8.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

Recipient: Cabinet for Health and Family Services
% of Funds Agency Receives: 42.00
Component: Program Benefits

Page 8 of 20


Additional guidance on this policy is available from the respective CMS Regional Office, U.S. Department of Health &
Human Services.

The State will comply with the following guidelines when requesting supplemental funding for TANF (CFDA 93.558),
CCDF (CFDA 93.575), CSE (93.563), and the FC/AA (CFDA 93.658 and CFDA 93.659) programs administered by the
U.S. Department of Human Services, Administration for Children and Families (HHS/ACF):

a. Timing of the Request

A State should initiate its request for supplemental funding during a quarter as soon as it becomes aware of the fact that a
shortfall does/will exist. For the TANF and CCDF grants, supplemental funding requests (estimates) may be submitted by
a State, for consideration by ACF, up through and including the 15th day of the third month of the first, second or third
quarter of any fiscal year. Since TANF and CCDF are block grant programs, all unawarded portions of the annual
allotment will automatically be issued at the beginning of the fourth quarter. Therefore, supplemental funding requests will
not be available during the fourth quarter for these programs. For the CSE and FC/AA programs, supplemental funding
requests may be submitted by a state, for consideration by ACF, up through and including the 15th day of the third month
of any quarter of a fiscal year.

b. Justification for the Request

The request for a supplemental funding for any of the above mentioned programs should contain a justification clearly
documenting the need for the additional funding authority during the current quarter. This documentation should be in the
form of State accounting records or similar documents that will show the actual expenditures through the most recent
month for which such data are available, as well as the State's most accurate projection of its anticipated expenditures
during the remaining month(s) of the quarter. For either the TANF or the CCDF program, the State's justification should
also include an explanation of the activities requiring the obligation and/or expenditure of amounts that exceed the normal
quarterly grant award restrictions and why these activities could not have been delayed until the next quarter.

c¢. Form Submittal
Supplemental funding requests should be made by completing the appropriate ACF quarterly report of expenditures and
estimates applicable to the particular program for which the grant award request is being made.

d. Approval Process

Upon receipt of the state's request for additional funding authority for a quarter, the ACF Regional Office will promptly
teview the supporting documentation. If the request is properly justified, so long as ACF has adequate funding
availability, the State's request will be expedited and supplemental funding will be issued within 5 days of ACF receiving
the request. The State will be notified by the Regional Office when the supplemental award has been transmitted to the
Payment Management System (PMS) and when it may initiate drawdowns against the supplemental funding.

Additional guidance on this policy is provided in the U.S. Department of Health & Human Services, Administration for
Children and Families, letter (May 19, 2004) to State Administrators from the Deputy Assistant Secretary for
Administration.

6.2 Description of Funding Techniques

6.2.1 The following are terms under which standard funding techniques shall be implemented for all transfers of funds to
which the funding technique is applied in section 6.3.2 of this Agreement.

Page 4 of 20


8.6.2.3 Standards Applied

Census (Average Daily Balance):
The average daily cash balance of Federal Funds in the program's account reflects the actual activity of each draw from
the date of deposit to the date of issuance or clearance, whichever is pertinent.

8.6.2.4 Calculation Procedure

Average Daily Balance + Clearance Pattern:
|= {ADB x R} + {P x rx T}, where

|= State's total interest liability

ADB = Average Daily Balance of cash in a program's account, measured from deposit to clearance

R = Annualized rate equal to the average equivalent yields of 13-week Treasury bills auctioned during a State's fiscal year
P = Total annual expenditures of Federal funds for program or component cash flow of program

r=R/365 days

T = Dollar-weighted average day of clearance, as determined by the appropriate clearance pattern in Exhibit II

9.0 REVERSE FLOW PROGRAMS

The State is not required to cover any reverse flow programs under the terms of this Agreement because the State does
not participate in the program.

10.0 INTEREST CALCULATION COSTS

10.1 As set forth in 31 CFR 205.27, interest calculation costs are defined as those costs necessary for the actual
calculation of interest, including the cost of developing and maintaining clearance patterns in support of the interest
calculations. Interest calculation costs do not include expenses for normal disbursing services, such as processing of
checks or maintaining records for accounting and reconciliation of cash balances, or expenses for upgrading or
modemizing accounting systems. Interest calculation costs in excess of $50,000 in any year are not eligible for
reimbursement, unless the State provides justification with the annual report.

10.2 The State expects to incur the following types of interest calculation costs:
All costs associated with development of check patterns and interest calculations.

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

11.0 NON-COMPLIANCE

11.1 The provisions of 31 CFR Part 205.29 and 31 CFR Part 205.30 shall apply in cases of non-compliance with the
terms of this Agreement.

Page 15 of 20




Cabinet for Health and Family Services
Education and Workforce Development Cabinet
Transportation Cabinet

5.2 Entities that meet the definition of a Fiscal Agent per 31 CFR Part 205 shall be subject to the terms of this Agreement.
The following is a list of Fiscal Agents that administer funds under the programs listed in the Section 4.0 of this
Agreement:

JPMorgan Chase & Co 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children
6.0 FUNDING TECHNIQUES
6.1 General Terms

6.1.1 The State shall request Federal funds in accordance with the appropriate cut-off times shown in Exhibit | to ensure
funds will be received and credited to a State account by the times specified in the funding techniques. Exhibit | is
incorporated by reference herein.

6.1.2 The State shall schedule the receipt of Federal funds such that the funds are received and credited to a State
account in accordance with the clearance patterns specified in Exhibit II - List of State Clearance Patterns. Exhibit II is
incorporated by reference herein.

6.1.3 In instances where the receipt of 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 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 the day prior to the scheduled day.

6.1.4 Estimates and Reconciliation of Estimates:

Where estimated expenditures are used to determine the amount of the drawdown, the State will indicate in the terms of
the State unique funding technique how the estimated amount is determined and when and how the State will reconcile
the difference between the estimate and the State's actual expenditures.

6.1.5 Supplemental Funding:
Unless otherwise defined by program rules, Supplemental Funding is the award of additional funds to provide for an
increase in costs due to unforeseen circumstances.

The State will comply with all Federal program agency policies and procedures for requesting supplemental grant funding.

The State will comply with the following guidelines when requesting supplemental funding for the Medical Assistance
Program and associated administrative payments (CFDA 93.778):

The State must submit a revised Medicaid Program Budget Report (CMS-37) to request supplemental funding. The CMS
guidelines and instructions for completing the CMS-37 are provided in Section 2600F of the State Medicaid Manual
(SMM). The CMS/CO must receive the revised Form CMS-37 through the Medicaid Budget Expenditure
System/Children's Budget Expenditure System (MBES/CBES) no later than 10 calendar days before the end of the
quarter for which the supplemental grant award is being requested.

Page 3 of 20


4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on the Commonwealth's
most recent Single Audit, which for the purposes of this Agreement is for fiscal year ending 06/30/2016.

All major Federal assistance programs shall be covered by this Agreement, unless otherwise specified in section 4.4 of
this Agreement.

4.2 The State's threshold for major Federal assistance programs is $37,148,231.
The following programs meet or exceed the threshold and are not excluded in Section 4.4:

10.551 Supplemental Nutrition Assistance Program

10.553 School Breakfast Program

10.555 National School Lunch Program

10.557 Special Supplemental Nutrition Program for Women, Infants, and Children
10.558 Child and Adult Care Food Program

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program
17.225F Unemployment Insurance — Federal Benefit Account and Administrative Costs
17.225S Unemployment Insurance -- State Benefit Account

20.205 Highway Planning and Construction

84.010 Title | Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

84.126 Rehabilitation Services —- Vocational Rehabilitation Grants to States
93.558 Temporary Assistance for Needy Families

93.563 Child Support Enforcement

93.568 Low-Income Home Energy Assistance

93.575 Child Care and Development Block Grant

93.658 Foster Care -- Title |V-E

93.659 Adoption Assistance

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

96.001 Social Security -- Disability Insurance

4.3 The following programs fall below the State's threshold but have been required to be covered by Fiscal Service in
accordance with the non-compliance provisions of Subpart B of 31 CFR Part 205:

There are currently no programs listed for Section 4.3.

4.4 The following programs exceed the State's threshold but have been excluded from coverage for the reason indicated:
93.268 Immunization Grants --- Exclusion:Non-Cash

5.0 ENTITIES COVERED

5.1 State agencies and instrumentalities that meet the definition of a State per 31 CFR Part 205, shall be subject to the
terms of this Agreement. The following is a list of such entities that administer funds under the programs listed in Section
4.0 of this Agreement:

Page 2 of 20


7.10 The State shall follow the procedures of 31 CFR 205 if it has actual or constructive knowledge, at any time, that a
clearance pattern does not correspond to a program's clearance activity.

8.0 INTEREST CALCULATION METHODOLOGY
8.1 General Terms

8.1.1 The State and the Secretary agree that no interest liabilities will be incurred for transfers of funds made in
accordance with the procedures specified in section 6 of this Agreement where the following funding techniques are
applied:

Actual Clearance, ZBA - Same Day Payment
Average Clearance

8.1.2 The State shall maintain information on disbursements and receipts of funds to verify the implementation of any
funding technique and document interest liabilities.

For each disbursement, the State shall be able to identify:

(1) amount of the issuance

(2) date of issuance

(3) date Federal funds are received and credited to a State account

(4) amount of Federal funds received

(5) date funds were requested

8.2 Federal Interest Liabilities

8.2.1 A Federal interest liability shall accrue from the day the State pays out its own funds for program purposes to the
day Federal funds are credited to a State account. With regard to funds transferred out of the Federal Highway Trust
Fund, if a State does not bill at least weekly for current project costs, the Federal interest liability shall not accrue prior to
the day the State submits a request for funds.

8.2.2 The State shall use the following methad to calculate Federal interest liabilities:

Actual Activity:

For all transactions where the State pays out its own funds for program purposes prior to receiving Federal funds, the
State shall track each payment from the date it is paid out of a State account to the date Federal funds are subsequently
credited to a State account to cover that outlay. The Federal interest liability on each payment shall be based on the
difference in whole days between the two events. With Federal-State matching programs, interest shall be calculated on
the Federal percentage of the disbursement.

8.3 The Unemployment Trust Fund

8.3.1 The State shall use the following method to calculate State interest liabilities on funds withdrawn from the several
accounts in the Unemployment Trust Fund:

Federal and State Funds are Interest Neutral:

There are no interest earnings on funds withdrawn from the State account, as the State has implemented estimated
clearance, an interest-neutral funding technique, for such transfers. For UTF transfers that do not follow the technique
specified in section 6.2 and result in a positive balance of funds in a State account, the State's liability for interest on funds
withdrawn from its account in the UTF shall consist of the actual interest earnings of the benefit payment account on the
pro-rata share less the related banking costs attributed to such funds.

Page 13 of 20


12.0 AUTHORIZED SIGNATURES

William M. Landrum III

Secretary, Ei it
Signature: Date Signed:_2© tyes 201")

Date Submitted 03/27/2017

Corvelli A. McDaniel
Assistant Commissioner
Revenue Collections Management

Bureau of the Fiscal Service
U.S. Department of the vi

A . HA Date Signed: sli, 12

Signature:

Page 16 of 20