20.205 {Highway Planning and Department of 8,00 |GARVEE Bonds Pre-Issuance Grant 7 Days
Construction Transportation Anticipation Revenue
Vehicle (GARVEE) Bond
Repayment
84.010 | Title 1 Grants to Local Department of Education |95.0 /Payments to Local Pre-Issuance N/A
Educational Agencies Q Education Agencies
84.010 | Title | Grants to Local Department of Education {5.00 |Payroll and Other Pre-Issuance NIA
Educational Agencies Administrative Costs
84.027 |Special Education — Department of Education |5.00 |Payroll and Other Pre-Issuance N/A
Grants to States Administrative Costs
84.027 | Special Education -- Department of Education |95.0 |Payments to the School |Pre-Issuance NIA
Grants to States te) Districts and Contractors
84.126 |Rehabilitation Services -- | Department of Economic |55.0 |Payments to Vendors Average Clearance 6 Days
Vocational Rehabilitation | Security [) and Service Providers
Grants to States
84.126 |Rehabilitation Services -- | Department of Economic |45.0 |Payroll and Other Bi-weekly Estimated ‘0 Days
Vocational Rehabilitation | Security 0 Operating Costs Allocation
Grants to States
93.558 | Temporary Assistance for} Department of Economic |73.6 |Payments to Actual Clearance, ZBA- |0 Days
Needy Families Security 7 Beneficiaries Same Day Payment
93.558 | Temporary Assistance for} Department of Economic |10.7 |Payments to Average Clearance 5 Days
Needy Families Security 3 Beneficiaries-non-EBT
93.558 | Temporary Assistance for|Department of Economic |15.6 |Payroll and Other Bi-weekly Estimated 0 Days
Needy Families Security 0 Operating Costs Allocation
93.596 | Child Care Mandatory Department of Economic |97.2 |Payments to Vendors Average Clearance 6 Days
and Matching Funds of | Security 8 and Service Providers
the Child Care and
Development Fund
93.586 {Child Care Mandatory Department of Economic {2.72 |Payroll and Other Bi-weekly Estimated 0 Days
and Matching Funds of —|Security Operating Costs Allocation
the Child Care and
Development Fund
93.658 |Foster Care — Title 1V-E /Department of Child 66.5 |Payments to Vendors. Average Clearance 3 Days
Safety 7 and Service Providers
93.658 Foster Care — Title 1V-E |Department of Child 33.4 |Payroll and Other Bi-weekly Estimated 0 Days
Safety 3 Operating Costs Allocation
93.659 |Adoption Assistance Department of Child 89.1 | Payments to Vendors Average Ciearance 4 Days
Safety 5 and Service Providers
93.659 |Adoption Assistance Department of Child 10.8 |Payroll and Other Bi-weekly Estimated 0 Days
Safety 5 Operating Costs Allocation
93.767 | Children's Health Arizona Health Care Cost|0.23 | Payroll Costs Actual Clearance, ZBA- |0 Days
Insurance Program Containment System Same Day Payment
93.767 | Children’s Health Arizona Health Care Cost|99.7 |Programmatic payments |Pre-Issuance NIA
Insurance Program Containment System 7 to AHCCCS health plans
lor providers and non-
payroll administrative
costs
93.778 |Medical Assistance Arizona Health Care Cost|1.51 |Payroll Costs. Actual Clearance, ZBA- |0 Days
Program Containment System Same Day Payment
93.778 Medical Assistance Arizona Health Care Cost}98.4 |Programmatic payments |Pre-Issuance NIA
Program ‘Containment System 9 to AHCCCS health plans
or providers and non-
payroll administrative
costs

| 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 20 of 21


Actual Clearance, ZBA - Same Day Payment

Average Clearance

Bi-weekly Estimated Allocation

Composite Average Day of Clearance (ADOT)

Modified Zero-Balance Accounting (WIC Food Vouchers)

Pre-Issuance Grant Anticipation Revenue Vehicle (GARVEE) Bond Repayment

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 shail use the following method to calculate Federal interest liabilities:

Where an interest-neutral funding technique is being applied to a program, the State will use accepted methods to
determine potential interest charges resulting from non-compliance or late Federal funding. Where Average Clearance is
being applied, and the State pays out its own funds for program purposes prior to receiving Federal funds, a Federal
interest liability will be calculated from the average date of clearance to the date Federal funds are credited to a State
account,

8.3 The Unemployment Trust Fund

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

The State's interest liability on funds withdrawn from the State Account in the Unemployment Trust Fund shall consist of
actual interest earnings attributable to such funds while held in a State account, less banking costs associated with such
funds. This interest shall be deposited in the State's account in the Unemployment Trust Fund. For funds withdrawn from
the Federal Benefit Accounts in the Unemployment Trust Fund, the State's interest liability shall be based on the average
daily balance of such funds, multiplied by the 13-week Treasury Bill Rate specified in 31 CFR Part 205.

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.

Page 14 of 21


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.

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 pattern 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.

Pre-lssuance

The State shall request funds such that they are deposited in a State account not more than three business days prior to
the day the State makes a disbursement. 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 the amount the State expects to disburse. This
funding technique is not 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.

Bi-weekly Estimated Allocation

The State shall request funds at bi-weekly intervals, such that they are deposited in a State account on the dollar-
weighted average day of clearance for payroll payments, as specified in section 7.3. The request shall be made in
accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The amount of the request for each bi-
weekly period shall be an estimate based on the related cost allocation of the last three months for which an allocation
has been performed. The bi-weekly requests shall also be adjusted for the difference between estimated and actual
allocated expenditure amounts following the actual allocation. This funding technique is interest neutral.

Page 5 of 21


4. 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: /- A Bf Ll a

Printed Name: D. ( lay K Var indge.

Certifying Signature: i ~~

we: State, Compbe ler

Page 21 of 21


Exhibit | - Funds Request and Receipt Times Schedule
State of Arizona

ues!

ACH

Agriculture-FNS. 11:59 PM iday
Agriculture-FNS Fedwire 5:45 PM O 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. 0 day
Education ACH 3:00 PM 1 day
Education Fedwire 2:00 PM. 0 day
Energy ACH 4:00 PM. 1day
Energy Fedwire 3:00 PM 0 day
HHS ACH 6:30 PM. iday
HHS: Fedwire 3:00 PM. QO day
HUD ACH 5:30 PM 2 days
HUD. Fedwire 3:00 PM 0 day
Interior-FWS ACH 41:59 PM. 4 day
Interior-FWS_ Fedwire §:45 PM. 0 day
Interior-OSM. ACH 3:00 PM i day
Interior-OSM Fedwire 5:45 PM 0 day
Justice ACH 11:00 PM 6 days
Justice Fedwire 2:00 PM. 2 days
Labor-Non-UTF ACH 3:00 PM dday
Labor-UTF ACH 3:00 PM 1 day
Labor-UTF. Fedwire 3:00 PM. 0 day
National Science Foundation (NSF) ACH. 8:00 PM day
National Science Foundation (NSF) Fedwire §:45 PM 0 day
Social Security Administration |ACH 11:59 PM. iday
Social Security Administration Fedwire 5:45 PM 0 day
Transportation (FAA) ACH 2:00 PM. 4 day
‘Transportation (FHWA) ACH 12:00 PM 3 days
Transportation (FHWA) Fedwire 12:00 PM 0 day
Transportation (FTA) ACH 2:00 PM 4 day
Veterans Administration ACH 42:00 PM 3 days

Page 18 of 21


Average Day of Clearance: 0 Days

93.558 Temporary Assistance for Needy Families
Recipient: Department of Economic Security

% of Funds Agency Receives: 73.67

Component: Payments to Beneficiaries

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

Recipient: Department of Economic Security

% of Funds Agency Receives: 10.73
Component: Payments to Beneficiaries-non-EBT
Technique: Average Clearance

Average Day of Clearance: 5 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 15.60
Component: Payroll and Other Operating Costs
Technique: Bi-weekly Estimated Allocation
Average Day of Clearance: 0 Days

93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund

Recipient: Department of Economic Security

% of Funds Agency Receives: 97.28

Component: Payments to Vendors and Service Providers
Technique: Average Clearance

Average Day of Clearance: 6 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 2.72
Component: Payroll and Other Operating Costs
Technique: Bi-weekly Estimated Allocation
Average Day of Clearance: 0 Days

93.658 Foster Care -- Title IV-E

Recipient: Department of Child Safety

% of Funds Agency Receives: 66.57

Component: Payments to Vendors and Service Providers
Technique: Average Clearance

Average Day of Clearance: 3 Days

Recipient: Department of Child Safety

% of Funds Agency Receives: 33.43
Component: Payroll and Other Operating Costs
Technique: Bi-weekly Estimated Allocation
Average Day of Clearance: 0 Days

Page 10 of 24


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

10.553 Schoo! Breakfast Program
Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Payments to Local Agencies
Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 99.00

Component: Payments to School Districts and Charters
Technique: Pre-lssuance

Average Day of Clearance: N/A

10.555 National Schoo! Lunch Program
Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Payments to Local Agencies
Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 99.00
Component: Payments to the Schoo! Districts
Technique: Pre-lssuance

Average Day of Clearance: N/A

40.557 Special Supplemental Nutrition Program for Women, Infants, and Children
Recipient: Department of Health Services

% of Funds Agency Receives: 52.74

Component: Food Voucher Redemption

Technique: Modified Zero-Balance Accounting (WIC Food Vouchers)

Average Day of Clearance: 0 Days

Recipient: Department of Health Services

% of Funds Agency Receives: 24.62

Component: Payroll and Other Administrative Costs
Technique: Pre-issuance

Average Day of Clearance: N/A

Recipient: Department of Health Services
% of Funds Agency Receives: 22.64
Component: WIC Formula Rebate
Technique: WIC Formula Rebates

Page 7 of 21


Composite Average Day of Clearance (ADOT)

The Arizona Department of Transportation (ADOT) shall bill FHWA weekly for all major contractor and consultant
payments, miscellaneous supplies and service payments, and payroll payments. The funds shall be requested such that
they are deposited in a State account on the average day of clearance for the major contractor payment component which
accounts for approximately 85% of all program dollars expended by ADOT. Per Federal Regulations, Federal interest
may be calculated from the last day of the last billing if billings are weekly. The request for funds 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 amount of the Federal share of the disbursement per the specific Federal Project Agreement. This funding technique
is interest neutral.

Modified Zero-Balance Accounting (WiC Food Vouchers)

The State shall request the actual amount paid by the State's fiscal agent, one day in arrears (to be deposited in a State
account two days after payment by the State's fiscal agent) for the remainder of the State's fiscal year. For days when the
State's fiscal agent will be redeeming food vouchers when the State is unable to make the appropriate request of Federal
funds (EG; State holidays), the State shall draw, one business day prior, the normal redemption amount in arrears plus an
amount equal to the estimated average daily food draft clearance amount. Any difference between the estimated amount
and the actual redeemed amount shall be used to adjust the next request of Federal funds. No interest liabilities shall be
incurred nor calculated when this Modified Zero-Balance Accounting Method is properly applied. This funding technique
is interest neutrai.

Pre-issuance Grant Anticipation Revenue Vehicle (GARVEE) Bond Repayment

The State of Arizona will request funds for the repayment of GARVEE bonds issued. Funds may be requested up to 7
business days in advance of the bond payment. This early drawdown has been approved by Fiscal Service and Dept of
Transportation for program purposes. Funds will be requested for payments of principal and interest on the bonds. This
funding technique is interest neutral.

WIC Formula Rebates

The State shall deposit the rebates in a State account and use them to offset the subsequent draw downs for food
voucher redemptions until another draw down is necessary to meet redemption demands. Interest earned on rebate
money deposited in State accounts shall be used for program purposes. No other liability shall be incurred using this
funding technique. This funding technique is not interest neutral.

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: Department of Economic Security

% of Funds Agency Receives: 100.00

Component: Payment to Beneficiaries

Page 6 of 21


Exhibit ll - State of Arizona

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

Supplemental Nutrition {Department of Economic |100. |Payment to Beneficiaries |Actual Clearance, ZBA- |0 Days
Assistance Program Security 00 ‘Same Day Payment

10.553 | School Breakfast Department of Education |99.0 |Payments to School Pre-Issuance NIA
Program 0 Districts and Charters

10.553 | School Breakfast Department of Education |1.00 |Payments to Local Pre-issuance NIA
Program Agencies

10.555 |National School Lunch [Department of Education |1.00 |Payments to Local Pre-Issuance N/A
Program Agencies

40.555 |National School Lunch {Department of Education |99.0 |Payments to the School |Pre-Issuance NIA
Program i) Districts.

10.557 | Special Supplemental Department of Health 22.6 |WIC Formula Rebate WIC Formula Rebates N/A
Nutrition Program for Services 4
Women, Infants, and
Children

10.557 |Special Supplemental Department of Health 24.6 |Payroll and Other Pre-Issuance N/A
Nutrition Program for Services 2 Administrative Costs
Women, Infants, and
Children

10.557 |Special Supplemental Department of Health 52.7 |Food Voucher Modified Zero-Balance 0 Days
Nutrition Program for Services 4 Redemption Accounting (WIC Food
Women, Infants, and Vouchers)
Children

10.561 |State Administrative Department of Economic |86.0 | Payroll and Other Average Clearance 3 Days
Matching Grants for the | Security i) Administrative Costs
Supplemental Nutrition
Assistance Program

10.561 |State Administrative Department of Health 14.0 {Payroll and Other Average Clearance 2 Days
Matching Grants for the |Services 0 Administrative Costs
Supplemental Nutrition
Assistance Program

17.225F |Unemployment Insurance| Department of Economic |87.7 |Payments to Actual Clearance, ZBA- |0 Days
-- Federal Benefit Security 7 Beneficiaries Same Day Payment
Account and
Administrative Costs

17.225F |Unemployment Insurance Department of Economic {2.22 |Payments to Pre-Issuance N/A
|-- Federal Benefit Security Beneficiaries
Account and
Administrative Costs

17.225F |Unemployment Insurance Deparment of Economic |10.0 | Payroll and Other Bi-weekly Estimated 0 Days
|-- Federal Benefit Security 4 Administrative Costs Allocation
Account and
Administrative Costs

17.225S |Unemployment Insurance Department of Economic |100. |Payments to Actual Clearance, ZBA- |0 Days
-- State Benefit Account | Security 00 Beneficiaries from the Same Day Payment

Unemployment Trust
Fund (UTF)

20.205 | Highway Planning and Department of 92.0 {All other program costs {Composite Average Day |3 Days

Construction Transportation 0 of Clearance (ADOT)

Page 19 of 21


Technique: Composite Average Day of Clearance (ADOT)
Average Day of Clearance: 3 Days

Recipient: Department of Transportation

% of Funds Agency Receives: 8.00

Component: GARVEE Bonds

Technique: Pre-Issuance Grant Anticipation Revenue Vehicle (GARVEE) Bond Repayment
Average Day of Clearance: 7 Days

84.010 Title | Grants to Local Educational Agencies
Recipient: Department of Education

% of Funds Agency Receives: 95.00

Component: Payments to Local Education Agencies
Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 5.00

Component: Payroll and Other Administrative Costs
Technique: Pre-Issuance

Average Day of Clearance: N/A

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 95.00

Component: Payments to the Schoo! Districts and Contractors
Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 5.00

Component: Payroll and Other Administrative Costs
Technique: Pre-Issuance

Average Day of Clearance: N/A

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States
Recipient: Department of Economic Security

% of Funds Agency Receives: 55.00

Component: Payments to Vendors and Service Providers

Technique: Average Clearance

Average Day of Clearance: 6 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 45.00
Component: Payroll and Other Operating Costs
Technique: Bi-weekly Estimated Allocation

Page 9 of 21


Cash Management Improvement Act Agreement
between
The State of Arizona
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 State of Arizona
(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 State of Arizona shall be the State Comptroller, Department of Administration, State
of Arizona in all matters concerning 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 concerning 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 07/01/2016 and shall remain in effect until terminated.

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 patterns, and methods for calculating interest liabilities to
be used by the State.

Page 1 of 21


Department of Juvenile Corrections (10.555)
Department of Administration (17.225)

Arizona State Land Department (20.205)
Arizona State Parks (20.205)

Department of Administration (20.205)
Department of Game and Fish (20.205)
Department of Public Safety (20.205)

Arizona Schools for the Deaf and Blind (84.010)
Department of Corrections (84.010)

Arizona Supreme Court (84.027)

Arizona Schools for the Deaf and Blind (84.027)
Department of Corrections (84.027)
Department of Juvenile Corrections (84.027)
Department of Health Services (84.027)
Arizona Supreme Court (93.658)

7.0 CLEARANCE PATTERNS

7.1 The State shall develop separate clearance patterns for each of the following:
The programs as described in section 4.2 that meet or exceed the threshold.

7.2 The following shall develop the State's clearance patterns:

Department of Child Safety
Department of Health Services
Department of Economic Security
Department of Transportation
Department of Education

7.3 The sources of data the State shall use when developing its clearance patterns are as follows:

The average clearance days are derived from the verification of clearance patterns done in April 2015 (84.126
Rehabilitation Services -- Vocational Rehabilitation Grants to States) and June 2016 (10.561 State Administrative
Matching Grants for the Supplemental Nutrition Assistance Program, 93.558 Temporary Assistance for Needy Families,
93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund, 93.658 Foster Care-Title IV-
E and 93.659 Adoption Assistance) using an AFIS report and sampling transactions.

In February of 2007, the State applied the Statistically Valid Clearance Patterns developed by FMS (now Fiscal Service)
to determine that the doliar-weighted average clearance day of payroll is Thursday of the week when payroll is disbursed.
This clearance day has been determined as follows:

The State has documented that approximately 99% of ail current payrolls are paid by direct deposit. A single warrant is
issued to the Bank of America to cover all direct deposit payroll, and this warrant is redeemed on Thursday. Most of the
remaining warrants are hand-delivered to employees on Thursday, with the remainder mailed on Thursday. Therefore,
when applying funding techniques that require Federal funds to be deposited in a State account on the average clearance
day of payroll, the State shall request funds to be received by the State on Thursday of the payroll week.

Page 12 of 21


93.659 Adoption Assistance

Recipient: Department of Child Safety

% of Funds Agency Receives: 89.15

Component: Payments to Vendors and Service Providers
Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: Department of Child Safety

% of Funds Agency Receives: 10.85
Component: Payroll and Other Operating Costs
Technique: Bi-weekly Estimated Allocation
Average Day of Clearance: 0 Days

93.767 Children's Health Insurance Program

Recipient: Arizona Health Care Cost Containment System
% of Funds Agency Receives: 0.23

Component: Payroll Costs

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

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 99.77

Component: Programmatic payments to AHCCCS health plans or providers and non-payroll administrative costs
Technique: Pre-Issuance

Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Arizona Health Care Cost Containment System
% of Funds Agency Receives: 1.51

Component: Payroll Costs

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

Recipient: Arizona Health Care Cost Containment System
% of Funds Agency Receives: 98.49
Component: Programmatic payments to AHCCCS health plans or providers and non-payroll administrative costs

Technique: Pre-Issuance
Average Day of Clearance: N/A

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:

Department of Corrections (10.553)

Department of Juvenile Corrections (10.553)

Arizona State Schools for the Deaf and Blind (10.555)
Department of Corrections (10,555)

Page 11 of 21


Average Day of Clearance: N/A

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program
Recipient: Department of Health Services

% of Funds Agency Receives: 14.00

Component: Payroll and Other Administrative Costs

Technique: Average Clearance

Average Day of Clearance: 2 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 86.00

Component: Payroll and Other Administrative Costs
Technique: Average Clearance

Average Day of Clearance: 3 Days

17.225F Unemployment Insurance -- Federai Benefit Account and Administrative Costs
Recipient: Department of Economic Security

% of Funds Agency Receives: 87.77

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 10.01

Component: Payroll and Other Administrative Costs
Technique: Bi-weekly Estimated Allocation
Average Day of Clearance: 0 Days

Recipient: Department of Economic Security
% of Funds Agency Receives: 2.22
Component: Payments to Beneficiaries
Technique: Pre-Issuance

Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Economic Security

% of Funds Agency Receives: 100.00

Component: Payments to Beneficiaries from the Unemployment Trust Fund (UTF)
Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction
Recipient: Department of Transportation

% of Funds Agency Receives: 92.00
Component: All other program costs

Page 8 of 21




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.

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
review the supporting documentation. If the request is properly justified, so !ong 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

Page 4 of 21


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:

For programs to which an interest-neutral funding technique is applied (as identified in Section 8.1.1), the State's 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.

For programs to which Pre-issuance Funding is being applied, the State's interest liability will be captured in the State's
calculation of interest for each program. Refunds will be included as deposits to the program's account, and subsequent
payments from the account will include the amounts of refunds deposited.

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 Clearance:
To determine the total time Federal funds are held, the State shall measure the time between the date Federal funds are
received and credit to a State's account and the date those funds are debited from the State's account.

8.6.2.2 Source of Data

Central Accounting System:
The time period from Deposit to clearance shall be determined from information captured by the Arizona Financial
Information System (AFIS).

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.

Page 15 of 24


12.0 AUTHORIZED SIGNATURES

D. Clark Partridge
State Comptroller
State of Arizona

Signature:
Date Submitted 11/18/2016

Corvelli A. McDaniel
Assistant Commissioner
Revenue Collections Management
Bureau of the Fiscal Service /
US. Department of the Tredsury

Signature: pri)

Nn

Date Signed:

f- PL Yb,

A wot

al

Page 17 of 21


Department of Health Services
Department of Transportation

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:

FSMC (Financial Services Management Corporation) 10.557 Special Supplemental Nutrition Program for Women, Infants,
and Children

JP Morgan 17.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs

JP Morgan 17.225S Unemployment Insurance -- State Benefit Account

JP Morgan Electronic Financial Services Inc. 10.551 Supplemental Nutrition Assistance Program

5.3 When payments are made from one State agency to a second State agency using the capitated rate payment method
approved by the Federal grantor agency or a fee for service payment, the funds shall be considered paid out for program
purposes at the time they are expended by the first State agency. Current examples of this are capitated and fee for
service payments made from the Arizona Health Care Cost Containment System (AHCCCS) to the Department of
Economic Security as negotiated with the Centers for Medicare and Medicaid Services (CMS).

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 Il - 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

Page 3 of 21


4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on the State's Single
Audit Report for fiscal year ending 06/30/2015.

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 $60,000,000.
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

10.561 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

93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund
93.658 Foster Care -- Title IV-E

93.659 Adoption Assistance

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

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:

Arizona Health Care Cost Containment System
Department of Child Safety

Department of Economic Security

Department of Education

Page 2 of 21


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

When developing each clearance pattern, the State shall track at least 99% of the funds disbursed, from issuance to
clearance, for a period of at least three months.

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 shail 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:

No exceptions.

The State shall also adjust each clearance pattern to reflect:

No additional adjustments.

7.8 Each of the State's clearance patterns is calculated in business 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.

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
8.0.1 Interest will be calculated consistent with the requirements of CMIA.
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:

Page 13 of 21


8.6.2.4 Calculation Procedure

Average Daily Balance:
|= ADB x R, 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
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
modernizing 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:

In addition to the costs stated in section 10.1, the costs associated with maintenance and improvement of current reports
used to calculate interest and document clearance patterns. The State may also develop new reports to perform these
tasks if necessary.

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

411.0 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 16 of 21