Recipient: Department of Heaith

% of Funds Agency Receives: 11.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 4.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.959 Block Grants for Prevention and Treatment of Substance Abuse
Recipient: Administration of Mental Health and Addiction Services

% of Funds Agency Receives: 2.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Administration of Mental Health and Addiction Services
% of Funds Agency Receives: 21,00

Component: Operational Costs.

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Administration of Mental Health and Addiction Services
% of Funds Agency Receives: 38.00

Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Administration of Mental Health and Addiction Services
% of Funds Agency Receives: 39.00

Component: Payments to Service Providers

Technique: Average Clearance

Average Day of Clearance: 1 Day

93.994 Maternal and Child Heaith Services Block Grant to the States
Recipient: Department of Health

% of Funds Agency Receives: 5.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Department of Health
% of Funds Agency Receives: 17.00

Page 20 of 34


% of Funds Agency Receives: 3.00
Component: Transportation Expenses
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

84.367 Improving Teacher Quality State Grants

Recipient: Department of Education

% of Funds Agency Receives: 5.00
Component: Administrative Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

‘% of Funds Agency Receives: 1.00
Component: Indirect Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 20.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 74.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

84.377 School Improvement Grants.
Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Other Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 98.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education
% of Funds Agency Receives: 1.00
Component: Payroll

Page 14 of 34


shall consist of the actual interest earnings attributable to such funds less the related banking costs attributed to such
funds.

The State shall determine the average daily cash balance of its unemployment compensation benefit payment account for
its fiscal year. The State shall calculate the average daily cash balance of Federal funds by multiplying the Federal % by
the average daily cash balance of the benefit payment account on the whole. The State's liability for interest on funds
withdrawn from the FECA and EUCA (and any other benefit accounts of Federal funds in the UTF from which the State
draws funds) shall be the average daily cash balance of Federal funds multiplied by the annualized rate equal to the
average equivalent yields of 13-week Treasury bills auctioned during the State's fiscal year.

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 shail 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:

With programs to which applicable interest neutral funding techniques 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. This shall be calculated as the average number of days
between drawdown deposits, which is determined 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 applicable non-interest neutral funding techniques shall be applied, the State shall also calculate
the time refunds are in a State account by comparing the date the refund is offset against a subsequent deposit of Federal
funds and the date the refund is paid out for program purposes. This period will be measured for each program in
accordance with the State method for calculating interest under pre-issuance funding, and will be applied independently to
the amount of refunds under each program to calculate the interest on refunds.

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.

Page 24 of 34


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 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.

Actual Clearance, ZBA - ACH

The State shall request funds such that they are deposited by ACH in a State account on the settlement date of payments
issued by the State. 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 amount of funds that clear the State's account on the settlement
date. This funding technique is interest neutral.

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 1. 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-Issuance

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 shail be the amount the State expects to disburse. This
funding technique Is not interest neutral.

Page 5 of 34



Component: Other Direct Cost
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 1.00
Component: Payment to Service Proniders
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 77.00

Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:
None

7.0 CLEARANCE PATTERNS

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

Group of Similar Programs - Composite clearance pattern for the administrative
costs and payroll components of the following group of programs:

CFDA = Program
14.228 Community Development Block Grants State's Program
14.850 Public and Indian Housing

Group of Similar Programs - Composite clearance pattern for the payroll costs of the
following programs:

CFDA = Program

10.557 Special Supplemental Nutrition Program for Women, Infants and Children
93.778 Medical Assistance Program (Medicaid)
93.779 Children Health Insurance Program

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

Banco Popular de Puerto Rico

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

1. PRIFAS - The Central Accounting System
2. Information from agencies outside of PRIFAS

Page 21 of 34



12.0 AUTHORIZED SIGNATURES

Ratil Maidonado Gautier, CPA
Secretary of the Treasury
Commonwealth of Puerto Rico

Signature: ; Date Signed: a | ig la

Date Submitted 02/01/2017

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management
Bureau of the Fiscal Service .

U.S. Department of the Treasury

fi fh Sy
Signature: CARY (oe A. foe Up Ea Date Signed:

Page 27 of 34



Actual Clearance, ZBA - ACH

Actual Clearance, ZBA - Same Day Payment
Average Clearance

Fixed Administrative Allowances - Bi-Weekly Payroll
indirect Cost Rates - Estimated Base

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 method to calculate Federal interest liabilities:

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:

The State shall use the following methodology to calculate State interest liabilities on funds withdrawn from the several
accounts in the UTF under the Unemployment Insurance program.

Based on statements provided by its financial institution, or other appropriate source, the State shall determine the actual
interest earnings and the related banking costs attributable to funds withdrawn from its account in the UTF.

At the end of the State's fiscal year, the State shall calculate the percentage of its total unemployment compensation
expenditures for (1) funds withdrawn from the State account in the UTF, or the State %, and (2) funds withdrawn from the
Federal Employees Compensation Account (FECA) and the Extended Unempioyment Compensation Account (EUCA)
and any other accounts of Federal funds in the UTF, or the Federal %.

3

The State shail calculate the actual interest earnings and the related banking costs attributable to funds withdrawn from
the State account in the UTF by multiplying the State % by the amount of the actual interest earnings and the related
banking costs of the account as a whole. The State's liability for interest on funds withdrawn from its account in the UTF

Page 23 of 34



Recipient: Governor's Office

% of Funds Agency Receives: 9.00
Component: Other Direct Cost
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and Integrated Development
% of Funds Agency Receives: 47.00

Component: Paymento to Service Providers

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and Integrated Development
% of Funds Agency Receives: 1.50

Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Governor's Office

% of Funds Agency Receives: 33.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.778 Medical Assistance Program
Recipient: Department of Health

% of Funds Agency Receives: 5.00
Component: Administrative Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives; 90,00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 5.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.779 Centers for Medicare and Medicaid Services (CMS) Research, Demonstrations and Evaluations
Recipient: Department of Health
% of Funds Agency Receives: 9.00

Page 18 of 34


Technique: Average Clearance
Average Day of Clearance: 2 Days

Recipient: Office of the Commissioner for Municipal Affairs

% of Funds Agency Receives: 12.00
Component: Administrative Costs
Technique: Average Clearance
Average Day of Clearance: 3 Days

Recipient: Office of the Commissioner for Municipal Affairs

% of Funds Agency Receives: 51.00
Component: Payment to Beneficiaries
Technique: Average Clearance
Average Day of Clearance: 3 Days

14.850 Public and Indian Housing
Recipient: Public Housing Administration
% of Funds Agency Receives: 1.00
Component: Payroll

Technique: Average Clearance

Average Day of Clearance: 2 Days

Recipient: Public Housing Administration
% of Funds Agency Receives: 3.00
Component: Administrative Costs
Technique: Average Clearance

Average Day of Clearance: 3 Days

Recipient: Public Housing Administration
% of Funds Agency Receives: 96.00
Component: Payment to Beneficiaries
Technique: Average Clearance

Average Day of Clearance: 3 Days

14.871 Section 8 Housing Choice Vouchers
Recipient: Department of Housing

% of Funds Agency Receives: 4.00
Component: Administrative Cost
Technique: Pre-Issuance - Modified
Average Day of Clearance: N/A

Recipient: Department of Housing

% of Funds Agency Recelves: 96.00
Component: Payment to Beneficiaries
Technique: Pre-lssuance - Modified
Average Day of Clearance: N/A

Page 10 of 34


SS Z iy
93.779 . |Centers for Medicare and |Department of Health 9.00 |Administrative Cost Actual Clearance, ZBA- |1 Day
Medicaid Services (CMS) ACH
Research,
Demonstrations and
Evaluations
93.779 |Centers for Medicare and {Department of Health 9.00 |Payrolt Actual Clearance, ZBA- |1 Day
Medicaid Services (CMS) ACH
Research,
Demonstrations and
Evaluations
93.779 |Centers for Medicare and | Department of Health 39.0 |Payment to Service ‘Actual Clearance, ZBA- |1 Day
Medicaid Services (CMS) 0 Providers ACH
Research,
Demonstrations and
Evaluations
93.779 |Centers for Medicare and |Department of Health 39.0 |Payment to Beneficiaries |Actual Clearance, ZBA- |1 Day
Medicaid Services (CMS) 0 ACH
Research,
Demonstrations and
Evaluations
93.779 |Centers for Medicare and |Puerto Rico Ombudsman |4.00 |Payment to Service Actual Clearance, ZBA - .|1 Day
Medicaid Services (CMS) | Office for the Elderly Providers. ACH
Research,
Demonstrations and
Evaluations
93.917 |HIV Care Formula Grants | Department of Health 4.00 {Administrative Costs Actual Clearance, ZBA- |1 Day
93.917 HIV Care Formula Grants | Department of Health 1.00 | Indirect Costs Aotual Clearance, ZBA- |1 Day
ACI
93.917 | HIV Care Formula Grants | Department of Health 4.00 | Payroll potual Clearance, ZBA- |1 Day
Cl
93.917 | HIV Care Formula Grants |Department of Health 11.0 |Payment to Service Actual Clearance, ZBA~- {1 Day
0 Providers ACH.
93.917 |HIV Care Formula Grants | Department of Health 63.0 Direct Services Actual Clearance, ZBA~- |1 Day
(ACH
93.959 |Block Grants for Administration of Mental |21.0 | Operational Costs Actual Clearance, ZBA- |1 Day
Prevention and Health and Addiction 0 ACH
‘Treatment of Substance | Services
Abuse
93.959 {Block Grants for Administration of Mental 38.0 {Payroll ‘Actual Clearance, ZBA- |1 Day
Prevention and Health and Addiction 0 ACH
Treatment of Substance | Services
Abuse
93.959 _ |Block Grants for Administration of Mental |2.00 |Administrative Costs Actual Clearance, ZBA- |1 Day
Prevention and Health and Addiction ACH
Treatment of Substance {Services
Abuse
93,959 |Block Grants for Administration of Mental |39.0 |Payments to Service Average Clearance 1 Day
Prevention and Health and Addiction 0 Providers
Treatment of Substance |Services
Abuse
93.994 |Maternal and Child Department of Health 5.00 |Administrative Costs Actual Clearance, ZBA- |1 Day
Health Services Block ACH
Grant to the States
93.994 | Maternal and Child Department of Health 77.0 |Payroll Actual Clearance, ZBA- |1 Day
Health Services Block 0 ACH
Grant to the States
93.994 |Maternal and Child Department of Health 1.00 |Payment to Service Actual Clearance, ZBA- |1 Day
Health Services Block Proniders ACH
Grant to the States
93.994 [Maternal and Child Department of Health 17.0 Other Direct Cost Actual Clearance, ZBA- |1 Day
Health Services Block 0 ACH

Grant to the States

Page 33 of 34



:

12.401 {National Guard Military {National Guard 15.0 |Other Expenses Actual Clearance, ZBA- |1 Day
Operations and 0 ACI
Maintenance (O&M)
Projects

12.401 |National Guard Military | National Guard 16.0 |Professional Services ‘Actual Clearance, ZBA- |1 Day
Operations and 0 ACH
Maintenance (O&M)
Projects

12.401 |Nationai Guard Military | National Guard 14.0 {Purchased Services Actual Clearance, ZBA- |1 Day
Operations and 0 ACH
Maintenance (O&M)
Projects

12.401 |National Guard Military | National Guard 20.0 |Facilities and Services jActual Clearance, ZBA- |1 Day
Operations and 0 Payment ACH
Maintenance (O&M)
Projects

12.401 [National Guard Military |National Guard 28.0 | Payroll Actual Clearance, ZBA- | 1 Day
Operations and 0 ACH
Maintenance (O&M)
Projects

14.228 |Community Development | Office of the 51.0 |Payment to Beneficiaries |Average Clearance 3 Days
Block Grants/State’s Commissioner for 0
Program Municipal Affairs

14.228 |Community Development | Office of the 37.0 | Payroll Average Clearance 2 Days
Block Grants/State's Commissioner for 0
Program Municipal Affairs

14.228 ;Community Development | Office of the 12.0 |Administrative Costs Average Clearance 3 Days
Block Grants/State's Commissioner for 0
Program Municipal Affairs

14.850 {Public and indian Public Housing 3.00 jAdministrative Costs Average Clearance 3 Days
Housing Administration

14.850 | Public and Indian Public Housing 96.0 |Payment to Beneficiaries |Average Clearance 3 Days
Housing Administration 0

14.850 | Public and Indian Public Housing 1.00 {Payroll Average Clearance 2 Days
Housing Administration

14,871 |Section 8 Housing Department of Housing {96.0 |Payment to Beneficiaries |Pre-Issuance - Modified |N/A
Choice Vouchers 0

14.871 | Section 8 Housing Department of Housing {4.00 |Administrative Cost Pre-Issuance - Modified |N/A
Choice Vouchers

14.872 | Public Housing Capital Public Housing 96.0 |Payment to Beneficiaries | Average Clearance 3 Days
Fund Administration 0

14.872 | Public Housing Capital Public Housing 3.00 |Administrative Costs Average Clearance 3 Days
Fund Administration

14.872 | Public Housing Capital | Public Housing 1,00 |Payroll Average Clearance 2 Days
Fund Administration

17.225F |Unemployment Insurance | Department of Labor and |75.0 {Payment to Beneficiaries-| Actual Clearance, ZBA- |0 Days
|-- Federal Benefit Human Resources 0 FECA and EUCA Same Day Payment
Account and Accounts
Administrative Costs.

17.225F {Unemployment Insurance |Department of Labor and |24.0 jAdministrative Cosis Fixed Administrative 3 Days
-- Federal Benefit Human Resources 0 (Including Payroll) Allowances - Bi-Weekly
Account and Payroll
Administrative Costs

17,225F |Unemployment insurance |Department of Labor and |1.00 [indirect Costs Indirect Cost Rates - 3 Days
-- Federal Benefit Human Resources Estimated Base
Account and
Administrative Costs

17.2258 |Unemployment Insurance |Department of Labor and |100. |Payment to Beneficiaries-|Pre-Issuance NIA
-- State Benefit Account_|Human Resources 00_|State Account

84.010 | Title i Grants to Local Department of Education |4.00 |Administrative Costs Actual Clearance, ZBA- |1 Day
Educational Agencies ACH

84.010 | Title 1 Grants to Local Department of Education }61.0 |Payroll Actua! Clearance, ZBA~ |1 Day
Educational Agencies 0 ACH

Page 30 of 34



Recipient: Department of Education

% of Funds Agency Receives: 20.00
Component: Other Direct Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 40.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 20.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

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

% of Funds Agency Receives: 25.00

Component: Payment to Service Providers

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 75.00

Component: Administrative Costs (including Payroll)
Technique: Fixed Administrative Allowances - Bi-Weekly Payroll
Average Day of Clearance: 1 Day

10.558 Child and Adult Care Food Program
Recipient: Department of Education

% of Funds Agency Receives: 100.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

40.559 Summer Food Service Program for Children
Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Department of Education

Page 7 of 34



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.

Fixed Administrative Allowances - Bi-Weekly Payroll

The State shall request funds such that one-sixth (or one-seventh) of the quarterly administrative allowance is deposited
on the dollar-weighted average date of clearance for payroll payments, as specified in the appropriate clearance pattern in
Exhibit ll. The request shall be made in accordance with the appropriate Federal agency cut-off time specified in Exhibit 1.
This funding technique is interest neutral.

Indirect Cost Rates - Estimated Base

The State shall request funds once a month, such that they are deposited on the median day of the month. 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 determined by applying the indirect cost rate to the appropriate cost base estimated for the current
month. The estimate of direct costs shall be based on the actual direct costs of the prior month. This funding technique is
interest neutral.

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,

Pre-Issuance - Modified

The Commonwealth receives Federal funds from the US Department of Housing and Urban Development (HUD) on the
first business day of each month. The payment of Federal funds is done automatically by US HUD and a request for
funds is not required of the Commonwealth. The Commonwealth subsequently makes disbursements to approved
recipients. The amount of funds that are received each month is equal to 1/12th of the annual budget, which is approved
by US HUD. 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.

10.555 National School Lunch Program
Recipient: Department of Education

% of Funds Agency Receives: 20.00
Component: Indirect Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Page 6 of 34


Component: Administrative Cost
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 39.00
Component: Payment to Beneficiaries
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Puerto Rico Ombudsman Office for the Elderly
% of Funds Agency Receives: 4.00

Component: Payment to Service Providers

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 39.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 9.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.917 HIV Care Formula Grants
Recipient: Department of Health

% of Funds Agency Receives: 1.00
Component: Administrative Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 83.00
Component: Direct Services

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Health

% of Funds Agency Receives: 1.00
Component: Indirect Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Page 19 of 34



12.401 National Guard Military Operations and Maintenance (O&M) Projects
Recipient: National Guard

% of Funds Agency Receives: 3.00

Component: Equipment

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: National Guard

% of Funds Agency Receives: 20.00
Component: Facilities and Services Payment
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: National Guard

% of Funds Agency Receives: 4.00
Component: Material

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: National Guard

% of Funds Agency Receives: 15.00
Component: Other Expenses

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: National Guard

% of Funds Agency Receives: 28.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: National Guard

% of Funds Agency Receives: 16.00
Component: Professional Services
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: National Guard

% of Funds Agency Receives: 14.00
Component: Purchased Services
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

14,228 Community Development Block Grants/State's Program
Recipient: Office of the Commissioner for Municipal Affairs

% of Funds Agency Receives: 37.00

Component: Payroll

Page 9 of 34



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

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

The time period from deposit to debit shall be determined from information captured by Banco Popular de Puerto Rico.

8.6.2.3 Standards Applied

To measure the time Federal funds are held in a State account prior to being disbursed, the State shall use statistical
sampling. The sample shall be randomly selected, and shall be of sufficient size to ensure, at a minimum, a 95%
confidence interval no wider than + 0.3 dollar-weighted days about the estimated mean. .

For each check in the sample population, the State shall:

41 subtract the deposit date from the issuance date

2 multiply the difference of step 1 by the check amount

3 divide the product of step 2 by the total amount of funds drawn in the sample to determine the dollar-weighted pre-
issuance time for that check

The State shall then sum the dollar-weighted pre-issuance time for each check to arrive at the total dollar-weighted
average pre-issuance time to be used for calculating State interest liabilities.

8.6.2.4 Calculation Procedure

|= 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

Page 25 of 34



Cash Management Improvement Act Agreement
between
The Commonwealth of Puerto Rico
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
Puerto Rico (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 Puerto Rico shall be the The Secretary of the Treasury 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 shail govern.

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

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 14 of 34



Recipient: Department of Education

% of Funds Agency Receives: 4.00
Component: Administrative Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Indirect Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Other Direct Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 33.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 61.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

84.027 Special Education -- Grants to States
Recipient: Department of Education

% of Funds Agency Receives: 5.00
Component: Other Direct Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 20.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 75.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Page 12 of 34


14.872 Public Housing Capital Fund
Recipient: Public Housing Administration
% of Funds Agency Receives: 1.00
Component: Payroll

Technique: Average Clearance

Average Day of Clearance: 2 Days

Recipient: Public Housing Administration
% of Funds Agency Receives: 3.00
Component: Administrative Costs
Technique: Average Clearance

Average Day of Clearance: 3 Days

Recipient: Public Housing Administration
% of Funds Agency Receives: 96.00
Component: Payment to Beneficiaries
Technique: Average Clearance

Average Day of Clearance: 3 Days

17.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs
Recipient: Department of Labor and Human Resources

% of Funds Agency Receives: 75.00

Component: Payment to Beneficiaries-FECA and EUCA Accounts

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Labor and Human Resources

% of Funds Agency Receives: 24.00

Component: Administrative Costs (Including Payroll)
Technique: Fixed Administrative Allowances - Bi-Weekly Payroll
Average Day of Clearance: 3 Days

Recipient: Department of Labor and Human Resources
% of Funds Agency Receives: 1.00

Component: Indirect Costs

Technique: Indirect Cost Rates - Estimated Base
Average Day of Clearance: 3 Days

17.225S Unemployment insurance -- State Benefit Account
Recipient: Department of Labor and Human Resources

% of Funds Agency Receives: 100.00

Component: Payment to Beneficiaries-State Account
Technique: Pre-Issuance

Average Day of Clearance: N/A

84.010 Title | Grants to Local Educational Agencies

Page 11 of 34



93.558 |Temporary Assistance for|Family Socioeconomic —_| 90.0 |Payment to Beneficiaries {Actual Clearance, ZBA -
Needy Families Development ie] ACH
Administration
93.558 |Temporary Assistance for |Family Socioeconomic [4.00 | Administrative Costs Actual Clearance, ZBA- |1 Day
Needy Families Development ACH
Administration
93.558 |Temporary Assistance for|Family Socioeconomic {4.00 |Payroll Actual Clearance, ZBA- |1 Day
Needy Families Development ACH
Administration
93.563 | Child Support Child Support 7.00 |Indirect Costs Actual Clearance, ZBA- /1 Day
Enforcement [Administration ACH
93.563 {Child Support Child Support 39.0 jAdministrative Costs Actual Clearance, ZBA- |1 Day
Enforcement Administration 0 ACH
93.563  |Child Support Child Support 54.0 |Payroll Actual Clearance, ZBA- |1 Day
Enforcement Administration 0 ACH
93.569 |Community Services Families and Children 5.00 |Administrative Costs Actual Clearance, ZBA~ |1 Day
Block Grant Administration ACH
93.569 |Community Services Families and Children 95.0 |Payment Service Actual Clearance, ZBA- |1 Day
Block Grant Administration Q Providers ACH.
93.575 {Child Care and Administration for the 3.00 |Payment to Beneficiaries |Actual Clearance, ZBA- |1 Day
Development Block Grant} Childhood Care and ACH
integrated Development
93.575 |Child Care and Administration for the 3.00 |Administrative Costs Actual Clearance, ZBA- |1 Day
Development Block Grant|Childhood Care and ACH
Integrated Development
93.575 Child Care and Administration for the 23.0 |Payroll Actual Clearance, ZBA- }1 Day
Development Block Grant} Childhood Care and 0 ACH
Integrated Development
93.575 |Child Care and Administration for the 68.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Development Block Grant| Childhood Care and tt) Providers ACH
Integrated Development
93.575 | Child Care and Administration for the 3.00 |Operations Actual Clearance, ZBA ~~ |1 Day
Development Block Grant| Childhood Care and ACH
Integrated Development
93.600 |Head Start Administration for the 1.50 {Payroll Actual Clearance, ZBA- |1 Day
Childhood Care and ACH
Integrated Development
93.600 |Head Start Administration for the 0.50 |Administrative Costs Actual Clearance, ZBA- |1 Day
Childhood Care and ACH
Integrated Development
93.600 |Head Start Administration for the 1.00 | Operations Actual Clearance, ZBA- |1 Day
Childhood Care and ACH
Integrated Development
93.600 |Head Start Administration for the 47.0 |Paymento to Service Actual Clearance, ZBA- |1 Day
Childhood Care and 0 Providers ACH
Integrated Development
93.600 |Head Start Governor's Office 33.0 |Payroll Actual Clearance, ZBA- |1 Day
i} ACH
93.600 |Head Start Governor's Office 9.00 |Other Direct Cost ctual Clearance, ZBA- |1 Day
93.600 |Head Start Governor's Office 6.00 |Operations Actual Clearance, ZBA- |1 Day
ACI
93.600 Head Start Governor's Office 2.00 |Administrative Costs Actual Clearance, ZBA~ |1 Day
|ACH.
93.778 |Medical Assistance Department of Heaith 90.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Program Q Providers |ACH.
93.778 |Medical Assistance Department of Health 5.00 {Administrative Costs Actual Clearance, ZBA- |1 Day
Program ACH
93.778 |Medical Assistance Department of Health 5.00 {Payroll Actual Clearance, ZBA- | 1 Day
‘Program ACH

Page 32 of 34



Department of Education

Needy Families

Development

Administration

Actual Clearance, ZBA -
ACH

84.010 | Title | Grants to Local 33.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Educational Agencies tt) Providers ACH

84.010 | Title | Grants to Local Department of Education |1.00 |Other Direct Costs Actual Clearance, ZBA- |1 Day
Educational Agencies ACH

84.010 | Title | Grants to Local Department of Education |1.00 |Indirect Costs Actual Clearance, ZBA- 11 Day
Educational Agencies. ACH

84.027 |Special Education — Department of Education |75.0 |Payroll Actual Clearance, ZBA- |1 Day
Grants to States ty) ACH

84.027 |Special Education — Department of Education 20.0 Payment to Service Actual Clearance, ZBA- |1 Day
Grants to States 0 Providers |ACH

84.027 |Special Education -- Department of Education {5.00 {Other Direct Costs Actual Clearance, ZBA - |1 Day
Grants to States ACH

84.126  |Rehabilitation Services -- |Vocational Rehabilitation |70.0 |Administrative Costs Actual Clearance, ZBA - |1 Day
Vocational Rehabilitation |Administration 0 (including payroll) ACH
Grants to States

84.126 | Rehabilitation Services -- |Vocational Rehabilitation |30.0 |Payment to Beneficiaries |Actual Clearance, ZBA- |1 Day.
Vocational Rehabilitation }Administration 0 ACH
Grants to States

84.287 | Twenty-First Century Department of Education |15.0 |Payroll Actual Clearance, ZBA- |1 Day
‘Community Learning o |ACH
Centers

84,287 | Twenty-First Century Department of Education |77.0 {Payment to Service Actual Clearance, ZBA- |1 Day
Community Learning 0 Providers ACH
Centers

84.287 | Twenty-First Century Department of Education |1.00 | Other expenses Actual Clearance, ZBA~ |1 Day
Community Learning ACH
Centers

84.287 | Twenty-First Century Department of Education |1.00 {Materials and Supplies {Actual Clearance, ZBA-' |1 Day
Community Learning ACH
Centers

84.287 | Twenty-First Century Department of Education |3.00 |Equipment Actual Clearance, ZBA- |1 Day
|Community Learning ACH
Centers

84.287 | Twenty-First Century Department of Education |3.00 }Transportation Expenses |Actual Clearance, ZBA- |1 Day
‘Community Learning ACH
Centers. ~

84.367 |Improving Teacher Department of Education |5.00 /Administrative Costs Actual Clearance, ZBA- |1 Day
Quality State Grants |ACH

84.367 ||mproving Teacher Department of Education |1.00 jindirect Costs Actual Clearance, ZBA- |1 Day
Quality State Grants ACH

84.367 |Improving Teacher Department of Education |20.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Quality State Grants 0 Providers ACH

84.367 — |Improving Teacher Department of Education |74.0 | Payroll Actual Clearance, ZBA- |1 Day
Quality State Grants 0 ACH

84.377 | School Improvement Department of Education |98.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Grants 0 Providers: ACH

84.377 |School Improvement Department of Education |1.00 |Payrolf Actual Clearance, ZBA- {1 Day
Grants ACH

84.377 |School Improvement Department of Education |1.00 {Other Costs Actual Clearance, ZBA- |1 Day
Grants ACH

84.388 |School Improvement Department of Education 3.00 {Other Costs Actual Clearance, ZBA- |1 Day
Grants, Recovery Act ACH

84.388 |School Improvement Department of Education {91.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Grants, Recovery Act li} Providers ACH

84.388 {School Improvement Department of Education {3.00 [Administrative Costs Actual Clearance, ZBA- |1 Day
Grants, Recovery Act ACH

84.388 | School Improvement Department of Education |3.00 |Equipment Actual Clearance, ZBA- |1 Day
Grants, Recovery Act ACH

93:558 |Temporary Assistance for|Family Socioeconomic {2.00 indirect Costs 1 Day

Page 31 of 34



% of Funds Agency Receives: 60.00
Component: Direct Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 2.00
Component: Other Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 23.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 14.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

10.566 Nutrition Assistance for Puerto Rico

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 2.00

Component: Indirect Costs

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 90.00

Component: Payment to Beneficiaries

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 4.00

Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 4.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 1 Day

Page 8 of 34


3. Banco Popular de Puerto Rico
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 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:

None

The State shall also adjust each clearance pattern to reflect:

None

7.8 Each of the State's clearance patterns 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.

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:

Page 22 of 34


Exhibit | - Funds Request and Receipt Times Schedule
Commonwealth of Puerto Rico

Agriculture-FNS ACH 11:59 PM. 1 day
Agriculture-FNS Fedwire §:45 PM 0 day
Agriculture-FS ACH 3:00 PM. 4 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. 4 day
Dept of Homeland Security (FEMA) Fedwire 2:00 PM O 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 1day
Education Fedwire 2:00 PM 0 day
Energy ACH 4:00 PM. iday
Energy Fedwire 3:00 PM. Oday
HHS ACH 6:30 PM. iday
HHS Fedwire 3:00 PM 0 day
HUD ACH 5:30 PM 2 days
HUD Fedwire 3:00 PM ‘0 day
Interior-FWS. ACH 11:59 PM 4 day
Interior-FWS. Fedwire 5:45 PM (0 day
Interior-OSM ACH 3:00 PM iday
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. 1day
lLabor-UTF ACH 3:00 PM. iday
Labor-UTF Fedwire 3:00 PM O_day
National Science Foundation (NSF) ACH 8:00 PM. 4day
National Science Foundation (NSF) Fedwire 5:45 PM O day
Social Security Administration ACH 41:59 PM 4 day
Social Security Administration Fedwire 5:45 PM 0 day
‘Transportation (FAA) ACH 2:00 PM 1 day
Transportation (FHWA) ACH 12:00 PM. 3 days
Transportation (FHWA) Fedwire 12:00 PM 0 day
Transportation (FTA) ACH 2:00 PM i day
Veterans Administration ACH 12:00 PM 3 days

Page 28 of 34


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 wiil 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.

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 93.578), 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

Page 4 of 34


Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

84.388 School Improvement Grants, Recovery Act
Recipient: Department of Education

% of Funds Agency Receives: 3.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 3.00
Component: Equipment

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 3.00
Component: Other Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 91.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.558 Temporary Assistance for Needy Families

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 4.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 2.00

Component: Indirect Costs

Technique: Actual Ciearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 90.00

Component: Payment to Beneficiaries

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Page 15 of 34



% of Funds Agency Receives: 3.00
Component: Operations

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and Integrated Development
% of Funds Agency Receives: 3.00

Component: Payment to Beneficiaries

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and integrated Development
% of Funds Agency Receives: 68.00

Component: Payment to Service Providers

Technique: Actual Clearance, ZBA ~ ACH

Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and Integrated Development
% of Funds Agency Receives: 23.00

Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

93.600 Head Start

Recipient: Administration for the Childhood Care and Integrated Development
% of Funds Agency Receives: 0.50

Component: Administrative Costs

Téchnique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Governor's Office

% of Funds Agency Receives: 2.00
Component: Administrative Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and integrated Development
% of Funds Agency Receives: 1.00

Component: Operations

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Governor's Office

% of Funds Agency Receives: 6.00
Component: Operations

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Page 17 of 34



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:
There are currently no programs listed for Section 4.4.

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:

Administration for the Childhood Care and Integrated Development
Administration of Mental Health and Addiction Services
Child Support Administration

Department of Education

Department of Health

Department of Housing

Department of Labor and Human Resources

Families and Children Administration

Family Socioeconomic Development Administration
Governor's Office

National Guard

Office of the Commissioner for Municipal Affairs

Public Housing Administration

Puerto Rico Ombudsman Office for the Elderly
Vocational Rehabilitation Administration

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 (he Section 4.0 of this
Agreement:

There are currently no fiscal agencies listed for Section 5.2.
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 {I - 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

Page 3 of 34



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:

Those costs necessary for the development and maintenance of clearance patterns and to perform the actual calculation
of interest liabilities.

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 26 of 34


4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on the expenses 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.

4.1.1 The basis of total expenses for fiscal year, as discussed in Section 4.1, is a consolidated report produced from
Puerto Rico's integrated Financial Accounting System and it Is used to determine the threshold and the major Federal
assistance programs,

4.2 The State's threshold for major Federal assistance programs is $13,668,579.
The following programs meet or exceed the threshold and are not excluded in Section 4.4:

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

10.559 Summer Food Service Program for Children

10.566 Nutrition Assistance for Puerto Rico

12.401 National Guard Military Operations and Maintenance (O&M) Projects
14.228 Community Development Block Grants/State's Program

14.850 Public and Indian Housing

14.871 Section 8 Housing Choice Vouchers

14.872 Public Housing Capital Fund

17.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs
17.225S Unemployment Insurance -- State Benefit Account

84.010 Title | Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States
84.287 Twenty-First Century Community Learning Centers

84.367 Improving Teacher Quality State Grants

84.377 School Improvement Grants

84.388 School Improvement Grants, Recovery Act

93.558 Temporary Assistance for Needy Families

93.563 Child Support Enforcement

93.569 Community Services Block Grant

93.575 Child Care and Development Block Grant

93.600 Head Start

93.778 Medical Assistance Program

93.779 Centers for Medicare and Medicaid Services (CMS) Research, Demonstrations and Evaluations
93.917 HIV Care Formula Grants

93.959 Block Grants for Prevention and Treatment of Substance Abuse

93.994 Maternal and Child Health Services Block Grant to the States

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:

Page 2 of 34


| 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:

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: Fe brvaray 2¥ 2oO7

Printed Name: Rai! Ha lalonaco Batter

Certifying Signature: |

Title: Secretacg of Tr CODA

Page 34 of 34


Exhibit II - Commonwealth of Puerto Rico

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
10.555 {National School Lunch Department of Education {20.0 |Indirect Costs Actual Clearance, ZBA- |1 Day
Program i} ACH
10.555 |National School Lunch | Department of Education }20.0 Payroll Actual Clearance, ZBA- |1 Day
Program 0. ACH
40.555 |National School Lunch | Department of Education }40.0 |Payment to Service Actual Clearance, ZBA- {1 Day
Program. 0 Providers ACH
10.555 {National School Lunch Department of Education |20.0 |Other Direct Costs Actual Clearance, ZBA- |1 Day
Program 0 ACH
10.557 {Special Supplemental Department of Health 25.0 {Payment to Service Actual Clearance, ZBA- |1 Day
Nutrition Program for o Providers ACH
Women, Infants, and
Children
10.557 |Special Supplemental —_ | Department of Health 75.0 |Administrative Costs Fixed Administrative 41 Day
Nutrition Program for 0 (including Payroll) Allowances - Bi-Weekly
Women, infants, and Payroll
Children
10.558 — |Child and Adult Care Department of Education |100. |Payment to Service Actual Clearance, ZBA- |1 Day
Food Program 00 ___|Providers ACH
10.559 |Summer Food Service Department of Education |60.0 |Direct Costs Actual Clearance, ZBA- |1.Day
Program for Children i) ACH
10.559 {Summer Food Service Department of Education |23.0 |Payment to Service Actual Clearance, ZBA- |1 Day
Program for Children 0 Providers ACH
10.559 | Summer Food Service Department of Education |14.0 |Payroll Actual Clearance, ZBA- |1 Day
Program for Children 0 ACH
10.559 /Summer Food Service Department of Education |1.00 |Administrative Costs Actual Clearance, ZBA~- |1 Day
Program for Children ACH
10.559 |Summer Food Service Department of Education {2.00 | Other Costs Actual Clearance, ZBA- |1 Day
Program for Children ACH
10.566 |Nutrition Assistance for {Family Socioeconomic [4.00 |Administrative Costs Actual Clearance, ZBA- {1 Day
Puerto Rico Development Same Day Payment
Administration
10.566 | Nutrition Assistance for |Family Socioeconomic —_‘/4.00 | Payroll Actual Clearance, ZBA- |1 Day
Puerto Rico Development ACH
Administration
10.566 |Nutrition Assistance for |Family Socioeconomic — {2.00 |Indirect Costs Actual Clearance, ZBA- |1 Day
Puerto Rico Development ACH
Administration
10.566 |Nutrition Assistance for |Family Socioeconomic | 90.0 |Payment to Beneficiaries [Actual Clearance, ZBA- |1 Day
Puerto Rico Development 0 ACH
Administration
12.401 {National Guard Military | National Guard 3.00 |Equipment Actual Clearance, ZBA- {1 Day
Operations and ACH
Maintenance (O&M)
Projects.
12.401 |National Guard Military |National Guard 4.00 |Materiat Actual Clearance, ZBA- |1 Day
Operations and ACH
Maintenance (O&M)
Projects

Page 29 of 34



Average Day of Ciearance: 1 Day

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States
Recipient: Vocational Rehabilitation Administration

% of Funds Agency Receives: 70.00

Component: Administrative Costs (including payroll)

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Vocational Rehabilitation Administration

% of Funds Agency Receives: 30.00
Component: Payment to Beneficiaries
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

84.287 Twenty-First Century Community Learning Centers

Recipient: Department of Education

% of Funds Agency Receives: 3.00
Component: Equipment

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Materials and Supplies
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 1.00
Component: Other expenses

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 77.00
Component: Payment to Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 15.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Department of Education

Page 13 of 34



Recipient: Family Socioeconomic Development Administration
% of Funds Agency Receives: 4.00

Component: Payroll

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

93.563 Child Support Enforcement
Recipient: Child Support Administration
% of Funds Agency Receives: 39.00
Component: Administrative Costs
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Child Support Administration
% of Funds Agency Receives: 7.00
Component: Indirect Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Child Support Administration
% of Funds Agency Receives: 54.00
Component: Payroll

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.569 Community Services Block Grant
Recipient: Families and Children Administration
% of Funds Agency Receives: 5.00
Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

Recipient: Families and Children Administration
% of Funds Agency Receives: 95.00
Component: Payment Service Providers
Technique: Actual Clearance, ZBA - ACH
Average Day of Clearance: 1 Day

93.575 Child Care and Development Block Grant

Recipient: Administration for the Childhood Care and integrated Development
% of Funds Agency Receives: 3.00

Component: Administrative Costs

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 1 Day

Recipient: Administration for the Childhood Care and integrated Development

Page 16 of 34