z see eee ES ase a i
17.225F |Unemployment insurance |Department of Labor and |88.0 | Benefit Payments Edison Unemployment |N/A
|-- Federal Benefit 'Workforce Development |0 Insurance Modified Post
Account and Issuance
Administrative Costs
17.2258 |Unemployment Insurance | Department of Labor and |100. {Benefit Payments Edison Unemployment |N/A
-- State Benefit Account |Workforce Development /00 Insurance Modified Post
Issuance
20.205 | Highway Planning and Department of 100. {All Project Cost Updates | Edison Transportation N/A
Construction Transportation 00 Modified Post Issuance
(Modified)
84.010 | Title | Grants to Local Department of Education |99.0 |Local Education Edison Modified Post N/A
Educational Agencies 0 Agencies and Vendor Issuance
Payments
84.010 Title | Grants to Local Department of Education |1.00 | Indirect and Edison Indirect Costs NIA
Educational Agencies Administrative Costs.
84.027 |Special Education -- Department of Education |99.0 |Local Education Edison Modified Post NIA
Grants to States 0 Agencies and Vendor Issuance
Payments
84.027 |Special Education -- Department of Education |1.00 |indirect and Edison Indirect Costs NIA
Grants to States Administrative Costs
93.558 |Temporary Assistance for | Department of Human 50.0 |Continuing Benefit and {Zero Balance Accounting |N/A
Needy Families Services 0 Retroactive Payments - Same Day Payment
(Modified)
93.558 |Temporary Assistance for | Department of Human 4.00 indirect and Cost Allocation - Actual |N/A
Needy Families Services Administrative Costs Costs ~ Estimated
[Allocation (Modified)
93.558 |Temporary Assistance for|Department of Human —_‘ {46.0 |All except Continuing Edison Modified Post NIA
Needy Families Services O Benefit and Retroactive jIssuance
Payments and Indirect
and Administrative Costs.
93.575 Child Care and Department of Human 5.00 |Indirect and Cost Allocation - Actual |N/A
Development Block Grant Services Administrative Costs Costs - Estimated
Allocation (Modified)
93.575 {Child Care and Department of Human 95.0 |All Except Indirect and [Edison Modified Post N/A
Development Block Grant| Services Ly} Administrative Costs Issuance
93,767 | Children's Health Bureau of TennCare 100. {Medical and Dental Edison Modified Post N/A
Insurance Program 00 {Payments Issuance
93.778 — |Medical Assistance Bureau of TennCare 100. |All Medical Assistance [Edison Modified Post NIA
Program 00 _{Payments. Issuance

| hereby certify that an authorized State official has certified at east 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:

S422 4

Page 20 of 21



8.4 Refund Liabilities

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

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

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

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

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

Refunds Deposited to interest Neutral Programs

The State interest liability shall be based on the difference in whole days between the date the refund is deposited in a
State account and the date the refund is offset against a subsequent deposit of Federal funds where the following funding
techniques are applied:

Modified Zero Balance Accounting

Zero Balance Accounting Same Day Payment

Edison Modified Post Issuance

Edison Transportation Modified Post Issuance

Edison Unemployment Insurance Modified Post issuance

For programs to which the Edison Modified Post Issuance funding technique is applied, the State shall maintain records
identifying the:

Amount of the refund

Compliance date of the refund

Date the refund is offset against subsequent deposit of Federal funds

Warrant issue date for the disbursement if the amount is repaid by warrant to the federal program

For refunds greater than $50,000, interest shall be calculated based on the difference in whole days between the date the
refund is credited to a State account and the compliance date of the refund paid out for program purposes. The
compliance date is based on the funding technique for each program component.

This applies where the federal portion of the refund for a single CFDA number is greater than $50,000 and the refund is
for a program covered by this agreement.

8.4.4 Under this agreement "the date the refund is credited to a State account" refers to and is equal to the "compliance
date of the refund". "The date the refund is debited from the State account" refers to and is equal to "the date the refund
is paid out".

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

Page 14 of 21



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.

There are no funding techniques listed in Section 6.2.1

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.

Cost Allocation ~ Actual Costs - Estimated Allocation (Modified)

The State shail request daily the Federal share of administrative and/or indirect costs such that funds are deposited with
the Modified Post Issuance drawdown. The request for funds shall be made in accordance with the appropriate request
cut-off time specified in Exhibit |. The request shall be equal to an estimated allocation based on actual daily costs,
distributed in accordance with allocation statistics of the prior period. At the end of each quarter, the State shall adjust
estimated drawdowns to the actual allocation based on the approved cost allocation plan. This funding technique is
interest neutral.

Edison Indirect Costs

Federal funds equa! to amounts billed on the Grants Invoice shall be requested on the billing report date of the Edison
Billing Worksheet and shall be received on the next Federal Reserve business day. The request for funds shall be made
in accordance with the appropriate request cut-off time specified in Exhibit |. The State shall request the appropriate
federal share of the indirect costs based on the agencys Federally approved indirect cost rate plan, public assistance cost
allocation plan, or other methodologies. This funding technique is interest neutral.

Edison Modified Post Issuance

Federal funds equal to the amounts billed on the Grants Invoice shall be requested on the billing report date of the Edison
Billing Worksheet and shall be received in accordance with the receipt window as specified in Exhibit |. The request for
funds shall be made in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request
the appropriate federal share of warrants, Automated Clearinghouse (ACH) payments, electronic funds transfer (EFT)
payments, and journals processed and billed to the program through the grant invoicing module of the Edison ERP
System. This funding technique is interest neutral.

Page 5 of 21


Printed Name: Larry B. Martin

Senne Sores — hl

tite: Commissionec of Fin@ace aad Administation

Page 21 of 21



Exhibit | - Funds Request and Receipt Times Schedule
State of Tennessee
edéral Ag ent Ly
Agriculture-FNS ACH 14:59 PM
Agriculture-FNS Fedwire 5:45 PM 0 day
Agriculture-FS |ACH 3:00 PM. dday
Air National Guard ACH 12:00 PM 15 days
Army National Guard ACH 12:00 PM 15 days
[Commerce-NOAA ACH 2:00 PM iday
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 ‘A day
Education Fedwire 2:00 PM 0 day
Energy ACH 4:00 PM tday
Energy Fedwire 3:00 PM 0 day
HHS ACH 6:30 PM 4 day
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 iday
Interior-FWS Fedwire. 5:45 PM 0 day
Interior-OSM. ACH 3:00 PM 1 day
Interior-OSM. Fedwire 5:45 PM 10 day
Justice ACH 11:00 PM 6 days
Justice Fedwire 2:00 PM 2 days
Labor-Non-UTF ACH 3:00 PM 1 day
Labor-UTF ACH 3:00 PM. iday
Labor-UTF Fedwire 3:00 PM 0 day
National Science Foundation (NSF) ACH 8:00 PM 1day
National Science Foundation (NSF) Fedwire 5:45 PM O_day
Social Security Administration ACH 11:59 PM i day
Social Security Administration Fedwire 5:45 PM Q day
Transportation (FAA) ACH 2:00 PM iday
Transportation (FHWA) ACH 42:00 PM 3 days
Transportation (FHWA) Fedwire 12:00 PM QO day
Transportation (FTA) ACH 2:00 PM 4 day
Veterans Administration ACH 12:00 PM. 3 days

Page 18 of 21


Recipient: Department of Human Services

% of Funds Agency Receives: 46.00

Component: All except Continuing Benefit and Retroactive Payments and Indirect and Administrative Costs
Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

Recipient: Department of Human Services

% of Funds Agency Receives: 50.00

Component: Continuing Benefit and Retroactive Payments
Technique: Zero Balance Accounting - Same Day Payment (Modified)
Average Day of Clearance: N/A

93.575 Child Care and Development Block Grant

Recipient: Department of Human Services

% of Funds Agency Receives: 5.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation - Actual Costs - Estimated Allocation (Modified)
Average Day of Clearance: N/A

Recipient: Department of Human Services

% of Funds Agency Receives: 95.00

Component: All Except Indirect and Administrative Costs
Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

93.767 Children's Health Insurance Program
Recipient: Bureau of TennCare

% of Funds Agency Receives: 100.00
Component: Medical and Dental Payments
Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

93.778 Medical Assistance Program
Recipient: Bureau of TennCare

% of Funds Agency Receives: 100.00
Component: All Medical Assistance Payments
Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:

Department of Labor and Workforce Development 10.561 State Administrative Matching Grants for the Supplemental
Nutrition Assistance Program
Department of Environment and Conservation 20.205 Highway Planning and Construction

Page 10 of 21


Average Day of Clearance: N/A

10.553 School Breakfast Program
Recipient: Department of Education
% of Funds Agency Receives: 100.00

Component: All Costs - Meal Reimbursement for Local Education Agencies, Correctional Institutions, and Children in

State Custody
Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

10.555 National School Lunch Program
Recipient: Department of Education
% of Funds Agency Receives: 100.00

Component: All Costs - Meal Reimbursement for Local Education Agencies, Correctional Institutions, and Children in

State Custody
Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

10.557 Special Supplemental Nutrition Program for Women, Infants, and Children

Recipient: Department of Health

% of Funds Agency Receives: 2.00
Component: Indirect Costs
Technique: Edison Indirect Costs
Average Day of Clearance: N/A

Recipient: Department of Health

% of Funds Agency Receives: 28.00
Component: Administrative and Payroll Costs
Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

Recipient: Department of Health

% of Funds Agency Receives: 70.00
Component: Vouchers

Technique: Modified Zero Balance Accounting
Average Day of Clearance: N/A

10.558 Child and Adult Care Food Program
Recipient: Department of Human Services
% of Funds Agency Receives: 100.00
Component: Provider Claims

Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

Page 7 of 21



Edison Transportation Modified Post Issuance (Modified)

The weekly request shall be the sum of the billable federal share of the payments issued in the series of disbursements.
The request shall be made two Federal Reserve business days after the bill date and shall be received by wire transfer
the same Federal Reserve business day. The request for funds shall be made in accordance with the appropriate request
cut-off time specified in Exhibit |. The State shall request the appropriate federal share of warrants, Automated
Clearinghouse (ACH) payments, electronic funds transfer (EFT) payments, and journals processed and billed to the
program through the grant invoicing module of the Edison ERP System. This funding technique is interest neutral.

Edison Unemployment Insurance Modified Post Issuance

Federal funds equal to the amounts billed on the Grants Invoice shall be requested on the billing report date of the Edison
Billing Worksheet and shall be received by wire transfer on the same Federal Reserve business day. The request for
funds shall be made in accordance with the appropriate request cut off time specified in Exhibit |. The State shall request
the appropriate federal share of warrants, Automated Clearinghouse (ACH) payments, electronic funds transfer (EFT)
payments, and journals processed and billed to the program through the grant invoicing module of the Edison ERP
System. This funding technique is interest neutral.

Modified Zero Balance Accounting

Payment from the Federal Government shail be received the next Federal Reserve business day. The request for funds
shall be made in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request funds
equal to actual voucher presentments net of vendor reclaims and infant formula adjustments the same day funds are
expended. No request of Federal funds should be made if rebate funds are available to offset presentments. This
funding technique is interest neutral.

Zero Balance Accounting - Same Day Payment (Modified)

A Federal agency will deposit the funds by wire transfer the same day as requested. The request for funds shall be made
in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request funds equal fo actual
recipient draws the same day funds are expended. This funding technique is interest neutral.

6.2.5 The State establishes a minimum draw criterion of $5,000 for each program identified in the Agreement. For
example, the State is not required to make fund requests until accumulated expenditures for a particular program are
equal to or exceed $5,000.

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 Human Services

% of Funds Agency Receives: 100.00

Component: Electronic Benefit Transfer (EBT) Client Benefit Payments
Technique: Zero Balance Accounting - Same Day Payment (Modified)

Page 6 of 21



Exhibit Il - State of Tennessee

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
10.551 |Supplemental Nutrition [Department of Human 100. | Electronic Benefit Zero Balance Accounting |N/A
Assistance Program Services. 00 =| Transfer (EBT) Client |- Same Day Payment
Benefit Payments (Modified)
10.553 | School Breakfast Department of Education |100. |All Costs - Meal Edison Modified Post NIA
Program 00 Reimbursement for Local |Issuance
Education Agencies,
Correctional Institutions,
and Children in State
Custody
10.555 |National Schoo! Lunch |Department of Education |100. |All Costs - Meal Edison Modified Post N/A
Program 00 {Reimbursement for Local | Issuance
Education Agencies,
Correctional Institutions,
and Children in State
Custody
10,557 |Special Supplemental Department of Health 70.0 |Vouchers Modified Zero Balance | N/A
Nutrition Program for Oo Accounting
Women, Infants, and
Children
10.557 | Special Supplemental Department of Health 28.0 |Administrative and Edison Modified Post N/A
Nutrition Program for [o} Payroll Costs Issuance
‘Women, Infants, and
Children.
10.557 | Special Supplemental Department of Health 2.00 {Indirect Costs Edison Indirect Costs N/A
Nutrition Program for
Women, Infants, and
Children
10,558 {Child and Adult Care Department of Human 100. |Provider Claims Edison Modified Post N/A
Food Program Services 00 Issuance
10.561 | State Administrative Department of Human 4.00 |Indirect and Cost Allocation - Actual |N/A
Matching Grants forthe Services Administrative Costs Costs - Estimated
Supplemental Nutrition Allocation (Modified)
Assistance Program
10.561 | State Administrative Department of Human 99.0 |All except indiret and Edison Modified Post NIA
Matching Grants for the | Services O Administrative Issuance
Supplemental Nutrition
Assistance Program
14.228 |Community Development Department of Economic |2.00 |Indirect and Cost Allocation - Actual |N/A
Block Grants/State’s and Community Administrative Costs Costs - Estimated
Program Development. [Allocation (Modified)
44.228 |Community Development |Department of Economic }98.0 |All Program Expenditures {Edison Modified Post N/A
Block Grants/State's and Community 0 Issuance
Program Development.
17.225F |Unemployment Insurance |Department of Labor and |11.0 |Unemployment Insurance | Edison Modified Post N/A
|-- Federal Benefit Workforce Development |0 Administrative Costs issuance
Account and
Administrative Costs
17.225F |Unemployment Insurance |Department of Labor and |1.00 {Indirect Costs Edison Indirect Costs NIA
-- Federal Benefit Workforce Development
Account and
Administrative Costs

Page 19 of 21



Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 100.00

Component: Benefit Payments

Technique: Edison Unemployment insurance Modified Post Issuance
Average Day of Clearance: N/A

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 100.00

Component: All Project Cost Updates

Technique: Edison Transportation Modified Post Issuance (Modified)
Average Day of Clearance: N/A

84.010 Title 1 Grants to Local Educational Agencies
Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Indirect and Administrative Costs
Technique: Edison indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 99.00

Component: Local Education Agencies and Vendor Payments
Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

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

% of Funds Agency Receives: 1.00
Component: Indirect and Administrative Costs
Technique: Edison Indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 99.00

Component: Local Education Agencies and Vendor Payments
Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

93.558 Temporary Assistance for Needy Families

Recipient: Department of Human Services

% of Funds Agency Receives: 4.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation - Actual Costs - Estimated Allocation (Modified)
Average Day of Clearance: N/A

Page 9 of 21


Cash Management Improvement Act Agreement
between
The State of Tennessee
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 Tennessee
(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 Tennessee shail be the Commissioner of the Department of Finance and
Administration 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 shalt take effect on 07/01/2016 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 1 of 21



Not applicable.
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:

Cost Allocation - Actual Costs - Estimated Allocation (Modified)
Edison Indirect Costs

Edison Modified Post Issuance

Edison Transportation Modified Post Issuance (Modified)
Edison Unemployment Insurance Modified Post issuance
Modified Zero Balance Accounting

Zero Balance Accounting - Same Day Payment (Modified)

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 shail 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

8.1.3 In addition, for each disbursement, the State shall be able to identify the Federal funding percentage and the date of
clearance,

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 the following funding techniques:

Modified Zero Balance Accounting
Page 12 of 21


7.0 CLEARANCE PATTERNS

7.1 The State shall develop separate clearance patterns for each of the following:
There are currently no program components listed in Section 7.1.

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

Tennessee Department of Treasury
Tennessee Department of Finance and Administration

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

State Treasurer's Accounts Reconciliation Package (ARP) system
State's central accounting system (Edison)

7.4 The State shail 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.

7.4.1 Under this agreement, in Section 7.4, "99% of the funds disbursed, from issuance to clearance” refers to and is
equal to "99% of the funds clearing and net of cancellations". The tracking period shall be at least three consecutive
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.

7.5.1 In Section 7.5 (1) "the date the check was released" refers to and is equal to "the date the check was issued".

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 EF T/Direct
payroll, with the following exceptions:

No exceptions.

The State shall also adjust each clearance pattern to reflect:

Page 11 of 21



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

% of Funds Agency Receives: 1.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation - Actual Costs - Estimated Allocation (Modified)

Average Day of Clearance: N/A

Recipient: Department of Human Services

% of Funds Agency Receives: 99.00
Component: All except Indiret and Administrative
Technique: Edison Modified Post Issuance
Average Day of Clearance: N/A

14.228 Community Development Block Grants/State's Program

Recipient: Department of Economic and Community Development

% of Funds Agency Receives: 2.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation - Actual Costs - Estimated Allocation (Modified)
Average Day of Clearance: N/A

Recipient: Department of Economic and Community Development
% of Funds Agency Receives: 98.00

Component: All Program Expenditures

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

417.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs
Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 1.00

Component: Indirect Costs

Technique: Edison Indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Labor and Workforce Development
% of Funds Agency Receives: 11.00

Component: Unemployment Insurance Administrative Costs
Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 88.00

Component: Benefit Payments

Technique: Edison Unemployment Insurance Modified Post Issuance
Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Page 8 of 21



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 93.575), 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 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

Page 4 of 21

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% 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

To determine the total time Federal funds are held, the State shall measure the time between the date Federal funds are
received and credited to a State's account and the compliance date those funds are used for program purposes. This
time is measure in whole days.

8.6.2.2 Source of Data

All time periods shall be determined from information captured in the Edison ERP System, Accounts Reconciliation
Package (ARP), and information supplied by State agencies from agency-specific reporting systems or mechanisms.

8.6.2.3 Standards Applied

The net daily cash balance of Federal funds in the programs account reflects the actual activity based on each days net
cash transactions. The amount of funds received for a given day is assumed to be for that compliance dates net
expenditures.

8.6.2.4 Calculation Procedure

Interest liability for each program shall be calculated by applying the following formula:
Net Daily Balance

| = NDB X R where

| = State or Federal Government's total interest liability

NDB = Net Daily Balance of cash in a program's account

R = Annualized rate equal to the average equivaient yields of 13-week Treasury
bills auctioned during the State's fiscal year.

The interest liability calculations shall be based on whole days.

8.7 The State shall make daily inquiries in the appropriate federal payment system to determine funds availability and
request funds, if available. If Federal funds are not available, inquiries will be made daily in the system until funds are

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12.0 AUTHORIZED SIGNATURES

Larry B. Martin

Commissioner

Department of Finance and Administration
State of Tennessee

Signature: Date Signed: 5/ 2 Z

Date Submitted 02/22/2017

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management
Bureau of the Fiscal Service

U.S. Department of the Treasury
Signature: Cael CL, Date Signed: olife2

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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:

Bureau of TennCare

Department of Economic and Community Development
Department of Education

Department of Health

Department of Human Services

Department of Labor and Workforce Development
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:

CSC Convansys Corporation until January 31, 2017 10.557 Special Supplemental Nutrition Program for Women, Infants,
and Children

FIS Government Solutions, DBA eFUNDS Corp, 10.551 Supplemental Nutrition Assistance Program

FIS Government Solutions, DBA eFUNDS Corp. 93.558 Temporary Assistance for Needy Families

Solutran, Inc. 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children

6.0 FUNDING TECHNIQUES
6.1 General Terms

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

6.1.2 The State shall schedule the receipt of Federal funds such that the funds are received and credited to a State
account in accordance with the clearance patterns specified in Exhibit Il - List of State Clearance Patterns. Exhibit il 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 Federat 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.

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4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on federal funds
expended reported in 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.

4.1.1 Total Federal assistance reported in the Schedule of Expenditures of Federal Awards for fiscal year 2015 exceeded
$10,000,000,000. According to CFR 31 Part 205.5 Table A, the State's threshold for major Federal assistance programs
is $60,000,000.

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
10.558 Child and Adult Care Food Program

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program
14.228 Community Development Block Grants/State's 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

93.558 Temporary Assistance for Needy Families

93.575 Child Care and Development Block Grant

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:

14.195 Section 8 Housing --- Exclusion:Non-State

84.032 Federal Family Education Loans --- Exclusion: Non-State

84.063 Federal Pell Grant Program --- Exclusion:Non-State

84.268 Federal Direct Student Loan --- Exclusion:Non-State

84.395 State Fiscal Stabilization Fund (SFSF) - Race-to-the-Top Incentive Grants, Recovery Act ---
Exclusion:Discontinued

93.268 Immunization Grants --- Exclusion:Non-Cash

5.0 ENTITIES COVERED

Page 2 of 21



Zero Balance Accounting - Same Day Payment

Edison Modified Post Issuance

Edison Transportation Modified Post Issuance

Edison Unemployment Insurance Modified Post Issuance

A Federal interest liability shall accrue from the day the State should have received funds based on the specified funding
technique to the day Federal funds are credited to a State account.

A State interest liability shall accrue from the day Federal funds are credited to a State account to the day the State
should have received funds based on the specified funding technique.

With Federal-State matching programs and programs that require maintenance of effort, interest shall be calculated on
the Federal percentage of the disbursement.

8.2.3 Under this agreement "the day the State pays out its own funds for program purposes” refers to and is equal to "the
compliance date".

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 has implemented the zero balance accounting-same day payment funding technique for funds withdrawn from
the State and Federal accounts with the Unemployment Trust Fund (UTF). This funding technique is interest neutral so
when properly applied, no interest is incurred of calculated. For transfers of funds that do not follow the technique
resulting in a positive balance, the State shall calculate interest as follows:

Interest Liability - State Unemployment Account

On a monthly basis, the State's Treasury Department publishes a State Pooled Investment Fund Average Earnings Rate
as well as an Administrative Fee Rate. Actual interest earnings and banking cost are determined by applying these rates
to the average daily cash balance of the unemployment compensation benefit payment account.

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

The State shall calculate the actual interest earnings and the related banking costs attributable to funds withdrawn from
the State account in the Unemployment Trust Fund (UTF) by multiplying the amount of the actual interest earnings and
related banking costs of the account as a whole by the State percent. The State's liability for interest on funds withdrawn
from its account in the UTF shall consist of the actual interest earnings attributable to such funds less the related banking
costs.

Interest Liability - Federal Unemployment Accounts

The interest liability is calculated by multiplying the net daily balance (as defined in 8.6.2.4) by the annualized rate equal
to the average equivalent yields of the 13-week Treasury bills auctioned during the fiscal year.

Page 13 of 21



available and can be requested.
9.0 REVERSE FLOW PROGRAMS

The State is not required to cover any reverse flow programs under the terms of this Agreement because the program
falls below the State's threshold.

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:
Interest calculation, Computer programming time, Preparation of annual report.

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

10.4 The interest calculation costs claimed for reimbursement are recorded as direct charges to a CMIA Direct Cost task
profile ID in the Edison ERP System or allocated to the task profile ID through the Edison ERP System Human Capital
Management (HCM) and the Department of Finance and Administration Office of Cash Management cost allocation plan,
which is prepared in accordance with OMB Uniform Administrative Requirements, Cost Principles, and Audit
Requirements.

11.0 NON-COMPLIANCE

41.1 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.

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