‘Costs-Other and Indirect
Costs

CFDA| Program Name Recipient % Component Technique Round |
ed
84.027 |Special Education — Department of Education |9.00 |Administrative Costs- Pre-Issuance NIA
Grants to States Payroll; Administrative
Costs-Other
84.027 |Special Education — Department of Education |90.0 |Payments to Local Pre-Issuance NIA
Grants to States 0 Education Agencies
(LEAs) and Other
Recipients
84.126 |Rehabilitation Services - |Department of 6.00 |Indirect Costs Actual Clearance, ZBA- |0 Days
Vocational Rehabilitation |Rehabilitation Services Same Day Payment
Grants to States
84.126 | Rehabilitation Services -- |Department of 30.0 |Administrative Costs - Pre-Issuance NIA
Vocational Rehabilitation {Rehabilitation Services [0 Payroll
Grants to States
84.126 | Rehabilitation Services ~ |Department of 164.0 | Vendor Payments for Pre-Issuance NIA
Vocational Rehabilitation |Rehabililation Services [0 Client Services and Other
Grants to States Recipients
93.558 [Temporary Assistance for|Department of Human _—‘[47.0 |Payments to Actual Clearance, ZBA- |0 Days
Needy Families Resources 0 Beneficiaries Same Day Payment.
93,558 | Temporary Assistance for|Depariment of Human [44.0 | Administrative Costs- Scheduled Draws NIA
Needy Families Resources 0 Other and Indirect Costs_|Funding
93,558 | Temporary Assistance for |Department of Human 9.00 | Administrative Costs- Actual Costs - Estimated |1 Day
Needy Families Resources Payroll Allocation - Monthly
93.767 | Children's Health Department of Public 10.0 |Medical Payments Actual Clearance, ZBA- |0 Days
Insurance Program Health 0 ‘Same Day Payment
93.767 |Children’s Health Department of Public 90.0 |Administrative Costs Scheduled Draws NIA
insurance Program Health 0 Funding
93.778 |Medical Assistance Alabama Medicaid 5.00 | Benefits Grant (CMS. Actual Clearance, ZBA- |0 Days
Agency Medicare Premium Same Day Payment
Payments)
93.778 |Medical Assistance Alabama Medicaid 92.0 |Benefits Grant (Payments| Actual Clearance, ZBA- |0 Days
Program Agency 0 to Service Providers Same Day Payment
through the Fiscal Agent)
93.778 | Medical Assistance Alabama Medicaid 3.00 | Administrative Costs- Scheduled Draws NIA
Program Agency Payroll, Administrative Funding

| 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:

Printed Name:

Page 20 of 21



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 %.

The State shall 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
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 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:

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

8.4.4 Funds received by the Department of Transportation from rentals of property and/or sale of property acquired with
Federal program funds of the Highway Planning and Construction and the Appalachian Development Highway System,
are considered to be program income. Under these conditions the State and Fiscal Service agree no interest liability will
be incurred or calculated.

8.4.5 Funds received by the Alabama Medicaid Agency from drug rebates, property liens, recoupments from recipients,
and third party insurance in the administration of the Medical Assistance Program will be estimated at the beginning of
each quarter. Draws of Federal funds during the quarter will be reduced prorata (one-sixth) by these estimates with the
final estimate of each quarter being adjusted to actual for the quarter. Under these conditions the State and Fiscal
Service agree no interest liability will be incurred or calculated.

8.4.6 Funds received by the Alabama Department of Public Health from rebates under the Special Supplemental Nutrition
Program for Women, Infants and Children will be treated as program income. When rebates are received, no federal
funds will be drawn until the rebate is depleted. Under these conditions the State and Fiscal Service agree no interest
liability will be incurred or calculated.

Page 14 of 21


6.1.6 Pursuant to 31 CFR 205.9(d) and (e) regarding estimates, administrative costs-other and indirect costs of agencies
administering Federal programs, with the exception of the Department of Transportation, Department of Education,
Department of Public Health, and the Department of Rehabilitation Services will be drawn on a scheduled draw basis
such that Federal funds will be drawn prorata 24 times per year to coincide with the State's semi-monthly payroll. This
means that the total amount of the Federal awards to be used for these costs will be equally divided over the course of the
fiscal year, and no reconciliation of estimate to actual is necessary. Under these conditions, the State and Fiscal Service
agree no interest liabilities will be incurred on the transfer of these funds for administrative costs-other and indirect costs.
The Department of Transportation's Federal billing program will include these type costs in its routine processing. The
Department of Education, Department of Public Health, the Alabama Medicaid Agency and the Department of
Rehabilitation Services will include these type costs in their routine processing. For these agencies, drawdowns of
Federal funds are based on actual invoices and/or amounts due to be paid out to the recipients, providers, contractors,
and employees. If at the time of the next drawdown there is either a deficiency or balance remaining from the previous
draw, an adjustment is made to increase or reduce the current drawdown by that amount.

6.2 Description of Funding Techniques

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

Actual Clearance, ZBA - Same Day Payment

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

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 shall be the amount the State expects to disburse. This
funding technique is not interest neutral.

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

Actual Costs - Estimated Allocation - Monthly

The State shall request funds once a month, such that they are deposited on the median day of the month, to fund the
activity of the prior 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 an estimate based on the actual costs of the month distributed to
the program according to the allocation of costs for the preceding six months. 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.

Page 5 of 21


Certifying Signature:

Title:

Page 21 of 21


Exhibit | - Funds Request and Receipt Times Schedule

State of Alabama
Federal Agency _ (Payment Type |Request Cut-Off Time |
|Agriculture-FNS ACH 11:59 PM
Agriculture-FNS. Fedwire 5:45 PM
|Agriculture-FS ACH 3:00 PM
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 2 days
Dept of Homeland Security (ODP) ACH. 2:00 PM 2 days
Dept of Homeland Security (ODP) Fedwire 2:00 PM 2 days
EPA ACH 2:00 PM 2 days
EPA Fedwire 2:00 PM O_day
Education ACH 3:00 PM. iday
Education Fedwire 2:00 PM Q day
Eneray ACH 4:00 PM 1 day
Energy Fedwire 3:00 PM 0 day
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 O_day
Interior-FWS ACH 11:59 PM 4day
Interior-FWS Fedwire 5:45 PM 0 day
Interior-OSM ACH 3:00 PM 4day
Interior-OSM Fedwire 4:00 PM. O day
Justice ACH 14:00 PM 6 days
Justice Fedwire 2:00 PM 2 days
Labor-Non-UTE_ ACH 3:00 PM. iday
Labor-UTF ACH 3:00 PM. iday
Labor-UTF Fedwire 3:00 PM. 10 day
National Science Foundation (NSF) ACH 8:00 PM 1 day
National Science Foundation (NSF) Fedwire 5:45 PM (O_day
Social Security Administration ACH 11:59 PM iday
Social Security Administration Fedwire 5:45 PM O day
Transportation (FAA) ACH 2:00 PM 1day
Transportation (FHWA) ACH 12:00 PM 3 days
Transportation (FHWA) Fedwire 12:00 PM. 0 day
‘Transportation (FTA) ACH 2:00 PM. 4day
Veterans Administration ACH 12:00 PM 3 days

Page 18 of 21


93.767 Children's Health Insurance Program

Recipient: Department of Public Health

% of Funds Agency Receives: 10.00

Component: Medical Payments

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

Recipient: Department of Public Health
% of Funds Agency Receives: 90.00
Component: Administrative Costs
Technique: Scheduled Draws Funding
Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Alabama Medicaid Agency

% of Funds Agency Receives: 5.00

Component: Benefits Grant (CMS Medicare Premium Payments)
Technique: Actual Clearance, ZBA - Same Day Payment
Average Day of Clearance: 0 Days

Recipient: Alabama Medicaid Agency

% of Funds Agency Receives: 92.00

Component: Benefits Grant (Payments to Service Providers through the Fiscal Agent)
Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Alabama Medicaid Agency

% of Funds Agency Receives: 3.00

Component: Administrative Costs-Payroll, Administrative Costs-Other and Indirect Costs
Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

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:

All programs with the exception of programs listed in Sections 7.1.1, 7.1.2, 7.1.3, 7.1.4, and 7.1.5.

7.1.1 Pursuant to 31 CFR 205.9(d) and (e) regarding estimates, administrative costs-other and indirect costs of agencies
administering Federal programs, with the exception of the Department of Transportation, Department of Education, and
the Department of Public Health, will be drawn on a scheduled draw basis such that Federal funds will be drawn prorata
24 times per year to coincide with the State's semi-monthly payroll. This means that the total amount of the Federal
awards to be used for these costs will be equally divided over the course of the fiscal year, and no reconciliation of

Page 10 of 21


10.553 School Breakfast Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: Payments to local Education Agencies (LEAs) and Other Recipients
Technique: Pre-lssuance

Average Day of Clearance: N/A

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: Payments to LEA and other recipients
Technique: Pre-Issuance

Average Day of Clearance: N/A

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

% of Funds Agency Receives: 77.00

Component: Vendor Payments to Food Providers

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Public Health

% of Funds Agency Receives: 23.00

Component: Administrative Costs-Payroll, Indirect Costs, Clinic Administration, and Administrative Costs-Other
Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

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

% of Funds Agency Receives: 17.00

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Labor

% of Funds Agency Receives: 83.00

Component: Administrative Costs-Payroll, Administrative Costs-Other and Indirect Costs
Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

17.225S Unemployment Insurance — State Benefit Account
Recipient: Department of Labor

% of Funds Agency Receives: 100.00

Component: Payments to Beneficiaries (UC)

Technique: Actual Clearance, ZBA - Same Day Payment

Page 7 of 21


Highway Composite (Average Clearance)

The Department of Transportation (DOT) will use an average clearance methodology described as follows: Using
department files, the DOT will capture federally participating expenditure data for the applicable CFDA numbers. The
dollar amounts of the expenditures will not be reduced by the State share of funding. The clearance time is the difference
between the disbursement redemption date and the expenditure posting date. A weighted clearance time is calculated by
multiplying the clearance time by a weighting factor. The weighting factor is the federally participating expenditure amount
divided by the total of all federally participating expenditure amounts of the disbursements redeemed in the reporting
period. The average clearance time is the sum of the weighted clearance times. All uncleared disbursements will have a
clearance time of three hundred sixty-five (365) days. All disbursements paid out by EFT/Direct Deposit Payroll will have
a weighted clearance time of zero (0). Any disbursements with negative clearance times will have a weighted clearance
time of zero (0). Disbursements that are cancelled and reissued or replaced by a duplicate will not be used in the average
clearance calculation. Expenditures that are not traceable back to the DOT's accounts payable system will not be used in
the average clearance calculation. These non-traceable expenditures are primarily the result of data entry errors and are
expected to be infrequent, irregular, and have an immaterial impact on the results of the average clearance calculation. All
requests for funds will be in accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The DOT
will use a weekly billing process for requesting Federal funds based on the federally participating expenditures posted
during the billing cycle with one Federal deposit on the date of average clearance. Any refunds and program income
received will be credited against the next billing cycle. Funds received by the DOT for rentals of property and/or sale of
property acquired with Federal program funds are considered to be program income. This funding technique is interest
neutral.

Scheduled Draws Funding

The State will draw Federal funds for administrative costs-payroll, administrative costs-other, and indirect costs on a
prorata basis to coincide with the semi-monthly payroll cycle (24 times per year) in accordance with 31 CFR 205.18(a).
The prorata amount of direct and indirect costs included in the drawdown will be based on the immediate cash needs to
cover projected direct and indirect cost expenditures allocable to the program until the next scheduled drawdown. Alll
requests will be made in accordance with the appropriate Federal agency cut-off times specified in Exhibit 1. Under these
conditions and in accordance with 31 CFR 205.12(d), no interest liability will be incurred or calculated on these revolving
loan funds. This funding technique is interest neutral.

6.3 Application of Funding Techniques to Programs

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

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

10.551 Supplemental Nutrition Assistance Program
Recipient: Department of Human Resources

% of Funds Agency Receives: 100.00

Component: Payments to Beneficiaries

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

Page 6 of 21


Exhibit Il - State of Alabama
LIST OF STATE CLEARANCE TIMES
(Rounded Dollar-Weighted Average Day of Clearance)
Clearance Times Where the Timing of A Draw Down Is Based on A Clearance

Pattern
CFDA} Program Name Recipient % Component Technique {
days: |
10.551 {Supplemental Nutrition |Department of Human 100. |Payments to Actual Clearance, ZBA- |0 Days
Assistance Program Resources 00__|Beneficiaries Same Day Payment
10.553 | School Breakfast Department of Education |100. |Payments to local Pre-Issuance NIA
Program (00 =| Education Agencies.
(LEAs) and Other
Recipients
10.555 |National Schoo! Lunch =| Department of Education }100. |Payments to LEA and Pre-lssuance NIA
Program 00__other recipients
10.557 | Special Supplemental Department of Public 77.0 |Vendor Payments to Actual Clearance, ZBA- |0 Days
Nutrition Program for Health o Food Providers Same Day Payment
‘Women, Infants, and
Children
10.557 | Special Supplemental Department of Public 23.0 |Administrative Costs- Scheduled Draws NIA
Nutrition Program for Health o Payroll, Indirect Costs, _ |Funding
‘Women, Infants, and Clinic Administration, and
Children Administrative Costs-
Other
17.225F |Unemployment Insurance | Department of Labor 17.0 |Payments to Actual Clearance, ZBA- |0 Days
-~- Federal Benefit 0 Beneficiaries Same Day Payment
Account and
Administrative Costs
17.225F |Unemployment Insurance |Department of Labor 83.0 |Administrative Costs- Scheduled Draws NIA
-- Federal Benefit ) Payroll, Administrative — | Funding
Account and Costs-Other and Indirect
Administrative Costs Costs
17.225S |Unemployment Insurance | Department of Labor 100. |Payments to Actual Clearance, ZBA- |0 Days
— State Benefit Account 00___|Beneficiaries (UC) Same Day Payment
20.205 | Highway Planning and Department of 100, |All Costs (Construction |Highway Composite 10 Days
Construction ‘Transportation 00 = jand Consultant (Average Clearance)
Contracts, Administrative,
Payroll, Indirect and
Reallocated)
23.003 |Appalachian Department of 100. |All Costs (Construction |Highway Composite 10 Days
Development Highway _| Transportation 00 {and Consultant (Average Clearance)
‘System Contracts, Administrative,
Payroll, Indirect and
Reallocation)
84.010 | Title | Grants to Local Department of Education |1.00 | Indirect Costs Actual Clearance, ZBA- |0 Days
Educational Agencies Same Day Payment
84.010 | Title | Grants to Local Department of Education |1.00 |Administrative Costs- Pre-Issuance N/A
Educational Agencies Payroll; Administrative
Costs-Other
84.010 | Title | Grants to Local Department of Education |98.0 |Payments to Local Pre-Issuance N/A
Educational Agencies 0 Education Agencies
(LEAs) and Other
Recipients
84.027 |Special Education ~ Department of Education |1.00 |Indirect Costs ‘Actual Clearance, ZBA- |0 Days
Grants to States Same Day Payment

Page 19 of 21


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

Recipient: Department of Education
% of Funds Agency Receives: 90.00

Component: Payments to Local Education Agencies (LEAs) and Other Recipients

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

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States

Recipient: Department of Rehabilitation Services

% of Funds Agency Receives: 6.00

Component: Indirect Costs

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

Recipient: Department of Rehabilitation Services
% of Funds Agency Receives: 30.00
Component: Administrative Costs - Payroll
Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Rehabilitation Services

% of Funds Agency Receives: 64.00

Component: Vendor Payments for Client Services and Other Recipients
Technique: Pre-Issuance

Average Day of Clearance: N/A

93.558 Temporary Assistance for Needy Families
Recipient: Department of Human Resources

% of Funds Agency Receives: 47.00

Component: Payments to Beneficiaries

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

Recipient: Department of Human Resources

% of Funds Agency Receives: 9.00

Component: Administrative Costs-Payroll

Technique: Actual Costs - Estimated Allocation - Monthly
Average Day of Clearance: 1 Day

Recipient: Department of Human Resources

% of Funds Agency Receives: 44.00

Component: Administrative Costs-Other and Indirect Costs
Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

Page 9 of 21


Cash Management Improvement Act Agreement
between
The State of Alabama
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 Alabama
(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 Alabama shall be the the State Comptroller 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.

2.3 All functions and duties undertaken pursuant to this Agreement will be performed in accordance with the Act and the
regulations and procedures prescribed thereunder. In the event of any inconsistency between this Agreement and 31
CFR Part 205, the regulations shall govern.

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS.
3.1 This Agreement shall take effect on 10/01/2017 and shall remain in effect until 09/30/2018.

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

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

Page 1 of 21


Departmental accounting files, payment document dates, disbursement issue dates, disbursement redemption dates, and
any other relevant data needed.

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.

7.6.1 The same method will be used to calculate dollar weighted average pre-issuance time using the date Federal funds
are deposited and the disbursement issue date to calculate pre-issuance time. (Dollar weighted average pre-issuance
time is added to dollar weighted average clearance time to get total days Federal cash is on hand to calculate interest.)

7.7 The State shall adjust each clearance pattem 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:

NIA

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

Page 12 of 21


estimate to actual is necessary. Under these conditions, the State and Fiscal Service agree no interest liabilities will be
incurred on the transfer of these funds for administrative costs-other and indirect costs. The Department of
Transportation's Federal billing program will include these type costs in its routine processing. The Department of
Education, Department of Public Health, and the Alabama Medicaid Agency will include these type costs in their routine
processing. For these agencies, drawdowns of Federal funds are based on actual invoices and/or amounts due to be
paid out to the recipients, providers, contractors, and employees. If at the time of the next drawdown there is either a
deficiency or balance remaining from the previous draw, an adjustment is made to increase or reduce the current
drawdown by that amount.

7.1.2 Pursuant to 31 CFR 205.9(d) and (e) regarding estimates, administrative costs-other and indirect costs of agencies
administering Federal programs, with the exception of the Department of Transportation, Department of Education, and
the Department of Public Health, will be drawn on a scheduled draw basis such that Federal funds will be drawn prorata
24 times per year to coincide with the State's semi-monthly payroll. This means that the total amount of the Federal
awards to be used for these costs will be equally divided over the course of the fiscal year, and no reconciliation of
estimate to actual is necessary. Under these conditions, the State and Fiscal Service agree no interest liabilities will be
incurred on the transfer of these funds for administrative costs-other and indirect costs. The Department of
Transportation's Federal billing program will include these type costs in its routine processing. The Department of
Education, Department of Public Health, and the Alabama Medicaid Agency will include these type costs in their routine
processing. For these agencies, drawdowns of Federal funds are based on actual invoices and/or amounts due to be
paid out to the recipients, providers, contractors, and employees. If at the time of the next drawdown there is either a
deficiency or balance remaining from the previous draw, an adjustment is made to increase or reduce the current
drawdown by that amount.

7.1.3 The State will not develop clearance patterns for the component parts of the programs that will use Actual
Clearance, ZBA - Same Day Payment.

7.1.4 The State will not develop clearance patterns for the component parts of the programs that will use Scheduled
Draws Funding.

7.1.5 The State will not develop clearance patterns for the programs that will use Payment Schedule Funding.
7.2 The following shall develop the State's clearance patterns:
Each State Agency will be responsible for developing the clearance pattern(s) for its applicable federal programs.

7.2.1 For the programs they administer, the Department of Education and the Department of Rehabilitation Services will
use disbursement clearance patterns developed using a census approach of 100% of the data. Disbursement issue dates
will be compared to the dates the disbursements are redeemed (paid) by the State Treasurer. For the purposes of this
calculation, all disbursements will be deemed cleared when 99% of the total dollar amount has been paid. From that
information, estimated daily clearance patterns and average clearance patterns are developed.

7.2.2 The Department of Human Resources (DHR) will use an actual activity clearance pattern where it is developed
using 100% of the data for its programs. Disbursement issue dates will be compared to the dates the disbursements are
tedeemed (paid) by the State Treasurer. For the purposes of this calculation, all disbursements will be deemed cleared
when 99% of the total dollar amount has been paid. From that information, estimated daily clearance pattems and
average clearance patterns are developed.

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

Page 11 of 21


Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 100.00

Component: All Costs (Construction and Consultant Contracts, Administrative, Payroll, Indirect and Reallocated)
Technique: Highway Composite (Average Clearance)

Average Day of Clearance: 10 Days

23.003 Appalachian Development Highway System

Recipient: Department of Transportation

% of Funds Agency Receives: 100.00

Component: All Costs (Construction and Consultant Contracts, Administrative, Payroll, Indirect and Reallocation)
Technique: Highway Composite (Average Clearance)

Average Day of Clearance: 10 Days

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

% of Funds Agency Receives: 1.00

Component: Indirect Costs

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

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Administrative Costs-Payroll; Administrative Costs-Other
Technique: Pre-lssuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 98.00

Component: Payments to Local Education Agencies (LEAs) and Other Recipients
Technique: Pre-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 Costs

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

Recipient: Department of Education
% of Funds Agency Receives: 9.00
Component: Administrative Costs-Payroll; Administrative Costs-Other

Page 8 of 21


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
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.

Page 4 of 21


8.5 Exemptions

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

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

8.6 State Interest Liabilities

8.6.1 The State shall be liable for interest on Federal funds from the date Federal funds are credited to a State account
until the date those funds are paid out for program purposes.

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

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 the State Treasury and the date those funds are debited from the State Treasury through
disbursement redemption.

8.6.2.2 Source of Data

The time period from receipt to issuance of Federal funds shall be determined from information captured by State
agencies managing those funds. State agencies are required to maintain records of Federal fund drawdowns for each
Federal program. Records of Federal fund drawdowns will be recorded by CFDA# and will include date requested, date
available at the bank, date credited to the State Treasury, amount of draw, etc. The time period from issuance of Federal
funds to the date funds are debited from the State Treasury through disbursement redemption shall be determined from
information captured by the agencies from information captured in the State of Alabama Accounting and Resource
System (STAARS) administered by the State Comptroller's Office. The STAARS will track disbursement issuance date
and disbursement redemption (paid) date.

8.6.2.3 Standards Applied

Statistical Sampling (Pre-Issuance):

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 disbursement in the sample population, the State shall:

1 subtract the deposit date from the issuance date

2 multiply the difference of step 1 by the disbursement 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 disbursement

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

Page 15 of 21


12.0 AUTHORIZED SIGNATURES

Kathleen D. Baxter, PhD, CGFM, CPM
State Comptroller

Date Submitted 06/01/2018

Corvelli A. McDaniel
Assistant Commissioner
Revenue Collections Management
Bureau of the Fiscal Service
U.S. Department of the TregSu

Date cove:
A A

Signature:

Page 17 of 21


Alabama Medicaid Agency
Department of Education

Department of Human Resources
Department of Labor

Department of Public Health
Department of Rehabilitation Services
Department of Transportation

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

HP Corporation 93.778 Medical Assistance Program
United Community Bank 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children
Xerox 10.551 Supplemental Nutrition Assistance Program

6.0 FUNDING TECHNIQUES
6.1 General Terms

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

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

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

6.1.4 Estimates and Reconciliation of Estimates:

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

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

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

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

Page 3 of 21


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.

3.5 The State representative identified in Section 1.1 of this agreement may designate a staff member(s) to act as his
agent in negotiating amendments with Fiscal Service's designated agent.

4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on the amounts of
Federal financial assistance received and disbursed by the State, excluding Federal funds received and disbursed by
institutions of higher education, hospitals, and non-profit organizations, as reviewed in the Single Audit for fiscal year
ending 09/30/2016.

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

4.2 The State's threshold for major Federal assistance programs is $54,432,905,
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
17.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs
17.225S Unemployment Insurance — State Benefit Account

20.205 Highway Planning and Construction

23.003 Appalachian Development Highway System

84.010 Title | Grants to Local Educational Agencies

84.027 Special Education —- Grants to States

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

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

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

There are currently no programs listed for Section 4.3.

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

5.0 ENTITIES COVERED

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

Page 2 of 21


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

Actual Clearance, ZBA - Same Day Payment
Actual Costs - Estimated Allocation - Monthly
Highway Composite (Average Clearance)
Scheduled Draws Funding

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

8.1.3 Federal funds drawn down by the State on an accural basis for future or contingency needs, as in the case of self-
insurance reserve funds or accrued employee leave, will be excluded from the interest calculations and reporting set forth
in this Agreement.

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 shail 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

Page 13 of 21


8.6.2.4 Calculation Procedure
Pre-Issuance Time + Clearance Time:
l=Pxrx {Pl + CT}, where

| = State's total interest liability

P = Total annual expenditures of Federal funds for program or component cash flow of program

r= Annualized rate equal to the average equivalent yields of 13-week Treasury bills auctioned during a State's fiscal year
divided by 365 days

PI = Dollar-weighted average number of days Federal funds are held by State prior to issuance

CT = Dollar-weighted average number of days Federal funds are held by State between issuance and clearance of
disbursements, as determined by the appropriate clearance pattern in Exhibit 11

9.0 REVERSE FLOW PROGRAMS

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

10.0 INTEREST CALCULATION COSTS

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

10.2 The State expects to incur the following types of interest calculation costs:

Actual staff time, actual computer time, and other actual expenses incurred to establish clearance patterns, make interest
calculations, and prepare the annual report.

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.

11.2 The provisions of 31 CFR Part 205.32-205.35 Sub-Part B covering Federal Assistance Programs not included in this
agreement (Non-Major Programs) provide that if a State demonstrates an unwillingness or inability to comply with this
Subpart, the Secretary may require the State and a Federal agency to cover additional programs in the same manner as
Major Federal Programs. The State and the Secretary agree to a reasonable period of time of no less than 90 days to
correct any funding problems within a Non-Major Federal Program prior to the Secretary mandating their inclusion under
this agreement in the same manner as Major Federal Programs.

Page 16 of 21