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Cash Management Improvement Act Agreement

between

The State of Hawaii

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 Hawaii (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 Hawaii shall be the Director of Finance in all matters concerning this Agreement.

1.2 The Assistant Commissioner, Revenue Collections Management, Bureau of the Fiscal Service (Fiscal Service), U.S. 

Department of the Treasury, shall act as the Secretary's representative in all matters concerning this Agreement.

2.0 AUTHORITY

2.1 The authority for this Agreement is the Cash Management Improvement Act of 1990 (Public Law 101-453), as amended by 

the Cash Management Improvement Act of 1992 (Public Law 102-589), codified at 31 U.S.C. 6501 and 31

U.S.C. 6503.

2.2 The regulations codified at 31 CFR Part 205 shall apply to all matters pertaining to this Agreement, and are incorporated 

herein by reference. In the event of any inconsistency between this Agreement and 31 CFR Part 205, the regulations shall govern.

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS

3.1 This Agreement shall take effect on 07/01/2021 and shall remain in effect until 06/30/2022.

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.

4.0 PROGRAMS COVERED

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4.1 The State's threshold and its major Federal assistance programs shall be determined based on the State's most recent Single 

Audit Reports. The State determined its threshold based on the Single Audits performed for its agencies receiving Federal 

financial assistance for fiscal year ending 06/30/2020.

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 $35,049,651.

The following programs meet or exceed the threshold and are not excluded in Section 4.4:

CFDA Program Name

10.551 Supplemental Nutrition Assistance Program

10.555 National School Lunch Program

14.195 Section 8 Housing

14.871 Section 8 Housing Choice Vouchers

17.225F Unemployment Insurance -- Federal Benefit Account and 

Administrative Costs

17.225S Unemployment Insurance -- State Benefit Account

20.106 Airport Improvement Program

20.205 Highway Planning and Construction

84.010 Title I Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

84.041 Impact Aid

84.063 Federal Pell Grant Program

84.268 Federal Direct Student Loan

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:

CFDA Program Name Exclusion Reason

21.019 Coronavirus Relief Fund Federal Statute - Full Exemption

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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:

Department of Education

Department of Human Services

Department of Labor and Industrial Relations

Department of Transportation

Hawaii Public Housing Authority

University of Hawaii

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:

Fiscal Agent CFDA Program Name

Fidelity National Information Services, 

Inc. (FIS)

10.551 Supplemental Nutrition Assistance 

Program

Fidelity National Information Services, Inc 

(FIS)

93.558 Temporary Assistance for Needy Families

Conduent State Healthcare, LLC 93.767 Children's Health Insurance Program

Conduent State Healthcare, LLC 93.778 Medical 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 I to ensure funds will 

be received and credited to a State account by the times specified in the funding techniques. Exhibit I is incorporated by reference 

herein.

6.1.2 The State shall schedule the receipt of Federal funds such that the funds are received and credited to a State account in 

accordance with the clearance patterns specified in Exhibit II - List of State Clearance Patterns. Exhibit II is incorporated by 

reference herein.

6.1.3 In instances where the receipt of funds is scheduled for a Saturday, the State shall request funds for deposit on Friday. In 

instances where the receipt of funds is scheduled for a Sunday, the State shall request funds for deposit on Monday. In instances 

where the receipt of Federal funds is scheduled for deposit on a day when the State is not open for business, the State shall request 

funds for deposit the day following the scheduled day; in instances where the receipt of Federal funds is scheduled for deposit on a 

day when the Federal Government is not open for business, the State shall request funds for deposit the day prior to the scheduled 

day.

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6.1.4 Estimates and Reconciliation of Estimates:

Where estimated expenditures are used to determine the amount of the drawdown, the State will indicate in the terms of the State 

unique funding technique how the estimated amount is determined and when and how the State will reconcile the difference 

between the estimate and the State's actual expenditures.

6.1.5 Supplemental Funding:

Unless otherwise defined by program rules, Supplemental Funding is the award of additional funds to provide for an increase in 

costs due to unforeseen circumstances.

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

The State will comply with the following guidelines when requesting supplemental funding for the Medical Assistance Program 

and associated administrative payments (CFDA 93.778):

The State must submit a revised Medicaid Program Budget Report (CMS-37) to request supplemental funding. The CMS guidelines 

and instructions for completing the CMS-37 are provided in Section 2600F of the State Medicaid Manual (SMM). The CMS/CO must 

receive the revised Form CMS-37 through the Medicaid Budget Expenditure System/Children's Budget Expenditure System

(MBES/CBES) no later than 10 calendar days before the end of the quarter for which the supplemental grant award is being 

requested.

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

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Upon receipt of the state's request for additional funding authority for a quarter, the ACF Regional Office will promptly review the 

supporting documentation. If the request is properly justified, so long as ACF has adequate funding availability, the State's request 

will be expedited and supplemental funding will be issued within 5 days of ACF receiving the request. The State will be notified by 

the Regional Office when the supplemental award has been transmitted to the Payment Management System (PMS) and when it 

may initiate drawdowns against the supplemental funding.

Additional guidance on this policy is provided in the U.S. Department of Health & Human Services, Administration for Children

and Families, letter (May 19, 2004) to State Administrators from the Deputy Assistant Secretary for Administration.

6.2 Description of Funding Techniques

6.2.1 The following are terms under which standard funding techniques shall be implemented for all transfers of funds to which the 

funding technique is applied in section 6.3.2 of this Agreement.

Funding Technique Name Description

Actual Clearance, ZBA - ACH The State shall request funds such that they are deposited by ACH in a State account 

on the settlement date of payments issued by the State. The request shall be made in 

accordance with the appropriate Federal agency cut-off time specified in Exhibit I. 

The amount of the request shall be for the amount of funds that clear the State's 

account on the settlement date. This funding technique is interest neutral.

Actual Clearance, ZBA - Same Day Payment The State shall request funds the same day it pays out funds, in accordance with the 

appropriate Federal agency cut-off time specified in Exhibit I. 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.

Post-Issuance The State shall request funds such that they are deposited in a State account after the 

State issues checks, but before the checks clear. The request shall be made in 

accordance with the appropriate Federal agency cut-off time specified in Exhibit I. 

The amount of the request shall be the amount of the disbursement. This funding 

technique is not 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 I. 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.

Funding Technique Name Description

Direct Administrative Costs - Drawdowns on 

a Payroll Cycle

The State shall request funds for all direct administrative costs such that they are 

deposited on the dollar-weighted average date of clearance of payroll. The request 

shall be made in accordance with the appropriate Federal agency cut-off time 

specified in Exhibit I. The amount of funds requested shall be based on the amount of 

liabilities recorded for direct administrative costs since the last request for funds. This 

funding technique is interest neutral.

Indirect Cost Rates - Proportionate Shares The State shall include a proportionate share of the indirect cost allowance in each 

request for funds by applying the indirect cost rate to the appropriate cost base of each 

drawdown. The request shall be made in accordance with the appropriate Federal 

agency cut-off time specified in Exhibit I. The amount of the request shall be 

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determined by applying the indirect cost rate to the appropriate cost base estimated in 

accordance with the drawdowns. 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 currently 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.

Funding Technique Name Description

Average Clearance: CFDA 20.106 Airport 

Improvement Program (DOT) (SU)

The State shall request funds such that they are deposited by ACH on the dollarweighted average day of clearance for the disbursement, in accordance with the 

clearance pattern specified in Exhibit II. In accordance with Title 49 United State 

Code, Section 47111, payment request over 90% of the grant will require FAA manual 

approval. Payment will be released after all financial close out documentation has 

been provided and approved. The request shall be made in accordance with the 

appropriated Federal agency cut-off time specified in Exhibit I. The amount of the 

request shall be for the exact amount of funds that clear the State's account that day. In 

addition, under this funding technique, the State agrees to waive any claim to a federal 

interest liability and will not calculate the federal interest liability. This funding 

technique is interest neutral. This funding technique is interest neutral.

Payment Schedule (Monthly Drawdown) 

(SU)

The State shall request funds once a month for amounts that were disbursed in the 

prior month. The State shall not draw down the funds earlier than the dollar-weighted 

average day of the clearance pattern for checks issued by the applicable program. 

Neither the Federal Government nor the State shall incur an interest liability under the 

application of this technique. This funding technique is interest neutral.

Payment Schedule (Weekly Drawdown) 

(SU)

The State shall request funds once a week for amounts that were disbursed in the prior 

week. The State shall not draw down the funds earlier than the dollar-weighted 

average day of the clearance pattern for checks issued by the applicable program. 

Neither the Federal Government nor the State shall incur an interest liability under the 

application of this technique. This funding technique is interest neutral.

Payment Schedule – Variation: CFDA 

84.041 Impact Aid Program (EDN) (SU)

The Federal Government shall make periodic payments to the State in accordance 

with 34 CRF Part 219 and 34 CRF Part 222. The State Department of Education is 

solely responsible for education and public instruction throughout the State, including 

education at the pre-school, primary, and secondary levels. The U.S. Secretary of 

Education determines when the State is to receive funds and in what amount. The 

State does not drawdown the funds. Neither the Federal Government nor the State 

shall incur an interest liability under this technique. This funding technique is interest 

neutral.

Payment Schedule: CFDA 10.555 National 

School Lunch Program Payments (EDN) 

(SU)

The State shall request funds once a month from the United States Department of 

Agriculture (USDA) for other private schools, charter schools, and residential 

institutions. The request will be made within 25 business days after the State has 

submitted the Food Nutrition Services (FNS)-10 (30 day) report to USDA in 

accordance with the appropriate Exhibit I cut-off time. The funds request is based on 

the FNS-10 (30 day) report -number of meals served and the reimbursement rate 

prescribed under 7 Code of Federal Regulations (CRF) 210. The State shall request 

additional funds within 25 business days after the State has submitted the FNS-10 (90 

day) report to USDA for any claim adjustments to the FNS-10 (30 day) report. This 

funding technique is interest neutral.

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Same Day or Weekly Drawdown: CFDA 

84.063 and 84.268 (UH) (SU)

The State shall request funds immediately following the distribution of aid or crediting 

of a loan to a student recipient. The federal agency will deposit funds into a state 

account in accordance with the schedule outlined in Exhibit 1. The amount requested 

shall be the amount of the federally approved aid or loan proceeds credited over the 

previous award period This funding technique is interest neutral.

Semi-Monthly Billing: CFDA 20.205 

Highway Planning and Construction (DOT) 

(SU)

The State shall bill and request Highway Planning and Construction funds semimonthly during the month immediately following the month after labor and non-labor 

expenses are incurred and paid using local, non-federal funds by the State or a 

subrecipient. The request shall be made in accordance with the appropriate Federal 

agency cut-off time specified in Exhibit I. Since the State does not bill weekly, the 

Federal interest liability shall not accrue prior to the day the State submits a request 

for funds. In addition, under this funding technique, the State agrees to waive any 

claim to a federal interest liability and will not calculate the federal interest liability. 

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 Services

% of Funds Agency Receives: 100

Component: Direct wire settlement to the Electronic Benefit Transfer 

(EBT) system contractor or by Electronic Fund Transfer.

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 100

Component: Benefit payments

Technique: Payment Schedule: CFDA 10.555 National School Lunch 

Program Payments (EDN) (SU)

Average Day of Clearance: N/A

14.195 Section 8 Housing

Recipient: Hawaii Public Housing Authority

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

14.871 Section 8 Housing Choice Vouchers

Recipient: Hawaii Public Housing Authority

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

17.225F Unemployment Insurance -- Federal Benefit Account and 

Administrative Costs

Recipient: Department of Labor and Industrial Relations

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% of Funds Agency Receives: 75

Component: Payroll

Technique: Direct Administrative Costs - Drawdowns on a Payroll 

Cycle

Average Day of Clearance: N/A

17.225F Unemployment Insurance -- Federal Benefit Account and 

Administrative Costs

Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 25

Component: Other Costs

Technique: Direct Administrative Costs - Drawdowns on a Payroll 

Cycle

Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 100

Component: Benefit Payments

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

20.106 Airport Improvement Program

Recipient: Department of Transportation

% of Funds Agency Receives: .4

Component: Administrative Cost

Technique: Payment Schedule (Monthly Drawdown) (SU)

Average Day of Clearance: N/A

20.106 Airport Improvement Program

Recipient: Department of Transportation

% of Funds Agency Receives: 99.6

Component: Construction and Consultant Cost (99.60%)

Technique: Average Clearance: CFDA 20.106 Airport Improvement 

Program (DOT) (SU)

Average Day of Clearance: N/A

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Semi-Monthly Billing: CFDA 20.205 Highway Planning 

and Construction (DOT) (SU)

Average Day of Clearance: N/A

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Payment Schedule (Weekly Drawdown) (SU)

Average Day of Clearance: N/A

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Payment Schedule (Weekly Drawdown) (SU)

Average Day of Clearance: N/A

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84.041 Impact Aid

Recipient: Department of Education

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Payment Schedule – Variation: CFDA 84.041 Impact Aid 

Program (EDN) (SU)

Average Day of Clearance: N/A

84.063 Federal Pell Grant Program

Recipient: University of Hawaii

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Same Day or Weekly Drawdown: CFDA 84.063 and 

84.268 (UH) (SU)

Average Day of Clearance: N/A

84.268 Federal Direct Student Loan

Recipient: University of Hawaii

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Same Day or Weekly Drawdown: CFDA 84.063 and 

84.268 (UH) (SU)

Average Day of Clearance: N/A

93.558 Temporary Assistance for Needy Families

Recipient: Department of Human Services

% of Funds Agency Receives: 88

Component: Electronic Benefit Payments for Temporary Assistance to 

Needy Family

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

93.558 Temporary Assistance for Needy Families

Recipient: Department of Human Services

% of Funds Agency Receives: 12

Component: Administrative Costs

Technique: Payment Schedule (Monthly Drawdown) (SU)

Average Day of Clearance: N/A

93.767 Children's Health Insurance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100

Component: All Program Funds

Technique: Post-Issuance

Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100

Component: Benefit Payments - Med-QUEST and Medicaid

Technique: Post-Issuance

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

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

a. Functional Payment: Payroll - State Central Payroll Checks

b. The programs as described in section 4.2 that meet or exceed the threshold

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

Department of Budget and Finance

Department of Accounting and General Services, Information & Communication Services Division

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

The State of Hawaii’s Financial Accounting and Management Information System (FAMIS), Check Reconciliation System, and Check 

Writing System. The Department of Education’s Central Accounting System.

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

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

period of at least three months.

7.5 The State shall identify for each check or warrant (hereafter, check) in the population: (1) the date the check was released 

for payment; (2) the date the check was debited from the State's account, and, (3) the amount of the check.

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

To determine the number of days each check was outstanding (clearance time), the issue date shall be subtracted from the date the 

check cleared the State's account.

To determine the percentage of the disbursement paid out each day following issuance, the amount of the checks that clear the

State's account each day shall be summed and then divided by the amount of the total disbursement.

For each day following issuance, the clearance time of the checks paid out that day shall be multiplied by the percentage of the total 

disbursement those checks represent. This product is the clearance factor.

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

following the disbursement.

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

with the following exceptions:

None.

The State shall also adjust each clearance pattern to reflect:

The State shall adjust each clearance pattern to reflect actual date the checks cleared the State's bank account for other than Department 

of Education checks. To arrive at the date the check was debited from the State's account (7.5, Item 2) the average day of clearance 

must be reduced by 1.45 days. The State computer files show the cashed date as the date the checks were returned to the State Treasury 

by the drawee bank. However, the checks were redeemed and charged to the State's bank account by the drawee bank on the prior

banking day. Accordingly, the average day of clearance is overstated by approximately 1.45 calendar days. The "rounded average day 

of clearance" in Exhibit II is adjusted to reflect the day the checks were cashed at the drawee bank and charged to the State's bank 

account. The following is the computation of the 1.45 days factor:

State of Hawaii Agencies (Other than Department of Education)

Clearance Pattern Adjustment:

Check Cashed by Bank; Recorded Cashed by State; Difference-Cashed & Recorded

Monday; Tuesday; 1 day

Tuesday; Wednesday; 1 day

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Wednesday; Thursday; 1 day

Thursday; Friday; 1 day

Friday; Monday; 3 days

Total difference = 7 days

Computation to determine number of days to be adjusted:

39 weeks x (7/5) = 54.60

(Holiday Factor) 13 weeks x (8/5) = 20.80

52 weeks = 75.40 / 52 weeks = 1.45 days

1.45 days will be reduced from the State-calculated clearance pattern to arrive at the clearance pattern to be used by the State in Exhibit 

II.

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:

Actual Clearance, ZBA - ACH

Actual Clearance, ZBA - Same Day Payment

Average Clearance: CFDA 20.106 Airport Improvement Program (DOT) (SU)

Direct Administrative Costs - Drawdowns on a Payroll Cycle

Indirect Cost Rates - Proportionate Shares

Payment Schedule (Monthly Drawdown) (SU)

Payment Schedule (Weekly Drawdown) (SU)

Payment Schedule – Variation: CFDA 84.041 Impact Aid Program (EDN) (SU)

Payment Schedule: CFDA 10.555 National School Lunch Program Payments (EDN) (SU)

Same Day or Weekly Drawdown: CFDA 84.063 and 84.268 (UH) (SU)

Semi-Monthly Billing: CFDA 20.205 Highway Planning and Construction (DOT) (SU)

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

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

(4) amount of Federal funds received

(5) date funds were requested

8.2 Federal Interest Liabilities

8.2.1 A Federal interest liability shall accrue from the day the State pays out its own funds for program purposes to the day Federal 

funds are credited to a State account. With regard to funds transferred out of the Federal Highway Trust Fund, if a State does not bill 

at least weekly for current project costs, the Federal interest liability shall not accrue prior to the day the State submits a request for 

funds.

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

For all transactions where the State pays out its own funds for program purposes prior to receiving Federal funds, the State shall track 

each payment from the date it is paid out of a State account to the date Federal funds are subsequently credited to a State account to 

cover that outlay. The Federal interest liability on each payment shall be based on the difference in whole days between the two events. 

With Federal-State matching programs, interest shall be calculated on the Federal percentage of the disbursement.

8.3 The Unemployment Trust Fund

8.3.1 The State shall use the following method to calculate State interest liabilities on funds withdrawn from the several accounts

in the Unemployment Trust Fund:

The State shall use the following methodology to calculate State interest liabilities on funds withdrawn from the several accounts in the 

UTF under the Unemployment Insurance program.

Based on statements provided by its financial institution, or other appropriate source, the State shall determine the actual interest 

earnings and the related banking costs attributable to funds withdrawn from its account in the UTF.

At the end of the State’s fiscal year, the State shall calculate the percentage of its total unemployment compensation expenditures for (1) 

funds withdrawn from the State account in the UTF, or the State %, and (2) funds withdrawn from the Federal Employees 

Compensation Account (FECA) and the Extended 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 States 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 States 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

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

For programs to which applicable non-interest neutral funding techniques are applied, each State agency shall maintain records 

identifying:

(1) the date of the refund

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

(3) the check issue date for the disbursement related to the subsequent deposit of Federal funds

(4) the amount of the refund

Interest shall be calculated based on the difference in whole days between the date the refund is deposited in a State account and the 

date the refund is paid out for program purposes. The State shall measure this period by dividing it into three periods: the pre-offset 

period, the pre-disbursement period, and the clearance period.

The pre-offset period is from deposit of the refund to the subsequent deposit of Federal funds against which the refund is offset. The 

pre-disbursement period is from the deposit of Federal funds against which the refund is offset to the issuance of checks, as measured 

by period one calculations. The clearance period is from the issuance of checks to the clearance of checks.

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 separately measure two time periods: (1) the date Federal funds are 

deposited to the date checks are issued; and (2) the date checks are issued to the date funds are debited from the State's account.

8.6.2.2 Source of Data

The time period from the date Federal funds are received and credited to a State account and the date those funds are 

expended by check from the State's account shall be determined from information captured in the State's FAMIS and 

supplementary accounting information kept at the department or agency-level. The check expended (issued) date is 

adjusted by the check clearance pattern specified in Exhibit II to arrive at the cash disbursement date.

8.6.2.3 Standards Applied

The average daily cash balance of Federal Funds in the program's account reflects the actual activity of each draw from the date of 

deposit to the date of issuance or clearance, whichever is pertinent.

8.6.2.4 Calculation Procedure

I = P x r x {PI + CT}, where

I = State's total interest liability

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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 checks, as 

determined by the appropriate clearance pattern in Exhibit II

8.7.0 Refunds for the Special Supplemental Food program (CFDA 10.557) is exempt from interest liabilities as long as the 

interest earned from the refund is used for program purposes.

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:

The State expects to incur the following costs for interest calculation and clearance pattern maintenance:

Staff Time

Systems Operations

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.

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12.0 AUTHORIZED SIGNATURES

Craig K. Hirai

Director of Finance State of Hawaii Department of Budget and Finance

Signature: Date Signed:

Date Submitted 8/24/2021

Sandra R. Paylor

Acting Assistant Commissioner

Revenue Collections Management

Bureau of the Fiscal Service

U.S. Department of the Treasury

Signature: Date Signed:

DocuSign Envelope ID: FF767A1F-2816-4F88-BEDB-1477C33E6660

8/27/2021

8/30/2021
Page 16 of 20

Exhibit I - Funds Request and Receipt Times Schedule

State of Hawaii

Federal Agency Payment Type Request Cut-Off Time Receipt Window

Agriculture-FNS ACH 11:59 PM 1 day

Agriculture-FNS Fedwire 5:45 PM 0 day

Agriculture-FS ACH 3:00 PM 1 day

Air National Guard ACH 12:00 PM 15 days

Army National Guard ACH 12:00 PM 15 days

Commerce-NOAA ACH 2:00 PM 1 day

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 0 day

Education ACH 3:00 PM 1 day

Education Fedwire 2:00 PM 0 day

Energy ACH 4:00 PM 1 day

Energy Fedwire 3:00 PM 0 day

HHS ACH 5:00 PM 1 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 1 day

Interior-FWS Fedwire 5:45 PM 0 day

Interior-OSM ACH 3:00 PM 1 day

Interior-OSM Fedwire 1:00 PM 0 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 1 day

Labor-UTF Fedwire 3:00 PM 0 day

National Science Foundation (NSF) ACH 8:00 PM 1 day

National Science Foundation (NSF) Fedwire 5:45 PM 0 day

Social Security Administration ACH 11:59 PM 1 day

Social Security Administration Fedwire 5:45 PM 0 day

Transportation (FAA) ACH 2:00 PM 1 day

Transportation (FHWA) ACH 12:00 PM 3 days

Transportation (FHWA) Fedwire 12:00 PM 0 day

Transportation (FTA) ACH 2:00 PM 1 day

Veterans Administration ACH 12:00 PM 3 days

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Exhibit II - State of Hawaii

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 Rounded 

days

10.551 Supplemental 

Nutrition 

Assistance 

Program

Department of 

Human Services

100.0 Direct wire 

settlement to the 

Electronic Benefit 

Transfer (EBT) 

system contractor or 

by Electronic Fund 

Transfer.

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

10.555 National School 

Lunch Program

Department of 

Education

100.0 Benefit payments Payment Schedule: 

CFDA 10.555 

National School 

Lunch Program 

Payments (EDN) 

(SU)

N/A

14.195 Section 8 Housing Hawaii Public 

Housing 

Authority

100.0 All Program Funds Actual Clearance, 

ZBA - ACH

0 Days

14.871 Section 8 Housing 

Choice Vouchers

Hawaii Public 

Housing 

Authority

100.0 All Program Funds Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

17.225

F

Unemployment 

Insurance --

Federal Benefit 

Account and 

Administrative 

Costs

Department of 

Labor and 

Industrial 

Relations

75.0 Payroll Direct 

Administrative 

Costs - Drawdowns 

on a Payroll Cycle

N/A

Unemployment 

Insurance --

Federal Benefit 

Account and 

Administrative 

Costs

Department of 

Labor and 

Industrial 

Relations

25.0 Other Costs Direct 

Administrative

Costs - Drawdowns 

on a Payroll Cycle

N/A

17.225

S

Unemployment 

Insurance -- State 

Benefit Account

Department of 

Labor and 

Industrial 

Relations

100.0 Benefit Payments Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

20.106 Airport 

Improvement 

Program

Department of 

Transportation

0.4 Administrative Cost Payment Schedule 

(Monthly 

Drawdown) (SU)

N/A

Airport 

Improvement 

Program

Department of 

Transportation

99.6 Construction and 

Consultant Cost 

(99.60%)

Average Clearance: 

CFDA 20.106 

Airport 

Improvement 

Program (DOT) 

(SU)

N/A

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20.205 Highway Planning 

and Construction

Department of 

Transportation

100.0 All Program Funds Semi-Monthly 

Billing: CFDA 

20.205 Highway 

Planning and 

Construction (DOT) 

(SU)

N/A

84.010 Title I Grants to 

Local Educational 

Agencies

Department of 

Education

100.0 All Program Funds Payment Schedule 

(Weekly 

Drawdown) (SU)

N/A

84.027 Special Education 

-- Grants to States

Department of 

Education

100.0 All Program Funds Payment Schedule 

(Weekly 

Drawdown) (SU)

N/A

84.041 Impact Aid Department of 

Education

100.0 All Program Funds Payment Schedule 

– Variation: CFDA 

84.041 Impact Aid 

Program (EDN) 

(SU)

N/A

84.063 Federal Pell Grant 

Program

University of 

Hawaii

100.0 All Program Funds Same Day or 

Weekly Drawdown: 

CFDA 84.063 and 

84.268 (UH) (SU)

N/A

84.268 Federal Direct 

Student Loan

University of 

Hawaii

100.0 All Program Funds Same Day or 

Weekly Drawdown: 

CFDA 84.063 and 

84.268 (UH) (SU)

N/A

93.558 Temporary 

Assistance for 

Needy Families

Department of 

Human Services

88.0 Electronic Benefit 

Payments for 

Temporary 

Assistance to Needy 

Family

Actual Clearance, 

ZBA - ACH

0 Days

Temporary 

Assistance for 

Needy Families

Department of 

Human Services

12.0 Administrative Costs Payment Schedule 

(Monthly 

Drawdown) (SU)

N/A

93.767 Children's Health 

Insurance 

Program

Department of 

Human Services

100.0 All Program Funds Post-Issuance N/A

93.778 Medical 

Assistance 

Program

Department of 

Human Services

100.0 Benefit Payments -

Med-QUEST and 

Medicaid

Post-Issuance N/A

Certification

I 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;

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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: 

Certifying Signature: 

Title: 

DocuSign Envelope ID: FF767A1F-2816-4F88-BEDB-1477C33E6660

8/27/2021

Director of Finance

Craig Hirai
Page 20 of 20

DocuSign Envelope ID: FF767A1F-2816-4F88-BEDB-1477C33E6660