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 07/01/2017 and shall remain in effect until 06/30/2018. 

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. 

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. 

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4.0 PROGRAMS COVERED 

4.1 The State's threshold and its major Federal assistance programs shall be determined based on 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 06/30/2016. 

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 $22,869,623. 

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

10.551 Supplemental Nutrition Assistance Program 

10.555 National School Lunch Program 

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

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 

93.558 Temporary Assistance for Needy Families 

93.767 Children's Health Insurance Program 

93.778 Medical Assistance Program 

96.006 Supplemental Security Income 

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: 

84.063 Federal Pell Grant Program --- Exclusion:Federal Statute - Full Exemption 

84.268 Federal Direct Student Loan --- Exclusion:Federal Statute - Full Exemption 

4.5 State must notify Fiscal Service in writing within 30 days of the time State becomes aware of a Federal Assistance 

program change. 

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 Health 

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Department of Human Services 

Department of Labor and Industrial Relations 

Department of Transportation 

Hawaii Public Housing Authority 

5.2 Entities that meet the definition of a Fiscal Agent per 31 CFR Part 205 shall be subjectto 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: 

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

Conduent State Healthcare, LLC 93.778 Medical Assistance Program 

Fidelity Information Services, LLP (FIS) 10.551 Supplemental Nutrition Assistance Program 

Fidelity Information Services, LLP {FIS) 93.558 Temporary Assistance for Needy Families 

United Community Bank 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children 

6.0 FUNDING TECHNIQUES 

6.1 General Terms 

6.1.1 The State shall request Federal funds in accordance with the appropriate cut-off times shown in Exhibit 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. 

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 

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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. 

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6.2 Description of Funding Techniques 

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

which the funding technique is applied in section 6.3.2 of this Agreement. 

Actual Clearance, ZBA - ACH 

The State shall request funds such that they are deposited by ACH in a State account on the settlement date of payments 

issued by the State. The request shall be made in accordance with the appropriate Federal agency cut-off time specified 

in Exhibit 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. 

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 cutoff 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 determined by applying 

the indirect cost rate to the appropriate cost base estimated in accordance with the drawdowns. This funding technique is 

interest neutral. 

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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. 

Reverse Flow Program - SSI (CFDA 96.006) 

In accordance with the terms in Section 9.0 of this Agreement, the Federal Government makes payments on behalf of the 

State for the Supplemental Security Income (SSI) program, CFDA No. 96.006. This funding technique is interest neutral. 

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. 

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

The State shall request funds such that they are deposited by ACH on the dollar-weighted average day of clearance for 

the disbursement, in accordance with the clearance pattern specified in Exhibit II. In accordance with Title 49 United 

States Code, Section 47111, payment request over 90% of the grant will require FM 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 appropriate 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. 

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: CFDA 10.555 National School Lunch Program Payments (EON) (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 cutoff 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. 

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

The State shall bill and request Highway Planning and Construction funds semi-monthly during the month immediately 

following the month vendors were paid and the month payroll was disbursed. 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 

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6.3.1 The State shall apply the following funding techniques when requesting Federal funds for the component cash flows 

of the programs listed in sections 4.2 and 4.3 of this Agreement. 

6.3.2 Programs 

Below are programs listed in Section 4.2 and Section 4.3. 

10.551 Supplemental Nutrition Assistance Program 

Recipient: Department of Human Services 

% of Funds Agency Receives: 100.00 

Component: All Program Funds 

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: 100.00 

Component: Benefit payments 

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

Average Day of Clearance: 0 Days 

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

Recipient: Department of Health 

% of Funds Agency Receives: 69.00 

Component: Food Rebate (16.0%); Food Benefit (53.0%) 

Technique: Actual Clearance, ZBA - Same Day Payment 

Average Day of Clearance: 0 Days 

Recipient: Department of Health 

% of Funds Agency Receives: 2.00 

Component: Indirect Costs (Nutrition Services and Administrative [NSA]) 

Technique: Indirect Cost Rates - Proportionate Shares 

Average Day of Clearance: NIA 

Recipient: Department of Health 

% of Funds Agency Receives: 29.00 

Component: Direct Administrative and Payroll (Nutrition Services and Administrative [NSA]) 

Technique: Pre-Issuance 

Average Day of Clearance: NIA 

14.195 Section 8 Housing 

Recipient: Hawaii Public Housing Authority 

% of Funds Agency Receives: 100.00 

Component: All Program Funds 

Technique: Actual Clearance, ZBA-ACH 

Average Day of Clearance: 0 Days 

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14.871 Section 8 Housing Choice Vouchers 

Recipient: Hawaii Public Housing Authority 

% of Funds Agency Receives: 100.00 

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 

% of Funds Agency Receives: 25.00 

Component: Other Costs 

Technique: Direct Administrative Costs - Drawdowns on a Payroll Cycle 

Average Day of Clearance: 0 Days 

Recipient: Department of Labor and Industrial Relations 

% of Funds Agency Receives: 75.00 

Component: Payroll 

Technique: Direct Administrative Costs - Drawdowns on a Payroll Cycle 

Average Day of Clearance: 0 Days 

17.225S Unemployment Insurance -- State Benefit Account 

Recipient: Department of Labor and Industrial Relations 

% of Funds Agency Receives: 100.00 

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: 99.60 

Component: Construction and Consultant Cost 

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

Average Day of Clearance: 7 Days 

Recipient: Department of Transportation 

% of Funds Agency Receives: 0.40 

Component: Administrative Cost (0.40%) 

Technique: Payment Schedule (Monthly Drawdown):(SU) 

Average Day of Clearance: 0 Days 

20.205 Highway Planning and Construction 

Recipient: Department of Transportation 

% of Funds Agency Receives: 100.00 

Component: All Program Funds 

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

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Average Day of Clearance: 8 Days 

84.010 Title I Grants to Local Educational Agencies 

Recipient: Department of Education 

% of Funds Agency Receives: 100.00 

Component: All Program Funds 

Technique: Payment Schedule (Monthly Drawdown):(SU) 

Average Day of Clearance: 0 Days 

84.027 Special Education -- Grants to States 

Recipient: Department of Education 

% of Funds Agency Receives: 100.00 

Component: All Program Funds 

Technique: Payment Schedule (Monthly Drawdown):(SU) 

Average Day of Clearance: 0 Days 

93.558 Temporary Assistance for Needy Families 

Recipient: Department of Human Services 

% of Funds Agency Receives: 88.00 

Component: Electronic Benefit Payments for Temporary Assistance to Needy Family 

Technique: Actual Clearance, ZBA-ACH 

Average Day of Clearance: 0 Days 

Recipient: Department of Human Services 

% of Funds Agency Receives: 12.00 

Component: Administrative Costs 

Technique: Payment Schedule (Monthly Drawdown):(SU) 

Average Day of Clearance: 0 Days 

93.767 Children's Health Insurance Program 

Recipient: Department of Human Services 

% of Funds Agency Receives: 100.00 

Component: All Program Funds 

Technique: Post-Issuance 

Average Day of Clearance: 1 Day 

93.778 Medical Assistance Program 

Recipient: Department of Human Services 

% of Funds Agency Receives: 100.00 

Component: Benefit Payments - Medquest and Medicaid 

Technique: Post-Issuance 

Average Day of Clearance: 1 Day 

96.006 Supplemental Security Income 

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Recipient: Department of Human Services 

% of Funds Agency Receives: 100 .00 

Component: Benefit payment 

Technique: Reverse Flow Program - SSI (CFDA 96.006) 

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: 

a. Functional Payment: Payroll - State Central Payroll Checks 

b. The programs as described in section 4.2 that meet or exceed the threshold (except CFDA 96.006) 

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: 

State's central Financial Accounting and Management Information System (FAMIS), Check Reconciliation System, Check 

Writing System and 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. 

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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 

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 I 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: 

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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: CFDA 10.555 National School Lunch Program Payments (EON) (SU) 

Reverse Flow Program - SSI (CFDA 96.006) 

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 

(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: 

Average Daily Balance: 

The State shall track the actual cash activity for each Federal program by its own account. A negative cash balance at 

the close of business indicates the State paid out its own funds for program purposes in the absence of supporting 

Federal funds. The. Federal interest liability shall be calculated by applying the daily interest to a program's negative cash 

balance. 

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%. 

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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: 

Refunds Deposited Randomly to Program: 

With programs to which applicable interest neutral funding techniques shall be applied, the State shall determine the 

actual amount of refunds received during the State fiscal year for each program using the information in its standard 

Federal financial status reports. For each program, the State shall estimate the number of days that refunds are held prior 

to being offset against a subsequent deposit of Federal funds. This shall be calculated as the average number of days 

between drawdown deposits, which is determined by dividing the total number of drawdowns into 365, and assuming that 

all refunds are received at the midpoint of the average number of days between drawdowns. 

With programs to which applicable non-interest neutral funding techniques shall be applied, the State shall also calculate 

the time refunds are in a State account by comparing the date the refund is offset against a subsequent deposit of Federal 

funds and the date the refund is paid out for program purposes. This period will be measured for each program in 

accordance with the State method for calculating interest under pre-issuance funding, and will be applied independently to 

the amount of refunds under each program to calculate the interest on refunds. 

8.4.4 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. 

8.5 Exemptions 

8.5.1 Where more than one State agency is a recipient of Federal funds under a program, a particular State agency's 

funding may be excluded from interest calculation procedures if the State agency receives an amount of funds less than 5 

Page 13 of 21 
% of the State's threshold for major Federal assistance programs. Notwithstanding this potential exemption, however, in 

no case shall less than 90% of a program's total funding be subject to interest calculation procedures. 

Proration of calculations: If less than total program funding is subject to interest calculation procedures, the resulting 

interest liability calculations shall be prorated to 100% of program funding. 

8.6 State Interest Liabilities 

8.6.1 The State shall be liable for interest on Federal funds from the date Federal funds are credited to a State account 

until the date those funds are paid out for program purposes. 

8.6.2 The State shall use the following method to calculate State interest liabilities on Federal funds: 

8.6.2.1 Measuring Time Funds Are Held 

Deposit to Clearance: 

To determine the total time Federal funds are held, the State shall measure the time between the date Federal funds are 

received and credit to a State's account and the date those funds are debited from the State's account. 

8.6.2.2 Source of Data 

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

expended by check from the State's account shall be determined from information captured in the Department of 

Education Central Accounting System, the Highways Billing System or the State's FAMIS. The check expended (issued) 

date is adjusted by the check clearance pattern specified in Exhibit II to arrive at the cash disbursed 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 

Average Daily Balance: 

I = ADB x R, where 

I = State's total interest liability 

ADB = Average Daily Balance of cash in a program's account, measured from deposit to clearance 

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

9.0 REVERSE FLOW PROGRAMS 

9.1 The Federal government makes payments on behalf of the State for the Supplemental Security Income (SSI) 

program. 

9.2 Definitions 

State Supplementary Payment (SSP): Monthly payment made by the State to the Social Security Administration (SSA), as 

Page 14 of 21 
a voluntary supplement to monthly SSI payments made by the SSA to the State' s SSI beneficiaries. 

SSI/SSP: The monthly SSI payment made by the SSA to beneficiaries, which combines both Federal SSI program funds 

and SSP funds. 

SSI/SSP Transfer Date: The dollar-weighted average day of clearance of the regularly issued monthly SSI/SSP checks 

issued by the SSA, adjusted to reflect three payment variations. 

Due Date: The day on which States are required to deposit funds to the SSA. 

Deposit Date: The day on which State funds are deposited to the SSA. 

9.3 Funding Technique 

The State and the Federal government will apply the following funding technique to the SSI program: 

Component: State Supplementary Payment 

Technique: SSI Funding Technique 

Description: In accordance with Public Law 106-170, the State shall deposit funds to the SSA no later than the business 

day preceding the date on which the SSA Commissioner pays monthly benefits, or with respect to monthly benefits paid 

for the month that is the last month of the State' s fiscal year, the fifth business day following such date. 

9.4 Clearance Pattern 

The SSI/SSP Transfer Date is determined by adjusting the dollar weighted average day of clearance for regularly issued 

monthly SSI/SSP checks, as determined by the Federal Reserve Bank's Survey of Float on US Government Checks, with 

. the three payment variations below, to reflect the proportion of SSI/SSP payments made to beneficiaries as follows: 

By check on days later in a month: To calculate this adjustment, SSA will determine the nationwide percentage of total 

SSI/SSP payments made to beneficiaries by check on days later in a month, using full data from the most recent Federal 

fiscal year. The average day of clearance for regularly issued monthly SSI/SSP checks shall be dollar-weighted for 

SSI/SSP payments made to beneficiaries by check on days later in the month, which are assumed to be issued on the 

11th business day of the month. 

By direct deposit on the regularly designated day of the month for delivery of SSI/SSP payments: To calculate this 

adjustment, SSA will determine the nationwide percentage of total SSI/SSP payments made to beneficiaries by direct 

deposit on the regularly designated day of the month for delivery of SSI/SSP payments, using full data from the most 

recent Federal fiscal year. The average day of clearance for regularly issued monthly SSI/SSP checks shall be dollarweighted with the average day of clearance for SSI/SSP payments made to beneficiaries by direct deposit on the regularly 

designated day of the month for delivery of SSI/SSP payments to beneficiaries. 

By direct deposit on days later in a month: To calculate this adjustment, SSA will determine the nationwide percentage of 

total SSI/SSP payments made to beneficiaries by direct deposit on days later in a month, using full data from the most 

recent Federal fiscal year. The average day of clearance for regularly issued monthly SSI/SSP checks shall be dollarweighted with the average day of clearance for SSI/SSP payments made to beneficiaries by direct deposit on days later in 

Page 15 of 21 
a month, which are assumed to be issued on the 11th business day of the month. 

9.5 Interest Calculations 

The Federal Government shall use the following methods to calculate and document Federal and State interest liabilities 

forSSI. 

To calculate the interest liability, SSA shall record the Deposit Date of each monthly SSP payment and compare it to the 

SSI/SSP Transfer Date for each month. The liability for interest will be based on the following: 

Payments received before the Due Date: The interest liability provisions of the CMIA do not apply to payments paid by a 

State before the Due Date, pursuant to Public Law 106-170. All payments received prior to the Due Date will be deemed 

as received on the Due Date, for the purposes of calculating interest. 

Payments received on the Due Date: A Federal interest liability should be computed from (1) the Due Date to (2) the day 

SSA pays out the State funds for program purposes (SSI/SSP Transfer Date). 

Payments received after the Due Date but on or before the SSI/SSP Transfer Date: Interest liability provisions of the 

CMIA do not apply. 

Payments received after the SSI/SSP Transfer Date: A State interest liability will accrue from (1) the SSI/SSP Transfer 

Date until (2) the day State funds are credited to the SSA. 

SSA shall calculate Federal and State interest liabilities on the variance between (1) the amount of the monthly State 

payment, which is an estimate, and (2) the actual monthly outlays for program purposes made by the SSA on behalf of 

the State. The monthly State payment includes the cumulative balance brought forward from the previous month. For 

each month of the State's fiscal year, SSA will compare the amount of the State payment to the amount of the actual 

outlays made on behalf of the State. To the extent the State payment (including the estimated cumulative balance) is 

greater than actual outlays, a Federal interest liability will accrue. To the extent the State payment (including estimated 

cumulative balance) is less than actual outlays, a State interest liability will be calculated. In either case, the interest 

liability will be calculated based on the difference in whole days from (1) the day the monthly State payment was 

deposited to a Federal account to (2) the day a subsequent monthly State payment is deposited to a Federal account. 

Any overpayment that results in a cumulative balance does not constitute an early deposit as defined in Public Law 106-

170, Section 410, Schedule for SSI Supplementation Agreements. 

9.6 Refunds 

Pursuant to 31 CFR 205.25 (c)(3), the State or the Federal government will not incur interest liabilities on refunds under 

the Supplemental Security Income Program as States are credited with the refunds in advance, before SSA collects the 

funds. 

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 

Page 16 of 21 
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: 

Computer Programming 

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.. 

Page 17 of 21 
12.0 AUTHORIZED SIGNATURES 

Wesley K. Machida 

Director of Finance 

State of Hawaii 

Department of Budget and Finance 

Signature: 

Date Submitted 12/27/201 

Corvelli A. McDaniel 

Assistant Commissioner 

Revenue Collections Management 

Date Signed: ~ ~/11 

Page 18 of 21 
Exhibit I - Funds Request and Receipt Times Schedule 

State of Hawaii 

Fedwire 5:45 PM 

ACH 3:00 PM 

ACH 12:00 PM 

Arm National Guard ACH 12:00 PM 

Commerce-NOAA ACH 2:00 PM 

De t of Homeland Securit FEMA Fedwire 2:00 PM 

De t of Homeland Securit ODP ACH 2:00 PM 

De t of Homeland Securit ODP Fedwire 2:00 PM 

EPA ACH 2:00 PM 

EPA Fedwire 2:00 PM 

Education ACH 3:00 PM 

Education Fedwire 2:00 PM 

ACH 4:00 PM 

Fedwire 3:00 PM 

HHS ACH 5:00 PM 

HHS Fedwire 3:00 PM 

HUD ACH 5:30 PM 

HUD Fedwire 3:00 PM 

lnterior-FWS ACH 11:59 PM 

lnterior-FWS Fedwire 5:45 PM 

lnterior-OSM ACH 3:00 PM 

lnterior-OSM Fedwire 1:00 PM 

Justice ACH 11 :00 PM 

Justice Fedwire 2:00 PM 

Labor-Non-UTF ACH 3:00 PM 

Labor-UTF ACH 3:00 PM 

Labor-UTF Fedwire 3:00 PM 

National Science Foundation NSF ACH 8:00 PM 

National Science Foundation NSF Fedwire 5:45 PM 

Social Securit Administration ACH 11:59 PM 

Social Securit Administration Fedwire 5:45 PM 

Trans ortation FAA ACH 2:00 PM 

FHWA ACH 12:00 PM 

Fedwire 12:00 PM 

Trans ortation FTA ACH 2:00 PM 

Veterans Administration ACH 12:00 PM 

Page 19 of 21 
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 

10.551 Supplemental Nutrition Department of Human 100. All Program Funds Actual Clearance, ZBA - 0 Days 

Assistance Pro ram Services 00 Same Da Pa ment 

10.555 National School Lunch Department of Education 100. Benefit payments Payment Schedule: 0 Days 

Program 00 CFDA 10.555 National 

School Lunch Program 

Pa ments EON SU 

10.557 Special Supplemental Department of Health 29.0 Direct Administrative and Pre-Issuance N/A 

Nutrition Program for 0 Payroll (Nutrition 

Women, Infants, and Services and 

Children Administrative NSA 

10.557 Special Supplemental Department of Health 69.0 Food Rebate (16.0%); Actual Clearance, ZBA - 0 Days 

Nutrition Program for 0 

Women, Infants, and 

Food Benefit (53.0%) Same Day Payment 

Children 

10.557 Special Supplemental Department of Health 2.00 Indirect Costs (Nutrition Indirect Cost Rates - N/A 

Nutrition Program for Services and Proportionate Shares 

Women, Infants, and Administrative [NSA]) 

Children 

14.195 Section 8 Housing Hawaii Public Housing 100. All Program Funds Actual Clearance, ZBA - 0 Days 

Authorit 00 ACH 

14.871 Section 8 Housing Hawaii Public Housing 100. All Program Funds Actual Clearance, ZBA - O Days 

Choice Vouchers Authorit 00 Same Da Pa ment 

17.225F Unemployment Insurance Department of Labor and 25.0 Other Costs Direct Administrative 0 Days -- Federal Benefit Industrial Relations 0 Costs - Drawdowns on a 

Account and 

Administrative Costs 

Payroll Cycle 

17.225F Unemployment Insurance Department of Labor and 75.0 Payroll Direct Administrative 0 Days -- Federal Benefit Industrial Relations 0 Costs - Drawdowns on a 

Account and 

Administrative Costs 

Payroll Cycle 

17.225S Unemployment Insurance Department of Labor and 100. Benefit Payments Actual Clearance, ZBA - O Days -- State Benefit Account Industrial Relations 00 Same Da Pa ment 

20.106 Airport Improvement Department of 0.40 Administrative Cost Payment Schedule 0 Days 

Program Transportation (0.40%) (Monthly 

Drawdown : SU 

20.106 Airport Improvement Department of 99.6 Construction and Average Clearance: 7 Days 

Program Transportation 0 Consultant Cost CFDA 20.106 Airport 

Improvement Program 

DOT SU 

20.205 Highway Planning and Department of 100. All Program Funds Semi-Monthly Billing: 8 Days 

Construction Transportation 00 CFDA 20.205 Highway 

Planning and 

Construction DOT SU 

84.010 Title I Grants to Local Department of Education 100. All Program Funds Payment Schedule O Days 

Educational Agencies 00 (Monthly 

Drawdown : SU 

84.027 Special Education -- Department of Education 100. All Program Funds Payment Schedule 0 Days Grants to States 00 (Monthly 

Drawdown : SU 

Page 20 of 21 
93.558 Temporary Assistance for Department of Human 12.0 Administrative Costs Payment Schedule 0 Days 

Needy Families Services 0 (Monthly 

Drawdown : SU 

93.558 Temporary Assistance for Department of Human 88.0 Electronic Benefit Actual Clearance, ZBA - 0 Days 

Needy Families Services 0 Payments for Temporary ACH 

Assistance to Needy 

Famil 

93.767 Children's Health Department of Human 100. All Program Funds Post-Issuance 1 Day 

Insurance Pro ram Services 00 

93.778 Medical Assistance Department of Human 100. Benefit Payments - Post-Issuance 1 Day 

Pro ram Services 00 Med uest and Medicaid 

96.006 Supplemental Security Department of Human 100. Benefit payment Reverse Flow Program - N/A 

Income Services 00 SSI CFDA 96.006 

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; 

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. 

;z/2 't /wit1 Date: __________________________ _ 

Printed Name: __ w_e_s_l_e_y_. K_._M_a_c_h_i_d_a _____________ _ 

Certtty;ng s;gnature: 

Title: Director of Finance 

Page 21 of 21