Cash Management Improvement Act Agreement

between

The State of Tennessee

and

The Secretary of the Treasury,

United States Department of the Treasury

The Secretary of the Treasury, United States Department of the Treasury (hereafter 'Secretary'), and State of Tennessee

(hereafter 'State'), in order to implement Section 5 of the Cash Management Improvement Act of 1990, as amended

(hereafter 'Act'), agree as follows:

1.0 AGENTS OF THE AGREEMENT

1.1 The Authorized Official(s) for the State of Tennessee shall be the Chief of Accounts of the Department of Finance and

Administration in all matters concerning this Agreement.

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

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

2.0 AUTHORITY

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

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

U.S.C. 6503.

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

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

regulations shall govern.

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS

3.1 This Agreement shall take effect on 07/01/2018 and shall remain in effect until 06/30/2019.

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 Federal funds

expended reported in the State's Single Audit Report for fiscal year ending 06/30/2017.

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

this Agreement.

4.1.1 Total Federal assistance reported in the Schedule of Expenditures of Federal Awards for fiscal year 2017 exceeded

$10,000,000,000. According to CFR 31 Part 205.5 Table A, the State's threshold for major Federal assistance programs

is $60,000,000.

4.2 The State's threshold for major Federal assistance programs is $60,000,000.

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

10.551 Supplemental Nutrition Assistance Program

10.553 School Breakfast Program

10.555 National School Lunch Program

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

10.558 Child and Adult Care Food Program

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program

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

17.225S Unemployment Insurance -- State Benefit Account

20.205 Highway Planning and Construction

84.010 Title I Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

93.558 Temporary Assistance for Needy Families

93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

4.3 The following programs fall below the State's threshold but have been required to be covered by Fiscal Service in

accordance with the non-compliance provisions of Subpart B of 31 CFR Part 205:

There are currently no programs listed for Section 4.3.

4.4 The following programs exceed the State's threshold but have been excluded from coverage for the reason indicated:

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

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

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

93.268 Immunization Grants --- Exclusion:Non-Cash

5.0 ENTITIES COVERED

5.1 State agencies and instrumentalities that meet the definition of a State per 31 CFR Part 205, shall be subject to the

terms of this Agreement. The following is a list of such entities that administer funds under the programs listed in Section

4.0 of this Agreement:

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Bureau of TennCare

Department of Education

Department of Health

Department of Human Services

Department of Labor and Workforce Development

Department of Transportation

5.2 Entities that meet the definition of a Fiscal Agent per 31 CFR Part 205 shall be subject to the terms of this Agreement.

The following is a list of Fiscal Agents that administer funds under the programs listed in the Section 4.0 of this

Agreement:

Conduent State & Local Solutions, Inc. 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children

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

Xerox State & Local Solutions, Inc., DBA Conduent Inc. 10.551 Supplemental Nutrition Assistance Program

Xerox State & Local Solutions, Inc., DBA Conduent Inc. 93.558 Temporary Assistance for Needy Families

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):

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

guidelines and instructions for completing the CMS-37 are provided in Section 2600F of the State Medicaid Manual

(SMM). The CMS/CO must receive the revised Form CMS-37 through the Medicaid Budget Expenditure

System/Children's Budget Expenditure System (MBES/CBES) no later than 10 calendar days before the end of the

quarter for which the supplemental grant award is being requested.

Additional guidance on this policy is available from the respective CMS Regional Office, U.S. Department of Health &

Human Services.

The State will comply with the following guidelines when requesting supplemental funding for TANF (CFDA 93.558),

CCDF (CFDA 93.575), CSE (93.563), and the FC/AA (CFDA 93.658 and CFDA 93.659) programs administered by the

U.S. Department of Human Services, Administration for Children and Families (HHS/ACF):

a. Timing of the Request

A State should initiate its request for supplemental funding during a quarter as soon as it becomes aware of the fact that a

shortfall does/will exist. For the TANF and CCDF grants, supplemental funding requests (estimates) may be submitted by

a State, for consideration by ACF, up through and including the 15th day of the third month of the first, second or third

quarter of any fiscal year. Since TANF and CCDF are block grant programs, all unawarded portions of the annual

allotment will automatically be issued at the beginning of the fourth quarter. Therefore, supplemental funding requests will

not be available during the fourth quarter for these programs. For the CSE and FC/AA programs, supplemental funding

requests may be submitted by a state, for consideration by ACF, up through and including the 15th day of the third month

of any quarter of a fiscal year.

b. Justification for the Request

The request for a supplemental funding for any of the above mentioned programs should contain a justification clearly

documenting the need for the additional funding authority during the current quarter. This documentation should be in the

form of State accounting records or similar documents that will show the actual expenditures through the most recent

month for which such data are available, as well as the State's most accurate projection of its anticipated expenditures

during the remaining month(s) of the quarter. For either the TANF or the CCDF program, the State's justification should

also include an explanation of the activities requiring the obligation and/or expenditure of amounts that exceed the normal

quarterly grant award restrictions and why these activities could not have been delayed until the next quarter.

c. Form Submittal

Supplemental funding requests should be made by completing the appropriate ACF quarterly report of expenditures and

estimates applicable to the particular program for which the grant award request is being made.

d. Approval Process

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

review the supporting documentation. If the request is properly justified, so long as ACF has adequate funding

availability, the State's request will be expedited and supplemental funding will be issued within 5 days of ACF receiving

the request. The State will be notified by the Regional Office when the supplemental award has been transmitted to the

Payment Management System (PMS) and when it may initiate drawdowns against the supplemental funding.

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

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

Administration.

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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.

There are no funding techniques listed in Section 6.2.1

6.2.2 The following are terms under which funding techniques for administrative costs shall be implemented for all

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

There are no funding techniques listed in Section 6.2.2

6.2.3 The following are terms under which miscellaneous funding techniques shall be implemented for all transfers of

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

There are no funding techniques listed in Section 6.2.3

6.2.4 The following are terms under which State unique funding techniques shall be implemented for all transfers of funds

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

Cost Allocation Plan - Administrative and Indirect Cost

The State shall request daily the Federal share of administrative and/or indirect costs such that funds are deposited with

the Modified Post Issuance drawdown. The request for funds shall be made in accordance with the appropriate request

cut-off time specified in Exhibit I. The State shall request the appropriate Federal share of the administrative and/or

indirect costs based on actual costs incurred distributed in accordance with allocation statistics of a prior period.

Allocations (i.e. the actual allocation statistics used for the drawdowns) will be developed based on the most recent

quarterly statistical information (staffing patterns, expenditure information, etc.) available at October 1st and April 1st each

year. The final allocation of costs shall be made based on the agency's Federally approved Public Assistance Cost

Allocation Plan. In the event that a cost allocation plan has been submitted but not yet approved, the final allocations

shall be based on the agency's proposed cost allocation plan until such approval is obtained. Final adjustments shall be

made within 60 days of the end of a quarter. This funding technique is interest neutral.

Edison Indirect Costs

Federal funds equal to amounts billed on the Grants Invoice shall be requested on the billing report date of the Edison

Billing Worksheet and shall be received on the next Federal Reserve business day. The request for funds shall be made

in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request the appropriate

Federal share of the indirect costs based on the agencys Federally approved indirect cost rate plan, public assistance

cost allocation plan, or other methodologies. This funding technique is interest neutral.

Edison Modified Post Issuance

Federal funds equal to the amounts billed on the Grants Invoice shall be requested on the billing report date of the Edison

Billing Worksheet and shall be received in accordance with the receipt window as specified in Exhibit I. The request for

funds shall be made in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request

the appropriate Federal share of warrants, Automated Clearinghouse (ACH) payments, electronic funds transfer (EFT)

payments, and journals processed and billed to the program through the grant invoicing module of the Edison ERP

System. This funding technique is interest neutral.

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Edison Transportation Modified Post Issuance (Modified)

The weekly request shall be the sum of the billable Federal share of the payments issued in the series of disbursements.

The request shall be made two Federal Reserve business days after the bill date and shall be received by wire transfer

the same Federal Reserve business day. The request for funds shall be made in accordance with the appropriate request

cut-off time specified in Exhibit I. The State shall request the appropriate Federal share of warrants, Automated

Clearinghouse (ACH) payments, electronic funds transfer (EFT) payments, and journals processed and billed to the

program through the grant invoicing module of the Edison ERP System. This funding technique is interest neutral.

Edison Unemployment Insurance Modified Post Issuance

Federal funds equal to the amounts billed on the Grants Invoice shall be requested on the billing report date of the Edison

Billing Worksheet and shall be received by wire transfer on the same Federal Reserve business day. The request for

funds shall be made in accordance with the appropriate request cut off time specified in Exhibit I. The State shall request

the appropriate Federal share of warrants, Automated Clearinghouse (ACH) payments, electronic funds transfer (EFT)

payments, and journals processed and billed to the program through the grant invoicing module of the Edison ERP

System. This funding technique is interest neutral.

Modified Zero Balance Accounting

Payment from the Federal Government shall be received the next Federal Reserve business day. The request for funds

shall be made in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request funds

equal to actual voucher presentments and approved, cleared WIC transactions net of vendor reclaims and infant formula

adjustments the same day funds are expended. No request of Federal funds should be made if rebate funds are available

to offset presentments. This funding technique is interest neutral.

Zero Balance Accounting - Same Day Payment (Modified)

A Federal agency will deposit the funds by wire transfer the same day as requested. The request for funds shall be made

in accordance with the appropriate request cut-off time specified in Exhibit I. The State shall request funds equal to actual

recipient draws the same day funds are expended. This funding technique is interest neutral.

6.2.5 The State establishes a minimum draw criterion of $5,000 for each program identified in the Agreement. For

example, the State is not required to make fund requests until accumulated expenditures for a particular program are

equal to or exceed $5,000.

6.3 Application of Funding Techniques to Programs

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

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

6.3.2 Programs

Below are programs listed in Section 4.2 and Section 4.3.

10.551 Supplemental Nutrition Assistance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100.00

Component: Electronic Benefit Transfer (EBT) Client Benefit Payments

Technique: Zero Balance Accounting - Same Day Payment (Modified)

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Average Day of Clearance: N/A

10.553 School Breakfast Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

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

State Custody

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

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

State Custody

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

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

Recipient: Department of Health

% of Funds Agency Receives: 2.00

Component: Indirect Costs

Technique: Edison Indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Health

% of Funds Agency Receives: 37.00

Component: Administrative and Payroll Costs

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

Recipient: Department of Health

% of Funds Agency Receives: 61.00

Component: Vouchers and Approved, Cleared WIC Transactions

Technique: Modified Zero Balance Accounting

Average Day of Clearance: N/A

10.558 Child and Adult Care Food Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100.00

Component: Provider Claims

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

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10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 97.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation Plan - Administrative and Indirect Cost

Average Day of Clearance: N/A

Recipient: Department of Human Services

% of Funds Agency Receives: 3.00

Component: All Except Indirect and Administrative Costs

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

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

Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 10.00

Component: Indirect Costs

Technique: Edison Indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 88.00

Component: Unemployment Insurance Administrative Costs

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 2.00

Component: Benefit Payments

Technique: Edison Unemployment Insurance Modified Post Issuance

Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 1.00

Component: Unemployment Insurance Administrative Costs

Technique: Edison Unemployment Insurance Modified Post Issuance

Average Day of Clearance: N/A

Recipient: Department of Labor and Workforce Development

% of Funds Agency Receives: 99.00

Component: Benefit Payments

Technique: Edison Unemployment Insurance Modified Post Issuance

Average Day of Clearance: N/A

20.205 Highway Planning and Construction

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Recipient: Department of Transportation

% of Funds Agency Receives: 100.00

Component: All Project Cost Updates

Technique: Edison Transportation Modified Post Issuance (Modified)

Average Day of Clearance: N/A

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Indirect and Administrative Costs

Technique: Edison Indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 99.00

Component: Local Education Agencies and Vendor Payments

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Indirect and Administrative Costs

Technique: Edison Indirect Costs

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 99.00

Component: Local Education Agencies and Vendor Payments

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

93.558 Temporary Assistance for Needy Families

Recipient: Department of Human Services

% of Funds Agency Receives: 4.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation Plan - Administrative and Indirect Cost

Average Day of Clearance: N/A

Recipient: Department of Human Services

% of Funds Agency Receives: 46.00

Component: All except Continuing Benefit and Retroactive Payments and Indirect and Administrative Costs

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

Recipient: Department of Human Services

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% of Funds Agency Receives: 50.00

Component: Continuing Benefit and Retroactive Payments

Technique: Zero Balance Accounting - Same Day Payment (Modified)

Average Day of Clearance: N/A

93.596 Child Care Mandatory and Matching Funds of the Child Care and Development Fund

Recipient: Department of Human Services

% of Funds Agency Receives: 5.00

Component: Indirect and Administrative Costs

Technique: Cost Allocation Plan - Administrative and Indirect Cost

Average Day of Clearance: N/A

Recipient: Department of Human Services

% of Funds Agency Receives: 95.00

Component: All Except Indirect and Administrative Costs

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

93.767 Children's Health Insurance Program

Recipient: Bureau of TennCare

% of Funds Agency Receives: 100.00

Component: Medical and Dental Payments

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Bureau of TennCare

% of Funds Agency Receives: 100.00

Component: All Medical Assistance Payments

Technique: Edison Modified Post Issuance

Average Day of Clearance: N/A

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:

Department of Labor and Workforce Development 10.561 State Administrative Matching Grants for the Supplemental

Nutrition Assistance Program

Department of Environment and Conservation 20.205 Highway Planning and Construction

7.0 CLEARANCE PATTERNS

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

There are currently no program components listed in Section 7.1.

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

Tennessee Department of Treasury

Tennessee Department of Finance and Administration

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

State Treasurer's Accounts Reconciliation Package (ARP) system

State's central accounting system (Edison)

7.4 The State 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.

7.4.1 Under this agreement, in Section 7.4, "99% of the funds disbursed, from issuance to clearance" refers to and is

equal to "99% of the funds clearing and net of cancellations". The tracking period shall be at least three consecutive

months.

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

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

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

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

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

the date the check cleared the State's account.

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

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

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

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

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

of each day following the disbursement.

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

payroll, with the following exceptions:

No exceptions.

The State shall also adjust each clearance pattern to reflect:

Not applicable.

7.8 Each of the State's clearance patterns is calculated in calendar days.

7.9 An authorized State official shall certify that each clearance pattern developed by the State accurately corresponds to

the clearance activity of the programs to which it is applied. This certification shall be provided to the Fiscal Service prior

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to the effective date of the Agreement. The State shall recertify its clearance patterns at least every five years.

7.10 The State shall follow the procedures of 31 CFR 205 if it has actual or constructive knowledge, at any time, that a

clearance pattern does not correspond to a program's clearance activity.

8.0 INTEREST CALCULATION METHODOLOGY

8.1 General Terms

8.1.1 The State and the Secretary agree that no interest liabilities will be incurred for transfers of funds made in

accordance with the procedures specified in section 6 of this Agreement where the following funding techniques are

applied:

Cost Allocation Plan - Administrative and Indirect Cost

Edison Indirect Costs

Edison Modified Post Issuance

Edison Transportation Modified Post Issuance (Modified)

Edison Unemployment Insurance Modified Post Issuance

Modified Zero Balance Accounting

Zero Balance Accounting - Same Day Payment (Modified)

8.1.2 The State shall maintain information on disbursements and receipts of funds to verify the implementation of any

funding technique and document interest liabilities.

For each disbursement, the State shall be able to identify:

(1) amount of the issuance

(2) date of issuance

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

(4) amount of Federal funds received

(5) date funds were requested

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

clearance.

8.2 Federal Interest Liabilities

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

day Federal funds are credited to a State account. With regard to funds transferred out of the Federal Highway Trust

Fund, if a State does not bill at least weekly for current project costs, the Federal interest liability shall not accrue prior to

the day the State submits a request for funds.

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

For the following funding techniques:

Modified Zero Balance Accounting

Zero Balance Accounting - Same Day Payment

Edison Modified Post Issuance

Edison Transportation Modified Post Issuance

Edison Unemployment Insurance Modified Post Issuance

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A Federal interest liability shall accrue from the day the State should have received funds based on the specified funding

technique to the day Federal funds are credited to a State account.

A State interest liability shall accrue from the day Federal funds are credited to a State account to the day the State

should have received funds based on the specified funding technique.

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

the Federal percentage of the disbursement.

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

compliance date".

8.3 The Unemployment Trust Fund

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

accounts in the Unemployment Trust Fund:

The State has implemented the zero balance accounting-same day payment funding technique for funds withdrawn from

the State and Federal accounts with the Unemployment Trust Fund (UTF). This funding technique is interest neutral so

when properly applied, no interest is incurred of calculated. For transfers of funds that do not follow the technique

resulting in a positive balance, the State shall calculate interest as follows:

Interest Liability - State Unemployment Account

On a monthly basis, the State's Treasury Department publishes a State Pooled Investment Fund Average Earnings Rate

as well as an Administrative Fee Rate. Actual interest earnings and banking cost are determined by applying these rates

to the average daily cash balance of the unemployment compensation benefit payment account.

 

At the end of the fiscal year, the State shall calculate the percentage of its total unemployment compensation

expenditures for (1) funds withdrawn from the State account in the UTF, or the State percent, and (2) funds withdrawn

from the Federal Employees Compensation Account (FECA) and the Extended Unemployment Compensation Account

(EUCA) and any other accounts of Federal funds in the UTF, or the Federal percent.

The State shall calculate the actual interest earnings and the related banking costs attributable to funds withdrawn from

the State account in the Unemployment Trust Fund (UTF) by multiplying the amount of the actual interest earnings and

related banking costs of the account as a whole by the State percent. The State's liability for interest on funds withdrawn

from its account in the UTF shall consist of the actual interest earnings attributable to such funds less the related banking

costs.

Interest Liability - Federal Unemployment Accounts

The interest liability is calculated by multiplying the net daily balance (as defined in 8.6.2.4) by the annualized rate equal

to the average equivalent yields of the 13-week Treasury bills auctioned during the fiscal year.

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.

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

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

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

(3) amount of the refund

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

Refunds Deposited to Interest Neutral Programs

The State interest liability shall be based on the difference in whole days between the date the refund is deposited in a

State account and the date the refund is offset against a subsequent deposit of Federal funds where the following funding

techniques are applied:	

Modified Zero Balance Accounting	

Zero Balance Accounting Same Day Payment	

Edison Modified Post Issuance

Edison Transportation Modified Post Issuance

Edison Unemployment Insurance Modified Post Issuance	

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

identifying the:	

Amount of the refund	

Compliance date of the refund	

Date the refund is offset against subsequent deposit of Federal funds	

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

For refunds greater than $50,000, interest shall be calculated based on the difference in whole days between the date the

refund is credited to a State account and the compliance date of the refund paid out for program purposes. The

compliance date is based on the funding technique for each program component.

This applies where the Federal portion of the refund for a single CFDA number is greater than $50,000 and the refund is

for a program covered by this agreement.

8.4.4 Under this agreement "the date the refund is credited to a State account" refers to and is equal to the "compliance

date of the refund". "The date the refund is debited from the State account" refers to and is equal to "the date the refund

is paid out".

8.5 Exemptions

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

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

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

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

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

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

Page 14 of 21
8.6 State Interest Liabilities

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

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

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

8.6.2.1 Measuring Time Funds Are Held

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

received and credited to a State's account and the compliance date those funds are used for program purposes. This

time is measure in whole days.

8.6.2.2 Source of Data

All time periods shall be determined from information captured in the Edison ERP System, Accounts Reconciliation

Package (ARP), and information supplied by State agencies from agency-specific reporting systems or mechanisms.

8.6.2.3 Standards Applied

The net daily cash balance of Federal funds in the programs account reflects the actual activity based on each days net

cash transactions. The amount of funds received for a given day is assumed to be for that compliance dates net

expenditures.

8.6.2.4 Calculation Procedure

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

Net Daily Balance	

I = NDB X R where	

I = State or Federal Government's total interest liability	

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

R = Annualized rate equal to the average equivalent yields of 13-week Treasury	

bills auctioned during the State's fiscal year.	

The interest liability calculations shall be based on whole days.

8.7 The State shall make daily inquiries in the appropriate Federal payment system to determine funds availability and

request funds, if available. If Federal funds are not available, inquiries will be made daily in the system until funds are

available and can be requested.

9.0 REVERSE FLOW PROGRAMS

The State is not required to cover any reverse flow programs under the terms of this Agreement because the program

falls below the State's threshold.

Page 15 of 21
10.0 INTEREST CALCULATION COSTS

10.1 As set forth in 31 CFR 205.27, interest calculation costs are defined as those costs necessary for the actual

calculation of interest, including the cost of developing and maintaining clearance patterns in support of the interest

calculations. Interest calculation costs do not include expenses for normal disbursing services, such as processing of

checks or maintaining records for accounting and reconciliation of cash balances, or expenses for upgrading or

modernizing accounting systems. Interest calculation costs in excess of $50,000 in any year are not eligible for

reimbursement, unless the State provides justification with the annual report.

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

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

10.3 The State shall submit all claims for reimbursement of interest calculation costs with its Annual Report in accordance

with 31 CFR 205.

10.4 The interest calculation costs claimed for reimbursement are recorded as direct charges to a CMIA Direct Cost task

profile ID in the Edison ERP System or allocated to the task profile ID through the Edison ERP System Human Capital

Management (HCM) and the Department of Finance and Administration Office of Cash Management cost allocation plan,

which is prepared in accordance with OMB Uniform Administrative Requirements, Cost Principles, and Audit

Requirements.

11.0 NON-COMPLIANCE

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 16 of 21
12.0 AUTHORIZED SIGNATURES

Mike Corricelli

Chief of Accounts

Department of Finance and Administration

State of Tennessee

Signature:________________________________________Date Signed:_______________

Date Submitted 07/24/2018

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management

Bureau of the Fiscal Service

U.S. Department of the Treasury

Signature:________________________________________Date Signed:_______________

Page 17 of 21

Mikel J Corricelli (Jul 30, 2018)

Mikel J Corricelli

Jul 30, 2018

Corvelli A. McDaniel (Aug 15, 2018)

Corvelli A. McDaniel

Aug 15, 2018
Exhibit I - Funds Request and Receipt Times Schedule

State of Tennessee

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 6:30 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

Page 18 of 21
Exhibit II - State of Tennessee

LIST OF STATE CLEARANCE TIMES

(Rounded Dollar-Weighted Average Day of Clearance)

Clearance Times Where the Timing of A Draw Down Is Based on A Clearance

Pattern

CFDA Program Name Recipient % Component Technique Round

ed

days

10.551 Supplemental Nutrition

Assistance Program

Department of Human

Services

100.

00

Electronic Benefit

Transfer (EBT) Client

Benefit Payments

Zero Balance Accounting

- Same Day Payment

(Modified)

N/A

10.553 School Breakfast

Program

Department of Education 100.

00

All Costs - Meal

Reimbursement for Local

Education Agencies,

Correctional Institutions,

and Children in State

Custody

Edison Modified Post

Issuance

N/A

10.555 National School Lunch

Program

Department of Education 100.

00

All Costs - Meal

Reimbursement for Local

Education Agencies,

Correctional Institutions,

and Children in State

Custody

Edison Modified Post

Issuance

N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health 61.0

0

Vouchers and Approved,

Cleared WIC

Transactions

Modified Zero Balance

Accounting

N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health 37.0

0

Administrative and

Payroll Costs

Edison Modified Post

Issuance

N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health 2.00 Indirect Costs Edison Indirect Costs N/A

10.558 Child and Adult Care

Food Program

Department of Human

Services

100.

00

Provider Claims Edison Modified Post

Issuance

N/A

10.561 State Administrative

Matching Grants for the

Supplemental Nutrition

Assistance Program

Department of Human

Services

3.00 All Except Indirect and

Administrative Costs

Edison Modified Post

Issuance

N/A

10.561 State Administrative

Matching Grants for the

Supplemental Nutrition

Assistance Program

Department of Human

Services

97.0

0

Indirect and

Administrative Costs

Cost Allocation Plan -

Administrative and

Indirect Cost

N/A

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor and

Workforce Development

88.0

0

Unemployment Insurance

Administrative Costs

Edison Modified Post

Issuance

N/A

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor and

Workforce Development

10.0

0

Indirect Costs Edison Indirect Costs N/A

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor and

Workforce Development

2.00 Benefit Payments Edison Unemployment

Insurance Modified Post

Issuance

N/A

Page 19 of 21
________________________________________________________________________________________________________

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.

Date: ___________________________________________________________

CFDA Program Name Recipient % Component Technique Round

ed

days

17.225S Unemployment Insurance

-- State Benefit Account

Department of Labor and

Workforce Development

99.0

0

Benefit Payments Edison Unemployment

Insurance Modified Post

Issuance

N/A

17.225S Unemployment Insurance

-- State Benefit Account

Department of Labor and

Workforce Development

1.00 Unemployment Insurance

Administrative Costs

Edison Unemployment

Insurance Modified Post

Issuance

N/A

20.205 Highway Planning and

Construction

Department of

Transportation

100.

00

All Project Cost Updates Edison Transportation

Modified Post Issuance

(Modified)

N/A

84.010 Title I Grants to Local

Educational Agencies

Department of Education 99.0

0

Local Education

Agencies and Vendor

Payments

Edison Modified Post

Issuance

N/A

84.010 Title I Grants to Local

Educational Agencies

Department of Education 1.00 Indirect and

Administrative Costs

Edison Indirect Costs N/A

84.027 Special Education --

Grants to States

Department of Education 99.0

0

Local Education

Agencies and Vendor

Payments

Edison Modified Post

Issuance

N/A

84.027 Special Education --

Grants to States

Department of Education 1.00 Indirect and

Administrative Costs

Edison Indirect Costs N/A

93.558 Temporary Assistance for

Needy Families

Department of Human

Services

50.0

0

Continuing Benefit and

Retroactive Payments

Zero Balance Accounting

- Same Day Payment

(Modified)

N/A

93.558 Temporary Assistance for

Needy Families

Department of Human

Services

46.0

0

All except Continuing

Benefit and Retroactive

Payments and Indirect

and Administrative Costs

Edison Modified Post

Issuance

N/A

93.558 Temporary Assistance for

Needy Families

Department of Human

Services

4.00 Indirect and

Administrative Costs

Cost Allocation Plan -

Administrative and

Indirect Cost

N/A

93.596 Child Care Mandatory

and Matching Funds of

the Child Care and

Development Fund

Department of Human

Services

95.0

0

All Except Indirect and

Administrative Costs

Edison Modified Post

Issuance

N/A

93.596 Child Care Mandatory

and Matching Funds of

the Child Care and

Development Fund

Department of Human

Services

5.00 Indirect and

Administrative Costs

Cost Allocation Plan -

Administrative and

Indirect Cost

N/A

93.767 Children's Health

Insurance Program

Bureau of TennCare 100.

00

Medical and Dental

Payments

Edison Modified Post

Issuance

N/A

93.778 Medical Assistance

Program

Bureau of TennCare 100.

00

All Medical Assistance

Payments

Edison Modified Post

Issuance

N/A

Page 20 of 21 Jul 30, 2018
Printed Name: ____________________________________________________

Certifying Signature: _______________________________________________

Title: ___________________________________________________________

Page 21 of 21

Mikel J Corricelli (Jul 30, 2018)

Mikel J Corricelli

Chief of Accounts Mikel J Corricelli