12.0 AUTHORIZED SIGNATURES

David Ridolfino
Acting Director, partment of Treasury

Signature Date Signed: G-23-17

Date Submitted 06/05/2017

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management _
Bureau of the Fiscal Service

U.S. Depart it of the Treasufy

Signature: Pt A. Hcl ano Date Signed: abla

Page 20 of 24


8.0 INTEREST CALCULATION METHODOLOGY
8.1 General Terms

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

Actual Base Quarter Amount, Bi-weekly

Actual Clearance, ZBA - ACH

Actual Clearance, ZBA - Same Day Payment
Composite Clearance

Modified Average Clearance, Monthly Estimate
Payment Schedule (Annual Award, Monthly)

Prior Month Actual, Mid-monthly

Quarterly Estimate, Same Day Payment, Biweekly
Quarterly Estimates, Bi-weekly

Reimbursement Analysis

8.1.2 The State shall maintain information on disbursements and receipts of funds to verify the implementation of any
funding technique and document interest liabilities.

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

(1) amount of the issuance

(2) date of issuance

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

(4) amount of Federal funds received

(5) date funds were requested

8.2 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 teast 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:

Actual Activity:

For all transactions where the State pays out its own funds for program purposes prior to receiving Federal funds, the
State shall track each payment from the date it is paid out of a State account to the date Federal funds are subsequently
credited to a State account to cover that outlay. The Federal interest liability on each payment shall be based on the
difference in whole days between the two events. With Federal-State matching programs, interest shall be calculated on
the Federal percentage of the disbursement.

8.3 The Unemployment Trust Fund

8.3.1 The State shall use the following method to calculate State interest liabilities on funds withdrawn from the several
accounts in the Unemployment Trust Fund:

Page 14 of 24


Tite; _ Acting Director, Office of Management and Budget

Page 24 of 24


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 |. 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 |. 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.

Composite Clearance

The State shall request funds such that they are deposited on the dollar-weighted average number of days required for
funds to be paid out for a series of disbursements, in accordance with the clearance pattern specified in Exhibit Il. The
request shall be made in accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The amount of
the request shall be the sum of the payments issued in the series of disbursements. This funding technique is interest
neutral.

Pre-Issuance

The State shail request funds such that they are deposited in a State account not more than three business days prior to
the day the State makes a disbursement. The request shall be made in accordance with the appropriate Federal agency
cut-off time specified in Exhibit |. The amount of the request shall be the amount the State expects to disburse. This
funding technique is not interest neutral.

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

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.

Actual Base Quarter Amount, Bi-weekly

The State shall request funds such that they are deposited in a State account on the average day of clearance of payroll.
The request shall be made in accordance with the appropriate Federal agency cut-off time specified in Exhibit !. The
amount of the request shall be the actual amount of administrative expenses for the base quarter, divided by the number

Page 5 of 24


Exhibit | - Funds Request and Receipt Times Schedule

State of New Jersey
Federal.Agency Payment Type |Request Cut-Off Time Receipt Window
|Agriculture-FNS ACH. 11:59 PM iday
Agricutture-FNS Fedwire 5:45 PM. 0 day
|Agricuiture-FS_ ACH 3:00 PM iday
Air National Guard ACH 42:00 PM 15 days
[Army National Guard ACH 42:00 PM 15 days
Commerce-NOAA ACH iday
Dept of Homeland Security (FEMA) Fedwire 2 days
Dept of Homeland Security (ODP) ACH 2 days
Dept of Homeland Security (ODP) Fedwire 2 days
EPA. ACH 2 days
EPA. Fedwire 10 day_
Education ACH 4 day
Education Fedwire 10 day
Energy ACH 1 day
Energy Fedwire 0 day
HHS. ACH iday
HHS. Fedwire 10 _day
[HUD ACH 2 days
HUD Fedwire 3:00 PM. 10 day
Interior-FWS ACH. 41:59 PM iday
Interior-FWS Fedwire 5:45 PM. 0 day
Interior-OSM ACH 3:00 PM. iday
Interior-OSM Fedwire 1:00 PM. 10 day
Justice ACH 11:00 PM |6 days
Justice __ Fedwire 2:00 PM 2 days
Labor-Non-UTF. ACH 3:00 PM. iday
Labor-UTF ACH. 3:00 PM. iday
Labor-UTF Fedwire 3:00 PM. 10 day
National Science Foundation (NSF) ACH 18:00 PM 1 day
National Science Foundation (NSE) Fedwire 5:45 PM 0 day
Social Security Administration ACH 11:59 PM iday
Social Security Administration Fedwire 5:45 PM 10 day
Transportation (FAA) ACH 2:00 PM iday
Transporation (FHWA) |ACH 12:00 PM 3 days
Transportation (FHWA) Fedwire 12:00 PM 0 day
Transportation (FTA) (ACH. 2:00 PM iday
Veterans Administration [ACH 12:00 PM 3 days

Page 21 of 24


| CFDA} Program Name Recipient Component Technique Round
| ed
| days
84.027 |Special Education — Department of Education |6.00 ‘LEA (Local Education Prior Month Actual, Mid- |N/A
Grants to States Agency) Payments - monthly
_ _ Check — _
‘Temporary Assistance for|Department of Human —_|100. |All Program Costs Quarterly Estimates, Bi-
Needy Families [Services 00 — __|weekly
93.563 | Child Support [Department of Human [35.0 |All Administrative Costs Quarterly Estimates, Bi-
Enforcement Services 0 weekly 7
93.563 [Child Support Department of Justice 65.0 |All Administrative Costs | Quarterly Estimates, Bi-
Enforcement _ 0 weekly
93,568 |Low-Income Home ‘Department of 100. |All Program Costs Prior Month Actual, Mid-
Eneray Assistance Community Affairs 00 : _ monthly
93,767 {Children's Health Department of Human 92.0 |Children's Insurance ‘| Actual Clearance, ZBA -
Insurance Program Services 0 Payment Same Day Payment
93.767 Children’s Health Department of Human 7,00 |Administrative Cost Quarterly Estimates, Bi-
Insurance Program Services oe | weekly
93.767 [Children’s Health Department of Human 1.00 |Children's Insurance Reimbursement Analysis |N/A
Insurance Program Services Payments _|
93.778 |Medical Assistance Department of Human 70.0 |Health care Provider Actual Clearance, ZBA- [0 Days
|Program. Services Q_|Payments Same Day Payment ___|
;93.778 ‘Medical Assistance Department of Human 7.00 |All Administartive Costs | Quarterly Estimates, Bi- |1 Day
| Program - Services weekly i
93.778 |Medical Assistance |Department of Human 12.0 ‘Title XIX Reimbursable | Reimbursement Analysis |N/A
Program Services 0 Care Costs (Psychiatric
| Hospitals, Residential |
| Treatment Centers, |
ICFMR's, Community = |
Care Waiver.etc.) a _
|93.778 Medical Assistance Department of Human |11.0 |Uncompensated Care Quarterly Estimate, Same
___|Program ____|Services _ 10 | ___|Day Payment. Biweekly
97.036 Disaster Grants - Public Office of Emergency 1s Applicant Payments Pre-Issuance
Assistance (Presidentially |Management 00 |
Declared Disasters) _ i i _

| hereby certify that an authorized State official has cerlified 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 ass:stance programs to which they apply;

3, Reflect seasonal or other periodic vanations in the clearance activites; and,

4. Are auditable.

Date:

Printed Name: _ David Ridolfino

Certifying Signatdre

Page 23 of 24


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 dollar-
weighted 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 SS/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 dollar-
weighted with the average day of clearance for SS/SSP payments made to beneficiaries by direct deposit on days later in
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 methads to calculate and document Federal and State interest liabilities
for SSI.

To calculate the interest liability, SSA shall record the Deposit Date of each monthly SSP payment and compare it to the
SSIW/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 Que 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 catculating 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 tiabilities 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 theextent 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, Schedute for SSI Supplementation Agreements.

Page 18 of 24


% of Funds Agency Receives: 35.00
Component: All Administrative Costs
Technique: Quarterly Estimates, Bi-weekly
Average Day of Clearance: 1 Day

Recipient: Department of Justice

% of Funds Agency Receives: 65.00
Component: All Administrative Costs
Technique: Quarterly Estimates, Bi-weekly
Average Day of Clearance: 1 Day

93.568 Low-Income Home Energy Assistance
Recipient: Department of Community Affairs
% of Funds Agency Receives: 100.00
Component: All Program Costs

Technique: Prior Month Actual, Mid-menthly
Average Day of Clearance: N/A

93.767 Children’s Health Insurance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 92.00

Component: Children's Insurance Payment

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

Recipient: Department of Human Services
% of Funds Agency Receives: 7.00
Component: Administrative Cost
Technique: Quarterly Estimates, Bi-weekly
Average Day of Clearance: 1 Day

Recipient: Department of Human Services
% of Funds Agency Receives: 1.00
Component: Children's Insurance Payments
Technique: Reimbursement Analysis
Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 70.00

Component: Health care Provider Payments

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

Recipient: Department of Human Services
% of Funds Agency Receives: 11.00

Page 10 of 24


The State shall request funds upon determination of the reimbursable costs incurred by the State. The request will be
made in accordance with the cut-off time in Exhibit |. Payments to the State owned/operated medical services are paid by
State funds and reflected in Molina, the States fiscal agent, based on division cost reports. The draw reimburses the
State for costs previously incurred and offset by any rebates or recoveries: therefore, itis not disbursed and the State
shall request funds every Monday based on the weekly Molina reports. If both the State and Federal Government fulfill
and adhere to the specific elements and timing of this funding technique, the State voluntarily waives Federal interest
liabilities resulting from the State prior expenditure funding technique. This funding technique is interest neutral.

6.3 Application of Funding Techniques to Programs

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

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

10.555 National School Lunch Program

Recipient: Department of Agriculture

% of Funds Agency Receives: 92.00

Component: LEA (Local Education Agencies) Payments-ACH
Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

Recipient: Department of Agriculture
% of Funds Agency Receives: 8.00
Component: LEA (Local Education Agency) Payments
Technique: Prior Month Actual, Mid-monthly
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: 72.00

Component: Voucher Payments

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Health

‘% of Funds Agency Receives: 18.00

Component: Subreceipient Payments

Technique: Modified Average Clearance, Monthly Estimate
Average Day of Clearance: 8 Days

Recipient: Department of Health

% of Funds Agency Receives: 10.00

Component: Administrative Costs, Excluding Subreceipient Payments
Technique: Quarterly Estimates, Bi-weekly

Average Day of Clearance: 1 Day

Page 7 of 24


of pay periods in the current quarter. The base quarter shail be the most recent quarter for which actual data is available.
Once each quarter, as soon as possible after the first business day of the quarter, the State shall make an adjustment in
its next request for funds to reconcile the difference between the funds drawn for the period and the actual costs incurred.
The adjustment shall be interest neutral. This funding technique is interest neutral.

Modified Average Clearance, Monthly Estimate

The State shail request funds such that they are deposited in a State account on the dollar weighted average day of
clearance of the monthly disbursement. The request shall be made in accordance with the appropriate Federal agency
cutoff times specified in Exhibit |. The amount drawn shall be an estimate of the value of the monthly disbursement. Once
each quarter, as soon as possible after the close of the prior quarter, the State shall adjust for the difference between the
total amount drawn and the actual costs incurred or the Federal settlement of the claim. The adjustment shall be interest
neutral. This funding technique is interest neutral.

Payment Schedule (Annual Award, Monthly)

The State shall receive funds such that they are deposited in a State account on the 1st banking day of the month. The
request shall be made in accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The amount of
the receipt shall be 1/12 of the annual grant award. Program disbursements are to be made such that they clear on the
first banking day of the month. This funding technique is interest neutral,

Prior Month Actual, Mid-monthly

The State shall request funds such that they are deposited on the 15th calendar day of the month. The request shall be
made in accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The amount of the request will
be the actual disbursements of the preceding month; i.e. the draw for August 15th will be in the amount of the July actual
disbursements. If both the State and Federal Government fulfill and adhere to the specific elements and timing of this
funding technique, the State voluntarily waives Federal interest tiabilities resulting from the State prior expenditure funding
technique. This funding technique is interest neutral.

Quarterly Estimate, Same Day Payment, Biweekly

The State shall request funds such that they are deposited in a State account on the day of the request. The request shall
be made in accordance with the appropriate Federal agency cut off time specified in Exhibit |. The amount of the request
shall be an estimate of expenses for the current period, divided by the number of pay periods in the quarter. Once each
quarter the State shall make a draw adjustment to reconcile the difference between the funds drawn for the period and the
actual costs incurred or the federal settlement of the claim. The adjustment shall be interest neutral. This funding
technique is interest neutral.

Quarterly Estimates, Bi-weekly

The State shall request funds such that they are deposited in a State account an the average day of clearance of payroll.
The request shall be made in accordance with the appropriate Federal agency cut-off time specified in Exhibit !. The
amount of the request shall be an estimate of all administrative expenses for the current period, divided by the number of
pay periods in the quarter. Once each quarter, the State shall make an adjustment to request funds to reconcile the
difference between the funds drawn for the period and the actual costs incurred or the federal settlement of the claim. The
adjustment shall be interest neutral. This funding technique is interest neutral.

Reimbursement Analysis

Page 6 of 24


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
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 of New Jersey does not calculate or bill for CMIA administartive costs.

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 19 of 24


Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Administrative Costs

Technique: Actual Base Quarter Amount, Bi-weekly
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 98.00

Component: LEA (Local Education Agencies) Payments - ACH
Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: LEA (Local Education Agencies) Payments - Check
Technique: Prior Month Actual, Mid-monthly

Average Day of Clearance: N/A

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

% of Funds Agency Receives: 3.00

Component: All Administrative Costs

Technique: Actual Base Quarter Amount, Bi-weekly
Average Day of Clearance: 1 Day

Recipient: Department of Education

% of Funds Agency Receives: 91.00

Component: LEA ( Local Education Agencies) Payments - ACH
Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

Recipient: Department of Education

% of Funds Agency Receives: 6.00

Component: LEA (Local Education Agency) Payments - Check
Technique: Prior Month Actual, Mid-monthly

Average Day of Glearance: N/A

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

% of Funds Agency Receives: 100.00
Component: All Program Costs

Technique: Quarterly Estimates, Bi-weekly
Average Day of Clearance: 1 Day

93.563 Child Support Enforcement
Recipient: Department of Human Services

Page 9 of 24


Cash Management Improvement Act Agreement
between
The State of New Jersey
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 New Jersey
(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 New Jersey shall be the Acting Director, Office of Management and Budget,
Department of Treasury in all matters concerning this Agreement.

41.2 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.

Page 1 of 24


draw additional funds or negative if funds were overdrawn in the previous quarter. For the Local Education Agency
Payments component the agency uses a report from the State accounting system to capture the actual expenditures by
the CFDA number each month. The total expenditures at the end of the month are the amount drawn by the 15th day of
the next month, If there were a need for any adjustment, it would be determined in the same manner as for the
Administrative Costs component.

CFDA #93.558 - Bi-weekly draws are based on quarterly estimates submitted by the divisions.

CFDA #93.563 - Title IV-D: The estimates, which are completed by the Division of Family Development, are completed in
accordance with the Child Support Enforcement Program Action Transmittal No. OCSE-AT-G0-02. The estimates are
based on historical trends, including seasonal, economic or other variations, and include any costs applicable to a prior
quarter for which payments are to be made in the next quarter. This estimate is then submitted to the Federal Government
on the OCSE-396-A, Quarterly Report of Expenditures and Estimates. The draw is based on this estimate until the actual
grant award is received. If the grant amount is different then the estimate requested, a draw adjustment is made at this
time.

CFDA #93.778 - The draws for administrative costs is based on quarterly reports that certify estimated expenditures. The
total amount expended is compared to the grant award. If the expended amount is greater, then a supplemental award is
requested.

CFDA #96.006 - Reverse flow program, from State to Federal.

The State voluntarily waives any Federal interest liability resulting for programs using the Reimbursement Analysis
funding technique.

{n instances where the request of federal funds can be warehoused, the State will request funds on the scheduled day
even if the State is not open for business.

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

CFDA #10.557, Supplemental Food Program (WIC).

CFDA #20.205, Highway Planning and Construction.

CFDA #10.557, Supplemental Food Program (WIC), CFDA #84.010, Educationally Deprived Children, CFDA #84.027,
Handicapped, State Grants, CFDA #93.563, Child Support Enforcement, CFDA #93.767, Children's Insurance Program,
and CFDA #93.778, Medical Assistance - Administrative Cost Component.

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

CFDA #10.557, Supplemental Food Program (WIC) developed by the State Department of Treasury, Office of
Management and Budget as part of our FY'17 TSA.

CFDA #20.205, Highway Planning and Construction developed by the State Department of Treasury, Office of
Management and Budget as part of our FY'17 TSA.

CFDA #10.557, Supplemental Food Program (WIC), CFDA #84.010 Educationally Deprived Children, CFDA #84.027,
Handicapped, Stale Grants, CFDA #93.563, Child Support Enforcement, CFDA #93.767, Children’s Insurance Program,
and CFDA #93.778, Medical Assistance - Administrative Cost Component clearance pattem related to payroll developed
by the State Department of Treasury, Office of Management and Budget as part of our FY'17 TSA.

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

CFDA #10.557, Supplemental Food Program (WIC) based on a random sampling of disbursements from issuance to
clearance date.
CFDA #20.205, Highway Planning and Construction based on a random sampling of disbursements from issuance to
clearance date.

Page 12 of 24


Component: Uncompensated Care
Technique: Quarterly Estimate, Same Day Payment, Biweekly
Average Day of Clearance: N/A

Recipient: Department of Human Services
% of Funds Agency Receives: 7.00
Component: All Administartive Costs
Technique: Quarterly Estimates, Bi-weekly
Average Day of Clearance: 1 Day

Recipient: Department of Human Services

% of Funds Agency Receives: 12.00

Component: Title XIX Reimbursable Care Costs (Psychiatric Hospitals, Residential Treatment Centers, ICFMR's,
Community Care Waiver,etc.)

Technique: Reimbursement Analysis

Average Day of Clearance: N/A

97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters)
Recipient: Office af Emergency Management

% of Funds Agency Receives: 100.00

Component: Applicant Payments

Technique: Pre-Issuance

Average Day of Clearance: N/A

6.3.3 Materiality Exemptions
Agencies exempt from coverage on the basis of materiality:
None

6.3.4 MISCELLANEOUS ISSUES

CFDA #10.555 - Schools submit vouchers with pertinent information to The Bureau of Child Nutrition. Expenditures are
submitted to the Department of Agriculture. These amounts are reconciled to the State's accounting system. This is done
on a monthly basis at the beginning of the month based on the prior month’ s expenditures. The request for the mid-month
draw is warehoused at this time.
CFDA #84.010 - For the Administrative Costs component the agency uses salary reports generated each pay period
during the quarter to determine the amount of the draw. At the close of the quarter the actual expenditures are compared
to the draws and an adjustment is made in the first draw of the next quarter. The adjustment will be positive if they need to
draw additional funds or negative if funds were overdrawn in the previous quarter. For the Local Education Agency
Payments component the agency uses a report from the State accounting system to capture the actual expenditures by
the CFDA number each month. The total expenditures at the end of the month are the amount drawn by the 15th day of
the next month. If there were a need for any adjustment, it would be determined in the same manner as for the
Administrative Costs component.
CFDA #84.027 - For the Administrative Costs component the agency uses salary reports generated each pay period

. during the quarter to determine the amount of the draw. At the close of the quarter the actual expenditures are compared
to the draws and an adjustment is made in the first draw of the next quarter. The adjustment will be positive if they need to

Page 11 of 24


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

% of Funds Agency Receives: 100.00

Component: Alt Program Costs

Technique: Quarterly Estimates, Bi-weekly

Average Day of Clearance: 1 Day

14.269 Hurricane Sandy Community Development Block Grant Disaster Recovery Grants
Recipient: Department of Community Affairs

% of Funds Agency Receives: 100.00

Component: All Program Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

14.871 Section 8 Housing Choice Vouchers

Recipient: Department of Community Affairs

% of Funds Agency Receives: 100.00

Component: All Program Costs

Technique: Payment Schedule (Annual Award, Monthly)
Average Day of Clearance: 0 Days

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

% of Funds Agency Receives: 100.00

Component: All Administrative Costs.

Technique: Actual Base Quarter Amount, Bi-weekly

Average Day of Clearance: 1 Day

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

% of Funds Agency Receives: 100.00

Component: All Administrative Costs

Technique: Actual Base Quarter Amount, Bi-weekly
Average Day of Clearance: 1 Day

20.205 Highway Planning and Construction
Recipient: Department of Transportation

% of Funds Agency Receives: 100.00
Component: Vendor Payments.

Technique: Composite Clearance

Average Day of Clearance: 5 Days

84.010 Title | Grants to Local Educational Agencies

Page 8 of 24


Exhibit Il - State of New Jersey

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
; - a ed
days
10.585 |National School Lunch | Department of Agriculture 92.0 |LEA (Local Education Actual Clearance, ZBA- |0 Days
Program io Agencies) Payments- |ACH
ACH
110.555 |National School Lunch + Department of Agriculture |8.00 |LEA (Local Education Prior Month Actual, Mid- |N/A
i Program Agency) Payments monthly
10.557 |Special Supplemental Department of Health 72.0 | Voucher Payments Actual Clearance, ZBA- |0 Days
Nutrition Program for 0 Same Day Payment
Women, Infants, and
Children
10.557 | Special Supplemental Department of Health 10.0 |Administrative Costs, Quarterly Estimates, Bi- | 1 Day
Nutrition Program for 0 Excluding Subreceipient |weekly
Women, Infants, and Payments
Children
10.557 |Special Supplemental |Departmentof Health {18.0 |Subraceipient Payments |Modified Average 8 Days
Nutrition Program for 1o Clearance, Monthly
Women, Infants, and Estimate
Children
10.561 | State Administrative Department of Human 100, |All Program Costs Quarterly Estimates, Bi- {1 Day
Matching Grants forthe | Services 00 iweekly
‘Supplemental Nutrition
Assistance Program.
14.269 {Hurricane Sandy ‘Department of 100. jAll Program Costs Actual Clearance, ZBA- |0 Days
|Community Development |Community Affairs 00 Same Day Payment
Block Grant Disaster
Recovery Grants
14,871 |Section 8 Housing Department of 100. |All Pragram Costs Payment Schedule 0 Days
[Choice Vouchers Community Affairs 00 (Annual Award, Monthly)
17.225F [Unemployment insurance |Department of Labor —_{100. |All Administrative Costs. |Actual Base Quarter 1 Day
| Federal Benefit 00 Amount, Bi-weekly
Account and
Administrative Costs
17.225S |Unemployment Insurance |Depariment of Labor 100. |All Administrative Costs Actual Base Quarter 4 Day
- State Benefit Account, 00 Amount, Bi-weekly.
20.205 |Highway Planning and == [Department of 100. |Vendar Payments Composite Clearance 5 Days
Construction. [Transportation 00
84.010 | Title | Grants to Local Department of Education |98.0 |LEA (Local Education Actual Clearance, ZBA- |0 Days
Educational Agencies io Agencies) Payments- |ACH
ACH
84.010 {Title | Grants to Local Department of Education |1.00 |Administrative Costs Actual Base Quarter 1 Day
Educational Agencies Amount, Bi-weekly
84.010 Title | Grants to Local Department of Education |1.00 |LEA (Local Education Prior Month Actual, Mid- |N/A
Educational Agencies Agencies) Payments - monthly
Check
84.027 |Special Education — Department of Education |91.0 |LEA (Local Education {Actual Clearance, ZBA- {0 Days
Grants to States 0 Agencies) Payments- [ACH
84.027 |Special Education — Department of Education |3.00 |All Administrative Costs |Actual Base Quarter 1 Day
Grants to States Amount, Bi-weekly

Page 22 of 24


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 scon as it becomes aware of the fact thata
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 CCOF 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 decumentation. If the request is properly justified, so long as ACF has adequate funding
availability, the State's request will be expedited and supplemental funding will be issued within 5 days of ACF receiving
the request. The State will be notified by the Regional Office when the supplemental award has been transmitted to the
Payment Management System (PMS) and when it may initiate drawdowns against the supplemental funding.

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

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

Page 4 of 24


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 Stale account in the UTF, or the State %, and (2) funds withdrawn from the
Federal Employees Compensation Account (FECA) and the Extended Unemployment Compensation Account (EUCA)
and any other accounts of Federal funds in the UTF, or the Federal %.

The State shall calculate the actual interest earnings and the related banking costs attributable to funds withdrawn from
the State account in the UTF by multiplying the State % by the amount of the actual interest eamings 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 an 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 Liz

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 tiabilities on refunds:

Refunds Deposited to Interest Neutral Programs:

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

8.5 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 fess than S
% 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.

Page 15 of 24


In instances where a State agency requests Federal funds on a particualr day and for some reason does not receive the
funds until the subsequest day this formula would catculate a Federal interest liability based on the 13-week Treasury bill
rate multiplied by the drawdown amount multiplied by 1/365.

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
a voluntary supplement to monthly SSI payments made by the SSA to the State’ s SS! 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 SSYSSP 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.

Page 17 of 24


Department of Human Services
Department of Justice
Department of Labor

Department of Transportation
Office of Emergency Management

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 tist of Fiscal Agents that administer funds under the programs listed In the Section 4.0 of this
Agreement:

Molina 93.778 Medical Assistance Program

5.2.1 Molina pays out funds for program purposes on behalf of the State, but it issues payments on the State's Account,
not its own. All other transfers of Federal funds from the State to Molina are for services provided. Molina never holds
Federal funds itself.

6.0 FUNDING TECHNIQUES
6.1 General Terms

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

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

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

Page 3 of 24


4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on Single Audit 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.

4.1.1 The single audit is used in conjunction with information from offical State or Federal documentation.
4.2 The State's threshold for majer Federal assistance programs is $112,589,633.
The following programs meet or exceed the threshold and are not excluded in Section 4.4:

10.555 National Schoo! Lunch Program

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

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program
14.269 Hurricane Sandy Community Development Block Grant Disaster Recovery Grants
14.871 Section 8 Housing Choice Vouchers

17.225F Unemployment Insurance — Federal Benefit Account and Administrative Costs
17.225S Unemployment Insurance — State Benefit Account

20.205 Highway Planning and Construction

84.010 Title | Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

93.558 Temporary Assistance for Needy Families

93.563 Child Support Enforcement

93.568 Low-Income Home Energy Assistance

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

97.036 Disaster Grants - Public Assistance (Presidentially Declared Disasters)

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:
There are currently no programs listed for Section 4.4.

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 Agriculture
Deparment of Community Affairs
Depariment of Education
Department of Health

Page 2 of 24


CFDA #10.557, Supplemental Food Program (WIC), CFDA #84.010, Educationally Deprived Children, CFDA #84.027,
Handicapped, State Grants, CFDA #93.563, Child Support Enforcement, CFDA #93.767, Children’s Insurance Program,
and CFDA #93.778, Medical Assistance - Administrative Cost Component clearance pattern related to payroll based on a
random sampling of disbursements from issuance to clearance date.

The actual source of the data are the checks, ACH and wires issued by the State's system that are than reconciled
against the bank records. The average of the actual clearance date becomes our estimated clearance pattern.

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

For all clearance patterns developed by statistical sampling, the State shall randomly sample checks to ensure, ata
minimum, a 95% confidence interval for a .25 weighted-day level of precision for the checks in the sample. The State
shall track at least 99% of the funds disbursed, from issuance to clearance, in the sample period.

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 shail 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 reftect the dollar-weighted proportion of funds paid out by EFT/Direct
payroll, with the following exceptions:

CFDA #10.557, Supplemental Food Program (WIC) and CFDA #20.205, Highway Planning and Construction.
The State shall also adjust each clearance pattern to reflect:

Program changes that might significantly alter clearance patterns.

7.8 Each of the State's clearance pattems is calculated in business 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 pattem does not correspond to a program's clearance activity.

Page 13 of 24


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

Bank or Agency:
The time period covered under this agreement based on the funding technique specified using various system or adhoc
reports generated by the using agencies.

8.6.2.3 Standards Applied

Statistical Sampling (Pre-Issuance):

To measure the time Federal funds are held in a State account prior to being disbursed, the State shall use statistical
sampling. The sample shall be randomly selected, and shall be of sufficient size to ensure, at a minimum, a 95%
confidence interval no wider than + 0.3 dollar-weighted days about the estimated mean.

For each check in the sample population, the State shall:

1 subtract the deposit date from the issuance date

2 multiply the difference of step 1 by the check amount

3 divide the product of step 2 by the total amount of funds drawn in the sample to determine the dollar-weighted pre-
issuance time for that check

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

8.6.2.4 Calculation Procedure

Average Daily Balance:
|= ADB x R, where

1 = 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

Page 16 of 24