Cash Management Improvement Act Agreement

between

The State of Arizona

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 Arizona

(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 Arizona shall be the Chief Financial Officer, Department of Administration,

State of Arizona 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 07/01/2020 and shall remain in effect until terminated.

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 21
4.0 PROGRAMS COVERED

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

Audit Report for fiscal year ending 06/30/2019.

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

this Agreement.

4.2 The State's threshold for major Federal assistance programs is $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

10.561 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

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States

93.558 Temporary Assistance for Needy Families

93.575 Child Care and Development Block Grant

93.658 Foster Care -- Title IV-E

93.659 Adoption Assistance

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

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

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

There are currently no programs listed for Section 4.3.

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

93.268 Immunization Grants --- Exclusion:Non-Cash

5.0 ENTITIES COVERED

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

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

4.0 of this Agreement:

Arizona Health Care Cost Containment System

Department of Child Safety

Department of Economic Security

Department of Education

Page 2 of 21
Department of Health Services

Department of Transportation

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

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

Agreement:

Bank of America 17.225F Unemployment Insurance -- Federal Benefit Account and Administrative Costs

Bank of America 17.225S Unemployment Insurance -- State Benefit Account

Custom Data Processing (CDP) 10.557 Special Supplemental Nutrition Program for Women, Infants, and Children

Fidelity National Bank 10.551 Supplemental Nutrition Assistance Program

5.3 When payments are made from one State agency to a second State agency using the capitated rate payment method

approved by the Federal grantor agency or a fee for service payment, the funds shall be considered paid out for program

purposes at the time they are expended by the first State agency. Current examples of this are capitated and fee for

service payments made from the Arizona Health Care Cost Containment System (AHCCCS) to the Department of

Economic Security as negotiated with the Centers for Medicare and Medicaid Services (CMS).

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):

Page 3 of 21
The State must submit a revised Medicaid Program Budget Report (CMS-37) to request supplemental funding. The CMS

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

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

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

quarter for which the supplemental grant award is being requested.

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

Human Services.

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

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

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

a. Timing of the Request

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

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

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

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

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

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

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

of any quarter of a fiscal year.

b. Justification for the Request

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

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

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

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

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

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

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

c. Form Submittal

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

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

d. Approval Process

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

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

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

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

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

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

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

Page 4 of 21
Administration.

6.2 Description of Funding Techniques

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

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

Actual Clearance, ZBA - Same Day Payment

The State shall request funds the same day it pays out funds, in accordance with the appropriate Federal agency cut-off

time specified in Exhibit I. A Federal agency will deposit funds in a State account the same day as requested. The amount

of the request shall be for the amount of funds that clear the State's account that day. This funding technique is interest

neutral.

Average Clearance

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

the disbursement, in accordance with the clearance pattern specified in Exhibit II. The request shall be made in

accordance with the appropriate Federal agency cut-off time specified in Exhibit I. The amount of the request shall be for

the exact amount of that disbursement. This funding technique is interest neutral.

Pre-Issuance

The State shall request funds such that they are deposited in a State account not more than three business days prior to

the day the State makes a disbursement. The request shall be made in accordance with the appropriate Federal agency

cut-off time specified in Exhibit I. The amount of the request shall be the amount the State expects to disburse. This

funding technique is not interest neutral.

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

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

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.

Bi-weekly Estimated Allocation

The State shall request funds at bi-weekly intervals, such that they are deposited in a State account on the dollarweighted average day of clearance for payroll payments, as specified in section 7.3. The request shall be made in

accordance with the appropriate Federal agency cut-off time specified in Exhibit I. The amount of the request for each biweekly period shall be an estimate based on the related cost allocation of the last three months for which an allocation

has been performed. The bi-weekly requests shall also be adjusted for the difference between estimated and actual

allocated expenditure amounts following the actual allocation. This funding technique is interest neutral.

Composite Average Day of Clearance (ADOT)

Page 5 of 21
The Arizona Department of Transportation (ADOT) shall bill FHWA weekly for all major contractor and consultant

payments, miscellaneous supplies and service payments, and payroll payments. The funds shall be requested such that

they are deposited in a State account on the average day of clearance for the major contractor payment component which

accounts for approximately 85% of all program dollars expended by ADOT. Per Federal Regulations, Federal interest

may be calculated from the last day of the last billing if billings are weekly. The request for funds shall be made in

accordance with the appropriate Federal agency cut-off time specified in Exhibit I. The amount of the request shall be for

the amount of the Federal share of the disbursement per the specific Federal Project Agreement. This funding technique

is interest neutral.

Pre-Issuance Grant Anticipation Revenue Vehicle (GARVEE) Bond Repayment

The State of Arizona Department of Transportation will request funds for the repayment of GARVEE bonds issued. The

Federal legislation that enables reimbursement of such costs is described in Title 23, United States Code, Section 122.

Funds may be requested up to seven business days in advance of the bond payment. This early drawdown has been

approved by the Federal Highway Administration (FHWA) and Fiscal Service. Funds will be requested for payments of

principal and interest on the bonds. This funding technique is interest neutral.

WIC Formula Rebates

The State shall deposit the rebates in a State account and use them to offset the subsequent draw downs for food

voucher redemptions until another draw down is necessary to meet redemption demands. Interest earned on rebate

money deposited in State accounts shall be used for program purposes. No other liability shall be incurred using this

funding technique. This funding technique is not interest neutral.

6.3 Application of Funding Techniques to Programs

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

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

6.3.2 Programs

Below are programs listed in Section 4.2 and Section 4.3.

10.551 Supplemental Nutrition Assistance Program

Recipient: Department of Economic Security

% of Funds Agency Receives: 100.00

Component: Payment to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

10.553 School Breakfast Program

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Payments to Local Agencies

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

Page 6 of 21
% of Funds Agency Receives: 99.00

Component: Payments to School Districts and Charters

Technique: Pre-Issuance

Average Day of Clearance: N/A

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 99.00

Component: Payments to the School Districts

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Payments to Local Agencies

Technique: Pre-Issuance

Average Day of Clearance: N/A

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

Recipient: Department of Health Services

% of Funds Agency Receives: 42.19

Component: Food Voucher Redemption

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Health Services

% of Funds Agency Receives: 27.34

Component: Payroll and Other Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Health Services

% of Funds Agency Receives: 30.47

Component: WIC Formula Rebates

Technique: WIC Formula Rebates

Average Day of Clearance: N/A

10.561 State Administrative Matching Grants for the Supplemental Nutrition Assistance Program

Recipient: Department of Economic Security

% of Funds Agency Receives: 87.91

Component: Payroll and Other Administrative Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

Recipient: Department of Health Services

% of Funds Agency Receives: 12.09

Page 7 of 21
Component: Payroll and Other Administrative Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

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

Recipient: Department of Economic Security

% of Funds Agency Receives: 87.77

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 10.01

Component: Payroll and Other Administrative Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 2.22

Component: Payments to Beneficiaries

Technique: Pre-Issuance

Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Economic Security

% of Funds Agency Receives: 100.00

Component: Payments to Beneficiaries from the Unemployment Trust Fund (UTF)

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 96.00

Component: All Other Program Costs

Technique: Composite Average Day of Clearance (ADOT)

Average Day of Clearance: 3 Days

Recipient: Department of Transportation

% of Funds Agency Receives: 4.00

Component: GARVEE Bonds

Technique: Pre-Issuance Grant Anticipation Revenue Vehicle (GARVEE) Bond Repayment

Average Day of Clearance: 7 Days

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

Page 8 of 21
% of Funds Agency Receives: 5.00

Component: Payroll and Other Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 95.00

Component: Payments to Local Education Agencies

Technique: Pre-Issuance

Average Day of Clearance: N/A

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 95.00

Component: Payments to the School Districts and Contractors

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 5.00

Component: Payroll and Other Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States

Recipient: Department of Economic Security

% of Funds Agency Receives: 59.98

Component: Payments to Vendors and Service Providers

Technique: Average Clearance

Average Day of Clearance: 7 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 40.02

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.558 Temporary Assistance for Needy Families

Recipient: Department of Economic Security

% of Funds Agency Receives: 73.67

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 10.73

Page 9 of 21
Component: Payments to Beneficiaries-non-EBT

Technique: Average Clearance

Average Day of Clearance: 5 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 15.60

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.575 Child Care and Development Block Grant

Recipient: Department of Economic Security

% of Funds Agency Receives: 87.17

Component: Payments to Vendors and Service Providers

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Economic Security

% of Funds Agency Receives: 12.83

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: N/A

93.658 Foster Care -- Title IV-E

Recipient: Department of Child Safety

% of Funds Agency Receives: 65.19

Component: Payments to Vendors and Service Providers

Technique: Average Clearance

Average Day of Clearance: 2 Days

Recipient: Department of Child Safety

% of Funds Agency Receives: 34.81

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.659 Adoption Assistance

Recipient: Department of Child Safety

% of Funds Agency Receives: 97.45

Component: Payments to Vendors and Service Providers

Technique: Average Clearance

Average Day of Clearance: 2 Days

Recipient: Department of Child Safety

% of Funds Agency Receives: 2.55

Component: Payroll and Other Operating Costs

Page 10 of 21
Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.767 Children's Health Insurance Program

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 1.10

Component: Payroll Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 98.90

Component: Programmatic Payments to AHCCCS Health Plans or Providers and Non-Payroll Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 0.50

Component: Payroll Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 99.50

Component: Programmatic Payments to AHCCCS Health Plans or Providers and Non-Payroll Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:

Department of Corrections (10.553)

Department of Juvenile Corrections (10.553)

Arizona State Schools for the Deaf and Blind (10.553)

Arizona State Schools for the Deaf and Blind (10.555)

Department of Corrections (10.555)

Department of Juvenile Corrections (10.555)

Office of Economic Opportunity (17.225)

Department of Administration (20.205)

Department of Game and Fish (20.205)

Department of Public Safety (20.205)

Arizona Schools for the Deaf and Blind (84.010)

Arizona Schools for the Deaf and Blind (84.027)

Department of Corrections (84.027)

Department of Juvenile Corrections (84.027)

Page 11 of 21
Early Childhood Development and Health Board (93.575)

Governor's Office (93.575)

Arizona Supreme Court (93.658)

Department of Health Services (93.767)

7.0 CLEARANCE PATTERNS

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

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

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

Department of Child Safety

Department of Health Services

Department of Economic Security

Department of Transportation

Department of Education

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

The average clearance days are derived from the verification of clearance patterns done in April 2019 (84.126

Rehabilitation Services -- Vocational Rehabilitation Grants to States), June 2016 (93.558 Temporary Assistance for Needy

Families) and October 2016 (93.658 Foster Care-Title IV-E and 93.659 Adoption Assistance) using an AFIS report and

sampling transactions.

The State has documented that over 99% of all current payrolls are paid by direct deposit. Bank of America is paid via

wire on Wednesday of pay week for payroll. Therefore, when applying funding techniques that require Federal funds to be

deposited in a State account on the average clearance day of payroll, Wednesday of the pay week has been established

as the date to receive Federal funds.

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

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

clearance, for a period of at least three months.

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

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

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

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

the date the check cleared the State's account.

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

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

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

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

Page 12 of 21
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:

No additional adjustments.

7.8 Each of the State's clearance patterns 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 pattern does not correspond to a program's clearance activity.

8.0 INTEREST CALCULATION METHODOLOGY

8.0.1 Interest will be calculated consistent with the requirements of CMIA.

8.1 General Terms

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

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

applied:

Actual Clearance, ZBA - Same Day Payment

Average Clearance

Bi-weekly Estimated Allocation

Composite Average Day of Clearance (ADOT)

Pre-Issuance Grant Anticipation Revenue Vehicle (GARVEE) Bond Repayment

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

funding technique and document interest liabilities.

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

(1) amount of the issuance

(2) date of issuance

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

(4) amount of Federal funds received

(5) date funds were requested

8.2 Federal Interest Liabilities

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

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

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

Page 13 of 21
the day the State submits a request for funds.

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

Where an interest-neutral funding technique is being applied to a program, the State will use accepted methods to

determine potential interest charges resulting from non-compliance or late Federal funding. Where Average Clearance is

being applied, and the State pays out its own funds for program purposes prior to receiving Federal funds, a Federal

interest liability will be calculated from the average date of clearance to the date Federal funds are credited to a State

account.

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's interest liability on funds withdrawn from the State Account in the Unemployment Trust Fund shall consist of

actual interest earnings attributable to such funds while held in a State account, less banking costs associated with such

funds. This interest shall be deposited in the State's account in the Unemployment Trust Fund. For funds withdrawn from

the Federal Benefit Accounts in the Unemployment Trust Fund, the State's interest liability shall be based on the average

daily balance of such funds, multiplied by the 13-week Treasury Bill Rate specified in 31 CFR Part 205.

8.4 Refund Liabilities

8.4.1 The State shall be liable for interest on refunds from the date the refund is credited to a State account until the date

the refund is debited from the State account for program purposes. The State shall apply a $50,000 refund transaction

threshold below which the State shall not incur or calculate interest liabilities on refunds. A transaction is defined as a

single deposit.

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

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

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

(3) amount of the refund

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

For programs to which an interest-neutral funding technique is applied (as identified in Section 8.1.1), the State's 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.

For programs to which Pre-issuance Funding is being applied, the State's interest liability will be captured in the State's

calculation of interest for each program. Refunds will be included as deposits to the program's account, and subsequent

payments from the account will include the amounts of refunds deposited.

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.

Page 14 of 21
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

Central Accounting System:

The time period from Deposit to clearance shall be determined from information captured by the Arizona Financial

Information System (AFIS).

8.6.2.3 Standards Applied

Census (Average Daily Balance):

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

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

8.6.2.4 Calculation Procedure

Average Daily Balance:

I = ADB x R, where

I = State's total interest liability

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

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

9.0 REVERSE FLOW PROGRAMS

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

not participate in the program.

10.0 INTEREST CALCULATION COSTS

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

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

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

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

Page 15 of 21
modernizing accounting systems. Interest calculation costs in excess of $50,000 in any year are not eligible for

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

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

In addition to the costs stated in section 10.1, the costs associated with maintenance and improvement of current reports

used to calculate interest and document clearance patterns. The State may also develop new reports to perform these

tasks if necessary.

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 16 of 21
12.0 AUTHORIZED SIGNATURES

Angela Dillard

Interim Chief Financial Officer

State of Arizona

Signature:________________________________________Date Signed:_______________

Date Submitted 04/28/2020

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

Angela Dillard (Jun 23, 2020 13:48 PDT)

Angela Dillard

Jun 23, 2020

Sandra R. Paylor (Jul 23, 2020 06:27 EDT)

Sandra R. Paylor

Jul 23, 2020
Exhibit I - Funds Request and Receipt Times Schedule

State of Arizona

Federal Agency Payment Type Request Cut-Off Time Receipt Window

Agriculture-FNS ACH 11:59 PM 1 day

Agriculture-FNS Fedwire 5:45 PM 0 day

Agriculture-FS ACH 3:00 PM 1 day

Air National Guard ACH 12:00 PM 15 days

Army National Guard ACH 12:00 PM 15 days

Commerce-NOAA ACH 2:00 PM 1 day

Dept of Homeland Security (FEMA) Fedwire 2:00 PM 2 days

Dept of Homeland Security (ODP) ACH 2:00 PM 2 days

Dept of Homeland Security (ODP) Fedwire 2:00 PM 2 days

EPA ACH 2:00 PM 2 days

EPA Fedwire 2:00 PM 0 day

Education ACH 3:00 PM 1 day

Education Fedwire 2:00 PM 0 day

Energy ACH 4:00 PM 1 day

Energy Fedwire 3:00 PM 0 day

HHS ACH 5:00 PM 1 day

HHS Fedwire 3:00 PM 0 day

HUD ACH 5:30 PM 2 days

HUD Fedwire 3:00 PM 0 day

Interior-FWS ACH 11:59 PM 1 day

Interior-FWS Fedwire 5:45 PM 0 day

Interior-OSM ACH 3:00 PM 1 day

Interior-OSM Fedwire 1:00 PM 0 day

Justice ACH 11:00 PM 6 days

Justice Fedwire 2:00 PM 2 days

Labor-Non-UTF ACH 3:00 PM 1 day

Labor-UTF ACH 3:00 PM 1 day

Labor-UTF Fedwire 3:00 PM 0 day

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

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

Social Security Administration ACH 11:59 PM 1 day

Social Security Administration Fedwire 5:45 PM 0 day

Transportation (FAA) ACH 2:00 PM 1 day

Transportation (FHWA) ACH 12:00 PM 3 days

Transportation (FHWA) Fedwire 12:00 PM 0 day

Transportation (FTA) ACH 2:00 PM 1 day

Veterans Administration ACH 12:00 PM 3 days

Page 18 of 21
Exhibit II - State of Arizona

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 Economic

Security

100.

00

Payment to Beneficiaries Actual Clearance, ZBA -

Same Day Payment

0 Days

10.553 School Breakfast

Program

Department of Education 99.0

0

Payments to School

Districts and Charters

Pre-Issuance N/A

10.553 School Breakfast

Program

Department of Education 1.00 Payments to Local

Agencies

Pre-Issuance N/A

10.555 National School Lunch

Program

Department of Education 1.00 Payments to Local

Agencies

Pre-Issuance N/A

10.555 National School Lunch

Program

Department of Education 99.0

0

Payments to the School

Districts

Pre-Issuance N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health

Services

42.1

9

Food Voucher

Redemption

Actual Clearance, ZBA -

Same Day Payment

0 Days

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health

Services

27.3

4

Payroll and Other

Administrative Costs

Pre-Issuance N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health

Services

30.4

7

WIC Formula Rebates WIC Formula Rebates N/A

10.561 State Administrative

Matching Grants for the

Supplemental Nutrition

Assistance Program

Department of Economic

Security

87.9

1

Payroll and Other

Administrative Costs

Bi-weekly Estimated

Allocation

0 Days

10.561 State Administrative

Matching Grants for the

Supplemental Nutrition

Assistance Program

Department of Health

Services

12.0

9

Payroll and Other

Administrative Costs

Bi-weekly Estimated

Allocation

0 Days

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Economic

Security

87.7

7

Payments to

Beneficiaries

Actual Clearance, ZBA -

Same Day Payment

0 Days

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Economic

Security

10.0

1

Payroll and Other

Administrative Costs

Bi-weekly Estimated

Allocation

0 Days

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Economic

Security

2.22 Payments to

Beneficiaries

Pre-Issuance N/A

17.225S Unemployment Insurance

-- State Benefit Account

Department of Economic

Security

100.

00

Payments to

Beneficiaries from the

Unemployment Trust

Fund (UTF)

Actual Clearance, ZBA -

Same Day Payment

0 Days

20.205 Highway Planning and

Construction

Department of

Transportation

96.0

0

All Other Program Costs Composite Average Day

of Clearance (ADOT)

3 Days

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;

CFDA Program Name Recipient % Component Technique Round

ed

days

20.205 Highway Planning and

Construction

Department of

Transportation

4.00 GARVEE Bonds Pre-Issuance Grant

Anticipation Revenue

Vehicle (GARVEE) Bond

Repayment

7 Days

84.010 Title I Grants to Local

Educational Agencies

Department of Education 95.0

0

Payments to Local

Education Agencies

Pre-Issuance N/A

84.010 Title I Grants to Local

Educational Agencies

Department of Education 5.00 Payroll and Other

Administrative Costs

Pre-Issuance N/A

84.027 Special Education --

Grants to States

Department of Education 95.0

0

Payments to the School

Districts and Contractors

Pre-Issuance N/A

84.027 Special Education --

Grants to States

Department of Education 5.00 Payroll and Other

Administrative Costs

Pre-Issuance N/A

84.126 Rehabilitation Services --

Vocational Rehabilitation

Grants to States

Department of Economic

Security

59.9

8

Payments to Vendors

and Service Providers

Average Clearance 7 Days

84.126 Rehabilitation Services --

Vocational Rehabilitation

Grants to States

Department of Economic

Security

40.0

2

Payroll and Other

Operating Costs

Bi-weekly Estimated

Allocation

0 Days

93.558 Temporary Assistance for

Needy Families

Department of Economic

Security

73.6

7

Payments to

Beneficiaries

Actual Clearance, ZBA -

Same Day Payment

0 Days

93.558 Temporary Assistance for

Needy Families

Department of Economic

Security

15.6

0

Payroll and Other

Operating Costs

Bi-weekly Estimated

Allocation

0 Days

93.558 Temporary Assistance for

Needy Families

Department of Economic

Security

10.7

3

Payments to

Beneficiaries-non-EBT

Average Clearance 5 Days

93.575 Child Care and

Development Block Grant

Department of Economic

Security

87.1

7

Payments to Vendors

and Service Providers

Actual Clearance, ZBA -

Same Day Payment

0 Days

93.575 Child Care and

Development Block Grant

Department of Economic

Security

12.8

3

Payroll and Other

Operating Costs

Bi-weekly Estimated

Allocation

N/A

93.658 Foster Care -- Title IV-E Department of Child

Safety

65.1

9

Payments to Vendors

and Service Providers

Average Clearance 2 Days

93.658 Foster Care -- Title IV-E Department of Child

Safety

34.8

1

Payroll and Other

Operating Costs

Bi-weekly Estimated

Allocation

0 Days

93.659 Adoption Assistance Department of Child

Safety

97.4

5

Payments to Vendors

and Service Providers

Average Clearance 2 Days

93.659 Adoption Assistance Department of Child

Safety

2.55 Payroll and Other

Operating Costs

Bi-weekly Estimated

Allocation

0 Days

93.767 Children's Health

Insurance Program

Arizona Health Care Cost

Containment System

1.10 Payroll Costs Actual Clearance, ZBA -

Same Day Payment

0 Days

93.767 Children's Health

Insurance Program

Arizona Health Care Cost

Containment System

98.9

0

Programmatic Payments

to AHCCCS Health Plans

or Providers and NonPayroll Administrative

Costs

Pre-Issuance N/A

93.778 Medical Assistance

Program

Arizona Health Care Cost

Containment System

0.50 Payroll Costs Actual Clearance, ZBA -

Same Day Payment

0 Days

93.778 Medical Assistance

Program

Arizona Health Care Cost

Containment System

99.5

0

Programmatic Payments

to AHCCCS Health Plans

or Providers and NonPayroll Administrative

Costs

Pre-Issuance N/A

Page 20 of 21
3. Reflect seasonal or other periodic variations in the clearance activities; and,

4. Are auditable.

Date: ___________________________________________________________

Printed Name: ____________________________________________________

Certifying Signature: _______________________________________________

Title: ___________________________________________________________

Page 21 of 21

Angela Dillard (Jun 23, 2020 13:48 PDT)

Angela Dillard

Interim Chief Financial Officer Jun 23, 2020 Angela Dillard