Cash Management Improvement Act Agreement

between

The State of Hawaii

and

The Secretary of the Treasury,

United States Department of the Treasury

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

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

(hereafter 'Act'), agree as follows:

1.0 AGENTS OF THE AGREEMENT

1.1 The Authorized Official(s) for the State of Hawaii shall be the Director of Finance in all matters concerning this

Agreement.

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

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

2.0 AUTHORITY

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

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

U.S.C. 6503.

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

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

regulations shall govern.

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS

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

3.2 This Agreement may be amended at any time by written, mutual consent of the State and the Fiscal Service. This

Agreement shall be amended annually to incorporate new programs that qualify as major Federal assistance programs

and remove programs that no longer qualify as major Federal assistance programs. A State must notify the Fiscal Service

in writing within 30 days of the time the State becomes aware of a change that involves additions or deletions of programs

subject to Subpart A, changes in funding techniques, and/or changes in clearance patterns. The notification must include

a proposed amendment for review by the Fiscal Service.

3.3 Notwithstanding section 3.2, in the event of Federal or State non-compliance with Subpart B of 31 CFR, Part 205, the

Fiscal Service may amend this Agreement at any time to incorporate additional programs and the entities that administer

those programs.

3.4 This Agreement may be terminated by either party with 30 days written notice. If this Agreement is terminated, the

Fiscal Service will prescribe the funding techniques, clearance patterns, and methods for calculating interest liabilities to

be used by the State.

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4.0 PROGRAMS COVERED

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

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

receiving Federal financial assistance for fiscal year ending 06/30/2017.

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 $23,142,838.

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

10.551 Supplemental Nutrition Assistance Program

10.555 National School Lunch Program

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

14.195 Section 8 Housing

14.850 Public and Indian Housing

14.871 Section 8 Housing Choice Vouchers

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

17.225S Unemployment Insurance -- State Benefit Account

20.205 Highway Planning and Construction

84.010 Title I Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

84.041 Impact Aid

93.558 Temporary Assistance for Needy Families

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

96.006 Supplemental Security Income

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

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

There are currently no programs listed for Section 4.3.

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

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

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

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

program change.

5.0 ENTITIES COVERED

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

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

4.0 of this Agreement:

Department of Education

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Department of Health

Department of Human Services

Department of Labor and Industrial Relations

Department of Transportation

Hawaii Public Housing Authority

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

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

Agreement:

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

Conduent State Healthcare, LLC 93.778 Medical Assistance Program

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

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

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

6.0 FUNDING TECHNIQUES

6.1 General Terms

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

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

incorporated by reference herein.

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

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

incorporated by reference herein.

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

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

Monday. In instances where the receipt of Federal funds is scheduled for deposit on a day when the State is not open for

business, the State shall request funds for deposit the day following the scheduled day; in instances where the receipt of

Federal funds is scheduled for deposit on a day when the Federal Government is not open for business, the State shall

request funds for deposit the day prior to the scheduled day.

6.1.4 Estimates and Reconciliation of Estimates:

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

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

the difference between the estimate and the State's actual expenditures.

6.1.5 Supplemental Funding:

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

increase in costs due to unforeseen circumstances.

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

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

Program and associated administrative payments (CFDA 93.778):

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

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

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

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

quarter for which the supplemental grant award is being requested.

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

Human Services.

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

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

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

a. Timing of the Request

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

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

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

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

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

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

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

of any quarter of a fiscal year.

b. Justification for the Request

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

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

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

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

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

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

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

c. Form Submittal

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

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

d. Approval Process

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

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

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

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

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

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

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

Administration.

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6.2 Description of Funding Techniques

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

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

Actual Clearance, ZBA - ACH

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

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

in Exhibit I. The amount of the request shall be for the amount of funds that clear the State's account on the settlement

date. This funding technique is interest neutral.

Actual Clearance, ZBA - Same Day Payment

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

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

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

neutral.

Post-Issuance

The State shall request funds such that they are deposited in a State account after the State issues checks, but before the

checks clear. The request shall be made in accordance with the appropriate Federal agency cut-off time specified in

Exhibit I. The amount of the request shall be the amount of the disbursement. This funding technique is not interest

neutral.

Pre-Issuance

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

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

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

funding technique is not interest neutral.

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

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

Direct Administrative Costs - Drawdowns on a Payroll Cycle

The State shall request funds for all direct administrative costs such that they are deposited on the dollar-weighted

average date of clearance of payroll. The request shall be made in accordance with the appropriate Federal agency cutoff time specified in Exhibit I. The amount of funds requested shall be based on the amount of liabilities recorded for direct

administrative costs since the last request for funds. This funding technique is interest neutral.

Indirect Cost Rates - Proportionate Shares

The State shall include a proportionate share of the indirect cost allowance in each request for funds by applying the

indirect cost rate to the appropriate cost base of each drawdown. The request shall be made in accordance with the

appropriate Federal agency cut-off time specified in Exhibit I. The amount of the request shall be determined by applying

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

interest neutral.

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

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

Reverse Flow Program - SSI (CFDA 96.006)

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

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

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

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

Payment Schedule (Monthly Drawdown):(SU)

The State shall request funds once a month for amounts that were disbursed in the prior month. The State shall not draw

down the funds earlier than the dollar-weighted average day of the clearance pattern for checks issued by the applicable

program. Neither the Federal Government nor the State shall incur an interest liability under the application of this

technique. This funding technique is interest neutral.

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

The State shall request funds once a month from the United States Department of Agriculture (USDA) for other private

schools, charter schools, and residential institutions. The request will be made within 25 business days after the State has

submitted the Food Nutrition Services (FNS)-10 (30 day) report to USDA in accordance with the appropriate Exhibit I cutoff time. The funds request is based on the FNS-10 (30 day) report -number of meals served and the reimbursement rate

prescribed under 7 Code of Federal Regulations (CRF) 210. The State shall request additional funds within 25 business

days after the State has submitted the FNS-10 (90 day) report to USDA for any claim adjustments to the FNS-10 (30 day)

report. This funding technique is interest neutral.

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

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

following the month vendors were paid and the month payroll was disbursed. The request shall be made in accordance

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

interest liability shall not accrue prior to the day the State submits a request for funds. In addition, under this funding

technique, the State agrees to waive any claim to a federal interest liability and will not calculate the federal interest

liability. This funding technique is interest neutral.

6.3 Application of Funding Techniques to Programs

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

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

6.3.2 Programs

Below are programs listed in Section 4.2 and Section 4.3.

10.551 Supplemental Nutrition Assistance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100.00

Component: All Program Funds

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Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: Benefit payments

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

Average Day of Clearance: 0 Days

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

Recipient: Department of Health

% of Funds Agency Receives: 69.00

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

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Health

% of Funds Agency Receives: 2.00

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

Technique: Indirect Cost Rates - Proportionate Shares

Average Day of Clearance: N/A

Recipient: Department of Health

% of Funds Agency Receives: 29.00

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

Technique: Pre-Issuance

Average Day of Clearance: N/A

14.195 Section 8 Housing

Recipient: Hawaii Public Housing Authority

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

14.850 Public and Indian Housing

Recipient: Hawaii Public Housing Authority

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

14.871 Section 8 Housing Choice Vouchers

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Recipient: Hawaii Public Housing Authority

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

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

Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 25.00

Component: Other Costs

Technique: Direct Administrative Costs - Drawdowns on a Payroll Cycle

Average Day of Clearance: 0 Days

Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 75.00

Component: Payroll

Technique: Direct Administrative Costs - Drawdowns on a Payroll Cycle

Average Day of Clearance: 0 Days

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 100.00

Component: Benefit Payments

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 100.00

Component: All Program Funds

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

Average Day of Clearance: 8 Days

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: All Program Funds

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

Average Day of Clearance: 0 Days

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: All Program Funds

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

Average Day of Clearance: 0 Days

84.041 Impact Aid

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: All Program Funds

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

Average Day of Clearance: 0 Days

93.558 Temporary Assistance for Needy Families

Recipient: Department of Human Services

% of Funds Agency Receives: 88.00

Component: Electronic Benefit Payments for Temporary Assistance to Needy Family

Technique: Actual Clearance, ZBA - ACH

Average Day of Clearance: 0 Days

Recipient: Department of Human Services

% of Funds Agency Receives: 12.00

Component: Administrative Costs

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

Average Day of Clearance: 0 Days

93.767 Children's Health Insurance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Post-Issuance

Average Day of Clearance: 1 Day

93.778 Medical Assistance Program

Recipient: Department of Human Services

% of Funds Agency Receives: 100.00

Component: Benefit Payments - Medquest and Medicaid

Technique: Post-Issuance

Average Day of Clearance: 1 Day

96.006 Supplemental Security Income

Recipient: Department of Human Services

% of Funds Agency Receives: 100.00

Component: Benefit payment

Technique: Reverse Flow Program - SSI (CFDA 96.006)

Average Day of Clearance: N/A

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6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:

None.

7.0 CLEARANCE PATTERNS

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

a. Functional Payment: Payroll - State Central Payroll Checks

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

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

Department of Budget and Finance

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

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

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

Writing System and the Department of Education's Central Accounting System.

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

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

clearance, for a period of at least three months.

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

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

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

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

the date the check cleared the State's account.

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

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

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

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

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

of each day following the disbursement.

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

payroll, with the following exceptions:

None.

The State shall also adjust each clearance pattern to reflect:

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

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

the average day of clearance must be reduced by 1.45 days. The State computer files show the cashed date as the date

the checks were returned to the State Treasury by the drawee bank. However, the checks were redeemed and charged

to the State's bank account by the drawee bank on the prior banking day. Accordingly, the average day of clearance is

overstated by approximately 1.45 calendar days. The "rounded average day of clearance" in Exhibit II is adjusted to

reflect the day the checks were cashed at the drawee bank and charged to the State's bank account. The following is the

computation of the 1.45 days factor:

State of Hawaii Agencies (Other than Department of Education)

Clearance Pattern Adjustment:

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

 Monday; Tuesday; 1 day

 Tuesday; Wednesday; 1 day

 Wednesday; Thursday; 1 day

 Thursday; Friday; 1 day

 Friday; Monday; 3 days

 Total difference = 7 days

Computation to determine number of days to be adjusted:

 39 weeks x (7/5) = 54.60

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

 52 weeks = 75.40 / 52 weeks = 1.45 days

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

State in Exhibit II.

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

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

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

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

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

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

8.0 INTEREST CALCULATION METHODOLOGY

8.1 General Terms

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

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

applied:

Actual Clearance, ZBA - ACH

Actual Clearance, ZBA - Same Day Payment

Direct Administrative Costs - Drawdowns on a Payroll Cycle

Indirect Cost Rates - Proportionate Shares

Payment Schedule (Monthly Drawdown):(SU)

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

Reverse Flow Program - SSI (CFDA 96.006)

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

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

funding technique and document interest liabilities.

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

(1) amount of the issuance

(2) date of issuance

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

(4) amount of Federal funds received

(5) date funds were requested

8.2 Federal Interest Liabilities

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

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

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

the day the State submits a request for funds.

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

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

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

credited to a State account to cover that outlay. The Federal interest liability on each payment shall be based on the

difference in whole days between the two events. With Federal-State matching programs, interest shall be calculated on

the Federal percentage of the disbursement.

8.3 The Unemployment Trust Fund

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

accounts in the Unemployment Trust Fund:

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

accounts in the UTF under the Unemployment Insurance program.

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

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

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

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

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

and any other accounts of Federal funds in the UTF, or the Federal %.

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

the State account in the UTF by multiplying the State % by the amount of the actual interest earnings and the related

banking costs of the account as a whole. The States liability for interest on funds withdrawn from its account in the UTF

shall consist of the actual interest earnings attributable to such funds less the related banking costs attributed to such

funds.

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The State shall determine the average daily cash balance of its unemployment compensation benefit payment account for

its fiscal year. The State shall calculate the average daily cash balance of Federal funds by multiplying the Federal % by

the average daily cash balance of the benefit payment account on the whole. The States liability for interest on funds

withdrawn from the FECA and EUCA (and any other benefit accounts of Federal funds in the UTF from which the State

draws funds) shall be the average daily cash balance of Federal funds multiplied by the annualized rate equal to the

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

8.4 Refund Liabilities

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

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

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

single deposit.

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

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

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

(3) amount of the refund

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

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

records identifying:

(1)	the date of the refund

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

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

(4)	the amount of the refund

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

account and the date the refund is paid out for program purposes. The State shall measure this period by dividing it into

three periods: the pre-offset period, the pre-disbursement period, and the clearance period.

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

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

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

of checks.

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

interest earned from the refund is used for program purposes.

8.5 Exemptions

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

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

% 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.

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

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

8.6 State Interest Liabilities

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

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

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

8.6.2.1 Measuring Time Funds Are Held

To determine the total time Federal funds are held, the State shall separately measure two time periods: (1) the date

Federal funds are deposited to the date checks are issued; and (2) the date checks are issued to the date funds are

debited from the State's account.

8.6.2.2 Source of Data

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

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

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

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

8.6.2.3 Standards Applied

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

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

8.6.2.4 Calculation Procedure

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

I = State's total interest liability

P = Total annual expenditures of Federal funds for program or component cash flow of program

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

divided by 365 days

PI = Dollar-weighted average number of days Federal funds are held by State prior to issuance

CT = Dollar-weighted average number of days Federal funds are held by State between issuance and clearance of

checks, as determined by the appropriate clearance pattern in Exhibit II

9.0 REVERSE FLOW PROGRAMS

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

program.

Page 14 of 21
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 SSI beneficiaries.

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

and SSP funds.

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

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

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

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

9.3 Funding Technique

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

Component: State Supplementary Payment

Technique: SSI Funding Technique

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

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

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

9.4 Clearance Pattern

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

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

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

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

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

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

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

11th business day of the month.

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

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

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

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

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

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

Page 15 of 21
total SSI/SSP payments made to beneficiaries by direct deposit on days later in a month, using full data from the most

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

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

9.5 Interest Calculations

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

for SSI.

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

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

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

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

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

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

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

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

CMIA do not apply.

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

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

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

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

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

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

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

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

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

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

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

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

170, Section 410, Schedule for SSI Supplementation Agreements.

9.6 Refunds

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

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

funds.

10.0 INTEREST CALCULATION COSTS

Page 16 of 21
10.1 As set forth in 31 CFR 205.27, interest calculation costs are defined as those costs necessary for the actual

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

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

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

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

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

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

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

Staff Time 

Systems Operations

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

with 31 CFR 205.

11.0 NON-COMPLIANCE

11.1 The provisions of 31 CFR Part 205.29 and 31 CFR Part 205.30 shall apply in cases of non-compliance with the

terms of this Agreement.

Page 17 of 21
12.0 AUTHORIZED SIGNATURES

Laurel A. Johnston

Director of Finance

State of Hawaii

Department of Budget and Finance

Signature:________________________________________Date Signed:_______________

Date Submitted 06/05/2018

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management

Bureau of the Fiscal Service

U.S. Department of the Treasury

Signature:________________________________________Date Signed:_______________

Page 18 of 21 Jun 27, 2018

Corvelli A. McDaniel (Jul 5, 2018)

Corvelli A. McDaniel

Jul 5, 2018
Exhibit I - Funds Request and Receipt Times Schedule

State of Hawaii

Federal Agency Payment Type Request Cut-Off Time Receipt Window

Agriculture-FNS ACH 11:59 PM 1 day

Agriculture-FNS Fedwire 5:45 PM 0 day

Agriculture-FS ACH 3:00 PM 1 day

Air National Guard ACH 12:00 PM 15 days

Army National Guard ACH 12:00 PM 15 days

Commerce-NOAA ACH 2:00 PM 1 day

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

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

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

EPA ACH 2:00 PM 2 days

EPA Fedwire 2:00 PM 0 day

Education ACH 3:00 PM 1 day

Education Fedwire 2:00 PM 0 day

Energy ACH 4:00 PM 1 day

Energy Fedwire 3:00 PM 0 day

HHS ACH 6:30 PM 1 day

HHS Fedwire 3:00 PM 0 day

HUD ACH 5:30 PM 2 days

HUD Fedwire 3:00 PM 0 day

Interior-FWS ACH 11:59 PM 1 day

Interior-FWS Fedwire 5:45 PM 0 day

Interior-OSM ACH 3:00 PM 1 day

Interior-OSM Fedwire 1:00 PM 0 day

Justice ACH 11:00 PM 6 days

Justice Fedwire 2:00 PM 2 days

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

Labor-UTF ACH 3:00 PM 1 day

Labor-UTF Fedwire 3:00 PM 0 day

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

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

Social Security Administration ACH 11:59 PM 1 day

Social Security Administration Fedwire 5:45 PM 0 day

Transportation (FAA) ACH 2:00 PM 1 day

Transportation (FHWA) ACH 12:00 PM 3 days

Transportation (FHWA) Fedwire 12:00 PM 0 day

Transportation (FTA) ACH 2:00 PM 1 day

Veterans Administration ACH 12:00 PM 3 days

Page 19 of 21
Exhibit II - State of Hawaii

LIST OF STATE CLEARANCE TIMES

(Rounded Dollar-Weighted Average Day of Clearance)

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

Pattern

CFDA Program Name Recipient % Component Technique Round

ed

days

10.551 Supplemental Nutrition

Assistance Program

Department of Human

Services

100.

00

All Program Funds Actual Clearance, ZBA -

Same Day Payment

0 Days

10.555 National School Lunch

Program

Department of Education 100.

00

Benefit payments Payment Schedule:

CFDA 10.555 National

School Lunch Program

Payments (EDN) (SU)

0 Days

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health 29.0

0

Direct Administrative and

Payroll (Nutrition

Services and

Administrative [NSA])

Pre-Issuance N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health 69.0

0

Food Rebate (16.0%);

Food Benefit (53.0%)

Actual Clearance, ZBA -

Same Day Payment

0 Days

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Health 2.00 Indirect Costs (Nutrition

Services and

Administrative [NSA])

Indirect Cost Rates -

Proportionate Shares

N/A

14.195 Section 8 Housing Hawaii Public Housing

Authority

100.

00

All Program Funds Actual Clearance, ZBA -

ACH

0 Days

14.850 Public and Indian

Housing

Hawaii Public Housing

Authority

100.

00

All Program Funds Actual Clearance, ZBA -

Same Day Payment

0 Days

14.871 Section 8 Housing

Choice Vouchers

Hawaii Public Housing

Authority

100.

00

All Program Funds Actual Clearance, ZBA -

Same Day Payment

0 Days

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor and

Industrial Relations

25.0

0

Other Costs Direct Administrative

Costs - Drawdowns on a

Payroll Cycle

0 Days

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor and

Industrial Relations

75.0

0

Payroll Direct Administrative

Costs - Drawdowns on a

Payroll Cycle

0 Days

17.225S Unemployment Insurance

-- State Benefit Account

Department of Labor and

Industrial Relations

100.

00

Benefit Payments Actual Clearance, ZBA -

Same Day Payment

0 Days

20.205 Highway Planning and

Construction

Department of

Transportation

100.

00

All Program Funds Semi-Monthly Billing:

CFDA 20.205 Highway

Planning and

Construction (DOT) (SU)

8 Days

84.010 Title I Grants to Local

Educational Agencies

Department of Education 100.

00

All Program Funds Payment Schedule

(Monthly

Drawdown):(SU)

0 Days

84.027 Special Education --

Grants to States

Department of Education 100.

00

All Program Funds Payment Schedule

(Monthly

Drawdown):(SU)

0 Days

84.041 Impact Aid Department of Education 100.

00

All Program Funds Payment Schedule

(Monthly

Drawdown):(SU)

0 Days

Page 20 of 21
________________________________________________________________________________________________________

I hereby certify that an authorized State official has certified at least every five years that the "Rounded Days of Clearance" listed in

Exhibit 2 of this Treasury-State Agreement:

1. Have been prepared in accordance with the standards provided in 31 CFR 205.20;

2. Accurately represent the flow of Federal funds under the Federal assistance programs to which they apply;

3. Reflect seasonal or other periodic variations in the clearance activities; and,

4. Are auditable.

Date: ___________________________________________________________

Printed Name: ____________________________________________________

Certifying Signature: _______________________________________________

Title: ___________________________________________________________

CFDA Program Name Recipient % Component Technique Round

ed

days

93.558 Temporary Assistance for

Needy Families

Department of Human

Services

12.0

0

Administrative Costs Payment Schedule

(Monthly

Drawdown):(SU)

0 Days

93.558 Temporary Assistance for

Needy Families

Department of Human

Services

88.0

0

Electronic Benefit

Payments for Temporary

Assistance to Needy

Family

Actual Clearance, ZBA -

ACH

0 Days

93.767 Children's Health

Insurance Program

Department of Human

Services

100.

00

All Program Funds Post-Issuance 1 Day

93.778 Medical Assistance

Program

Department of Human

Services

100.

00

Benefit Payments -

Medquest and Medicaid

Post-Issuance 1 Day

96.006 Supplemental Security

Income

Department of Human

Services

100.

00

Benefit payment Reverse Flow Program -

SSI (CFDA 96.006)

N/A

Page 21 of 21 Director Jun 27, 2018 Laurel Johnston