Exhibit | - Funds Request and Receipt Times Schedule
State of Hawaii

al Agen i equest

Agriculture-FNS, ACH 14:59 PM 4 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 4 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 10 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 4:00 PM 0 day
Justice [ACH 41:00 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 QO day
National Science Foundation (NSF) ACH 8:00 PM iday
National Science Foundation (NSF) Fedwire 5:45 PM 0 day
Sociai Security Administration ACH 11:59 PM 4 day
Social Security Administration Fedwire 5:45 PM. 0 day
Transportation (FAA) |ACH 2:00 PM iday
Transportation (FHWA) ACH 12:00 PM 3 days
Transportation (FHWA) Fedwire 12:00 PM 0 day
Transportation (FTA) ACH 2:00 PM. 41 day
Veterans Administration ACH 12:00 PM 3 days

Page 20 of 22



8.3 The Unemployment Trust Fund

8.3.1 The State shail use the following method to calculate State interest liabilities on funds withdrawn from the several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

The State shall use the following methodology to calculate State interest liabilities on funds withdrawn from the several
accounts in the UTF under the Unemployment Insurance program.

Based on statements provided by its financial institution, or other appropriate source, the State shall determine the actual
interest earnings and the related banking costs attributable to funds withdrawn from its account in the UTF.

At the end of the State's fiscal year, the State shall calculate the percentage of its total unemployment compensation
expenditures for (1) funds withdrawn from the State account in the UTF, or the State %, and (2) funds withdrawn from the
Federal Employees Compensation Account (FECA) and the Extended Unemployment Compensation Account (EUCA)
and any other accounts of Federal funds in the UTF, or the Federal %.

The State shall calculate the actual interest earnings and the related banking costs attributable to funds withdrawn from
the State account in the UTF by multiplying the State % by the amount of the actual interest earnings and the related
banking costs of the account as a whole. The State's liability for interest on funds withdrawn from its account in the UTF
shall consist of the actual interest earnings attributable to such funds less the related banking costs attributed to such
funds.

The State shall determine the average daily cash balance of its unemployment compensation benefit payment account for
its fiscal year. The State shall calculate the average daily cash balance of Federal funds by multiplying the Federal % by
the average daily cash balance of the benefit payment account on the whole. The State's liability for interest on funds
withdrawn from the FECA and EUCA (and any other benefit accounts of Federal funds in the UTF from which the State
draws funds) shall be the average daily cash balance of Federal funds multiplied by the annualized rate equal to the
average equivalent yields of 13-week Treasury bills auctioned during the State's fiscal year.

8.4 Refund Liabilities

8.4.1 The State shall be liable for interest on refunds from the date the refund is credited to a State account until the date
the refund is debited from the State account for program purposes. The State shall apply a $50,000 refund transaction
threshold below which the State shall not incur or calculate interest liabilities on refunds. A transaction is defined as a
single deposit.

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

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

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

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

Refunds Deposited Randomly to Program:

With programs to which applicable interest neutral funding techniques shall be applied, the State shall determine the
actual amount of refunds received during the State fiscal year for each program using the information in its standard
Federal financial status reports. For each program, the State shall estimate the number of days that refunds are held prior
to being offset against a subsequent deposit of Federal funds. This shall be calculated as the average number of days
between drawdown deposits, which is determined by dividing the total number of drawdowns into 365, and assuming that

Page 14 of 22



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

The State shall request funds such that they are deposited by ACH in a State account on the settlement date of payments
issued by the State. The request shall be made in accordance with the appropriate Federal agency cut-off time specified
in Exhibit |. The amount of the request shall be for the amount of funds that clear the State's account on the settlement
date. This funding technique is interest neutral.

Actual Clearance, ZBA - Same Day Payment

The State shall request funds the same day it pays out funds, in accordance with the appropriate Federal agency cut-off
time specified in Exhibit |. A Federal agency will deposit funds in a State account the same day as requested. The amount
of the request shall be for the amount of funds that clear the State's account that day. This funding technique is interest
neutral.

Payment Schedule - Monthly

The State shall request funds such that they are deposited in a State account on the median business day of the month.
The request shall be made in accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The
amount of the request shall be a prorated share of the lesser of (1) the annual grant divided by 12, or (2) the total amount
of Federal funds expected to be paid out for program purposes during the year divided by 12. 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 |. 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 |. 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 cut-

Page 5 of 22



Exhibit Il - 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
Supplemental Nutrition | Department of Human. . |All Program Funds Actual Clearance, ZBA -
Assistance Program Services 00 Same Day Payment
10.555 |National School Lunch {Department of Education {100. {Benefit payments Payment Schedule: 0 Days
Program 00 CFDA 10.555 Nationai
School Lunch Program
Payments (EDN) (SU)
10.557 Special Supplemental Department of Health 29.0 |Direct Administrative and |Pre-Issuance NIA
Nutrition Program for ti) Payroll (Nutrition
Women, Infants, and Services and
Children, Administrative [NSA])
10,557 |Special Supplemental Department of Health 69.0 {Food Rebate (16.0%); Actual Clearance, ZBA- |0 Days
Nutrition Program for 0 Food Benefit (53.0%) Same Day Payment
Women, Infants, and
Children
10.557 |Special Supplemental Department of Health 2.00 |Indirect Costs (Nutrition [Indirect Cost Rates - N/A
Nutrition Program for Services and Proportionate Shares
Women, Infants, and Administrative [NSA]}
Children
12.401 |National Guard Military {Department of Defense [5.00 {Construction and O&M —_| Payment Schedule - 0 Days
Operations and Payments Monthly
Maintenance (O&M)
Projects
12.401 |National Guard Military |Department of Defense [95.0 /Construction and O&M |Advance Funding Based 0 Days
Operations and (0) Payments on An Estimate: CFDA
Maintenance (O&M) 12.401 National Guard
Projects Military Operations and
Maintenance (O&M)
Projects (DEF) (SU)
14.195 |Section 8 Housing Hawaii Public Housing 100. |All Program Funds Actual Clearance, ZBA- |0 Days
Authority 00 ACH
14.871 Section 8 Housing Hawaii Public Housing 100. |All Program Funds Actual Clearance, ZBA- {0 Days
Choice Vouchers Authority 00. Same Day Payment
17.225F |Unemployment Insurance | Department of Labor and |25.0 | Other Costs Direct Administrative 0 Days.
— Federal Benefit Industrial Relations 0 Costs - Drawdowns on a
Account and Payroll Cycle
Administrative Costs
17.225F |Unemployment Insurance |Department of Labor and |75.0 |Payroll Direct Administrative 0 Days
-- Federal Benefit Industrial Relations 0 Costs - Drawdowns on a
[Account and Payroll Cycle
Administrative Costs
17.2258 |Unemployment Insurance | Department of Labor and |100. |Benefit Payments Actual Clearance, ZBA- |0 Days
|-- State Benefit Account [Industrial Relations 0. Same Day Payment
20.106 | Airport Improvement Department of 0.40 |Administrative Cost Payment Schedule 0 Days
Program Transportation (0.40%) fucntaly Drawdown)
20.106 Airport Improvement Department of 99.6 | Construction and Average Clearance: 7 Days
Program Transportation 0 Consultant Cost (99.60%)| CFDA 20.106 Airport
Improvement Program
(DOT) (SU)

Page 21 of 22



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 SS] Supplementation Agreements.

9.6 Refunds

Pursuant to 31 CFR 205.25 (c)(3), the State or the Federal government will not incur interest liabilities on refunds under
the Supplemental Security Income Program as States are credited with the refunds in advance, before SSA collects the
funds.

10.0 INTEREST CALCULATION COSTS

10.1 As set forth in 31 CFR 205.27, interest calculation costs are defined as those costs necessary for the actual
calculation of interest, including the cost of developing and maintaining clearance patterns in support of the interest
calculations. Interest calculation costs do not include expenses for normal disbursing services, such as processing of
checks or maintaining records for accounting and reconciliation of cash balances, or expenses for upgrading or
modernizing accounting systems. Interest calculation costs in excess of $50,000 in any year are not eligible for
reimbursement, unless the State provides justification with the annual report.

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

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

Computer Programming
Systems Operations

10.3 The State shall submit all claims for reimbursement of interest calculation costs with its Annual Report in accordance
with 31 CFR 205.

41.0 NON-COMPLIANCE

11.1 The provisions of 31 CFR Part 205.29 and 31 CFR Part 205.30 shail apply in cases of non-compliance with the
terms of this Agreement.

Page 18 of 22



% 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 | Grants to Local Educational Agencies
Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Payment Schedule (Monthly Drawdown) (SU)
Average Day of Clearance: 0 Days

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Payment Schedule (Monthly Drawdown) (SU)
Average Day of Clearance: 0 Days

84.041 impact Aid

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: All Program Funds

Technique: Payment Schedule - Variation (Impact Aid Program, CFDA 84.041)(EDN) (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

Page 10 of 22



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 - Variation (Impact Aid Program, CFDA 84.041)(EDN) (SU)

The Federal Government shall make periodic payments to the State in accordance with 34 CFR Part 219 and 34 CFR
Part 222. The State Department of Education is solely responsible for education and public instruction throughout the
State, including education at the pre-school, primary and secondary school levels. The State does not drawdown the
funds. The U. S, Secretary of Education determines when the State is to receive the funds and in what amount. Neither
the Federal Government nor the State shall incur an interest liability. 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 | cut-
off 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 1. 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

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

Page 7 of 22



off time specified in Exhibit |. 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 |. 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.

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 (SS!) 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.

Advance Funding Based on An Estimate: CFDA 12.401 National Guard Military Operations and Maintenance (O&M)
Projects (DEF) (SU)

The State shall submit its request for advance payment to the National Guard Bureau (NGB) approximately 10 days prior
to the beginning of the period for which any advance payment cash requirement exists. The advance payment request is
made by USPFO on behalf of the State, in accordance with cut-off times in Exhibit |. Approximately 20 days after the end
of each month, the State shall submit to the USPFO for approval a Standard Form 270 itemizing the amount of funds
expended during the preceding month and the corresponding account classification to be charged with appropriate actual
expenditure documentation for the period for which advance payments have been received. The documents shall be
reconciled with the advance payments previously made and shall be applied to the liquidation of those advance payments
outstanding. Any differences that occur each month of the initial Federal fiscal year shall be accounted for in the next
months advance payment request. At the end of the fiscal year, any payments due to the State that exceed the
outstanding and unliquidated advance payments shall be paid to the State. If there are outstanding and unliquidated
advance payments upon completion of this 5-year agreement, the State shall immediately pay the unliquidated amount to
the Federal Government upon demand. To mitigate negative balances on the books of the State Treasury, State funds will
be borrowed when available. The advance payment amount requested will be based on a budget and/or financial plan
submitted and approved by USPFO/NGB for each fiscal year. This funding technique is interest neutral.

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

The State shall request funds such that they are deposited by ACH on the dollar-weighted average day of clearance for
the disbursement, in accordance with the clearance pattern specified in Exhibit Il. In accordance with Title 49 United
State Code, Section 47111, payment request over 90% of the grant will require FAA manual approval. Payment will be
released after all financial close out documentation has been provided and approved. The request shal! be made in
accordance with the appropriated Federal agency cut-off time specified in Exhibit |. The amount of the request shall be for
the exact amount of funds that clear the State's account that day. In addition, under this funding technique, the State
agrees to waive any claim to a federal interest liability and will not calculate the federal interest liability. This funding
technique is interest neutral.

Page 6 of 22



12.0 AUTHORIZED SIGNATURES

Wesley K. Machida

Director of Finance

State of Hawaii

Department of Budget and Finance

Signature:

Date Signed: falaar

Date Submitted 12/06/2017

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management

Bureau of the Fiscal Servi

US. Department of the Treasury
[!

Signature:

SS {
awl Act | ja 2X Date Signed:_/ ff
‘ i

Page 19 of 22



Average Day of Clearance: 0 Days

14.871 Section 8 Housing Choice Vouchers

Recipient: Hawaii Public Housing Authority

% of Funds Agency Receives: 100.00

Component: All Program Funds

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

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

% of Funds Agency Receives: 25.00

Component: Other Costs

Technique: Direct Administrative Costs - Drawdowns on a Payroll Cycle

Average Day of Clearance: 0 Days

Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 75.00

Component: Payroll

Technique: Direct Administrative Costs - Drawdowns on a Payroll Cycle
Average Day of Clearance: 0 Days

17.2258 Unemployment Insurance -- State Benefit Account
Recipient: Department of Labor and Industrial Relations

% of Funds Agency Receives: 100.00

Component: Benefit Payments

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

20.106 Airport Improvement Program

Recipient: Department of Transportation

% of Funds Agency Receives: 99.60

Component: Construction and Consultant Cost (99.60%)

Technique: Average Clearance: CFDA 20.106 Airport Improvement Program (DOT) (SU)
Average Day of Clearance: 7 Days

Recipient: Department of Transportation

% of Funds Agency Receives: 0.40

Component: Administrative Cost (0.40%)

Technique: Payment Schedule (Monthly Drawdown) (SU)
Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction
Recipient: Department of Transportation

Page 9 of 22



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:

41.0 AGENTS OF THE AGREEMENT

1.1 The Authorized Official(s) for the State of Hawaii shall be the Director of Finance in all matters conceming 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 07/01/2016 and shall remain in effect until 06/30/2017.

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 22



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:

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 tI.

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

Page 12 of 22



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-Ilssuance

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 - SS! (CFDA 96.006)
Average Day of Clearance: N/A

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:
None.

7.0 CLEARANCE PATTERNS

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

a. Functional Payment: Payroll - State Central Payroll Checks
b. The programs as described in section 4.2 that meet or exceed the threshold (except CFDA 96.006)

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

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

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

State's central Financial Accounting and Management Information System (FAMIS), Check Reconciliation System, Check
Writing System and the Department of Education's Central Accounting System.

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

When developing each clearance pattern, the State shall track at least 99% of the funds disbursed, from issuance to
clearance, for a period of at least three months.

7.5 The State shail 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

Page 11 of 22



10.555 National Schoo! Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: Benefit payments

Technique: Payment Schedule: CFDA 10.555 National Schoo! 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

12.401 National Guard Military Operations and Maintenance (O&M) Projects

Recipient: Department of Defense

% of Funds Agency Receives: 95.00 ‘

Component: Construction and O&M Payments

Technique: Advance Funding Based on An Estimate: CFDA 12.401 National Guard Military Operations and Maintenance
(O&M) Projects (DEF) (SU)

Average Day of Clearance: 0 Days

Recipient: Department of Defense

% of Funds Agency Receives: 5.00
Component: Construction and O&M Payments
Technique: Payment Schedule - Monthly
Average Day of Clearance: 0 Days

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

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20.205 | Highway Planning and Department of 100. |All Program Funds. Semi-Monthly Billing: 8 Days
Construction Transportation 00 FDA 20.208 Highway
janning an
Construction (DOT) (SU)
84.010 Title | Grants to Local Department of Education |100. |All Program Funds Payment Schedule 0 Days
Educational Agencies 00 {ygriny Drawdown)
SU.
84.027 |Special Education -- Department of Education |100. |All Program Funds Payment Schedule ‘0 Days
Grants to States 00 {unity Drawdown)
84.041 {Impact Aid Department of Education |100. |All Program Funds Payment Schedule - 0 Days
00 Variation (Impact Aid
Program, CFDA
84.041)(EDN) (SU)
93.558 Temporary Assistance for | Department of Human 12.0 |Administrative Costs Payment Schedule 0 Days
Needy Families Services 0 Monthly Drawdown)
SI
93.558 |Temporary Assistance for| Department of Human 88.0 |Electronic Benefit Actual Clearance, ZBA- |0 Days
Needy Families Services 0 Payments for Temporary |ACH
Assistance to Needy
Family
93.767 | Children’s Health Department of Human. 100. {All Program Funds Post-Issuance 1 Day
Insurance Program Services 00
93.778 |Medical Assistance Department of Human 100. |Benefit Payments - Post-Issuance 1 Day
Program Services 00 _|Medquest and Medicaid
96.006 |Supplemental Security | Department of Human 100. |Benefit payment Reverse Flow Program - |N/A
Income Services 00 SSI(CFDA 96.006)

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

Exhibit 2 of this Treasury-State Agreement:

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

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

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

4. Are auditable.

Date: December 22, 2017

Printed Name:

Wesley K. Machida

Certifying Signature:

Title:

Director of Finance

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Program and associated administrative payments (CFDA 93.778):

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

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

With programs to which applicable non-interest neutral funding techniques shall be applied, the State shall also calculate
the time refunds are in a State account by comparing the date the refund is offset against a subsequent deposit of Federal
funds and the date the refund is paid out for program purposes. This period will be measured for each program in
accordance with the State method for calculating interest under pre-issuance funding, and will be applied independently to
the amount of refunds under each program to calculate the interest on refunds.

8.4.4 Refunds for the Special Supplemental Food program (CFDA 10.557) is exempt from interest liabilities as long as the
interest earned from the refund is used for program purposes.

8.5 Exemptions

8.5.1 Where more than one State agency is a recipient of Federal funds under a program, a particular State agency's
funding may be excluded from interest calculation procedures if the State agency receives an amount of funds less than 5
% of the State's threshold for major Federal assistance programs. Notwithstanding this potential exemption, however, in
no case shall less than 90% of a program's total funding be subject to interest calculation procedures.

Proration of calculations: If less than total program funding is subject to interest calculation procedures, the resulting
interest liability calculations shall be prorated to 100% of program funding.

8.6 State Interest Liabilities

8.6.1 The State shall be liable for interest on Federal funds from the date Federal funds are credited to a State account
until the date those funds are paid out for program purposes.

8.6.2 The State shall use the following method to calculate State interest liabilities on Federal funds:
8.6.2.1 Measuring Time Funds Are Held

Deposit to Clearance:
To determine the total time Federal funds are held, the State shall measure the time between the date Federal funds are
received and credit to a State's account and the date those funds are debited from the State's account.

8.6.2.2 Source of Data

The time period from the date Federal funds are received and credited to a State's account and the date those funds are
expended by check from the State's account shall be determined from information captured in the Department of
Education Central Accounting System, the Highways Billing System or the State's FAMIS. The check expended (issued)
date is adjusted by the check clearance pattem specified in Exhibit II to arrive at the cash disbursed date.

8.6.2.3 Standards Applied

The average daily cash balance of Federal Funds in the program's account reflects the actual activity of each draw from
the date of deposit to the date of issuance or clearance, whichever is pertinent.

8.6.2.4 Calculation Procedure

Average Daily Balance:
|= ADB x R, where

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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 dollar-
weighted with the average day of clearance for SSI/SSP payments made to beneficiaries by direct deposit on the regularly
designated day of the month for delivery of SS/SSP payments to beneficiaries.

By direct deposit on days later in a month: To calculate this adjustment, SSA will determine the nationwide percentage of
total SSI/SSP payments made to beneficiaries by direct deposit on days later in a month, using full data from the most
recent Federal fiscal year. The average day of clearance for regularly issued monthly SSI/SSP checks shall be dollar-
weighted with the average day of clearance for 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 shail 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 fess 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.

Page 17 of 22



Department of Defense

Department of Education

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) 93.558 Temporary Assistance for Needy Families

JP Morgan Electronic Financial Services, Inc. 10.551 Supplemental Nutrition Assistance Program

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 | to ensure
funds will be received and credited to a State account by the times specified in the funding techniques. Exhibit | is
incorporated by reference herein.

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

Page 3 of 22



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 06/30/2015.

Ail major Federal assistance programs shail be covered by this Agreement, unless otherwise specified in section 4.4 of
this Agreement.

4.2 The State's threshold for major Federal assistance programs is $22,477,863.
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
12.401 National Guard Military Operations and Maintenance (O&M) Projects
14.195 Section 8 Housing

14.871 Section 8 Housing Choice Vouchers

17.225F Unemployment tnsurance -- Federal Benefit Account and Administrative Costs
17.225S Unemployment insurance -- State Benefit Account

20.106 Airport improvement Program

20.205 Highway Planning and Construction

84.010 Title | 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 threshald 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:

Page 2 of 22



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

Advance Funding Based on An Estimate: CFDA 12.401 National Guard Military Operations and Maintenance (O&M)
Projects (DEF) (SU)

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

Direct Administrative Costs - Drawdowns on a Payroll Cycle

Indirect Cost Rates - Proportionate Shares

Payment Schedule - Monthly

Payment Schedule - Variation (Impact Aid Program, CFDA 84.041)(EDN) (SU)

Payment Schedule (Monthly Drawdown) (SU)

Payment Schedule: CFDA 10.555 National School Lunch Program Payments (EDN) (SU)
Reverse Flow Program - SS! (CFDA 96.006)

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

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

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

(1) amount of the issuance

(2) date of issuance

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

(4) amount of Federal funds received

(5) date funds were requested

8.2 Federal Interest Liabilities

8.2.1 A Federal interest liability shall accrue from the day the State pays out its own funds for program purposes to the
day Federal funds are credited to a State account. With regard to funds transferred out of the Federal Highway Trust
Fund, if a State does not bill at least weekly for current project costs, the Federal interest liability shall not accrue prior to
the day the State submits a request for funds.

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

Average Daily Balance:

The State shall track the actual cash activity for each Federal program by its own account. A negative cash balance at
the close of business indicates the State paid out its own funds for program purposes in the absence of supporting
Federal funds. The Federal interest liability shall be calculated by applying the daily interest to a program's negative cash
balance. .

Page 13 of 22



1 = State's total interest liability
ADB = Average Daily Balance of cash in a program's account, measured from deposit to clearance

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

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

9.2 Definitions

State Supplementary Payment (SSP): Monthly payment made by the State to the Social Security Administration (SSA), as
a voluntary supplement to monthly SSI payments made by the SSA to the State’ s 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

Page 16 of 22