Cash Management Improvement Act Agreement

between

The State of Alabama

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 Alabama

(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 Alabama shall be the State Comptroller 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.

2.3 All functions and duties undertaken pursuant to this Agreement will be performed in accordance with the Act and the

regulations and procedures prescribed thereunder. 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 10/01/2020 and shall remain in effect until 09/30/2021.

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.

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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.

3.5 The State representative identified in Section 1.1 of this agreement may designate a staff member(s) to act as his

agent in negotiating amendments with Fiscal Service's designated agent.

4.0 PROGRAMS COVERED

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

Federal financial assistance received and disbursed by the State, excluding Federal funds received and disbursed by

institutions of higher education, hospitals, and non-profit organizations, as reviewed in the Single Audit for fiscal year

ending 09/30/2019.

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

this Agreement.

4.2 The State's threshold for major Federal assistance programs is $59,078,860.

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

10.551 Supplemental Nutrition Assistance Program

10.553 School Breakfast Program

10.555 National School Lunch Program

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

10.558 Child and Adult Care Food Program

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

17.225S Unemployment Insurance -- State Benefit Account

20.205 Highway Planning and Construction

84.010 Title I Grants to Local Educational Agencies

84.027 Special Education -- Grants to States

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States

93.558 Temporary Assistance for Needy Families

93.575 Child Care and Development Block Grant

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

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

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

There are currently no programs listed for Section 4.3.

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

93.268 Immunization Grants --- Exclusion:Non-Cash

5.0 ENTITIES COVERED

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

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

4.0 of this Agreement:

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Alabama Medicaid Agency

Department of Education

Department of Human Resources

Department of Labor

Department of Public Health

Department of Rehabilitation Services

Department of Transportation

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

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

Agreement:

HP Corporation 93.778 Medical Assistance Program

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

Xerox 10.551 Supplemental Nutrition Assistance Program

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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6.1.6 Pursuant to 31 CFR 205.9(d) and (e) regarding estimates, administrative costs-other and indirect costs of agencies

administering Federal programs, with the exception of the Department of Transportation, Department of Education,

Department of Public Health, and the Department of Rehabilitation Services will be drawn on a scheduled draw basis

such that Federal funds will be drawn prorata 24 times per year to coincide with the State's semi-monthly payroll. This

means that the total amount of the Federal awards to be used for these costs will be equally divided over the course of the

fiscal year, and no reconciliation of estimate to actual is necessary. Under these conditions, the State and Fiscal Service

agree no interest liabilities will be incurred on the transfer of these funds for administrative costs-other and indirect costs.

The Department of Transportation's Federal billing program will include these type costs in its routine processing. The

Department of Education, Department of Public Health, the Alabama Medicaid Agency and the Department of

Rehabilitation Services will include these type costs in their routine processing. For these agencies, drawdowns of

Federal funds are based on actual invoices and/or amounts due to be paid out to the recipients, providers, contractors,

and employees. If at the time of the next drawdown there is either a deficiency or balance remaining from the previous

draw, an adjustment is made to increase or reduce the current drawdown by that amount.

6.2 Description of Funding Techniques

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

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

Actual Clearance, ZBA - Same Day Payment

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

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

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

neutral.

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.

Actual Costs - Estimated Allocation - Monthly

The State shall request funds once a month, such that they are deposited on the median day of the month, to fund the

activity of the prior month. 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 an estimate based on the actual costs of the month distributed to

the program according to the allocation of costs for the preceding six months. 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.

There are no funding techniques listed in Section 6.2.3

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

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

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Highway Composite (Average Clearance)

The Alabama Department of Transportation (ALDOT) will use an average clearance methodology described as follows:

Using department files, ALDOT will capture federally participating expenditure data. The dollar amounts of the

expenditures will not be reduced by the State share of funding. The clearance time is the difference between the

disbursement redemption date and the expenditure posting date. A weighted clearance time is calculated by multiplying

the clearance time by a weighting factor. The weighting factor is the federally participating expenditure amount divided by

the total of all federally participating expenditure amounts of the disbursements redeemed in the reporting period. The

average clearance time is the sum of the weighted clearance times. All uncleared disbursements will have a clearance

time of three hundred sixty-five (365) days. All employee disbursements paid via payroll direct deposit will have a

weighted clearance time of zero (0). Any disbursements with negative clearance times will have a weighted clearance

time of zero (0). Expenditures that are not traceable back to ALDOT's accounts payable system will not be used in the

average clearance calculation. These non-traceable expenditures are primarily the result of data entry errors and are

expected to be infrequent, irregular, and have an immaterial impact on the results of the average clearance calculation. All

requests for funds will be in accordance with the appropriate Federal agency cut-off time specified. ALDOT will use a

weekly billing process for requesting Federal funds based on the federally participating expenditures posted during the

billing cycle with one Federal deposit on the date of average clearance. Any refunds and program income received will be

credited against the next billing cycle. Funds received by ALDOT for rentals of property and/or sale of property acquired

with Federal program funds are considered to be program income. This funding technique is interest neutral.

Scheduled Draws Funding

The State will draw Federal funds for administrative costs-payroll, administrative costs-other, and indirect costs on a

prorata basis to coincide with the semi-monthly payroll cycle (24 times per year) in accordance with 31 CFR 205.18(a).

The prorata amount of direct and indirect costs included in the drawdown will be based on the immediate cash needs to

cover projected direct and indirect cost expenditures allocable to the program until the next scheduled drawdown. All

requests will be made in accordance with the appropriate Federal agency cut-off times specified in Exhibit I. Under these

conditions and in accordance with 31 CFR 205.12(d), no interest liability will be incurred or calculated on these revolving

loan funds. 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 Resources

% of Funds Agency Receives: 100.00

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

10.553 School Breakfast Program

Recipient: Department of Education

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% of Funds Agency Receives: 100.00

Component: Payments to local Education Agencies (LEAs) and Other Recipients

Technique: Pre-Issuance

Average Day of Clearance: N/A

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 100.00

Component: Payments to LEA and other recipients

Technique: Pre-Issuance

Average Day of Clearance: N/A

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

Recipient: Department of Public Health

% of Funds Agency Receives: 77.00

Component: Vendor Payments to Food Providers

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Public Health

% of Funds Agency Receives: 23.00

Component: Administrative Costs-Payroll, Indirect Costs, Clinic Administration, and Administrative Costs-Other

Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

10.558 Child and Adult Care Food Program

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Indirect Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Administrative Costs-Payroll; Administrative Costs-Other

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 98.00

Component: Payments to Local Education Agencies (LEAs) and Other Recipients

Technique: Pre-Issuance

Average Day of Clearance: N/A

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

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Recipient: Department of Labor

% of Funds Agency Receives: 17.00

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Labor

% of Funds Agency Receives: 83.00

Component: Administrative Costs-Payroll, Administrative Costs-Other and Indirect Costs

Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Labor

% of Funds Agency Receives: 100.00

Component: Payments to Beneficiaries (UC)

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 Costs (Construction and Consultant Contracts, Administrative, Payroll, Indirect and Reallocated)

Technique: Highway Composite (Average Clearance)

Average Day of Clearance: 7 Days

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Indirect Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Administrative Costs-Payroll; Administrative Costs-Other

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 98.00

Component: Payments to Local Education Agencies (LEAs) and Other Recipients

Technique: Pre-Issuance

Average Day of Clearance: N/A

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84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 1.00

Component: Indirect Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Education

% of Funds Agency Receives: 9.00

Component: Administrative Costs-Payroll; Administrative Costs-Other

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Education

% of Funds Agency Receives: 90.00

Component: Payments to Local Education Agencies (LEAs) and Other Recipients

Technique: Pre-Issuance

Average Day of Clearance: N/A

84.126 Rehabilitation Services -- Vocational Rehabilitation Grants to States

Recipient: Department of Rehabilitation Services

% of Funds Agency Receives: 6.00

Component: Indirect Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Rehabilitation Services

% of Funds Agency Receives: 30.00

Component: Administrative Costs - Payroll

Technique: Pre-Issuance

Average Day of Clearance: N/A

Recipient: Department of Rehabilitation Services

% of Funds Agency Receives: 64.00

Component: Vendor Payments for Client Services and Other Recipients

Technique: Pre-Issuance

Average Day of Clearance: N/A

93.558 Temporary Assistance for Needy Families

Recipient: Department of Human Resources

% of Funds Agency Receives: 47.00

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Human Resources

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% of Funds Agency Receives: 9.00

Component: Administrative Costs-Payroll

Technique: Actual Costs - Estimated Allocation - Monthly

Average Day of Clearance: 1 Day

Recipient: Department of Human Resources

% of Funds Agency Receives: 44.00

Component: Administrative Costs-Other and Indirect Costs

Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

93.575 Child Care and Development Block Grant

Recipient: Department of Human Resources

% of Funds Agency Receives: 100.00

Component: Payments to Service Providers, Admin Costs-Payroll, Admin and Indirect Costs

Technique: Actual Costs - Estimated Allocation - Monthly

Average Day of Clearance: N/A

93.767 Children's Health Insurance Program

Recipient: Department of Public Health

% of Funds Agency Receives: 10.00

Component: Medical Payments

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Department of Public Health

% of Funds Agency Receives: 90.00

Component: Administrative Costs

Technique: Scheduled Draws Funding

Average Day of Clearance: N/A

93.778 Medical Assistance Program

Recipient: Alabama Medicaid Agency

% of Funds Agency Receives: 5.00

Component: Benefits Grant (CMS Medicare Premium Payments)

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Alabama Medicaid Agency

% of Funds Agency Receives: 92.00

Component: Benefits Grant (Payments to Service Providers through the Fiscal Agent)

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

Recipient: Alabama Medicaid Agency

% of Funds Agency Receives: 3.00

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Component: Administrative Costs-Payroll, Administrative Costs-Other and Indirect Costs

Technique: Scheduled Draws Funding

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:

All programs with the exception of programs listed in Sections 7.1.1, 7.1.2, 7.1.3, 7.1.4, and 7.1.5.

7.1.1 Pursuant to 31 CFR 205.9(d) and (e) regarding estimates, administrative costs-other and indirect costs of agencies

administering Federal programs, with the exception of the Department of Transportation, Department of Education, and

the Department of Public Health, will be drawn on a scheduled draw basis such that Federal funds will be drawn prorata

24 times per year to coincide with the State's semi-monthly payroll. This means that the total amount of the Federal

awards to be used for these costs will be equally divided over the course of the fiscal year, and no reconciliation of

estimate to actual is necessary. Under these conditions, the State and Fiscal Service agree no interest liabilities will be

incurred on the transfer of these funds for administrative costs-other and indirect costs. The Department of

Transportation's Federal billing program will include these type costs in its routine processing. The Department of

Education, Department of Public Health, and the Alabama Medicaid Agency will include these type costs in their routine

processing. For these agencies, drawdowns of Federal funds are based on actual invoices and/or amounts due to be

paid out to the recipients, providers, contractors, and employees. If at the time of the next drawdown there is either a

deficiency or balance remaining from the previous draw, an adjustment is made to increase or reduce the current

drawdown by that amount.

7.1.2 The State will not develop clearance patterns for the component parts of the programs that will use Actual

Clearance, ZBA - Same Day Payment.

7.1.3 The State will not develop clearance patterns for the component parts of the programs that will use Scheduled

Draws Funding.

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

Each State Agency will be responsible for developing the clearance pattern(s) for its applicable federal programs.

7.2.1 For the programs they administer, the Department of Education and the Department of Rehabilitation Services will

use disbursement clearance patterns developed using a census approach of 100% of the data. Disbursement issue dates

will be compared to the dates the disbursements are redeemed (paid) by the State Treasurer. For the purposes of this

calculation, all disbursements will be deemed cleared when 99% of the total dollar amount has been paid. From that

information, estimated daily clearance patterns and average clearance patterns are developed.

7.2.2 The Department of Human Resources (DHR) will use an actual activity clearance pattern where it is developed

using 100% of the data for its programs. Disbursement issue dates will be compared to the dates the disbursements are

redeemed (paid) by the State Treasurer. For the purposes of this calculation, all disbursements will be deemed cleared

when 99% of the total dollar amount has been paid. From that information, estimated daily clearance patterns and

Page 11 of 22
average clearance patterns are developed.

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

Departmental accounting files, payment document dates, disbursement issue dates, disbursement redemption dates, and

any other relevant data needed.

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.

7.6.1 The same method will be used to calculate dollar weighted average pre-issuance time using the date Federal funds

are deposited and the disbursement issue date to calculate pre-issuance time. (Dollar weighted average pre-issuance

time is added to dollar weighted average clearance time to get total days Federal cash is on hand to calculate interest.)

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:

N/A

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.

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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 - Same Day Payment

Actual Costs - Estimated Allocation - Monthly

Highway Composite (Average Clearance)

Scheduled Draws Funding

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

funding technique and document interest liabilities.

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

(1) amount of the issuance

(2) date of issuance

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

(4) amount of Federal funds received

(5) date funds were requested

8.1.3 Federal funds drawn down by the State on an accural basis for future or contingency needs, as in the case of selfinsurance reserve funds or accrued employee leave, will be excluded from the interest calculations and reporting set forth

in this Agreement.

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

Page 13 of 22
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:

With programs to which applicable interest neutral funding techniques are applied, the State interest liability shall be

based on the difference in whole days between the date the refund is deposited in a State account and the date the

refund is offset against a subsequent deposit of Federal funds.

8.4.4 Funds received by the Department of Transportation from rentals of property and/or sale of property acquired with

Federal program funds of the Highway Planning and Construction and the Appalachian Development Highway System,

are considered to be program income. Under these conditions the State and Fiscal Service agree no interest liability will

be incurred or calculated.

8.4.5 Funds received by the Alabama Medicaid Agency from drug rebates, property liens, recoupments from recipients,

and third party insurance in the administration of the Medical Assistance Program will be estimated at the beginning of

each quarter. Draws of Federal funds during the quarter will be reduced prorata (one-sixth) by these estimates with the

final estimate of each quarter being adjusted to actual for the quarter. Under these conditions the State and Fiscal

Service agree no interest liability will be incurred or calculated.

Page 14 of 22
8.4.6 Funds received by the Alabama Department of Public Health from rebates under the Special Supplemental Nutrition

Program for Women, Infants and Children will be treated as program income. When rebates are received, no federal

funds will be drawn until the rebate is depleted. Under these conditions the State and Fiscal Service agree no interest

liability will be incurred or calculated.

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

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

received and credited to the State Treasury and the date those funds are debited from the State Treasury through

disbursement redemption.

8.6.2.2 Source of Data

The time period from receipt to issuance of Federal funds shall be determined from information captured by State

agencies managing those funds. State agencies are required to maintain records of Federal fund drawdowns for each

Federal program. Records of Federal fund drawdowns will be recorded by CFDA# and will include date requested, date

available at the bank, date credited to the State Treasury, amount of draw, etc. The time period from issuance of Federal

funds to the date funds are debited from the State Treasury through disbursement redemption shall be determined from

information captured by the agencies from information captured in the State of Alabama Accounting and Resource

System (STAARS) administered by the State Comptroller's Office. The STAARS will track disbursement issuance date

and disbursement redemption (paid) date.

8.6.2.3 Standards Applied

Statistical Sampling (Pre-Issuance):

To measure the time Federal funds are held in a State account prior to being disbursed, the State shall use statistical

sampling. The sample shall be randomly selected, and shall be of sufficient size to ensure, at a minimum, a 95%

confidence interval no wider than ± 0.3 dollar-weighted days about the estimated mean.

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

1 subtract the deposit date from the issuance date

2 multiply the difference of step 1 by the disbursement amount

Page 15 of 22
3 divide the product of step 2 by the total amount of funds drawn in the sample to determine the dollar-weighted preissuance time for that disbursement

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

8.6.2.4 Calculation Procedure

Pre-Issuance Time + Clearance Time:

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

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

9.0 REVERSE FLOW PROGRAMS

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

not participate in the program.

10.0 INTEREST CALCULATION COSTS

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

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

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

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

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:

Actual staff time, actual computer time, and other actual expenses incurred to establish clearance patterns, make interest

calculations, and prepare the annual report.

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

with 31 CFR 205.

11.0 NON-COMPLIANCE

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

terms of this Agreement.

Page 16 of 22
11.2 The provisions of 31 CFR Part 205.32-205.35 Sub-Part B covering Federal Assistance Programs not included in this

agreement (Non-Major Programs) provide that if a State demonstrates an unwillingness or inability to comply with this

Subpart, the Secretary may require the State and a Federal agency to cover additional programs in the same manner as

Major Federal Programs. The State and the Secretary agree to a reasonable period of time of no less than 90 days to

correct any funding problems within a Non-Major Federal Program prior to the Secretary mandating their inclusion under

this agreement in the same manner as Major Federal Programs.

Page 17 of 22
12.0 AUTHORIZED SIGNATURES

Kathleen D. Baxter, PhD, CGFM, CPM

State Comptroller

Signature:________________________________________Date Signed:_______________

Date Submitted 09/21/2020

Sandra Paylor Sanders

Acting Assistant Commissioner

Revenue Collections Management

Bureau of the Fiscal Service

U.S. Department of the Treasury

Signature:________________________________________Date Signed:_______________

Page 18 of 22

Kathleen D. Baxter (Sep 24, 2020 16:00 CDT)

Kathleen D. Baxter

Sep 24, 2020

Sandra R. Paylor (Sep 30, 2020 15:52 EDT)

Sandra R. Paylor

Sep 30, 2020
Exhibit I - Funds Request and Receipt Times Schedule

State of Alabama

Federal Agency Payment Type Request Cut-Off Time Receipt Window

Agriculture-FNS ACH 11:59 PM 1 day

Agriculture-FNS Fedwire 5:45 PM 0 day

Agriculture-FS ACH 3:00 PM 1 day

Air National Guard ACH 12:00 PM 15 days

Army National Guard ACH 12:00 PM 15 days

Commerce-NOAA ACH 2:00 PM 1 day

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

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

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

EPA ACH 2:00 PM 2 days

EPA Fedwire 2:00 PM 0 day

Education ACH 3:00 PM 1 day

Education Fedwire 2:00 PM 0 day

Energy ACH 4:00 PM 1 day

Energy Fedwire 3:00 PM 0 day

HHS ACH 5:00 PM 1 day

HHS Fedwire 3:00 PM 0 day

HUD ACH 5:30 PM 2 days

HUD Fedwire 3:00 PM 0 day

Interior-FWS ACH 11:59 PM 1 day

Interior-FWS Fedwire 5:45 PM 0 day

Interior-OSM ACH 3:00 PM 1 day

Interior-OSM Fedwire 1:00 PM 0 day

Justice ACH 11:00 PM 6 days

Justice Fedwire 2:00 PM 2 days

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

Labor-UTF ACH 3:00 PM 1 day

Labor-UTF Fedwire 3:00 PM 0 day

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

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

Social Security Administration ACH 11:59 PM 1 day

Social Security Administration Fedwire 5:45 PM 0 day

Transportation (FAA) ACH 2:00 PM 1 day

Transportation (FHWA) ACH 12:00 PM 3 days

Transportation (FHWA) Fedwire 12:00 PM 0 day

Transportation (FTA) ACH 2:00 PM 1 day

Veterans Administration ACH 12:00 PM 3 days

Page 19 of 22
Exhibit II - State of Alabama

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

Resources

100.

00

Payments to

Beneficiaries

Actual Clearance, ZBA -

Same Day Payment

0 Days

10.553 School Breakfast

Program

Department of Education 100.

00

Payments to local

Education Agencies

(LEAs) and Other

Recipients

Pre-Issuance N/A

10.555 National School Lunch

Program

Department of Education 100.

00

Payments to LEA and

other recipients

Pre-Issuance N/A

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Public

Health

77.0

0

Vendor Payments to

Food Providers

Actual Clearance, ZBA -

Same Day Payment

0 Days

10.557 Special Supplemental

Nutrition Program for

Women, Infants, and

Children

Department of Public

Health

23.0

0

Administrative CostsPayroll, Indirect Costs,

Clinic Administration, and

Administrative CostsOther

Scheduled Draws

Funding

N/A

10.558 Child and Adult Care

Food Program

Department of Education 1.00 Indirect Costs Actual Clearance, ZBA -

Same Day Payment

0 Days

10.558 Child and Adult Care

Food Program

Department of Education 98.0

0

Payments to Local

Education Agencies

(LEAs) and Other

Recipients

Pre-Issuance N/A

10.558 Child and Adult Care

Food Program

Department of Education 1.00 Administrative CostsPayroll; Administrative

Costs-Other

Pre-Issuance N/A

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor 17.0

0

Payments to

Beneficiaries

Actual Clearance, ZBA -

Same Day Payment

0 Days

17.225F Unemployment Insurance

-- Federal Benefit

Account and

Administrative Costs

Department of Labor 83.0

0

Administrative CostsPayroll, Administrative

Costs-Other and Indirect

Costs

Scheduled Draws

Funding

N/A

17.225S Unemployment Insurance

-- State Benefit Account

Department of Labor 100.

00

Payments to

Beneficiaries (UC)

Actual Clearance, ZBA -

Same Day Payment

0 Days

20.205 Highway Planning and

Construction

Department of

Transportation

100.

00

All Costs (Construction

and Consultant

Contracts, Administrative,

Payroll, Indirect and

Reallocated)

Highway Composite

(Average Clearance)

7 Days

84.010 Title I Grants to Local

Educational Agencies

Department of Education 1.00 Indirect Costs Actual Clearance, ZBA -

Same Day Payment

0 Days

84.010 Title I Grants to Local

Educational Agencies

Department of Education 1.00 Administrative CostsPayroll; Administrative

Costs-Other

Pre-Issuance N/A

84.010 Title I Grants to Local

Educational Agencies

Department of Education 98.0

0

Payments to Local

Education Agencies

(LEAs) and Other

Recipients

Pre-Issuance N/A

Page 20 of 22
________________________________________________________________________________________________________

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

Exhibit 2 of this Treasury-State Agreement:

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

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

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

4. Are auditable.

Date: ___________________________________________________________

CFDA Program Name Recipient % Component Technique Round

ed

days

84.027 Special Education --

Grants to States

Department of Education 1.00 Indirect Costs Actual Clearance, ZBA -

Same Day Payment

0 Days

84.027 Special Education --

Grants to States

Department of Education 9.00 Administrative CostsPayroll; Administrative

Costs-Other

Pre-Issuance N/A

84.027 Special Education --

Grants to States

Department of Education 90.0

0

Payments to Local

Education Agencies

(LEAs) and Other

Recipients

Pre-Issuance N/A

84.126 Rehabilitation Services --

Vocational Rehabilitation

Grants to States

Department of

Rehabilitation Services

6.00 Indirect Costs Actual Clearance, ZBA -

Same Day Payment

0 Days

84.126 Rehabilitation Services --

Vocational Rehabilitation

Grants to States

Department of

Rehabilitation Services

64.0

0

Vendor Payments for

Client Services and Other

Recipients

Pre-Issuance N/A

84.126 Rehabilitation Services --

Vocational Rehabilitation

Grants to States

Department of

Rehabilitation Services

30.0

0

Administrative Costs -

Payroll

Pre-Issuance N/A

93.558 Temporary Assistance for

Needy Families

Department of Human

Resources

47.0

0

Payments to

Beneficiaries

Actual Clearance, ZBA -

Same Day Payment

0 Days

93.558 Temporary Assistance for

Needy Families

Department of Human

Resources

9.00 Administrative CostsPayrollActual Costs - Estimated

Allocation - Monthly

1 Day

93.558 Temporary Assistance for

Needy Families

Department of Human

Resources

44.0

0

Administrative CostsOther and Indirect CostsScheduled Draws

Funding

N/A

93.575 Child Care and

Development Block Grant

Department of Human

Resources

100.

00

Payments to Service

Providers, Admin CostsPayroll, Admin and

Indirect Costs

Actual Costs - Estimated

Allocation - Monthly

N/A

93.767 Children's Health

Insurance Program

Department of Public

Health

10.0

0

Medical Payments Actual Clearance, ZBA -

Same Day Payment

0 Days

93.767 Children's Health

Insurance Program

Department of Public

Health

90.0

0

Administrative Costs Scheduled Draws

Funding

N/A

93.778 Medical Assistance

Program

Alabama Medicaid

Agency

5.00 Benefits Grant (CMS

Medicare Premium

Payments)

Actual Clearance, ZBA -

Same Day Payment

0 Days

93.778 Medical Assistance

Program

Alabama Medicaid

Agency

3.00 Administrative CostsPayroll, Administrative

Costs-Other and Indirect

Costs

Scheduled Draws

Funding

N/A

93.778 Medical Assistance

Program

Alabama Medicaid

Agency

92.0

0

Benefits Grant (Payments

to Service Providers

through the Fiscal Agent)

Actual Clearance, ZBA -

Same Day Payment

0 Days

Page 21 of 22 Sep 24, 2020
Printed Name: ____________________________________________________

Certifying Signature: _______________________________________________

Title: ___________________________________________________________

Page 22 of 22

Kathleen D. Baxter (Sep 24, 2020 16:00 CDT)

Kathleen D. Baxter

State Comptroller Kathleen D. Baxter