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Cash Management Improvement Act Agreement

between

The State of Arizona

and

The Secretary of the Treasury,

United States Department of the Treasury

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

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

as follows:

1.0 AGENTS OF THE AGREEMENT 

1.1 The Authorized Official(s) for the State of Arizona shall be the Chief Financial Officer, Department of Administration, State of 

Arizona in all matters concerning this Agreement.

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

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

2.0 AUTHORITY

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

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

U.S.C. 6503.

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

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

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS

3.1 This Agreement shall take effect on 07/01/2021 and shall remain in effect until 06/30/2022.

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

be amended annually to incorporate new programs that qualify as major Federal assistance programs and remove programs that no

longer qualify as major Federal assistance programs. A State must notify the Fiscal Service in writing within 30 days of the time the

State becomes aware of a change that involves additions or deletions of programs subject to Subpart A, changes in funding 

techniques, and/or changes in clearance patterns. The notification must include a proposed amendment for review by the Fiscal 

Service.

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

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

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

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

State.

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4.0 PROGRAMS COVERED

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

Report for fiscal year ending 06/30/2020.

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 $77,140,980.

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

CFDA Program Name

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

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

93.558 Temporary Assistance for Needy Families

93.575 Child Care and Development Block Grant

93.596 Child Care Mandatory and Matching Funds of the Child Care and 

Development Fund

93.658 Foster Care -- Title IV-E

93.659 Adoption Assistance

93.767 Children's Health Insurance Program

93.778 Medical Assistance Program

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

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

There are currently no programs listed for Section 4.3.

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

CFDA Program Name Exclusion Reason

21.019 Coronavirus Relief Fund Federal Statute - Full Exemption

93.268 Immunization Grants Non-Cash

5.0 ENTITIES COVERED

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

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

4.0 of this Agreement:

Arizona Health Care Cost Containment System

Department of Child Safety

Department of Economic Security

Department of Education

Department of Health Services

Department of Transportation

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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:

Fiscal Agent CFDA Program Name

Fidelity National Bank 10.551 Supplemental Nutrition Assistance 

Program

Custom Data Processing (CDP) 10.557 Special Supplemental Nutrition Program 

for Women, Infants, and Children

Bank of America 17.225F Unemployment Insurance -- Federal 

Benefit Account and Administrative Costs

Bank of America 17.225S Unemployment Insurance -- State Benefit 

Account

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):

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.

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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.

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.

Funding Technique Name Description

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.

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Average Clearance The State shall request funds such that they are deposited by ACH on the dollarweighted average day of clearance for the disbursement, in accordance with the 

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

the appropriate Federal agency cut-off time specified in Exhibit I. The amount of the 

request shall be for the exact amount of that disbursement. This funding technique is 

interest neutral.

Pre-Issuance The State shall request funds such that they are deposited in a State account not more 

than three business days prior to the day the State makes a disbursement. The request 

shall be made in accordance with the appropriate Federal agency cut-off time 

specified in Exhibit I. The amount of the request shall be the amount the State expects 

to disburse. This funding technique is not interest neutral.

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

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

There are currently no funding techniques listed in Section 6.2.2.

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

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

There are currently 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.

Funding Technique Name Description

Bi-weekly Estimated Allocation The State shall request funds at bi-weekly intervals, such that they are deposited in a 

State account on the dollar-weighted average day of clearance for payroll payments, as 

specified in section 7.3. The request shall be made in accordance with the appropriate 

Federal agency cut-off time specified in Exhibit I. The amount of the request for each 

bi-weekly period shall be an estimate based on the related cost allocation of the last 

three months for which an allocation has been performed. The bi-weekly requests 

shall also be adjusted for the difference between estimated and actual allocated 

expenditure amounts following the actual allocation. This funding technique is 

interest neutral.

Composite Average Day of Clearance 

(ADOT)

The Arizona Department of Transportation (ADOT) shall bill FHWA weekly for all 

major contractor and consultant payments, miscellaneous supplies and service 

payments, and payroll payments. The funds shall be requested such that they are 

deposited in a State account on the average day of clearance for the major contractor 

payment component which accounts for approximately 85% of all program dollars 

expended by ADOT. Per Federal Regulations, Federal interest may be calculated 

from the last day of the last billing if billings are weekly. The request for funds shall 

be made in accordance with the appropriate Federal agency cut-off time specified in 

Exhibit I. The amount of the request shall be for the amount of the Federal share of the 

disbursement per the specific Federal Project Agreement. This funding technique is 

interest neutral.

Pre-Issuance Grant Anticipation Revenue 

Vehicle (GARVEE) Bond Repayment

The State of Arizona Department of Transportation will request funds for the 

repayment of GARVEE bonds issued. The Federal legislation that enables 

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

Funds may be requested up to seven business days in advance of the bond payment. 

This early drawdown has been approved by the Federal Highway Administration 

(FHWA). Funds will be requested for payments of principal and interest on the bonds. 

This funding technique is interest neutral.

WIC Formula Rebates The State shall deposit the rebates in a State account and use them to offset the 

subsequent draw downs for food voucher redemptions until another draw down is 

necessary to meet redemption demands. Interest earned on rebate money deposited in 

State accounts shall be used for program purposes. No other liability shall be incurred 

using this funding technique. This funding technique is not interest neutral.

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6.3 Application of Funding Techniques to Programs

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

programs listed in sections 4.2 and 4.3 of this Agreement.

6.3.2 Programs

Below are programs listed in Section 4.2 and Section 4.3.

10.551 Supplemental Nutrition Assistance Program

Recipient: Department of Economic Security

% of Funds Agency Receives: 100

Component: Payment to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

10.553 School Breakfast Program

Recipient: Department of Education

% of Funds Agency Receives: 99

Component: Payments to School Districts and Charters

Technique: Pre-Issuance

Average Day of Clearance: N/A

10.553 School Breakfast Program

Recipient: Department of Education

% of Funds Agency Receives: 1

Component: Payments to Local Agencies

Technique: Pre-Issuance

Average Day of Clearance: N/A

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 1

Component: Payments to Local Agencies

Technique: Pre-Issuance

Average Day of Clearance: N/A

10.555 National School Lunch Program

Recipient: Department of Education

% of Funds Agency Receives: 99

Component: Payments to the School Districts

Technique: Pre-Issuance

Average Day of Clearance: N/A

10.557 Special Supplemental Nutrition Program for Women, Infants, 

and Children

Recipient: Department of Health Services

% of Funds Agency Receives: 37.43

Component: Food Voucher Redemption

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

10.557 Special Supplemental Nutrition Program for Women, Infants, 

and Children

Recipient: Department of Health Services

% of Funds Agency Receives: 28.98

Component: Payroll and Other Administrative Costs

Technique: Pre-Issuance

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Average Day of Clearance: N/A

10.557 Special Supplemental Nutrition Program for Women, Infants, 

and Children

Recipient: Department of Health Services

% of Funds Agency Receives: 33.59

Component: WIC Formula Rebates

Technique: WIC Formula Rebates

Average Day of Clearance: N/A

17.225F Unemployment Insurance -- Federal Benefit Account and 

Administrative Costs

Recipient: Department of Economic Security

% of Funds Agency Receives: 98.66

Component: Payments to Beneficiaries

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 Economic Security

% of Funds Agency Receives: 1.33

Component: Payroll and Other Administrative Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

17.225F Unemployment Insurance -- Federal Benefit Account and 

Administrative Costs

Recipient: Department of Economic Security

% of Funds Agency Receives: .01

Component: Payments to Beneficiaries

Technique: Pre-Issuance

Average Day of Clearance: N/A

17.225S Unemployment Insurance -- State Benefit Account

Recipient: Department of Economic Security

% of Funds Agency Receives: 100

Component: Payments to Beneficiaries from the Unemployment Trust 

Fund (UTF)

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 96

Component: All Other Program Costs

Technique: Composite Average Day of Clearance (ADOT)

Average Day of Clearance: 3 Days

20.205 Highway Planning and Construction

Recipient: Department of Transportation

% of Funds Agency Receives: 4

Component: GARVEE Bonds

Technique: Pre-Issuance Grant Anticipation Revenue Vehicle 

(GARVEE) Bond Repayment

Average Day of Clearance: 7 Days

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

% of Funds Agency Receives: 5

Component: Payroll and Other Administrative Costs

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Technique: Pre-Issuance

Average Day of Clearance: N/A

84.010 Title I Grants to Local Educational Agencies

Recipient: Department of Education

% of Funds Agency Receives: 95

Component: Payments to Local Education Agencies

Technique: Pre-Issuance

Average Day of Clearance: N/A

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 5

Component: Payroll and Other Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

84.027 Special Education -- Grants to States

Recipient: Department of Education

% of Funds Agency Receives: 95

Component: Payments to the School Districts and Contractors

Technique: Pre-Issuance

Average Day of Clearance: N/A

93.558 Temporary Assistance for Needy Families

Recipient: Department of Economic Security

% of Funds Agency Receives: 10.73

Component: Payments to Beneficiaries-non-EBT

Technique: Average Clearance

Average Day of Clearance: 3 Days

93.558 Temporary Assistance for Needy Families

Recipient: Department of Economic Security

% of Funds Agency Receives: 73.67

Component: Payments to Beneficiaries

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

93.558 Temporary Assistance for Needy Families

Recipient: Department of Economic Security

% of Funds Agency Receives: 15.6

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.575 Child Care and Development Block Grant

Recipient: Department of Economic Security

% of Funds Agency Receives: 88.35

Component: Payments to Vendors and Service Providers

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

93.575 Child Care and Development Block Grant

Recipient: Department of Economic Security

% of Funds Agency Receives: 11.65

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

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93.596 Child Care Mandatory and Matching Funds of the Child Care 

and Development Fund

Recipient: Department of Economic Security

% of Funds Agency Receives: 99.82

Component: Payments to vendors and service providers

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

93.596 Child Care Mandatory and Matching Funds of the Child Care 

and Development Fund

Recipient: Department of Economic Security

% of Funds Agency Receives: .18

Component: Payroll and other operating costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.658 Foster Care -- Title IV-E

Recipient: Department of Child Safety

% of Funds Agency Receives: 34.81

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.658 Foster Care -- Title IV-E

Recipient: Department of Child Safety

% of Funds Agency Receives: 65.19

Component: Payments to Vendors, Courts, Universities, and Service 

Providers

Technique: Average Clearance

Average Day of Clearance: 2 Days

93.659 Adoption Assistance

Recipient: Department of Child Safety

% of Funds Agency Receives: 97.45

Component: Payments to Vendors and Service Providers

Technique: Average Clearance

Average Day of Clearance: 2 Days

93.659 Adoption Assistance

Recipient: Department of Child Safety

% of Funds Agency Receives: 2.55

Component: Payroll and Other Operating Costs

Technique: Bi-weekly Estimated Allocation

Average Day of Clearance: 0 Days

93.767 Children's Health Insurance Program

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 1.1

Component: Payroll Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

93.767 Children's Health Insurance Program

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 98.9

Component: Programmatic Payments to AHCCCS Health Plans or 

Providers and Non-Payroll Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

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93.778 Medical Assistance Program

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: .5

Component: Payroll Costs

Technique: Actual Clearance, ZBA - Same Day Payment

Average Day of Clearance: 0 Days

93.778 Medical Assistance Program

Recipient: Arizona Health Care Cost Containment System

% of Funds Agency Receives: 99.5

Component: Programmatic Payments to AHCCCS Health Plans or 

Providers and Non-Payroll Administrative Costs

Technique: Pre-Issuance

Average Day of Clearance: N/A

6.3.3 Materiality Exemptions

Agencies exempt from coverage on the basis of materiality:

Department of Corrections (10.553)

Department of Juvenile Corrections (10.553)

Arizona State Schools for the Deaf and Blind (10.553)

Arizona State Schools for the Deaf and Blind (10.555)

Department of Corrections (10.555)

Department of Juvenile Corrections (10.555)

Office of Economic Opportunity (17.225)

Department of Administration (20.205)

Department of Game and Fish (20.205)

Department of Public Safety (20.205)

Arizona Schools for the Deaf and Blind (84.010)

Arizona Schools for the Deaf and Blind (84.027)

Department of Corrections (84.027)

Department of Juvenile Corrections (84.027)

Early Childhood Development and Health Board (93.575)

Governor's Office (93.575)

Department of Health Services (93.767)

Department of Health Services (93.778)

7.0 CLEARANCE PATTERNS

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

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

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

Department of Child Safety

Department of Health Services

Department of Economic Security

Department of Transportation

Department of Education

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

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

Vocational Rehabilitation Grants to States), April 2021 (93.558 Temporary Assistance for Needy Families) and June 2021 (93.658 

Foster Care-Title IV-E and 93.659 Adoption Assistance) using an AFIS report and sampling transactions.

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

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Wednesday of pay week for payroll. Therefore, when applying funding techniques that require Federal funds to be deposited in a State 

account on the average clearance day of payroll, Wednesday of the pay week has been established as the date to receive Federal funds.

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

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

period of at least three months.

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

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

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

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

check cleared the State's account.

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

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

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

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

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

following the disbursement.

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

with the following exceptions:

No exceptions.

The State shall also adjust each clearance pattern to reflect:

No additional adjustments.

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

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

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

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

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

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

8.0 INTEREST CALCULATION METHODOLOGY

8.1 General Terms

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

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

Actual Clearance, ZBA - Same Day Payment

Average Clearance

Bi-weekly Estimated Allocation

Composite Average Day of Clearance (ADOT)

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

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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:

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

interest charges resulting from non-compliance or late Federal funding. Where Average Clearance is being applied, and the State pays 

out its own funds for program purposes prior to receiving Federal funds, a Federal interest liability will be calculated from the average 

date of clearance to the date Federal funds are credited to a State account.

8.3 The Unemployment Trust Fund

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

in the Unemployment Trust Fund:

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

earnings attributable to such funds while held in a State account, less banking costs associated with such funds. This interest shall be 

deposited in the State's account in the Unemployment Trust Fund. For funds withdrawn from the Federal Benefit Accounts in the 

Unemployment Trust Fund, the State's interest liability shall be based on the average daily balance of such funds, multiplied by the 13-

week Treasury Bill Rate specified in 31 CFR Part 205.

8.4 Refund Liabilities

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

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

the State shall not incur or calculate interest liabilities on refunds. A transaction is defined as a single deposit.

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

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

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

(3) amount of the refund

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

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

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

against a subsequent deposit of Federal funds.

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

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

will include the amounts of refunds deposited.

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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

Central Accounting System:

The time period from deposit to issuance shall be determined from information captured by the Arizona Financial 

Information System (AFIS).

8.6.2.3 Standards Applied

Census (Average Daily Balance):

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

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

8.6.2.4 Calculation Procedure

Average Daily Balance:

I = ADB x R, where

I = State's total interest liability

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

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

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

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

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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:

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

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

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

CFR 205.

11.0 NON-COMPLIANCE

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

this Agreement.

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12.0 AUTHORIZED SIGNATURES

Angela Dillard

Chief Financial Officer State of Arizona

Signature: Date Signed:

Date Submitted 11/23/2021

Sandra R. Paylor

Acting Assistant Commissioner

Revenue Collections Management

Bureau of the Fiscal Service

U.S. Department of the Treasury

Signature: Date Signed:

DocuSign Envelope ID: E9CA3180-6917-44EC-8E6B-818E31AD5D9F

11/24/2021

11/29/2021
Page 16 of 20

Exhibit I - Funds Request and Receipt Times Schedule

State of Arizona

Federal Agency Payment Type Request Cut-Off Time Receipt Window

Agriculture-FNS ACH 11:59 PM 1 day

Agriculture-FNS Fedwire 5:45 PM 0 day

Agriculture-FS ACH 3:00 PM 1 day

Air National Guard ACH 12:00 PM 15 days

Army National Guard ACH 12:00 PM 15 days

Commerce-NOAA ACH 2:00 PM 1 day

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

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

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

EPA ACH 2:00 PM 2 days

EPA Fedwire 2:00 PM 0 day

Education ACH 3:00 PM 1 day

Education Fedwire 2:00 PM 0 day

Energy ACH 4:00 PM 1 day

Energy Fedwire 3:00 PM 0 day

HHS ACH 5:00 PM 1 day

HHS Fedwire 3:00 PM 0 day

HUD ACH 5:30 PM 2 days

HUD Fedwire 3:00 PM 0 day

Interior-FWS ACH 11:59 PM 1 day

Interior-FWS Fedwire 5:45 PM 0 day

Interior-OSM ACH 3:00 PM 1 day

Interior-OSM Fedwire 1:00 PM 0 day

Justice ACH 11:00 PM 6 days

Justice Fedwire 2:00 PM 2 days

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

Labor-UTF ACH 3:00 PM 1 day

Labor-UTF Fedwire 3:00 PM 0 day

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

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

Social Security Administration ACH 11:59 PM 1 day

Social Security Administration Fedwire 5:45 PM 0 day

Transportation (FAA) ACH 2:00 PM 1 day

Transportation (FHWA) ACH 12:00 PM 3 days

Transportation (FHWA) Fedwire 12:00 PM 0 day

Transportation (FTA) ACH 2:00 PM 1 day

Veterans Administration ACH 12:00 PM 3 days

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Exhibit II - State of Arizona

LIST OF STATE CLEARANCE TIMES

(Rounded Dollar-Weighted Average Day of Clearance)

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

CFDA Program Name Recipient % Component Technique Rounded 

days

10.551 Supplemental 

Nutrition 

Assistance 

Program

Department of 

Economic 

Security

100.0 Payment to 

Beneficiaries

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

10.553 School Breakfast 

Program

Department of 

Education

99.0 Payments to School 

Districts and Charters

Pre-Issuance N/A

School Breakfast 

Program

Department of 

Education

1.0 Payments to Local 

Agencies

Pre-Issuance N/A

10.555 National School 

Lunch Program

Department of 

Education

1.0 Payments to Local 

Agencies

Pre-Issuance N/A

National School 

Lunch Program

Department of 

Education

99.0 Payments to the 

School Districts

Pre-Issuance N/A

10.557 Special 

Supplemental 

Nutrition Program 

for Women, 

Infants, and 

Children

Department of 

Health Services

37.43 Food Voucher 

Redemption

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Special 

Supplemental 

Nutrition Program 

for Women, 

Infants, and 

Children

Department of 

Health Services

28.98 Payroll and Other 

Administrative Costs

Pre-Issuance N/A

Special 

Supplemental 

Nutrition Program 

for Women, 

Infants, and 

Children

Department of 

Health Services

33.59 WIC Formula 

Rebates

WIC Formula 

Rebates

N/A

17.225

F

Unemployment 

Insurance --

Federal Benefit 

Account and 

Administrative 

Costs

Department of 

Economic 

Security

98.66 Payments to 

Beneficiaries

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Unemployment 

Insurance --

Federal Benefit 

Account and 

Administrative 

Costs

Department of 

Economic 

Security

1.33 Payroll and Other 

Administrative Costs

Bi-weekly 

Estimated 

Allocation

0 Days

Unemployment 

Insurance --

Federal Benefit 

Account and 

Administrative 

Costs

Department of 

Economic 

Security

0.01 Payments to 

Beneficiaries

Pre-Issuance N/A

17.225

S

Unemployment 

Insurance -- State 

Benefit Account

Department of 

Economic 

Security

100.0 Payments to 

Beneficiaries from 

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

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the Unemployment 

Trust Fund (UTF)

20.205 Highway Planning 

and Construction

Department of 

Transportation

96.0 All Other Program 

Costs

Composite Average 

Day of Clearance 

(ADOT)

3 Days

Highway Planning 

and Construction

Department of 

Transportation

4.0 GARVEE Bonds Pre-Issuance Grant 

Anticipation 

Revenue Vehicle 

(GARVEE) Bond 

Repayment

7 Days

84.010 Title I Grants to 

Local Educational 

Agencies

Department of 

Education

5.0 Payroll and Other 

Administrative Costs

Pre-Issuance N/A

Title I Grants to 

Local Educational

Agencies

Department of 

Education

95.0 Payments to Local 

Education Agencies

Pre-Issuance N/A

84.027 Special Education 

-- Grants to States

Department of 

Education

5.0 Payroll and Other 

Administrative Costs

Pre-Issuance N/A

Special Education 

-- Grants to States

Department of 

Education

95.0 Payments to the 

School Districts and 

Contractors

Pre-Issuance N/A

93.558 Temporary 

Assistance for 

Needy Families

Department of 

Economic 

Security

10.73 Payments to 

Beneficiaries-nonEBT

Average Clearance 3 Days

Temporary 

Assistance for 

Needy Families

Department of 

Economic 

Security

73.67 Payments to 

Beneficiaries

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Temporary 

Assistance for 

Needy Families

Department of 

Economic 

Security

15.6 Payroll and Other 

Operating Costs

Bi-weekly 

Estimated 

Allocation

0 Days

93.575 Child Care and 

Development 

Block Grant

Department of 

Economic 

Security

88.35 Payments to Vendors 

and Service Providers

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Child Care and 

Development 

Block Grant

Department of 

Economic 

Security

11.65 Payroll and Other 

Operating Costs

Bi-weekly 

Estimated 

Allocation

0 Days

93.596 Child Care 

Mandatory and 

Matching Funds 

of the Child Care 

and Development 

Fund

Department of 

Economic 

Security

99.82 Payments to vendors 

and service providers

Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Child Care 

Mandatory and 

Matching Funds 

of the Child Care 

and Development 

Fund

Department of 

Economic 

Security

0.18 Payroll and other 

operating costs

Bi-weekly 

Estimated 

Allocation

0 Days

93.658 Foster Care --

Title IV-E

Department of 

Child Safety

34.81 Payroll and Other 

Operating Costs

Bi-weekly 

Estimated 

Allocation

0 Days

Foster Care --

Title IV-E

Department of 

Child Safety

65.19 Payments to Vendors, 

Courts, Universities, 

and Service Providers

Average Clearance 2 Days

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93.659 Adoption 

Assistance

Department of 

Child Safety

97.45 Payments to Vendors 

and Service Providers

Average Clearance 2 Days

Adoption 

Assistance

Department of 

Child Safety

2.55 Payroll and Other 

Operating Costs

Bi-weekly 

Estimated 

Allocation

0 Days

93.767 Children's Health 

Insurance 

Program

Arizona Health 

Care Cost 

Containment 

System

1.1 Payroll Costs Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Children's Health 

Insurance 

Program

Arizona Health 

Care Cost 

Containment 

System

98.9 Programmatic 

Payments to 

AHCCCS Health 

Plans or Providers 

and Non-Payroll 

Administrative Costs

Pre-Issuance N/A

93.778 Medical 

Assistance 

Program

Arizona Health 

Care Cost 

Containment 

System

0.5 Payroll Costs Actual Clearance, 

ZBA - Same Day 

Payment

0 Days

Medical 

Assistance 

Program

Arizona Health 

Care Cost 

Containment 

System

99.5 Programmatic 

Payments to 

AHCCCS Health 

Plans or Providers 

and Non-Payroll 

Administrative Costs

Pre-Issuance N/A

Certification

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

in Exhibit 2 of this Treasury-State Agreement:

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

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

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

4. Are auditable.

Date: 

Printed Name: 

Certifying Signature: 

Title: 

DocuSign Envelope ID: E9CA3180-6917-44EC-8E6B-818E31AD5D9F

Statewide Chief Financial Officer

11/24/2021

Angela Dillard
Page 20 of 20

DocuSign Envelope ID: E9CA3180-6917-44EC-8E6B-818E31AD5D9F