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: The Commonwealth of the Northern Mariana Islands
% of Funds Agency Receives: 7.00

Component: Payroll

Technique: Average Clearance

Average Day of Clearance: 0 Days

Recipient: The Commonwealth of the Northern Mariana Islands

% of Funds Agency Receives: 93.00

Component: Food stamp coupons issued and administrative costs
Technique: Average Clearance

Average Day of Clearance: 4 Days

15.875 Economic, Social, and Political Development of the Territories and the Freely Associated States
Recipient: The Commonwealth of the Northern Mariana Islands

% of Funds Agency Receives: 15.00

Component: Payroll

Technique: Average Clearance

Average Day of Clearance: 0 Days

Recipient: The Commonwealth of the Northern Mariana Islands
% of Funds Agency Receiv 38.00

Component: Construction Activities

Technique: Average Clearance

Average Day of Clearance: 4 Days

Recipient: The Commonwealth of the Northern Mariana Islands
% of Funds Agency Receives: 17.00

Component: Operational & Administrative Cost

Technique: Average Clearance

Average Day of Clearance: 9 Days

20.205 Highway Planning and Construction

Recipient: The Commonwealth of the Northern Mariana Islands
% of Funds Agency Receives: 4.00

Component: Payroll

Technique: Average Clearance

Average Day of Clearance: 0 Days

Recipient: The Commonwealth of the Northern Mariana Islands

Page 5 of 13


12.0 AUTHORIZED SIGNATURES

Larrisa C. Larson

Date Signed:__ 04/24/17

CNMI Secretary of Finan:
— CO
Date Submitted 04/07/2017

Corvelli A. McDaniel

Assistant Commissioner

Revenue Collections Management
Bureau of the Fiscal Service

U.S. Department of the Tréasury

Signature: ( A. Lapa

Date Signed: 29

Page 10 of 13


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:

Not applicable

The State shall also adjust each clearance pattem to reflect:

Not applicable

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

7.9 An authorized State official shall certify that each clearance pattern developed by the State accurately corresponds to
the clearance activity of the programs to which it is applied. This certification shall be provided to the Fiscal Service prior
to the effective date of the Agreement. The State shall recertify its clearance patterns at least every five years.

7.10 The State shall follow the procedures of 31 CFR 205 if it has actual or constructive knowledge, at any time, that a
clearance pattern does not correspond to a program's clearance activity.

8.0 INTEREST CALCULATION METHODOLOGY
8.1 General Terms

8.1.1 The State and the Secretary agree that no interest liabilities will be incurred for transfers of funds made in
accordance with the procedures specified in section 6 of this Agreement where the following funding techniques are
applied:

Average Clearance

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.

Page 7 of 13


% of Funds Agency Receives: 96.00
Component: non payroll

Technique: Average Clearance
Average Day of Clearance: 4 Days

93.778 Medical Assistance Program

Recipient: The Commonwealth of the Northern Mariana Islands

% of Funds Agency Receives: 100.00

Component: Medical Assistance provider payments and administrative costs
Technique: Average Clearance

Average Day of Clearance: 7 Days

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:
Program specific

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

The Commonwealth of the Northern Mariana Islands
Department of Finance
Office of the Secretary

7.3 The sources of data the State shall use when developing its clearance patterns are as follows:
CNMI's Financial Management System and bank statements
7.4 The State shall use the following methodology when developing its clearance patterns:

When developing each clearance pattem, 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.

Page 6 of 13


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 a State's account and the date those funds are debited from the State's account.

8.6.2.2 Source of Data

The time period from issuance of funds to the date funds are debited from the State's account shall be determined by the
appropriate clearance pattern specified in Exhibit II.

8.6.2.3 Standards Applied

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

8.6.2.4 Calculation Procedure

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

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

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

10.0 INTEREST CALCULATION COSTS

10.1 As set forth in 31 CFR 205.27, interest calculation costs are defined as those costs necessary for the actual
calculation of interest, including the cost of developing and maintaining clearance patterns in support of the interest
calculations. Interest calculation costs do not include expenses for normal disbursing services, such as processing of
checks or maintaining records for accounting and reconciliation of cash balances, or expenses for upgrading or
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:

Costs for preparing the Annual Report; developing clearance patterns; calculating interest for program disbursements and
refunds

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 9 of 13


Cash Management Improvement Act Agreement
between
The Commonwealth of Northern Mariana Islands
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 Commonwealth of
Northern Mariana Islands (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 Commonwealth of Northern Mariana Islands shall be the the CNMI Secretary of
Finance in all matters concerning this Agreement.

1.2 The Assistant Commissioner, Revenue Collections Management, Bureau of the Fiscal Service (Fiscal Service), U.S.
Department of the Treasury, shall act as the Secretary's representative in all matters concerning this Agreement.

2.0 AUTHORITY

2.1 The authority for this Agreement is the Cash Management Improvement Act of 1990 (Public Law 101-453), as
amended by the Cash Management Improvement Act of 1992 (Public Law 102-589), codified at 31 U.S.C. 6501 and 31
U.S.C. 6503.

2.2 The regulations codified at 31 CFR Part 205 shall apply to all matters pertaining to this Agreement, and are
incorporated herein by reference. In the event of any inconsistency between this Agreement and 31 CFR Part 205, the
regulations shall govern.

3.0 DURATION, AMENDING, TERMINATING, AND MISCELLANEOUS PROVISIONS,
3.1 This Agreement shall take effect on 10/01/2016 and shall remain in effect until 09/30/2017.

3.2 This Agreement may be amended at any time by written, mutual consent of the State and the Fiscal Service. This
Agreement shall be amended annually to incorporate new programs that qualify as major Federal assistance programs
and remove programs that no longer qualify as major Federal assistance programs. A State must notify the Fiscal Service
in writing within 30 days of the time the State becomes aware of a change that involves additions or deletions of programs
subject to Subpart A, changes in funding techniques, and/or changes in clearance patterns. The notification must include
a proposed amendment for review by the Fiscal Service.

3.3 Notwithstanding section 3.2, in the event of Federal or State non-compliance with Subpart B of 31 CFR, Part 205, the
Fiscal Service may amend this Agreement at any time to incorporate additional programs and the entities that administer
those programs.

3.4 This Agreement may be terminated by either party with 30 days written notice. If this Agreement is terminated, the
Fiscal Service will prescribe the funding techniques, clearance patterns, and methods for calculating interest liabilities to
be used by the State.

Page 1 of 13


Exhibit Il - Commonwealth of Northern Mariana Islands

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 |The Commonwealth of {7.00 |Payroll Average Clearance 0 Days
Assistance Program the Northern Mariana
Islands
10.551 Supplemental Nutrition |The Commonwealth of |93.0 |Food stamp coupons Average Clearance 4 Days
Assistance Program the Northern Mariana 0 issued and administrative
Islands costs
15.875 |Economic, Social, and The Commonwealth of {15.0 | Payroll Average Clearance 0 Days
Political Development of |the Northern Mariana 0
the Territories and the Islands
Freely Associated States
15.875 |Economic, Social, and The Commonwealth of {68.0 |Construction Activities Average Clearance 4 Days
Political Development of |the Northern Mariana 0
the Territories and the Islands
Freely Associated States
15.875 |Economic, Social, and The Commonwealth of 17.0 |Operational & Average Clearance 9 Days
Political Development of |the Northern Mariana 0 Administrative Cost
the Territories and the Islands
Freely Associated States
20.205 |Highway Planning and ‘The Commonwealth of |4.00 | Payroll Average Clearance 0 Days
Construction the Northern Mariana
Islands
20.205 {Highway Planning and The Commonwealth of {96.0 |non payroll Average Clearance 4 Days
Construction the Northern Mariana 0
Islands
93.778 |Medical Assistance The Commonwealth of 100. |Medical Assistance Average Clearance 7 Days
Program the Northern Mariana 00 = |provider payments and
Islands administrative costs

| 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:

Page 12 of 13


Exhibit | - Funds Request and Receipt Times Schedule

Commonwealth of Northern Mariana Islands

ederall Agency ay i

Agriculture-FNS ACH 11:59 PM 1day
Agriculture-FNS Fedwire 5:45 PM. 0 day
Agriculture-FS [ACH x iday
Air National Guard |ACH. 15 days
Army National Guard ACH 15 days
Commerce-NOAA ACH iday
Dept of Homeland Security (FEMA) Fedwire 2:00 PM 0 day
Dept of Homeland Security (ODP) ACH 2:00 PM 2 days
Dept of Homeland Security (ODP) Fedwire 12:00 PM. 2 days
EPA ACH 2:00 PM. 2 days
EPA Fedwire 12:00 PM. 10 day
Education ACH 3:00 PM. 1 day
Education Fedwire 2:00 PM. lO day
Energy ACH 4:00 PM 1day
Energy Fedwire 3:00 PM O day
HHS ACH 6:30 PM iday
HHS Fedwire 3:00 PM QO day
HUD ACH 5:30 PM. 2 days
HUD. Fedwire 3:00 PM 0 day
Interior-FWS. ACH 11:59 PM iday
Interior-FWS. Fedwire 5:45 PM 0 day
Interior-OSM [ACH 3:00 PM. iday
Interior-OSM Fedwire 5:45 PM. 0 day
Justice [ACH 11:00 PM. 6 days
Justice Fedwire 2:00 PM 2 days
Labor-Non-UTF. ACH 3:00 PM iday
Labor-UTF ACH 3:00 PM 1 day
Labor-UTF Fedwire 3:00 PM 0 day
National Science Foundation (NSF) ACH 8:00 PM iday
National Science Foundation (NSF) Fedwire 5:45 PM (0 day
Social Security Administration ACH 11:59 PM iday
Social Security Administration Fedwire 5:45 PM 0 day
Transportation (FAA) ACH 2:00 PM dday
Transportation (FHWA) |ACH 12:00 PM 3 days
Transportation (FHWA) Fedwire 12:00 PM O day
Transportation (FTA) ACH 2:00 PM iday
Veterans Administration |ACH 12:00 PM 3 days

Page 11 of 13


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:

Not Applicable Function:
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.

8.5 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:

Page 8 of 13


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.

Average Clearance

The State shall request funds such that they are deposited by ACH on the dollar-weighted average day of clearance for
the disbursement, in accordance with the clearance pattern specified in Exhibit ll. The request shall be made in
accordance with the appropriate Federal agency cut-off time specified in Exhibit |. The amount of the request shall be for
the exact amount of that disbursement. This funding technique is interest neutral.

6.2.2 The following are terms under which funding techniques for administrative costs shall be implemented for all
transfers of funds to which the funding technique is applied in section 6.3.2 of this Agreement.

There are no funding techniques listed in Section 6.2.2

6.2.3 The following are terms under which miscellaneous funding techniques shall be implemented for all transfers of
funds to which the funding technique is applied in section 6.3.2 of this Agreement.

There are no funding techniques listed in Section 6.2.3

6.2.4 The following are terms under which State unique funding techniques shall be implemented for all transfers of funds ~
to which the funding technique is applied in section 6.3.2 of this Agreement.

There are no funding techniques listed in Section 6.2.4

6.3 Application of Funding Techniques to Programs

Page 4 of 13


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.

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

Page 3 of 13


4.0 PROGRAMS COVERED

4.1 The State's threshold and its major Federal assistance programs shall be determined based on the Single Audit for
fiscal year ending 09/30/2015.

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 $2,229,198.
The following programs meet or exceed the threshold and are not excluded in Section 4.4:

10.551 Supplemental Nutrition Assistance Program

15.875 Economic, Social, and Political Development of the Territories and the Freely Associated States
20.205 Highway Planning and Construction

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: *
There are currently no programs listed for Section 4.4.

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:

The Commonwealth of the Northern Mariana Islands

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:

There are currently no fiscal agencies listed for Section 5.2.
6.0 FUNDING TECHNIQUES
6.1 General Terms

6.1.1 The State shall request Federal funds in accordance with the appropriate cut-off times shown in Exhibit | to ensure
funds will be received and credited to a State account by the times specified in the funding techniques. Exhibit | is
incorporated by reference herein.

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

Page 2 of 13


Printed Name: Larissa Larson

Certifying Signature:

Title: Secretary of Finance

Page 13 of 13