CMIA General Info

PURPOSE:

The Cash Management Improvement Act of 1990 (CMIA) was passed to improve the transfer of Federal funds between the Federal government and the States, Territories and the District of Columbia. Prior to its passage, there were two recurring intergovernmental problems that needed attention:

  1. States were drawing Federal funds in advance of need.

  2. The Federal government was providing late grant awards to States.

Therefore, CMIA was enacted to achieve the following objectives:

  1. Efficiency – To minimize the time between the transfer of funds to States and the payout for program purposes.

  2. Effectiveness – To ensure that Federal funds are available when requested.

  3. Equity – To assess an interest liability to the Federal government and/or the States to compensate for the lost value of funds. (Note: This means compensating the party that is “out of pocket” when funding a Federal program. In general, interest is due to the State if it must use its own funds for program purposes when there is valid obligational authority. Interest is due from the State for the time the State holds Federal funds in its account prior to its disbursement for federal programs.)

 

KEY COMPONENTS:

ANNUAL TREASURY-STATE AGREEMENT

Annual Treasury-State Agreement (effective with the beginning of the State’s fiscal year, July 1), which includes:

  • Covered Programs – All Federal fund transfers to the State are covered. However, only major assistance programs (large-dollar programs that exceed a calculated expenditure threshold) are included in the Treasury-State Agreement (TSA), which specifies how the Federal fund transfers will be handled. For non-major assistance programs (programs that are below the expenditure threshold), the State is required to minimize the time between the drawdown of Federal funds from the Federal government and their disbursement for Federal program purposes.

  • Funding Techniques – For each program component (payment type), the process of how and when Federal fund transfers to the State take place.

  • Interest Calculation Methodologies – For each funding technique, the process of how and when State or Federal interest accrues. Usually interest liabilities occur when Federal funds are drawn early or when Federal funds are received late.

  • Clearance Pattern Methodologies – For each program component with warrant or EFT (Electronic Fund Transfer) payments, a projection of when the payments will clear the State’s bank.

  • Projected Reimbursement for Direct Costs – The types of interest calculation cost the State expects to incur during the fiscal year. Interest calculation costs are the costs of calculating interest, including the cost of developing and maintaining clearance patterns in support of interest calculations.

ANNUAL REPORTS

Annual reports (submitted by December 31st of each year) for the State’s most recently completed fiscal year, which report on:

  • Federal interest liabilities – The State must submit a description and supporting documentation for program liability claims greater than $5,000.

  • State interest liabilities

  • State direct cost claims – State interest calculation costs incurred.

 

ANNUAL INTEREST EXCHANGE

Annual Interest Exchange (accomplished no later than March 31st of each year) for the State’s most recently completed fiscal year, to disburse:

  • Federal & State Interest liabilities – The Bureau of the Fiscal Service (a bureau of the U.S. Department of the Treasury) offsets the approved total State interest liability with the approved total Federal interest liability to determine the net interest payable due to or from the State.

  • Approved direct cost payments to the State – The amount of state interest calculation cost approved by The Bureau of Fiscal Service.