M E M O R A N D U M SAD 02-88
 

TO:	Chief Fiscal Officers
FROM:	Don Waugh Assistant State Controller
SUBJECT:	Federal Policy Final Amendments to CMIA

The Financial Management Service (FMS) has released final amendments to the Cash Management Improvement Act (CMIA) originally proposed in 2000.  The amendments are effective on June 24, 2002.  A copy of the final rule is available on the FMS website at the following address:  http://www.fms.treas.gov/policycmia.  Please review the amendments and implement them accordingly.  Special provisions of interest are as follows:

• CMIA does not cover disallowances.  “States are required to ensure that Federal funds are used solely for appropriate program purposes.  Although disallowances are not governed by CMIA regulations, they are covered by the specific program regulations.  In addition, disallowed expenses are subject to existing debt collection regulations.”
• State voluntary matching and maintenance of effort not covered by CMIA
• State mandatory matching subject to CMIA
• Federal funding subject to CMIA
• Increased default dollar thresholds in determining major programs-allowing states the option of dropping the smallest programs.
• Treasury-state agreement (TSA) terms are good until cancelled.  However, TSA termination dates can be set.
• States and FMS can agree on any funding techniques.
• All grants for administrative costs are subject to CMIA although states and FMS can agree to exempt certain costs if proper indirect cost rate procedures are applied.
• Pre-issuance states may draw funds 3 days in advance (an increase from the two days allowed in the proposal).  The State Cash Management Plan states that “All Federal draws should be timed so that the funds are on deposit with the State Treasurer no more than two business days prior to the disbursement.”  At this time we are requesting that you follow the current State Cash Management Directive for Federal Funds.

Thank you for your attention to this matter.  If you have questions or require further assistance, contact Angela Clark,  CMIA Coordinator, at (919) 981-5495 or aclark@mail.osc.state.nc.us.

cc:  Julie Mitchel, OSBM
       Tim Kennedy, OSA