The federal government enacted the Cash Management Improvement Act of 1990 (CMIA) to ensure greater efficiency, effectiveness, and equity in the exchange of funds between the federal government and the states, territories, and the District of Columbia. The CMIA regulations require the calculation of an interest liability due to the federal government when the state receives federal funds in advance of disbursement to vendors, subrecipients, or program participants. Similarly, when the state incurs costs for federal programs prior to receiving federal funds, the CMIA allows the state to calculate interest due from the federal government. To implement the CMIA, the federal government prescribes regulations for the transfer of funds for federal programs between the federal government and the state.
The CMIA requires an annual Treasury-State Agreement (TSA) between the U.S. Department of the Treasury, Financial Management Service and the state of Washington, Office of Financial Management. The TSA covers federal programs that meet the funding threshold established each year and establishes the procedures and requirements for the transfer of funds. These procedures require the state to calculate federal and state interest liabilities at the treasury bill rate for covered programs and to annually report the liabilities to the federal government. Any interest owed by the state for the preceding fiscal year is due to the federal government no later than March 31 of the following fiscal year.
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