Pursuant to the Cash Management Improvement Act of 1990 (CMIA), the state will incur an interest liability to the federal government. The purpose of CMIA is to ensure greater efficiency, effectiveness, and equity in the exchange of funds between the federal government and the state. The major provisions of CMIA are: (a) federal agencies must make timely fund disbursements and grant awards to the state; (b) the state must minimize the time between the deposit of federal funds in the state account and the payout of the funds for program purposes; (c) the state is entitled to interest from the federal government from the time state funds are paid out for program purposes until federal funds are deposited in the state account; and (d) the federal government is entitled to interest from the state from the time federal funds are deposited in the state account until the funds are paid out for program purposes.
The federal assistance programs impacted by the CMIA are those programs that have $272 million or more in federal fund expenditures. For the majority of these programs, state departments request federal funds in advance of the warrant (i.e., check) issuance. State departments use this funding technique because the State Constitution requires that the funds be deposited before the warrants are issued.
Interest payments to the federal government are due no later than March 31 each year. The payment will be for the interest liability incurred during the state's prior fiscal year.