Cash Management Improvement Act (CMIA)

Common Questions

• Why enact CMIA?
• What were the key issues?
• Who is covered?
• What is covered?
• What are CMIA's objectives?
• What are the key components of CMIA?
• What are future plans?
• What are State Fiscal Relief Payments made under Section 401?

Why enact CMIA?

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.

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What were the key issues?

Specifically, two recurrent intergovernmental problems needed attention:
(1) States were drawing Federal funds in advance of need.
(2) The Federal Government was providing late grant awards to States.

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Who is covered?

The program applies to the 50 States, the District of Columbia, and the Territories of American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the Virgin Islands. The term "State" will be used hereafter to refer to these 56 entities.

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What is covered?

All Federal funds transfers to the States are covered. However, only major assistance programs (large-dollar programs) are included in a written Treasury-State Agreement (TSA), which specifies how the Federal funds transfers will take place. In FY 1994, the first year of CMIA, 20 major programs were covered under TSAs. Today, more than 100 different Federal programs are included in TSAs with an average of approximately 20-25 programs per State.

The key entities involved in making CMIA work are the U.S. Treasury, the Federal granting agencies, and the States.

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What are CMIA's objectives?

(1) Efficiency -- To minimize the time between the transfer of funds to the 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.

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What are the key components of CMIA?

• Annual Treasury-State Agreements (based on the State's fiscal year), which include:
  
  --Covered Programs
  --Funding Techniques
  --Clearance Pattern Methodologies
  --Interest Calculation Methodologies
  --Projected Reimbursements for Direct Costs
  
  
• Annual Reports (submitted by December 31 of each year), which report on:
  
  --Federal Interest Liabilities
  --State Interest Liabilities
  --State Direct Cost Claims
  
  
• Annual Interest Exchange (accomplished no later than March 31 of each year) to disburse:
  
  --Federal and State interest liabilities
  --Approved Direct Cost payments to States

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What are future plans?

• Deploy CMIAS III, which will add the Treasury-State Agreement (TSA) module to CMIAS, enabling the negotiation of the Treasury-State Agreement using a standard format. This will streamline processes and reduce administrative burden.
• Streamline CMIA processes to reduce administrative burden.

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Are State Fiscal Relief Payments made under Section 401(b) of the Jobs and Growth Tax Relief Reconciliation Act of 2003 (Act) covered under the Cash Management Improvement Act (CMIA)?

No. The purpose of the payments made under Section 401(b) of the Act is to provide temporary fiscal relief to States. Under Treasury regulations, CMIA applies to the transfer of funds between the Federal Government and States for Federal assistance programs included in the Catalog of Federal Domestic Assistance (CFDA). Payments made under Section 401(b) are not a made under a program included in the CFDA.