One Hundred First Congress of the United States of America
At the Second Session
Begun and held at the City of Washington on Tuesday, the twenty-third day of
January, one thousand nine hundred and ninety
An Act
To amend title 31, United States Code, to improve cash management of
funds transferred between the Federal Government and the States, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
Section 1. Short Title.
This Act may be cited as the `Cash Management Improvement Act of 1990'.
Section. 2. Purpose.
The purpose of this Act is to ensure greater efficiency, effectiveness,
and equity in the exchange of funds between the Federal Government and the
States.
Section. 3. Technical Amensments.
Section 6501 of title 31, United States Code, is amended--
(1) in paragraph (2)(B) by striking `subclause (A) of this clause (2)'
and inserting in lieu thereof `subparagraph (A)';
(2) in paragraph (2)(E) by striking `subclauses (A)-(D) of this clause
(2)' and inserting in lieu thereof `subparagraphs (A), (B), (C), and
(D)';
(3) in paragraph (4)(A) by striking `subclause (C) of this clause (4)'
and inserting in lieu thereof `subparagraph (C)'; and
(4) in paragraph (4)(B) by striking `subclause (C) of this clause (4)'
and inserting in lieu thereof `subparagraph (C)'.
Section. 4. Disbursement Objectives.
(a) IN GENERAL- Subchapter II of chapter 33 of title 31, United States
Code, is amended by adding at the end thereof the following:
`Section. 3335. Timely disbursement of Federal funds
`(a) Each head of an executive agency (other than the Tennessee Valley
Authority) shall, under such regulations as the Secretary of the Treasury
shall prescribe, provide for the timely disbursement of Federal funds through
cash, checks, electronic funds transfer, or any other means identified by the
Secretary.
`(b) The Secretary may collect from any executive agency which does not
comply with subsection (a) a charge in an amount the Secretary determines to
be the cost to the general fund of the Treasury caused by such
noncompliance.
`(c) The amounts of charges collected from an executive agency under this
section shall be deposited in the Treasury and credited as miscellaneous
receipts.
`(d) Any charge assessed by the Secretary under this section, to the
maximum extent practicable--
`(1) shall be paid out of appropriations available for executive agency
operations; and
`(2) shall not be paid from amounts available for funding programs of an
executive agency.'.
(b) CLERICAL AMENDMENT- The chapter analysis for chapter 33 of title 31,
United States Code, is amended by inserting after the item relating to section
3334 the following:
`3335. Timely disbursement of Federal funds.'.
(c) REGULATIONS- The Secretary of the Treasury shall prescribe regulations
under section 3335 of title 31, United States Code, as added by subsection
(a), to ensure the full implementation of that section by the date which is 2
years after the date of the enactment of this Act.
Section. 5. Payment of Interest.
(a) DEFINITION OF STATE- Section 6501 of title 31, United States Code, is
amended--
(1) by redesignating paragraphs (7), (8), and (9) as paragraphs (8),
(9), and (10), respectively;
(2) by inserting after paragraph (6) the following new paragraph:
`(7) `Secretary' means the Secretary of the Treasury.'; and
(3) by striking out paragraph (9) (as redesignated by paragraph (1)) and
inserting in lieu thereof the following:
`(9) `State' means a State of the United States, the District of
Columbia, a territory or possession of the United States, and an agency,
instrumentality, or fiscal agent of a State but does not mean a local
government of a State.'.
(b) INTERGOVERNMENTAL TRANSFERS OF FUNDS; PAYMENT OF INTEREST- Section
6503 of title 31, United States Code, is amended to read as follows:
`Section. 6503. Intergovernmental financing
`(a) Consistent with program purposes and with regulations of the
Secretary, and in accordance with an agreement under subsection (b) entered
into by the Secretary and a State--
`(1) the head of an executive agency (other than the Tennessee Valley
Authority) carrying out a program shall schedule transfers of funds to the
State under the program so as to minimize the time elapsing between transfer
of funds from the United States Treasury and the issuance or redemption of
checks, warrants, or payments by other means by a State; and
`(2) the State shall minimize the time elapsing between transfer of
funds from the United States Treasury and the issuance or redemption of
checks, warrants, or payments by other means for program purposes.
`(b)(1) The Secretary shall enter into an agreement with each State to
which transfers of funds are made, which establishes procedures and
requirements for implementing this section.
`(2) An agreement under this subsection shall--
`(A) specify procedures chosen by the State for carrying out transfers
of funds under the agreement;
`(B) describe the process by which the Federal Government shall review
and approve the implementation of the procedures specified under
subparagraph (A);
`(C) establish the methods to be used for calculating and documenting
payments of interest pursuant to this section; and
`(D) specify those types of costs directly incurred by the State for
interest calculations required under this section, and require the Secretary
to consider those costs in computing payments under this section.
`(3) The Secretary shall issue regulations establishing procedures and
requirements for implementing this section with respect to a State with which
no agreement is entered into by the Secretary under paragraph (1). Such
regulations shall apply to a State until such time as the Secretary enters
into an agreement with the State under paragraph (1).
`(c)(1) The Secretary shall issue regulations that shall require a State,
when not inconsistent with program purposes, to pay interest to the United
States on funds from the time funds are deposited by the United States to the
State's account until the time that funds are paid out by the State in order
to redeem checks or warrants or make payments by other means for program
purposes. Except as provided under paragraph (3)(B) (relating to the
Unemployment Trust Fund), the interest payable under this subsection shall be
calculated at a rate equal to the average of the bond equivalent rates of
13-week Treasury bills auctioned during the period for which interest is
calculated, as determined by the Secretary.
`(2) Except as provided in paragraph (3), amounts received by the United
States as payment of interest under this subsection shall be deposited in the
Treasury and credited as miscellaneous receipts.
`(3)(A) Amounts paid by a State under paragraph (1) as interest on funds
paid to a State from a trust fund for which the Secretary is the trustee shall
be credited to such trust fund.
`(B) Notwithstanding any other provision of this section, amounts of
interest paid by a State, on funds drawn from its account in the Unemployment
Trust Fund, shall be deposited into that account and shall consist of actual
interest earnings by the State, less related banking costs incurred by the
State, for the period for which interest is calculated.
`(d)(1) If a State disburses its own funds for program purposes in
accordance with Federal law, Federal regulation, or Federal-State agreement,
the State shall be entitled to interest from the time the State's funds are
paid out to redeem checks or warrants, or make payments by other means, until
the Federal funds are deposited to the State's bank account. The Secretary
shall pay, out of any money in the Treasury not otherwise appropriated, such
amounts as may be necessary for interest owed to a State under this
subsection. Such interest shall be calculated, at a rate equal to the average
of the bond equivalent rates of 13-week Treasury bills auctioned during the
period for which interest is calculated, as determined by the Secretary.
`(2) If interest is paid under this subsection as a result of a State
disbursing its own funds before receiving payment from a trust fund for which
the Secretary of the Treasury is the trustee, such interest shall be charged
against such trust fund.
`(e) The budget submitted by the President under section 1105 of this
title for a fiscal year shall include a statement specifying, for the most
recently completed fiscal year, amounts of interest accrued to the Federal
Government under subsection (c) and amounts of interest paid to States under
subsection (d).
`(f) If a State receives refunds of funds disbursed by the State under a
Federal program, the State shall return those refunds to the Federal executive
agency administering the program or apply those refunds to reduce the amount
of funds owed by the Federal Government to the State under such program.
Interest earned on such refunds shall be considered when setting overall
interest obligations between the State and the Federal Government as required
by this section.
`(g) If the Federal Government makes a payment to a recipient under a
Federal program, and a portion of the payment is an amount which the Federal
Government is paying to such recipient on behalf of a State, such amount shall
be considered to be a transfer of funds between the Federal Government and the
State for purposes of this section.
`(h) A State may not be required by a law or regulation of the United
States to deposit funds received by it in a separate bank account. However, a
State shall account for funds made available to the State as United States
Government funds in the accounts of the State. The head of the State agency
concerned shall make periodic authenticated reports to the head of the
appropriate Federal executive agency on the status and the application of the
funds, the liabilities and obligations on hand, and other information required
by the head of the executive agency. Records related to the funds received by
the State shall be made available to the head of the executive agency, the
Inspector General of the executive agency, and the Comptroller General for
necessary audits.
`(i) The Secretary shall prescribe methods for the payment of interest
under this section between the Federal Government and the States, including
provisions for offsetting amounts owed by the respective parties. Such methods
of payment shall require payment of interest on an annual basis and shall
provide for comparable treatment in manner, technique, and timing for both the
States and the Federal Government.
`(j) Consistent with Federal program purposes and regulations of the
Director of the Office of Management and Budget, the head of a Federal
executive agency carrying out a program shall execute grant awards to States
on a timely basis to assure the availability of funds to accomplish transfers
in compliance with subsection (a) of this section.'.
(c) CLERICAL AMENDMENT- The item relating to section 6503 in the chapter
analysis for chapter 65 of title 31, United States Code, is amended to read as
follows:
`6503. Intergovernmental financing.'.
(d) AGREEMENTS WITH STATES-
(1) SECRETARY'S EFFORTS TO ENTER AGREEMENTS- The Secretary of the
Treasury shall make all reasonable efforts to enter into an agreement with
each State under section 6503(b) of title 31, United States Code, as added
by this section (relating to procedures and requirements for transfers of
funds between executive agencies and States), by not later than 2 years
after the date of the enactment of this Act.
(2) EFFECTIVE DATE OF REGULATIONS- Regulations issued by the Secretary
of the Treasury under subsection (b)(3) of section 6503 of title 31, United
States Code, as added by the section (relating to procedures and
requirements for transfers of funds involving States not entering
agreements), shall take effect 2 years after the date of the enactment of
this Act.
(e) EFFECTIVE DATE- The amendments made by this section shall take effect
on the date of enactment of this Act, except that subsections (c) and (d) of
section 6503 of title 31, United States Code, as added by subsection (b) of
this section (relating to payments of interest between the Federal Government
and State governments), shall take effect 2 years after the date of enactment
of this Act.
Section. 6. GAO Report.
Four years after the date of the enactment of this Act the Comptroller
General shall submit an audit of the implementation of the amendments made by
section 5 and submit a report to the Congress describing the results of that
audit.