office of fiscal services bureau of county finance & technical assistance cash on hand...

Office of Fiscal ServicesBureau of County Finance & Technical Assistance

Cash on Hand Monitoring

July – September 2008


Agencies Affected

• Public Assistance Agencies

• Child Support Enforcement Agencies beginning January 1, 2009

• Workforce Investment Agencies


Why the Fuss???

• 45 CFR 92.20 Standards for financial management systems

• Paragraph (7): Cash Management• Minimize time between transfer of funds from U.S.

Treasury and disbursement by grantees and subgrantees

• When advances are made by EFT transfer, grantees must make draw downs as close as possible to the time of making disbursements


Closeout Rules

• Requirement for cash on hand:– Counties must disburse draws within

average of 10 days

– Interest should be calculated when draws exceed expenditures

– Reasonable and feasible


Affected Funds

• County Child Care and Quality Allocations• Child Care “2”• Federal Medicaid and Food Stamp Administration• Federal Social Services• Food Stamp Employment and Training (FSET)• Income Maintenance Control• Help Me Grow• State Social Services Operating• Temporary Assistance for Needy Families (TANF)• Title XX TANF Transfer• Department of Labor Funds (WIA)• Title IV-D Funds Child Support• State Child Support Match• OCS Incentive Match Reduction


Excess Cash on Hand

• Calculate interest when monthly average is greater than one day of cash on hand

• Document internal control improvement when monthly average is greater than 10 days of cash on hand


Cash on Hand

The Calculation


Cash on Hand Calculation

• Formula based on accessible information• Applied separately to each subgrant award• Three months (one quarter) calculated at a time

AverageDays ofCash on

Hand

ExcessCash on

Hand

AverageDaily

Expenditures =


Total $DrawnDuringMonth

TotalExpenditures

DuringMonth

ExcessCash on

Hand- =

Step 1:Calculate Cash on Hand


Numberof DaysIn Month

AverageDaily

Expenditures

ExcessCash on

Hand

TotalExpenditures

DuringMonth

=

Step 2:Calculate AverageDaily Expenditures


AverageDays ofCash on

Hand

ExcessCash on

Hand

AverageDaily

Expenditures

=

When the result exceeds one day, the local agency must calculate interest.

Step 3:Calculate AverageDays of Cash on Hand


Cash on Hand Calculation ExampleFund: TANF

Month: July

a Total Draw $55,666.67

Less Total Exp $26,164.60

Excess COH $29,502.07

b Total Exp/ $26,164.60

Days in Month 31

Avg Daily Exp $844.02

c Excess COH/ $29,502.07


Avg Day COH 34.95


Cash on HandCalculation Example

Fund: Title IV-D

Month: July

a Total Draw: FFP $50,000.00



b Total Exp/ $25,000.00

Days in Month 31




Avg Day COH 31.00


Interest

• When the calculation shows that the agency has, on average, more than one day of cash on hand within a month, interest must be calculated

• Interest will be compounded daily


STAR Ohio Interest Rate

• State Treasury Asset Reserve (STAR) administered by the Treasurer of State

• Public investment pool in which Ohio counties and other governmental subdivisions may participate

• ODJFS will build the applicable rate into the cash on hand monitoring spreadsheet


Calculating InterestFund: SSO

Month: July

a Total Draw $55,666.67



b Total Exp/ $26,164.60

Days in Month 31




Avg Day COH 34.95

Interest rate: 5.00%

Interest on excess COH: $125.24


Interest

The Calculation


Interest Calculation

• Excess Cash on Hand: $29,502.07• Interest Rate: 5.00%• Total: $ 1,475.10• $1,475.10 / 365 days per year = $4.04 per

day• Number of days in month: 31 X $4.04 =

$125.24


Recording Interest

• Local agency records “net interest liability” as a reduction to expenditures.

• ODJFS will establish codes for public assistance agencies for SFY’s 08 and 09


Interest Offset

• Negative cash on hand (COH) occurs when a federal program’s expenditures are paid from local funds (not from other state or federal funding sources)

• At SFY end, local agency may offset excess COH by months with negative COH

• Must have documentation identifying the funds used as local


In Summary, the Cash on Hand Monitoring Process Is…

• Reasonable – 10 days, not three, for HHS (includes Child Support) and

DOL funds– Accounts for variation in local processes – Allows for practical implementation and monitoring

• Feasible – Use existing data– Use template provided– Calculate four times a year

office of fiscal services bureau of county finance & technical assistance cash on hand...

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