Office of Fiscal Services Bureau of County Finance & Technical Assistance Cash on Hand Monitoring July – September 2008

Office of Fiscal Services Bureau of County Finance & Technical Assistance Agencies Affected Public Assistance Agencies Child Support Enforcement Agencies beginning January 1, 2009 Workforce Investment Agencies

Office of Fiscal Services Bureau of County Finance & Technical Assistance Why the Fuss??? 45 CFR 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance Cash on Hand The Calculation

Office of Fiscal Services Bureau of County Finance & Technical Assistance Cash on Hand Calculation Formula based on accessible information Applied separately to each subgrant award Three months (one quarter) calculated at a time Average Days of Cash on Hand Excess Cash on Hand Average Daily Expenditures  =

Office of Fiscal Services Bureau of County Finance & Technical Assistance Total $ Drawn During Month Total Expenditures During Month Excess Cash on Hand - = Step 1:Calculate Cash on Hand

Office of Fiscal Services Bureau of County Finance & Technical Assistance Number of Days In Month Average Daily Expenditures Excess Cash on Hand Total Expenditures During Month  = Step 2:Calculate Average Daily Expenditures

Office of Fiscal Services Bureau of County Finance & Technical Assistance Average Days of Cash on Hand Excess Cash on Hand Average Daily Expenditures  = When the result exceeds one day, the local agency must calculate interest. Step 3:Calculate Average Days of Cash on Hand

Office of Fiscal Services Bureau of County Finance & Technical Assistance Cash on Hand Calculation Example

Office of Fiscal Services Bureau of County Finance & Technical Assistance Cash on Hand Calculation Example

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance Calculating Interest

Office of Fiscal Services Bureau of County Finance & Technical Assistance Interest The Calculation

Office of Fiscal Services Bureau of County Finance & Technical Assistance Interest Calculation Excess Cash on Hand: $29, Interest Rate: 5.00% Total: $ 1, $1, / 365 days per year = $4.04 per day Number of days in month: 31 X $4.04 = $125.24

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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

Office of Fiscal Services Bureau of County Finance & Technical Assistance 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