Cash on Hand Monitoring

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

2. 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

3. 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 Office of Fiscal Services Bureau of County Finance & Technical Assistance

4. 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

5. 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

6. 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

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

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

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

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

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

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

13. Cash on HandCalculation Example Office of Fiscal Services Bureau of County Finance & Technical Assistance

14. 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

15. 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

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

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

18. 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 Office of Fiscal Services Bureau of County Finance & Technical Assistance

19. 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

20. 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

21. 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