Cash Management Improvement Act (CMIA)

The Cash Management Improvement Act of 1990 provides rules and procedures for the efficient transfer of federal funds between federal agencies and the state. The main intent of CMIA is for states to draw in federal funds exactly when they are needed and for federal programs to be "interest-neutral". The main objectives of CMIA are:

  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.

CMIA regulations require each state to enter into a Treasury-State Agreement (TSA) with the US Treasury and to submit an annual interest report. The TSA is a means of quantifying drawdown procedures and interest calculation techniques for Kentucky’s major programs. These procedures require the state to calculate federal and state interest liabilities at the U.S. Treasury bill rate for covered programs and to report annually the liabilities to the federal government. This annual report is compiled in December. Any interest owed by the state for the preceding fiscal year is due to the federal government no later than March 31st of the following fiscal year.