[Federal Register Volume 64, Number 86 (Wednesday, May 5, 1999)]
[Rules and Regulations]
[Pages 24242-24243]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-11193]



[[Page 24241]]

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Part II





Department of the Treasury





_______________________________________________________________________



Fiscal Service



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31 CFR Part 205



Rules and Procedures for Funds Transfers; Final Rule

  Federal Register / Vol. 64, No. 86 / Wednesday May 5, 1999 / Rules 
and Regulations  

[[Page 24242]]



DEPARTMENT OF THE TREASURY

Fiscal Service

31 CFR Part 205

RIN 1510-AA38


Rules and Procedures for Funds Transfers

AGENCY: Financial Management Service, Fiscal Service, Treasury.

ACTION: Final rule.

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SUMMARY: This final rule amends regulations on rules and procedures for 
funds transfers which implement the Cash Management Improvement Act of 
1990 (CMIA), as amended. CMIA governs the transfer of funds between the 
Federal Government and States under Federal assistance programs, and 
requires Federal agencies and States to minimize the amount of time 
between the transfer of Federal funds to a State and the payout of 
those funds by a State for program purposes. Under the regulations, the 
application of CMIA is limited to major Federal assistance programs. 
The purpose of this final rule is to revise the dollar thresholds used 
to define major Federal assistance program for purposes of the 
regulations in order to add flexibility and, thereby, make it easier 
for States to comply with the requirements of the regulations. This 
final rule does not make any substantive changes.

EFFECTIVE DATE: May 5, 1999.

ADDRESSES: Cynthia L. Johnson, Director, Cash Management Policy and 
Planning Division, Financial Management Service, 401 14th Street, SW, 
Room 420, Washington, DC 20227. A copy of the final rule is being made 
available for downloading from the Financial Management Service's web 
site at the following address: http://www.fms.treas.gov/

FOR FURTHER INFORMATION CONTACT: Stephen K. Kenneally (Financial 
Program Specialist, Cash Management Policy and Planning Division) at 
(202) 874-6799; Cynthia L. Johnson (Director, Cash Management Policy 
and Planning Division) at (202) 874-6590; or Randall Lewis (Attorney-
Advisor) at (202) 874-6680.

SUPPLEMENTARY INFORMATION:

Background

    This rulemaking is authorized by the Cash Management Improvement 
Act of 1990 (``CMIA''), Public Law 101-453, as amended. See 31 U.S.C. 
3335, 6501, and 6503. The purpose of the CMIA is to ensure greater 
efficiency, effectiveness, and equity in the exchange of funds between 
the Federal Government and the States for Federal assistance programs.
    For major Federal assistance programs, States and the Financial 
Management Service (the ``Service'') negotiate Treasury-State 
Agreements which include the procedures used to determine the timing 
and amount of funds transfers. In the absence of an agreement, the 
Service is authorized to issue default procedures. In accordance with 
the CMIA, these funds transfer procedures are developed with the 
objective of minimizing the time between the transfer of cash from the 
Treasury and the payout of cash for program purposes by a State. Non-
major Federal assistance programs generally are not addressed in 
Treasury-State Agreements, but are subject to requirements in Subpart B 
of Part 205 which limit funds transfers to the minimum amounts needed 
at the time of the request.
    Under the current regulation, the distinction between major and 
non-major Federal programs is based on dollar thresholds contained in 
the Single Audit Act of 1984, Public Law 98-502. The Single Audit Act 
of 1984 used these thresholds to determine which Federal programs were 
subject to the substantive provisions of the Single Audit Act. In 1992, 
the Service adopted the Single Audit Act's thresholds as a means of 
meeting the CMIA's goals of efficient, effective, and equitable 
transfers of funds between the Federal Government and the States, while 
limiting the burden of implementing the CMIA. Use of these thresholds 
also eased implementation of the CMIA by incorporating a framework that 
was familiar to Federal agencies, States and auditors. See 57 FR 10102.
    The Single Audit Act Amendments of 1996, Public Law 104-156, 
revised the thresholds and added risk-based criteria to the 
determination of major programs. 31 U.S.C. 7501 et seq. As a 
consequence, the thresholds published in Appendix A to Subpart A of 
Part 205 no longer are consistent with the thresholds used by States 
and their auditors for purposes of conducting Single Audits. Revising 
Appendix A to Subpart A of Part 205 by incorporating the new Single 
Audit Act thresholds allows States the option to keep their CMIA and 
Single Audit Act thresholds consistent.
    However, in implementing the CMIA, the Service's primary concern is 
cash management. CMIA requires Federal agencies and States to minimize 
the amount of time between transfers of Federal funds to a State and 
the payout of those funds by States for program purposes. The risk-
based criteria included in the Single Audit Act's new definition of 
major program address other risk management issues which are not 
related to cash management, and their inclusion in the CMIA definition 
of major Federal assistance program would not ensure that a majority of 
funds transferred are covered in Treasury-State agreements. For that 
reason, the Service is not incorporating the risk-based criteria into 
Part 205.

Regulatory Analysis

    This rule is not a significant regulatory action as defined in E.O. 
12866. Therefore, a regulatory assessment is not required. Because no 
notice of proposed rulemaking is required, the provisions of the 
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply.

Special Analyses

    The Service is promulgating this final rule without opportunity for 
prior public comment, because the Service has determined notice and 
public procedure is unnecessary and contrary to the public interest. 5 
U.S.C. 553(b)(3)(B).
    This final rule makes only one change to Part 205; it revises the 
thresholds used in the definition of major Federal assistance programs 
for the purposes of CMIA. When FMS first published a Notice of Proposed 
Rulemaking (``NPRM'') implementing CMIA, it proposed the inclusion of 
provisions which, after a phase-in period, limited the mandatory 
application of CMIA to programs defined as major Federal assistance 
programs under the Single Audit Act of 1984. (57 FR 10102). The 
specific thresholds, which are based on the total amount of Federally 
funded State expenditures in a given year, were included in Appendix A 
to Subpart A of Part 205. After notice and an opportunity for comment, 
the Service retained the proposed definition of major Federal 
assistance program in the final rule published on September 24, 1992 
(57 FR 44272).
    As stated in the NPRM, the Single Audit Act thresholds were 
incorporated into Part 205 because they provide a consistent standard 
between the application of CMIA and the Single Audit Act. Use of the 
threshold also allows the Service to limit the administrative burden 
and costs of compliance, while still covering the majority of Federal 
program funds transferred to the States. This final rule does not 
change the substantive policy determinations underlying Part 205, it 
only makes technical changes to the thresholds included in the 
definition of major Federal assistance program which

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add flexibility to the requirements of Part 205. Because the new 
thresholds are incorporated in a manner which allows for the 
application of either the existing thresholds or the new thresholds, 
there is no detrimental impact on States. For most States, the final 
rule reduces administrative burden and costs of compliance.
    The Service has determined that good cause exists to make this 
final rule effective immediately upon publication, without the 30 day 
period between publication and the effective date contemplated by 5 
U.S.C. 553(d). Because this final rule does not make any substantive 
changes to Part 205, but, instead, adds flexibility which may reduce 
the administrative burden and costs of compliance, making this final 
rule effective immediately is for the convenience of the States 
governed by Part 205.

List of Subjects in 31 CFR Part 205

    Administrative practice and procedure, Electronic funds transfers, 
Grant programs, Intergovernmental relations.

Authority and Issuance

    For the reasons set out in the preamble, the Service amends 31 CFR 
part 205 as follows:

PART 205--RULES AND PROCEDURES FOR FUNDS TRANSFERS

    1. The authority citation for part 205 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3335, 6501, 6503.

    2. Appendix A to subpart A of part 205 is revised to read as 
follows:

Appendix A to Subpart A of Part 205--Definition of Major Federal 
Assistance Program

    Beginning with State fiscal year 2000, ``Major Federal Assistance 
Program'' for State governments is defined by the following criteria:

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   Total expenditure of Federal
   financial assistance for all           Major Federal assistance program means any program that exceeds
             programs
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Between $300,000 and $100 million  $300,000 or 3 percent of such total expenditures.
 inclusive.
Over $100 million but less than    $3 million or 0.30 percent of such total expenditures.
 or equal to $1 billion.
Over $1 billion but less than or   $4 million or 0.30 percent of such total expenditures.
 equal to $2 billion.
Over $2 billion but less than or   $7 million or 0.30 percent of such total expenditures.
 equal to $3 billion.
Over $3 billion but less than or   $10 million or 0.30 percent of such total expenditures.
 equal to $4 billion.
Over $4 billion but less than or   $13 million or 0.30 percent of such total expenditures.
 equal to $5 billion.
Over $5 billion but less than or   $16 million or 0.30 percent of such total expenditures.
 equal to $6 billion.
Over $6 billion but less than or   $19 million or 0.30 percent of such total expenditures.
 equal to $7 billion.
Over $7 billion but less than or   $20 million or 0.30 percent of such total expenditures.
 equal to $10 billion.
Over $10 billion.................  $30 million or 0.15 percent of such total expenditures.
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    Dated: April 29, 1999.
Richard L. Gregg,
Commissioner.
[FR Doc. 99-11193 Filed 5-4-99; 8:45 am]
BILLING CODE 4810-35-P