WILLIAM DONALD SCHAEFER, Governor J.R. 2

No. 2
(House Joint Resolution No. 3)

A House Joint Resolution concerning

Federal/State Cash Management

FOR the purpose of urging the U.S. Congress and the Maryland Congressional
Delegation to support the adoption of legislation to improve cash management
among the states and the federal government.

WHEREAS, The State/Federal Cash Management Reform Task Force, which
includes state members representing the National Association of State Auditors,
Comptrollers, and Treasurers (NASACT) and the National Association of State Budget
Officers (NASBO), has been working over six years to develop fair policies for the
exchange of funds between the federal government and the states; and

WHEREAS, The preliminary need for negotiation between the states and the
federal government was caused by the federal government acting to implement the
"delay of drawdown" cash management procedure; and

WHEREAS, Members of the Task Force have signed two Memoranda of
Understanding that include a set of intergovernmental cash management policies, as
well as methods to implement them; and

WHEREAS, The spirit of trust and cooperation that evolved among the Task
Force members has expanded the benefits of the Task Force beyond the development of
new funding policies to include the following initiatives:

(1) Pilot tests have been instituted in several states to test the feasibility of an
annual rather than a quarterly grant award process by the U.S. Department of Health
and Human Services expressly in response to the interest of state members of the
State/Federal Cash Management Reform Task Force; and

(2) The U.S. Treasury Department is acting as a single contact with federal
program agencies in approving and implementing cash management methods developed
by the Task Force; and

(3) The Task Force has become a conduit for bringing state concerns about
grant awards, funding issues, interest payments, and other matters to the attention of
federal decision-makers for resolution; and

WHEREAS, Pilot tests conducted in Virginia, Wisconsin, Indiana, and California
of one method that called for the reciprocal payment of interest as an alternative to
delay of drawdown and a means of encouraging a timely exchange of funds between the
federal government and the state, demonstrated that interest could be easily calculated
without significant systems changes or increases in staff; and

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