[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR205.27]

[Page 35-36]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 205--RULES AND PROCEDURES FOR EFFICIENT FEDERAL-STATE FUNDS TRANSFERS--Table of Contents
 
Subpart A--Rules Applicable to Federal Assistance Programs Included in a 
                        Treasury-State Agreement
 
Sec. 205.27  How are Interest Calculation Costs calculated?

    (a) We will compensate a State annually for the costs of calculating 
interest, including the cost of developing and maintaining clearance 
patterns in support of interest calculations, pursuant to this subpart 
A, subject to the conditions and limitations of this section.
    (b) We may deny an interest calculation cost claim if a State does 
not:

[[Page 36]]

    (1) Have a Treasury-State agreement with us, as set forth in 
Secs. 205.6 through 205.9;
    (2) Submit timely a Treasury-State agreement, as set forth in 
Secs. 205.6 through 205.9;
    (3) Submit timely an updated list of Federal assistance programs 
subject to this subpart A, as set forth in Secs. 205.6 through 205.9;
    (4) Submit timely a claim for Interest Calculation Costs with its 
Annual Report, as set forth in Sec. 205.26; or
    (5) Submit timely its Annual Report, as set forth in Sec. 205.26.
    (c) A State must maintain documentation to substantiate its claim 
for Interest Calculation Costs. We may require a State to provide 
documentation to support its interest calculation cost claims. We will 
review all interest calculation cost claims for reasonableness. If we 
determine that a cost claim is unreasonable, we will not reimburse a 
State for that cost, notwithstanding any other provision of this 
section.
    (d) Eligibility and treatment of Interest Calculation Costs. (1) 
Interest Calculation Costs do not include expenses for normal disbursing 
services, such as processing checks or maintaining records for 
accounting and reconciliation of cash accounts, or expenses for 
upgrading or modernizing accounting systems.
    (2) Interest Calculation Costs in excess of $50,000 in any year are 
not eligible for reimbursement, unless a State can justify to us that 
the State is unable to develop and maintain clearance patterns in 
support of interest calculations, or perform the actual calculation of 
interest, without incurring such costs. Supporting documentation must 
accompany State requests for reimbursement in excess of $50,000.
    (3) Interest Calculation Costs that a State incurs in fiscal years 
prior to its most recently completed Annual Report are not eligible for 
reimbursement.
    (4) A State must not include Interest Calculation Costs in its 
Statewide cost allocation plan, as defined and provided for in OMB 
Circular A-87. All costs incurred by a State to implement this subpart 
A, other than Interest Calculation Costs, are subject to the procedures 
and principles of OMB Circular A-87.
    (e) The payments from the Federal government to individual States to 
offset Interest Calculation Costs incurred are funded from the aggregate 
interest payments States make to the Federal government. The following 
limitations apply:
    (1) We will not reduce or adjust interest liabilities for Federal 
assistance programs funded out of trust funds for which the Secretary is 
trustee. These programs include, but are not limited to, Unemployment 
Insurance Trust Fund (CFDA 17.225); Highway & Planning Trust Fund (CFDA 
20.205); Airport Improvement Trust Fund (CFDA 20.106); Federal Transit 
Capital Improvement Trust Fund (CFDA 20.500); Federal Transit Capital & 
Operating Assistance Trust Fund (CFDA 20.507); and Social Security--
Disability Insurance Trust Fund (CFDA 96.001); and
    (2) The aggregate payments from the Federal government to States to 
offset Interest Calculation Costs will not be greater than the aggregate 
interest payments States make to the Federal government.