Transaction Threshold

Interest will be calculated on the federal percentage of all refund transactions executed by the state where such amounts are $50,000 (gross value) or more. The federal share of refunds is identified through a review of the NYGL0394 report produced by the SFS. The report identifies all federal refunds. Information from the report is summarized by federal program to identify those refunds credited to federal fund appropriations that reflect a gross transaction threshold of $50,000 or more. 

State Interest Liability

For each refund, a state interest liability accrues from the date the state agency receives the refund to the date the funds are returned to the U.S. Treasury or offset against program disbursements.

In order to minimize the state’s interest liability and pursuant to Section 121 of the State Finance Law, agencies are directed to return all refunds, immediately upon receipt, to the State Treasury for credit to the appropriate federal funds appropriation, but in no event shall this transfer occur less than semimonthly.

State agencies that do not remit refunds to the federal funds appropriation on a timely basis will have to separately account for the time (number of days, program, total refund and federal portion of the refunded amount) that they hold the refund prior to crediting it to the federal fund appropriation. However, state agencies that immediately remit original refund checks to the State Treasury pursuant to state statute will not have to separately account for refunds held when the state’s interest liability is calculated on refunds for their federal programs subject to the CMIA.

State Interest Liability Exceptions

Due to their uniqueness, exceptions to the special refund calculations apply to the following programs:
 
Special Supplemental Food Program for Women, Infants and Children (CFDA #10.557);
Unemployment Insurance Program (CFDA #17.225);
Highway Planning and Construction Program (CFDA #20.205);
Pell Grant Program (CFDA #84.063);
Federal Direct Student Loan Program (CFDA #84.268); and
Medical Assistance Program (CFDA #93.778).

Active Grant Awards

Occasionally, state agencies receive refunds (e.g. overpayments, disallowances, etc.) of payments made from federal funds. Such refunds must always be refunded to the federal funds appropriation from which such payments were made. See Chapter VII, Section 3 - Refund of Appropriation/AP Adjustment Vouchers and Section 8.A - Accounting for Federal Refunds of this Chapter. The effect of the refund transaction is to increase the amount of federal funds the state has on hand, and this causes a state interest liability to accrue until such time as the excess federal funds are returned to the U.S. Treasury or used for program purposes.

In certain cases, the state’s CMIA auditor/consultant will contact the state agency to determine the date the refund was received so that the total number of days the state held the funds can be determined and the state’s interest liability related to such refunds can be calculated.

Closed Grant Awards

Amounts recovered from payees after a federal award has been closed by the federal agency must be returned to the U.S. Treasury, but since the grant records have been closed, a Refund of Appropriation should not be used to record the refund. In these cases, the agency must enter an AR Deposit. Immediately following OSC’s posting of the AR Deposit the agency is required to prepare a Single Payment Voucher to return the recovered funds to the Federal Government. See Section 8 - Federal Grant Refunds of this Chapter, for procedures relating to refunding recoveries to the Federal Government.

Guide to Financial Operations
REV. 03/19/2012