Earned on Federal Funds Ltr (31-July-2018)

July 31, 2018

Dear County and District Superintendents, County and District Chief Business Officials, and Charter School Administrators:

Interest Earned on Federal Funds

The California Department of Education (CDE) is issuing this letter to remind local educational agency (LEA) fiscal officials of the federal administrative requirements for remitting interest earned on advances of federal program funds.

Title 2, Code of Federal Regulations, Part 200, Section 200.305, requires grantees and sub-grantees to remit interest earned on advances to the federal agency. Grantees or sub-grantees may retain interest amounts up to $500 per year for related administrative expenses.

LEAs should remit to the CDE only the interest earned on federal program advances administered by the CDE; interest earned on non-CDE administered program advances should be calculated separately and remitted to the Federal Treasury via the appropriate state or federal agency. In addition, LEAs should only calculate interest on the cash balances of federal program advances; the cash balances of federal reimbursement programs should be omitted in calculating federal interest due to the Federal Treasury.

To assist LEAs in complying with the federal administrative requirements for interest earned on federal program advances, please see the CDE’s guidelines for calculating and remitting interest at http://www.cde.ca.gov/fg/ac/co/intfedfunds-calculating.asp.

The CDE requires LEAs to calculate and report interest on a quarterly basis by email to cashmanagement@cde.ca.gov or letter to the CDE, Audits and Investigations Division, Attention: Alex Chew, at 1430 N Street, Suite 5319, Sacramento, CA 95814. The information must specify the reporting period and amount of interest due, or zero, if no interest is due. Please also include the following: (1) documentation of the County Treasurer’s interest rates utilized in the interest calculations; and (2) the LEA’s interest calculations, including the specific resource codes. The CDE is responsible for ensuring that LEAs are in compliance with federal administrative requirements. Therefore, if the LEA does not properly calculate, report, and remit interest earned on federal funds, the CDE will be obligated to consider further action, which may include a monitoring review, audit, and/or the withholding of federal program funds.

When remitting interest payments, include the County-District-School code and specify the time period(s) for which interest was earned (e.g., October 1, 2017 through December 31, 2017).

Remittances must be sent to the following address:

California Department of Education
P.O. Box 515006
Sacramento, CA 95851
Attention: Cashier’s Office

If you have any questions or need assistance regarding the federal administrative requirements for interest earned on federal program advances, please contact the CDE, Audits and Investigations Division, at 916-322-2288, or by email at cashmanagement@cde.ca.gov.

Sincerely,

Kimberly A. Tarvin, CPA
Director, Audits and Investigations Division

KAT:ac