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3.1 Payments

Understanding the Cash Management Improvement Act of 1990

The Cash Management Improvement Act of 1990 was an amendment to the Intergovernmental Cooperation Act of 1968, 31 United States Code (U.S.C.) 6503. Under the provision 31 U.S.C. 5(b) of Public Law 101-453, States are no longer exempt from returning interest to the Federal Government for drawing down funds prior to the need to pay off obligations incurred. The provisions of 31 U.S.C. 6503(c)(1) require States to pay interest in the event that the State draws down funds before the funds are needed to pay for program expenses.

Recipients and subrecipients that administer confidential funds may establish different procedures for administering confidential funds to provide quick access to funds to meet the needs of the project. Written policies and procedures must be in place to address confidential funds. Chapter 3.12: Confidential Funds defines and discusses confidential funds.

The Cash Management Improvement Act of 1990 and other laws will have different impacts on different kinds of award recipients. The table in the How to Manage Interest Income section of this chapter provides information by specific types of recipient organization: States, tribal government organizations, localities, and nonprofit organizations.