- Efficiency – minimizing the time between the transfer of funds to the State and the payout of those funds for program purposes. (i.e. The State should draw in funds on the exact day that they are paid out – or when they leave the State’s bank.)
- Effectiveness – ensuring funds will be available when requested. The TSA, also called the CMIA agreement, specifies how and when funds will be transferred under major Federal assistance programs.
- Equity – compensating the party that is “out-of-pocket” when funding a Federal program. In general, interest is due to the State if it must use its own funds for program purposes when there is valid obligational authority. Conversely, interest is payable by the State if it holds Federal funds in its account prior to disbursement for program purposes.
Prior to the enactment of CMIA, many states frequently drew in federal funds prior to their expenditure, thus causing the federal government to lose interest revenue. Conversely, federal funds were also often not available to states, causing states to advance their own funds for federal purposes and to lose interest revenue. The intent of CMIA is that, to the extent possible, programs will be interest-neutral, resulting in no interest gained or lost by either federal or state governments.
- Major programs (those that equal or exceed 6% of the State's total federal expenditures) must be covered in the Treasury-State Agreement. These programs are also subject to inclusion in the Annual Interest Report.
- Non-major programs are those that fall below the major program threshold. These programs are subject to the rules in Subpart B of 31 CFR 205. These programs are not required to be covered in the TSA and interest liabilities are not calculated, but States and Federal program agencies are responsible for minimizing the time between the transfer and payout of funds.
The following are the State of Vermont's recent approved Treasury-State Agreements and a Guide to Vermont's TSA which explains each year's plan:
Treasury-State Agreement Guide to Vermont's TSA