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Interest Earned on Federal Funds Ltr (01-May-2012)

California Department of Education
Official Letter
California Department of Education
Official Letter
May 1, 2012

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

INTEREST EARNED ON FEDERAL FUNDS

Code of Federal Regulations (CFR) Title 34Education, Part 80, Section 80.21, requires grantees and sub-grantees to promptly, but at least quarterly, remit interest earned on advances to the federal agency. The grantee or sub-grantee may keep interest amounts up to $100 per year for administrative expenses.

To assist local educational agencies (LEAs) in complying with the federal administrative requirements for interest earned on federal program advances, the California Department of Education (CDE) has posted guidelines for calculating and remitting interest on federal funds on the Web at http://www.cde.ca.gov/ar/rr/interestearnedltr2.asp [Note, the preceding Web address is no longer valid and has been replaced by http://www.cde.ca.gov/fg/ac/co/intfedfunds-calculating.asp].

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 and school food service funds should be omitted in calculating federal interest due to the Federal Treasury.

If you have any questions regarding the federal administrative requirements for interest earned on federal funds, please contact Teresa Palomino, Cash Management Analyst, by phone at 916-319-0698, or by e-mail at tpalomino@cde.ca.gov.

Sincerely,

Kevin W. Chan, Director
Audits and Investigations Division

KWC:pm

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