DEFINITION OF FEDERAL FUNDS - 17105
Agencies/departments will use the following definition of federal funds to identify money remitted to the State Treasury, which must be deposited in the Federal Trust Fund:
Federal funds are all monies received directly from the federal government, the expenditure of which is administered through or under the direction of any agency/department and reported as Federal Trust Fund moneys in the “Detail of Appropriations” in the Governor's Budget.
The state may receive money from the federal government under the different financial relationships. All federal money received directly from the federal government must be deposited in the Federal Trust Fund with exceptions such as contracts and equitable sharing program as described below.
Grants and Cooperative Agreements
The state may enter into grants and cooperative agreements with the federal government. The federal agency will transfer money, property, services, or anything of value to the state to accomplish a public purpose of support or stimulation authorized by federal statute.
Grants and cooperative agreements should have a valid Catalog of Federal Domestic Assistance (CFDA) number.
Money received directly from the federal government for a grant or cooperative agreement must be deposited in the Federal Trust Fund.
Contracts
The state may enter into procurement contracts with the federal government to acquire, purchase, lease, or barter property or services for the direct benefit or use of the federal government. Money received under federal procurement contracts will not be deposited in the Federal Trust Fund.
Equitable Sharing Program
The state may participate in the federal program to share federal asset forfeiture proceeds through equitable sharing. Money received under such a program will not be deposited in the Federal Trust Fund. For example, asset forfeiture proceeds from the federal government must be maintained in a separate fund or account subject to appropriate accounting controls and financial audits. Money received under such a program will not be deposited in the Federal Trust Fund.
Other Exceptions
Revenues derived from sources of financing other than receipts from the federal government should not be deposited in the Federal Trust Fund. For example, revenues derived from taxes, licenses, fees, and fines.
Money received directly from the federal government will be classified as federal funds. However, federal assistance money passed from one state agency/department to another will be classified by the receiving agency/department as reimbursements.
Refer to SAM section 8003, Receipt of Federal Funds, and sections 8010 through 8014 on the Cash Management Improvement Act for information on the exchange of funds between the state and the federal government. The funds received by the state are subject to the federal administrative and legal requirements, audit requirements, and federal cost principles. Refer to SAM sections 9215 and 9216 for information on federal cost recoveries.
Agencies/departments may contact the Department of Finance, Fiscal Systems and Consulting Unit for assistance in identifying the relationship for the federal funds.