---
kind: "section"
citation: "31 C.F.R. § 205.12"
title: "31"
number: "205.12"
heading: "What funding techniques may be used?"
url: "https://uscodex.org/cfr/31/205.12"
---

# §205.12. What funding techniques may be used?

- (a) We and a State may negotiate the use of mutually agreed upon funding techniques. We may deny interest liability if a State does not use a mutually agreed upon funding technique. Funding techniques should be efficient and minimize the exchange of interest between States and Federal agencies.
- (b) We and a State may base our agreement on the sample funding techniques listed in [paragraphs (b)(1) through (b)(5)](#b-1..b-5) of this section, or any other technique upon which both parties agree.
  - (1) Zero balance accounting means that a Federal Program Agency transfers the actual amount of Federal funds to a State that are paid out by the State each day.
  - (2) Projected clearance means that a Federal Program Agency transfers to a State the projected amount of funds that the State pays out each day. The projected amount paid out each day is determined by applying a clearance pattern to the total amount the State will disburse.
  - (3) Average clearance means that a Federal Program Agency, on the dollar-weighted average day of clearance of a disbursement, transfers to a State a lump sum equal to the actual amount of funds that the State is paying out. The dollar-weighted average day of clearance is the day when, on a cumulative basis, 50 percent of the funds have been paid out. The dollar-weighted average day of clearance is calculated from a clearance pattern, consistent with [§ 205.20](/cfr/31/205.20.md).
  - (4) Cash advance (pre-issuance or post-issuance) funding means that a Federal Program Agency transfers the actual amount of Federal funds to a State that will be paid out by the State, in a lump sum, not more than three business days prior to the day the State issues checks or initiates EFT payments.
  - (5) Reimbursable funding means that a Federal Program Agency transfers Federal funds to a State after that State has already paid out the funds for Federal assistance program purposes.

## Notes

### Authority

Authority: 5 U.S.C. 301; 31 U.S.C. 321, 3332, 3335, 6501, 6503.

### Source

Source: 67 FR 31885, May 10, 2002, unless otherwise noted.