WASHINGTON - President Bush has signed legislation postponing until next year new regulations governing the $150 billion annual flow of federal funds to states.
Approval of the delay was crucial because many states are simply not ready to comply with the new rules, according to Helena Sims, spokeswoman for the National Association of State Auditors, Comptrollers and Treasurers.
"This was very important for states." said a spokesman from the U.S. Treasury, which wrote and will enforce the new rules that were published in the Sept. 24 issue of the Federal Register.
The new law pushes back the effective date of the new regulations from Oct. 24, 1992, to either July 1, 1993, or the beginning of a state's next fiscal year, whichever comes later.
The new rules, which dictate who receives the interest earned on federal funds, are designed to prevent states from drawing federal funds before actually.spending the money. The rules are also meant to discourage federal agencies from withholding funds that states are entitled to receive.
The regulations require states, in some cases, to make costly changes to their existing accounting systems so that states can calculate the interest they owe on the federal funds they hold before spending them.
Because state accounting systems vary greatly, the new rules stipulate that each state must devise its own plan for making interest calculations, subject to Treasury approval.
The new law, in effect, gives each state at least until July 1993 to enter into an agreement with the Treasury on how it will comply with the new rules.
Sims noted previously that some states will have a difficult time meeting the new deadline for compliance because they will have to drastically change their accounting systems. One major change involves the elimination of states' prepaying for federal programs and then billing federal agencies afterward.