Chart 3: Intergovernmental Transfer Financing Bank Loan to County-owned Provider Example

Chart 3 shows an example of intergovernmental transfer financing from a bank through a county provider. In the example State, the statutory match rate is 50%. The State claims an expenditure of $100, and CMS pays a 50% match, or $50. The county provider gets a bank loan of $50, which it provides to the State. The State then pays the provider $100, $50 of which is repaid to the bank. So the provider nets $50 and CMS incurs a net loss of $50. Since the State paid nothing in the transaction, the effective match rate is 100%.

There is a second example within the chart that illustrates a 75%-25% match example. In this model, the total claimed expenditures are $200, with CMS making total payments of $100 and the State making total payments of $50.

Last Revised: November 6, 2003