HomeMy WebLinkAboutAgenda - 05-19-20; 6-b - Coronavirus Relief Funding Summary Report and Approval of County Plan 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: May 19, 2020
Action Agenda
Item No. 6-b
SUBJECT: Coronavirus Relief Funding Summary Report and Approval of County Plan
DEPARTMENT(S): Finance
ATTACHMENT(S): INFORMATION CONTACT:
1. PowerPoint Presentation Gary Donaldson, (919) 245-2453
2. Summary of House Bill 1043 -
COVID-19 Recovery Funding Act
3. Frequently Asked Questions
PURPOSE: To receive:
1) An outline and presentation on the Coronavirus Relief Funding (CRF) to North
Carolina counties, including allowable expenses, spend down timeframes and
reporting requirements; and
2) Approve an Orange County Coronavirus Plan for submittal by June 1, 2020.
BACKGROUND: The North Carolina General Assembly unanimously approved the Coronavirus
Relief Funding that was signed by the Governor on May 4, 2020. The CRF package includes
relief measures related to public health and safety, education, small business assistance, and
continuity of state government operations. The State has included $150 million in initial relief
funding, with each county's allocation distributed on a per capita basis, with the exception of the
largest three counties — Guilford, Wake, and Mecklenburg. Those three counties received
Coronavirus Relief funding directly from the U.S. Treasury based on their populations exceeding
500,000.
The Orange County State-wide per capita share is $2,665,753 of the $150 million allocated to
NC counties. House Bill 1043 does not appropriate any funds directly to a city or town but
instead delegates that funding decision to counties. If the BOCC directed staff to allocate a
share of the County's CRF funds to the municipalities, then a County per capita allocation is
proposed as a fair and reasonable allocation methodology. A per capita allocation is currently
used for the distribution of local option sales tax including Article 44 Hold Harmless sales tax.
The table below indicates funding distribution for CRF based on a per capita allocation.
Coronavirus Relief Per Capita
Fund $ 2,665,753.00 Allocation
ORANGE $ 1,546,136.74 58%
CARRBORO $ 266,575.30 10%
CHAPEL HILL $ 746,410.84 28%
DURHAM $ - 0%
HILLSBOROUGH $ 79,972.59 3%
MEBANE $ 26,657.53 1%
TOTAL $ 2,665,753.00 100%
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COVID-19 Eligible Expenses:
• Provide Grants to small businesses experiencing financial loss due to COVID-19
• Support COVID-19 related expenditure for public health staff and program costs,
personal protective equipment (PPE), public safety staff expense, medical expense,
overtime or mandatory pay, distance learning and teleworking requirements
• Expenses must be incurred between March 1, 2020 — December 30, 2020
• Funds cannot be used to replace lost local government revenue
Note: The U.S. Treasury may allow revenue replacement in any future CRF allocations.
Reporting Requirements:
June 1, 2020 - Counties determine a funding plan
Beginning October 1 - Submit Quarterly Reporting of expenditures to the State
The Funding Plan categories due by June 1, 2020 are:
1) Medical expenses
2) Public health expenses
3) Payroll expenses
4) Expenses to facilitate compliance with COVID-19-related public health measures
5) Expenses associated with economic support including small businesses
FINANCIAL IMPACT: The State has allocated $2,665,753 to the County for eligible COVID-19
expenses.
SOCIAL JUSTICE IMPACT: The following Orange Social Justice Goal is applicable to this item.
• GOAL: ENSURE ECONOMIC SELF-SUFFICIENCY
The creation and preservation of infrastructure, policies, programs, and funding
necessary for residents to provide shelter, food, clothing and medical care for themselves
and their dependents.
ENVIRONMENTAL IMPACT: There is no Orange County Environmental Responsibility Goal
impact associated with this item.
RECOMMENDATION(S): The Manager recommends that the Board receive this summary
report and approve an appropriate CRF Funding Plan for submittal by the June 1, 2020
deadline.
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ORANGE COUNTY
NORTH GAROLINA
Coronavirus Relief Fund Act
Summary
May 19, 2019
4
Background
❖ State of North Carolina allocation from the Federal CARES Act is $4 billion;
❖ The North Carolina General Assembly approved the Coronavirus Relief Fund Act House Bill
1043,
❖ Governor signed legislation House Bill 1043 on May 4, 2020;
❖ House Bill 1043 appropriates $150 million from the State to be allocated among 97 counties
on per capita basis;
❖ U.S. Treasury is providing direct funding to Guilford, Mecklenburg and Wake counties; there
populations exceed 500,000,
❖ House Bill 1043 allows NC counties to determine municipality funding;
❖ Orange County per capita share from the State is $2,665,753
❖ Fair and reasonable allocation is methodology is each town per capita share within Orange
County; similar to current Local Option Sales Tax per capita N4e --
ORANGE COUNTY
NORTH CAROLINA
County- Based Per Allocation
5
Per Capita
Coronavirus Relief Fund 2,665,753.00 Allocation
• ' 1,546,136.74 58%
• ' • 266,575.30 10%
CHAPEL HILL 746,410.84 28%
' - 0%
HILLSBOROUGH 79,972.59 3%
26,657.53 1%
• 2,665,753.00 100%
ORANGE COUNTY
NORTH CAROLINA
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CRF Act Eligible Uses
❖ Provide Grants to small businesses experiencing financial loss due to COVID-19
❖ Support COVID-19 related expenditure for public health staff and program costs, personal
protective equipment (PPE), public safety staff expense, medical expense, overtime or
mandatory pay, distance learning and teleworking requirements
❖ Expenses must be incurred between March 1, 2020 — December 30, 2020; and not
accounted for in FY 2019-20 Budget
❖ Eligible expenses if any prior to March 1, 2020 should be applied for through FEMA
❖ Must apply for either CRF or FEMA; trigger date is determinant
❖ Before March 1 apply through FEMA; minimal County coronavirus expenses within this
timeframe
❖ After March 1 apply through CRF; majority of coronavirus expenses
❖ Funds cannot be used to replace lost local government revenue
Note: The U.S. Treasury may allow revenue replacement in any future CRF allo®RANGE COUNTY
NORTH CAROLINA
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State Reporting Tirnefrarne
➢ June 1- Submit a Funding Plan to the Office of State
Budget and Management
➢ Quarterly Funding Reports on October 1, 2020 and
January 1, 2021
➢ All Funds must be expended by December 30, 2020
➢ Unexpended fund to be returned to the State
ORANGE COUNTY
NORTH CAROLINA
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Next Steps
BOCC Approval-
Two Step Process to Decide; 1) Municipalities Allocation
2) Eligible Uses Allocation by June 1
➢ Inform Town Finance Officers of Federal and State
Guidelines, Tracking Expenditures and Reporting
Timeframes
➢ Implement Funding Plan
--
ORANGE COUNTY
NORTH CAROLINA
9
Questions
ORANGE COUNTY
NORTH CAROLINA
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HOUSE BILL 1043:
2020 COVID-19 Recovery Act.
Qu v
2019-2020 General Assembly
Committee: Senate Appropriations/Base Budget Date: May 2, 2020
Introduced by: Reps. Bell, Jackson, Lewis Prepared by: Luke Gillenwater
Analysis of: PCS to Third Edition Dan Ettefagh
H1043-CSMLa-13 Committee Co-Counsel
OVERVIEW. House Bill 1043 provides aid to North Carolinians in response to the Coronavirus
Disease 2019 (COVID-19) crisis.
CURRENT LAW: House Bill 1043 does the following:
• Section 1.1 —Establishes the title of the act as the "2020 COVID-19 Recovery Act."
• Section 1.2 — Establishes definitions used throughout the act, including defining "COVID-19
Recovery Legislation" as the following legislation enacted by Congress:
■ The Coronavirus Aid, Relief, and Economic Security(CARES)Act, P.L. 116-136.
■ The Families First Coronavirus Response Act, P.L. 116-127.
■ The Coronavirus Preparedness and Response Supplemental Appropriations Act,2020,P.L.
116-123.
■ Paycheck Protection Program and Health Care Enhancement Act, P.L. 116-139.
• Section 1.3 — States the purpose of the act.
• Section 1.4 — Provides that the appropriations and allocations in the act are for the maximum
amounts necessary to implement the act, and directs State agencies to maximize the use of federal
funds made available in the act prior to using other State funds.
• Section 1.5—Provides that allocations made under this act that conflict with applicable federal law
are repealed and the funds are to be transferred back to the Coronavirus Relief Reserve.
• Section 1.6 — Directs the Office of State Budget and Management (OSBM) to work with State
agencies to ensure that receipts awarded pursuant to COVID-19 Recovery Legislation are used in
accordance with applicable federal laws and regulations. Additionally, provides that funds may
not be used for recurring expenditures, funds awarded under The CARES Act may not be used for
revenue replacement, and, depending on the award, employ additional time-limited State
personnel.
• Section 1.7 —Requires reports from OSBM and State agencies or departments that receive funds
under the act detailing how the funds are used. The reports are to be provided to the Joint
Legislative Commission on Governmental Operations and the Fiscal Research Division.
• Section 1.8 — Requires the State Auditor to conduct a preliminary financial audit and final
performance audit of the Coronavirus Relief Fund no later than 3/l/21.
• Section 2.1 — Establishes the Coronavirus Relief Reserve (Reserve) to maintain federal funds
received from the Coronavirus Relief fund created under The CARES Act, P.L. 116-136.
• Section 2.2—Establishes the Coronavirus Relief Fund(Fund)to be used to provide necessary and
appropriate relief and assistance from the effects of COVID-19. All funds in the Fund must be
Kory Goldsmith Legislative Drafting
Director 919-733-6660
H 1 0 4 3 — S M M L — 2 0 C S M L A — 1 3 — V — 2
This bill analysis was prepared by the nonpartisan legislative stafffor the use of legislators in their deliberations and does not constitute an official statement of legislative intent.
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used for necessary expenditures incurred due to the public health emergency resulting from
COVID-19, and the expenditures must have been incurred during the period that begins on March
1, 2020, and ends on December 30, 2020.
• Section 2.3 —Establishes the Local Government Coronavirus Relief Reserve (Local Reserve).
Additionally, transfers the sum of$300,000,000 from the Reserve to the Local Reserve. Lastly,
specifies that it is the intent of the General Assembly to appropriate a sum of up to $150,000,000
if local governments experience a revenue shortfall and The CARES Act, P.L. 116-136, is
amended to allow the use of federal funds to address the shortfall(s).
• Section 3.1 —Transfers the sum of$1,275,988,029 from the Reserve to the Fund and$150,000,000
from the Local Reserve to the Fund.
• Section 3.2 —Appropriates the sum of$1,425,988,029 in nonrecurring funds for the 2019-2020
fiscal year from the Fund to OSBM to be used in accordance with Section 3.3 of the act. Further,
specifies that funds appropriated in this section that remain unspent at the end of the 2019-2020
fiscal year shall not revert and shall remain available to expend until December 30, 2020.
• Section 3.3 —Directs OSBM to allocate the sum of$1,425,988,029 it received from the Fund as
follows:
o $50M for supplies and equipment for life safety, health, and sanitation and purchase of
PPE meeting federal and CDC standards, divided between NC Healthcare Foundation
(50%),NC Senior Living Association and NC Health Care Facilities Association in equal
amounts (15%),NC Medical Society(10%), and the Division of Emergency Management
in DPS for entities it deems essential (25%).
o $150M for counties ineligible to receive direct funding from the CARES Act. Each county
receives a base funding of $250,000, with remainder distributed on a per capita basis.
Funds can be allocated to municipalities if a necessary expenditure and consistent with
federal guidance on COVID-19 relief.
o $70M for continuity of operations of State government for expenditures incurred between
3/l/20 and 12/30/20 for listed expenditures. Includes up to $2M for the North Carolina
Pandemic Recovery Office and up to $500k for the audit to be performed by the State
Auditor as required by this act.
o $300M for the General Maintenance Reserve in the Highway Fund if federal guidance is
revised to allow the use of funds for revenue replacement. This allocation reverts if federal
guidance is not updated before 6/15/20.
o $20M to OSBM for allocation to State agencies negatively impacted by loss of anticipated
receipts, but only if federal guidance is revised to allow the use of funds for revenue
replacement.
o $100k for the General Assembly to reimburse funds to Wake Forest University Health
Services for COVID-19 research data for future legislative committees.
o $75M to DPI for school nutrition services provided in response to COVID-19 in the School
Lunch or Breakfast Programs from 3/16/20 through the end of the school year.
o $lM to DPI for improving Internet connectivity through extended reach mobile wife
gateway router devices in school buses.
o $11M to DPI for improving Internet connectivity for students through mobile Internet
access points.
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o $30M to DPI for computers or other electronic devices for use by certain public school
students in response to COVID-19.
o $5M to DPI for certain public schools to provide computers or other electronic devices for
use by school personnel.
o $4.5M to DPI to establish a shared cybersecurity infrastructure and district cybersecurity
monitoring and support.
o $10M to DPI for allocation conforming for school health support personnel for physical
and mental health support services for students in response to COVID-19,including remote
services.
o $70M to DPI for certain public schools to provide a supplemental summer learning
program in response to negative effects of COVID-19. At least $35M is to be used for
students in grades 2 and 3 during the 19-20 school year, and up to 25% may be used for
supplemental literacy support for students in grades 3 and 4 during the 20-21 school year
not on track to meet 20-21 year-end expectations. Remaining funds are to be used for
kindergarten and grades 1 and 4.
o $1.488M to DPI for public school units to provide remote instruction.
o $3M to DPI to provide nondigital remote instruction resources to students with limited
connectivity.
o $15M to DPI for grants to public school units for extraordinary costs of providing Extended
School Year Services or future services for exceptional children.
o $660,029 to DPI for the Governor Morehead School for the Blind, the Eastern NC School
for the Deaf, and the NC School for the Deaf for school nutrition, cleaning, sanitizing,
remote learning, compensatory services, and Extended School Year Services.
o $5M to DPI for the Extended Learning and Integrated Student Supports Competitive Grant
Program.
o $25M to Community Colleges for campuses to enhance online learning, cover expenses
for resources and supports for faculty and staff,provide Small Business Center councelors,
cover expenses for expanded IT demands, and provide sanitation and other expenses
required for ongoing campus operations.
o $44.4M to BOG of UNC for increased costs for online coursework, implementation of
digital learning accelerator, providing sanitation and other expenses for ongoing campus
operations, covering necessary eligible expenses for students and employees.
o $20M to BOG of UNC for the State Education Assistance Authority for private
postsecondary institutions to transition to online education.
o $15M for the Duke University Human Vaccine Institute to develop a COVID-19 vaccine.
o $29M to UNC Chapel Hill to allocate to the NC Policy Collaboratory for the development
of countermeasures for COVID-19, a vaccine for COVID-19, community testing
initiatives, and other research to address health and economic impacts of COVID-19.
o $15M to the Brody School of Medicine at ECU for the development of countermeasures
for COVID-19, vaccine for COVID-19, community testing initiatives, and other research
to address health and economic impacts of COVID-19.
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o $6M for Campbell University School of Osteopathic Medicine for community testing
initiatives, community-based health care treatment, monitoring rural populations,
educating health professionals on best practices, and supporting rural community primary
care.
o $20M to Wake Forest University Health Services to expand COVID-19 study to include
syndromic surveillance and representative sample antibody testing for near-real-time virus
data.
o $20M to DHHS for local health departments, rural health providers, State Laboratory, and
behavioral health and crises services for increasing nurses, community health workers,
telehealth services, infection control support in nursing and adult care homes and diverting
behavioral health emergencies.
o $6M to DHHS to allocate equally among each of the six food banks in the State and
encourages food banks to use North Carolina-based farmers and vendors.
o $290k to DHHS, Division of Social Services, to provide funds for the LINKS program, a
foster care support program for youth ages 13-21 years.
o $25M to DHHS for State-County Special Assistance-licensed facilities to offset increased
costs of serving residents during the COVID-19 emergency in the amount of
$1325/resident as of 4/l/20.
o $50M to DHHS for rural and underserved communities for health provider grants,
Medicaid assistance for rural hardship grants,enhanced telehealth services,critical services
transportation, health care security for uninsured, and related items.
o $5M for NC Association of Free and Charitable Clinics for cost of eligible health services
provided during the COVID-19 emergency.
o $1.5M to DHHS to provide a grant to NC MedAssist to offset increased costs for
prescription assistance for indigent or uninsured individuals for the COVID-19 emergency.
o $5M to the NC Community Health Centers Association for cost of eligible health services
provided during the COVID-19 emergency.
o $25M to DHHS to expand public and private initiatives for COVID-19 testing, contact
tracing, and trends tracking and analysis,provided the requirements in Section 4.10 of this
act are met.
o $20M to DHHS to provide funds to support behavior health and crisis services to respond
to COVID-19.
o $19M to DHHS to provide for food banks, support for residential settings incurring
additional costs to mitigate COVID-19 positive cases, adjust and child protective services
response, support for homeless and domestic violence shelters, child care response,
NCCARE360, and technology changes to support emergency relief to beneficiaries.
o $1.8M to Old North State Medical Society for rural and African American communities to
address COVID-19 disparities.
o $65M for a grant to NC Healthcare Foundation for grants to hospitals designated by the
Center for Medicare and Medicaid Services as critical access hospitals or non-critical
access rural hospitals to offset response care for COVID-19.
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o $15M to establish the COVID-19 Teaching Hospitals Relief Fund for grants to hospitals
classified as teaching hospitals by the Centers for Medicare and Medicaid Services.
o $15M to establish the COVID-19 General Hospitals Relief Fund to hospitals not eligible
for grants from NCHF or the COVID-19 Teaching Hospitals Relief Fund.
o $2.25M to Division of Social Services (DHHS) for serving children in foster care during
the COVID-19 emergency in the amount of$100 per child per month for April through
June 2020.
o $15M to DACS for animal depopulation and disposal.
o $5M to Commerce for stimulus investment in Visit NC to develop safe travel concepts and
strategies and research tools and analysis needed for implementation.
o $125M for Golden LEAF for small business loan assistance.
o $9M to DIT for funding the remaining portion of all qualifying GREAT program
applications.
• Section 4.1. —Subsection(a) appropriates funds received from federal grants authorized under the
COVID-19 Recovery Legislation. Subsection (b) provides an estimate of North Carolina's
allocations from the COVID-19 Recovery Legislation to be deposited in the State's Treasury and
administered by State agencies. Subsection(c)specifies that no funds in this act or the State Board
of Elections budget shall be used as a matching requirement for federal funds to meet election
needs, but instead specifies that it is the intent of the General Assembly to address the State's
additional elections needs resulting from the COVID-19 pandemic in separate legislation.
• Section 4.2—Provides guidelines for the$125,000,000 to Golden LEAF for the purpose of making
emergency loans to small businesses adversely affected by the COVID-19 outbreak in North
Carolina.
• Section 4.3—Directs OSBM to establish a time-limited Pandemic Recovery Office to oversee and
coordinate federal funds for COVID-19 recovery.
• Section 4.4. —Requires OSBM to release certain grant funds authorized in the 2017 Budget.
• Section 4.5 —Authorizes DHHS to provide Medicaid coverage for COVID-19 Testing for certain
uninsured individuals during the declared nationwide public health emergency period where the
federal medical assistance percentage is 100%.
• Section 4.6—Requires DHHS to provide a 5%increase in the Medicaid Fee-For-Service rates paid
to all provider types by the Division of Health Benefits. The rate increase will be effective 3/1/20,
and will expire on the earlier of. (i) the date the nationwide COVID-19 public health emergency
expires, (ii) the date Executive order 116 expires or is rescinded, or(iii) 3/31/21.
• Section 4.7— Specifies that certain provisions of State law pertaining to provider enrollment shall
not apply to the Medicaid and Health Choice Programs from 3/l/2020 through duration of the
nationwide COVID-19 public health emergency, in order to implement to temporary provider
enrollment authorized under the recently approved Medicaid 1135 waiver.
• Section 4.8—Eliminates requirement that an individual must have received a Supplement Security
Income(SSI)payment to qualify for the Disabled Adult Child passalong in the Medicaid program,
no later than 6/1/20.
• Section 4.9 —Uses increased availability from federal Child Care and Development Fund Block
Grant funds for the 2019-2020 fiscal year to address immediate child care needs resulting from the
coronavirus emergency.
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• Section 4.10 — Disallows funding for testing contact tracing and trends tracking until DHHS
satisfies certain requirements, including diagnostic service reporting, posting of COVID-19
vendors contracted with, and reporting on certain COVID-19 impact data.
• Section 4.11 — Provides additional information regarding use of funds for the purchase and
distribution of units of opioid antagonists at no charge to opioid treatment programs.
• Section 5.1 —Boilerplate providing headings are for reference only.
• Section 5.2 — Boilerplate providing invalid portions of the bill are severable from other portions
of the bill.
EFFECTIVE DATE: Except as otherwise provided, this act is effective when it becomes law. If Senate
Bill 704,2019 Regular Session, is vetoed,this act is repealed. If the veto of Senate Bill 704,2019 Regular
Session, is overridden, this act is reenacted.
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Coronavirus Relief Fund
Frequently Asked Questions
Updated as of May 4,2020
The following answers to frequently asked questions supplement Treasury's Coronavirus Relief Fund
("Fund")Guidance for State,Territorial,Local,and Tribal Governments, dated April 22, 2020,
("Guidance").' Amounts paid from the Fund are subject to the restrictions outlined in the Guidance and
set forth in section 601(d)of the Social Security Act, as added by section 5001 of the Coronavirus Aid,
Relief, and Economic Security Act("CARES Act").
Eligible Expenditures
Are governments required to submit proposed expenditures to Treasury for approval?
No. Governments are responsible for making determinations as to what expenditures are necessary due to
the public health emergency with respect to COVID-19 and do not need to submit any proposed
expenditures to Treasury.
The Guidance says that funding can be used to meet payroll expenses for public safety,public health,
health care, human services, and similar employees whose services are substantially dedicated to
mitigating or responding to the COVID-19 public health emergency. How does a government
determine whether payroll expenses for a given employee satisfy the "substantially dedicated"
condition?
The Fund is designed to provide ready funding to address unforeseen financial needs and risks created by
the COVID-19 public health emergency. For this reason, and as a matter of administrative convenience
in light of the emergency nature of this program, a State,territorial,local,or Tribal government may
presume that payroll costs for public health and public safety employees are payments for services
substantially dedicated to mitigating or responding to the COVID-19 public health emergency,unless the
chief executive (or equivalent) of the relevant government determines that specific circumstances indicate
otherwise.
The Guidance says that a cost was not accounted for in the most recently approved budget if the cost is
for a substantially different use from any expected use of funds in such a line item, allotment, or
allocation. What would qualify as a "substantially different use"for purposes of the Fund eligibility?
Costs incurred for a"substantially different use"include,but are not necessarily limited to, costs of
personnel and services that were budgeted for in the most recently approved budget but which, due
entirely to the COVID-19 public health emergency,have been diverted to substantially different
functions. This would include, for example,the costs of redeploying corrections facility staff to enable
compliance with COVID-19 public health precautions through work such as enhanced sanitation or
enforcing social distancing measures;the costs of redeploying police to support management and
enforcement of stay-at-home orders; or the costs of diverting educational support staff or faculty to
develop online learning capabilities, such as through providing information technology support that is not
part of the staff or faculty's ordinary responsibilities.
Note that a public function does not become a"substantially different use"merely because it is provided
from a different location or through a different manner. For example, although developing online
' The Guidance is available at https://home.treasM.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-
State-Territorial-Local-and-Tribal-Governments.pdf.
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instruction capabilities may be a substantially different use of funds, online instruction itself is not a
substantially different use of public funds than classroom instruction.
May a State receiving a payment transfer funds to a local government?
Yes,provided that the transfer qualifies as a necessary expenditure incurred due to the public health
emergency and meets the other criteria of section 601(d) of the Social Security Act. Such funds would be
subject to recoupment by the Treasury Department if they have not been used in a manner consistent with
section 601(d)of the Social Security Act.
May a unit of local government receiving a Fund payment transfer funds to another unit of
government?
Yes. For example, a county may transfer funds to a city,town,or school district within the county and a
county or city may transfer funds to its State,provided that the transfer qualifies as a necessary
expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of
the Social Security Act outlined in the Guidance. For example, a transfer from a county to a constituent
city would not be permissible if the funds were intended to be used simply to fill shortfalls in government
revenue to cover expenditures that would not otherwise qualify as an eligible expenditure.
Is a Fund payment recipient required to transfer funds to a smaller, constituent unit of government
within its borders?
No. For example, a county recipient is not required to transfer funds to smaller cities within the county's
borders.
Are recipients required to use other federal funds or seek reimbursement under other federal programs
before using Fund payments to satisfy eligible expenses?
No. Recipients may use Fund payments for any expenses eligible under section 601(d) of the Social
Security Act outlined in the Guidance. Fund payments are not required to be used as the source of
funding of last resort. However, as noted below,recipients may not use payments from the Fund to cover
expenditures for which they will receive reimbursement.
Are there prohibitions on combining a transaction supported with Fund payments with other CARES
Act funding or COVID-19 relief Federal funding?
Recipients will need to consider the applicable restrictions and limitations of such other sources of
funding. In addition,expenses that have been or will be reimbursed under any federal program, such as
the reimbursement by the federal government pursuant to the CARES Act of contributions by States to
State unemployment funds, are not eligible uses of Fund payments.
Are States permitted to use Fund payments to support state unemployment insurance funds generally?
To the extent that the costs incurred by a state unemployment insurance fund are incurred due to the
COVID-19 public health emergency, a State may use Fund payments to make payments to its respective
state unemployment insurance fund, separate and apart from such State's obligation to the unemployment
insurance fund as an employer. This will permit States to use Fund payments to prevent expenses related
to the public health emergency from causing their state unemployment insurance funds to become
insolvent.
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Are recipients permitted to use Fund payments to pay for unemployment insurance costs incurred by
the recipient as an employer?
Yes,Fund payments may be used for unemployment insurance costs incurred by the recipient as an
employer(for example,as a reimbursing employer)related to the COVID-19 public health emergency if
such costs will not be reimbursed by the federal government pursuant to the CARES Act or otherwise.
The Guidance states that the Fund may support a "broad range of uses"including payroll expenses for
several classes of employees whose services are "substantially dedicated to mitigating or responding to
the COVID-19 public health emergency." What are some examples of types of covered employees?
The Guidance provides examples of broad classes of employees whose payroll expenses would be eligible
expenses under the Fund. These classes of employees include public safety,public health,health care,
human services,and similar employees whose services are substantially dedicated to mitigating or
responding to the COVID-19 public health emergency. Payroll and benefit costs associated with public
employees who could have been furloughed or otherwise laid off but who were instead repurposed to
perform previously unbudgeted functions substantially dedicated to mitigating or responding to the
COVID-19 public health emergency are also covered. Other eligible expenditures include payroll and
benefit costs of educational support staff or faculty responsible for developing online learning capabilities
necessary to continue educational instruction in response to COVID-19-related school closures. Please
see the Guidance for a discussion of what is meant by an expense that was not accounted for in the budget
most recently approved as of March 27,2020.
In some cases,first responders and critical health care workers that contract COVID-19 are eligible
for workers'compensation coverage. Is the cost of this expanded workers compensation coverage
eligible?
Increased workers compensation cost to the government due to the COVID-19 public health emergency
incurred during the period beginning March 1,2020,and ending December 30,2020, is an eligible
expense.
If a recipient would have decommissioned equipment or not renewed a lease on particular office space
or equipment but decides to continue to use the equipment or to renew the lease in order to respond to
the public health emergency, are the costs associated with continuing to operate the equipment or the
ongoing lease payments eligible expenses?
Yes. To the extent the expenses were previously unbudgeted and are otherwise consistent with section
601(d) of the Social Security Act outlined in the Guidance, such expenses would be eligible.
May recipients provide stipends to employees for eligible expenses(for example, a stipend to employees
to improve telework capabilities)rather than require employees to incur the eligible cost and submit for
reimbursement?
Expenditures paid for with payments from the Fund must be limited to those that are necessary due to the
public health emergency. As such,unless the government were to determine that providing assistance in
the form of a stipend is an administrative necessity,the government should provide such assistance on a
reimbursement basis to ensure as much as possible that funds are used to cover only eligible expenses.
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May Fund payments be used for COVID-19 public health emergency recovery planning?
Yes. Expenses associated with conducting a recovery planning project or operating a recovery
coordination office would be eligible, if the expenses otherwise meet the criteria set forth in section
601(d) of the Social Security Act outlined in the Guidance.
Are expenses associated with contact tracing eligible?
Yes,expenses associated with contract tracing are eligible.
To what extent may a government use Fund payments to support the operations of private hospitals?
Governments may use Fund payments to support public or private hospitals to the extent that the costs are
necessary expenditures incurred due to the COVID-19 public health emergency,but the form such
assistance would take may differ. In particular, financial assistance to private hospitals could take the
form of a grant or a short-term loan.
May payments from the Fund be used to assist individuals with enrolling in a government benefit
program for those who have been laid off due to COVID-19 and thereby lost health insurance?
Yes. To the extent that the relevant government official determines that these expenses are necessary and
they meet the other requirements set forth in section 601(d)of the Social Security Act outlined in the
Guidance,these expenses are eligible.
May recipients use Fund payments to facilitate livestock depopulation incurred by producers due to
supply chain disruptions?
Yes,to the extent these efforts are deemed necessary for public health reasons or as a form of economic
support as a result of the COVID-19 health emergency.
Would providing a consumer grant program to prevent eviction and assist in preventing homelessness
be considered an eligible expense?
Yes, assuming that the recipient considers the grants to be a necessary expense incurred due to the
COVID-19 public health emergency and the grants meet the other requirements for the use of Fund
payments under section 601(d)of the Social Security Act outlined in the Guidance. As a general matter,
providing assistance to recipients to enable them to meet property tax requirements would not be an
eligible use of funds,but exceptions may be made in the case of assistance designed to prevent
foreclosures.
May recipients create a `payroll support program"for public employees?
Use of payments from the Fund to cover payroll or benefits expenses of public employees are limited to
those employees whose work duties are substantially dedicated to mitigating or responding to the
COVID-19 public health emergency.
May recipients use Fund payments to cover employment and training programs for employees that
have been furloughed due to the public health emergency?
Yes,this would be an eligible expense if the government determined that the costs of such employment
and training programs would be necessary due to the public health emergency.
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May recipients use Fund payments to provide emergency financial assistance to individuals and
families directly impacted by a loss of income due to the COVID-19 public health emergency?
Yes,if a government determines such assistance to be a necessary expenditure. Such assistance could
include,for example,a program to assist individuals with payment of overdue rent or mortgage payments
to avoid eviction or foreclosure or unforeseen financial costs for funerals and other emergency individual
needs. Such assistance should be structured in a manner to ensure as much as possible,within the realm
of what is administratively feasible,that such assistance is necessary.
The Guidance provides that eligible expenditures may include expenditures related to the provision of
grants to small businesses to reimburse the costs of business interruption caused by required closures.
What is meant by a "small business,"and is the Guidance intended to refer only to expenditures to
cover administrative expenses of such a grantprogram?
Governments have discretion to determine what payments are necessary. A program that is aimed at
assisting small businesses with the costs of business interruption caused by required closures should be
tailored to assist those businesses in need of such assistance. The amount of a grant to a small business to
reimburse the costs of business interruption caused by required closures would also be an eligible
expenditure under section 601(d)of the Social Security Act, as outlined in the Guidance.
The Guidance provides that expenses associated with the provision of economic support in connection
with the public health emergency,such as expenditures related to the provision of grants to small
businesses to reimburse the costs of business interruption caused by required closures, would
constitute eligible expenditures of Fundpayments. Would such expenditures be eligible in the absence
of a stay-at-home order?
Fund payments may be used for economic support in the absence of a stay-at-home order if such
expenditures are determined by the government to be necessary. This may include, for example,a grant
program to benefit small businesses that close voluntarily to promote social distancing measures or that
are affected by decreased customer demand as a result of the COVID-19 public health emergency.
May Fund payments be used to assist impacted property owners with the payment of their property
taxes?
Fund payments may not be used for government revenue replacement, including the provision of
assistance to meet tax obligations.
May Fund payments be used to replace foregone utility fees? If not, can Fund payments be used as a
direct subsidy payment to all utility account holders?
Fund payments may not be used for government revenue replacement,including the replacement of
unpaid utility fees. Fund payments may be used for subsidy payments to electricity account holders to the
extent that the subsidy payments are deemed by the recipient to be necessary expenditures incurred due to
the COVID-19 public health emergency and meet the other criteria of section 601(d) of the Social
Security Act outlined in the Guidance. For example,if determined to be a necessary expenditure, a
government could provide grants to individuals facing economic hardship to allow them to pay their
utility fees and thereby continue to receive essential services.
Could Fund payments be used for capital improvement projects that broadly provide potential
economic development in a community?
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In general,no. If capital improvement projects are not necessary expenditures incurred due to the
COVID-19 public health emergency,then Fund payments may not be used for such projects.
However,Fund payments may be used for the expenses of,for example,establishing temporary public
medical facilities and other measures to increase COVID-19 treatment capacity or improve mitigation
measures,including related construction costs.
The Guidance includes workforce bonuses as an example of ineligible expenses but provides that
hazard pay would be eligible if otherwise determined to be a necessary expense. Is there a specific
definition of"hazard pay"?
Hazard pay means additional pay for performing hazardous duty or work involving physical hardship, in
each case that is related to COVID-19.
The Guidance provides that ineligible expenditures include "[playroll or benefits expenses for
employees whose work duties are not substantially dedicated to mitigating or responding to the
COVID-19 public health emergency." Is this intended to relate only to public employees?
Yes. This particular nonexclusive example of an ineligible expenditure relates to public employees. A
recipient would not be permitted to pay for payroll or benefit expenses of private employees and any
financial assistance(such as grants or short-term loans)to private employers are not subject to the
restriction that the private employers' employees must be substantially dedicated to mitigating or
responding to the COVID-19 public health emergency.
May counties pre pay with CARES Act funds for expenses such as a one or two year facility lease,
such as to house staff hired in response to C011ID-19?
A government should not make prepayments on contracts using payments from the Fund to the extent that
doing so would not be consistent with its ordinary course policies and procedures.
Questions Related to Administration of Fund Payments
Do governments have to return unspent funds to Treasury?
Yes. Section 601(f)(2) of the Social Security Act, as added by section 5001(a)of the CARES Act,
provides for recoupment by the Department of the Treasury of amounts received from the Fund that have
not been used in a manner consistent with section 601(d) of the Social Security Act. If a government has
not used funds it has received to cover costs that were incurred by December 30,2020, as required by the
statute,those funds must be returned to the Department of the Treasury.
What records must be kept by governments receiving payment?
A government should keep records sufficient to demonstrate that the amount of Fund payments to the
government has been used in accordance with section 601(d)of the Social Security Act
May recipients deposit Fund payments into interest bearing accounts?
Yes,provided that if recipients separately invest amounts received from the Fund,they must use the
interest earned or other proceeds of these investments only to cover expenditures incurred in accordance
with section 601(d)of the Social Security Act and the Guidance on eligible expenses. If a government
deposits Fund payments in a government's general account, it may use those funds to meet immediate
cash management needs provided that the full amount of the payment is used to cover necessary
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expenditures. Fund payments are not subject to the Cash Management Improvement Act of 1990,as
amended.
May governments retain assets purchased with payments from the Fund?
Yes, if the purchase of the asset was consistent with the limitations on the eligible use of funds provided
by section 601(d)of the Social Security Act.
What rules apply to the proceeds of disposition or sale of assets acquired using payments from the
Fund?
If such assets are disposed of prior to December 30,2020,the proceeds would be subject to the
restrictions on the eligible use of payments from the Fund provided by section 601(d) of the Social
Security Act.
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