HomeMy WebLinkAbout06/16/2020 11B Eligibility for CARES Act Coronavirus Relief FundBUSINESS OF THE CITY COUNCIL
YAKIMA, WASHINGTON
AGENDA STATEM ENT
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Item No. 11.B.
For Meeting of: June 16, 2020
ITEM TITLE: Informational Brief on Eligibility for CARES Act Coronavirus Relief
Fund
SUBMITTED BY: Steve Groom, Director of Finance and Budget
SUMMARY EXPLANATION:
The COVI D-19 emergency is unfolding, with an unclear ending timeline. This is to continue to
keep council informed on questions being asked seeking guidance on using CARES Act money,
to counteract adverse effects the city is experiencing.
ITEM BUDGETED: NA
STRATEGIC PRIORITY:
APPROVED FOR SUBMITTAL BY THE CITY MANAGER
RECOM M ENDATION:
ATTACHMENTS:
Description Upload Date Type
O coyer memo 6/11/2020 Coyer Memo
❑ Support Schedule 6/5/2020 Backup Material
0 CARES money for Relief 6/12/2020 Coyer Memo
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FINANCE
TO: Honorable Mayor and Members of the City Council
Alex Meyerhoff, Interim City Manager
FROM: Steve Groom, Finance Director
DATE: June 9, 2020
RE: CARES Act
This is in response to the question being asked by council seeking guidance on using CARES Act
money, to counteract adverse effects the city is experiencing.
Federal Aid. Navigating Federal Aid programs involves considerable staff time and expertise.
We've received a large number of guidelines, rules, publications, FAQs and procedures to follow.
Staff has attended webinars and participated in conference calls, some with the result of finding
out that expenses we considered were ineligible.
The 4 -page guide attached summarizes the program. Funds may be used to cover costs that:
• are necessary expenditures incurred due to the public health emergency with
respect to the Coronavirus Disease 2019 (COVID-19);
• were not accounted for in the budget most recently approved as of March 27,
2020 (the date of enactment of the CARES Act) for the State or government; and
• were incurred during the period that begins on March 1, 2020 and ends on
October 31, 2020.
The City Council has suggested the following:
1) Utility relief of those impact by COVID-19 (lost revenue is not eligible)
2) Individual unemployment, reduced employment hours, childcare expenses, etc. (these are
not allowable expenses incurred by the City eligible for reimbursement)
3) Small business closure or reduced revenue (not allowable expenses incurred by the City,
ineligible for reimbursement)
4) Landlords for nonpayment of rent by impacted renters (not allowable expenses incurred
by the City, ineligible for reimbursement)
The expenses staff is pursuing include:
• Materials purchased that were not budgeted, face masks, gloves, cleaning
supplies, sanitizer, plexiglass barriers
• COVID-related meetings and related expenses
• COVID-related time logged by all employees using the timecard system for later
eligibility review
• EOC staffing
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Coronavirus Relief Fund
Guidance for State, Territorial, Local, and Tribal Governments
April 22, 2020
The purpose of this document is to provide guidance to recipients of the funding available under section
601(a) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic
Security Act ("CARES Act"). The CARES Act established the Coronavirus Relief Fund (the "Fund")
and appropriated $150 billion to the Fund. Under the CARES Act, the Fund is to be used to make
payments for specified uses to States and certain local governments; the District of Columbia and U.S.
Territories (consisting of the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam,
American Samoa, and the Commonwealth of the Northern Mariana Islands); and Tribal governments.
The CARES Act provides that payments from the Fund may only be used to cover costs that -
1. are necessary expenditures incurred due to the public health emergency with respect to
the Coronavirus Disease 2019 (COVID-19);
2. were not accounted for in the budget most recently approved as of March 27, 2020 (the
date of enactment of the CARES Act) for the State or government; and
3. were incurred during the period that begins on March 1, 2020, and ends on December 30,
2020.1
The guidance that follows sets forth the Department of the Treasury's interpretation of these limitations
on the permissible use of Fund payments.
Necessary expenditures incurred due to the public health emergency
The requirement that expenditures be incurred "due to" the public health emergency means that
expenditures must be used for actions taken to respond to the public health emergency. These may
include expenditures incurred to allow the State, territorial, local, or Tribal government to respond
directly to the emergency, such as by addressing medical or public health needs, as well as expenditures
incurred to respond to second -order effects of the emergency, such as by providing economic support to
those suffering from employment or business interruptions due to COVID-19-related business closures.
Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not
otherwise qualify under the statute. Although a broad range of uses is allowed, revenue replacement is
not a permissible use of Fund payments.
The statute also specifies that expenditures using Fund payments must be "necessary." The Department
of the Treasury understands this term broadly to mean that the expenditure is reasonably necessary for its
intended use in the reasonable judgment of the government officials responsible for spending Fund
payments.
Costs not accounted for in the budget most recently approved as of March 27, 2020
The CARES Act also requires that payments be used only to cover costs that were not accounted for in
the budget most recently approved as of March 27, 2020. A cost meets this requirement if either (a) the
cost cannot lawfully be funded using a line item, allotment, or allocation within that budget or (b) the cost
1 See Section 601(d) of the Social Security Act, as added by section 5001 of the CARES Act.
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is for a substantially different use from any expected use of funds in such a line item, allotment, or
allocation.
The "most recently approved" budget refers to the enacted budget for the relevant fiscal period for the
particular government, without taking into account subsequent supplemental appropriations enacted or
other budgetary adjustments made by that government in response to the COVID-19 public health
emergency. A cost is not considered to have been accounted for in a budget merely because it could be
met using a budgetary stabilization fund, rainy day fund, or similar reserve account.
Costs incurred during the period that begins on March 1, 2020, and ends on December 30, 2020
A cost is "incurred" when the responsible unit of government has expended funds to cover the cost.
Nonexclusive examples' of eligible expenditures
Eligible expenditures include, but are not limited to, payment for:
1. Medical expenses such as:
• COVID-19-related expenses of public hospitals, clinics, and similar facilities.
• Expenses of establishing temporary public medical facilities and other measures to increase
COVID-19 treatment capacity, including related construction costs.
• Costs of providing COVID-19 testing, including serological testing.
• Emergency medical response expenses, including emergency medical transportation, related
to COVID-19.
• Expenses for establishing and operating public telemedicine capabilities for COVID-19-
related treatment.
2. Public health expenses such as:
• Expenses for communication and enforcement by State, territorial, local, and Tribal
governments of public health orders related to COVID-19.
• Expenses for acquisition and distribution of medical and protective supplies, including
sanitizing products and personal protective equipment, for medical personnel, police officers,
social workers, child protection services, and child welfare officers, direct service providers
for older adults and individuals with disabilities in community settings, and other public
health or safety workers in connection with the COVID-19 public health emergency.
• Expenses for disinfection of public areas and other facilities, e.g., nursing homes, in response
to the COVID-19 public health emergency.
• Expenses for technical assistance to local authorities or other entities on mitigation of
COVID-19-related threats to public health and safety.
• Expenses for public safety measures undertaken in response to COVID-19.
• Expenses for quarantining individuals.
3. 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.
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4. Expenses of actions to facilitate compliance with COVID-19-related public health measures, such
as:
• Expenses for food delivery to residents, including, for example, senior citizens and other
vulnerable populations, to enable compliance with COVID-19 public health precautions.
• Expenses to facilitate distance learning, including technological improvements, in connection
with school closings to enable compliance with COVID-19 precautions.
• Expenses to improve telework capabilities for public employees to enable compliance with
COVID-19 public health precautions.
• Expenses of providing paid sick and paid family and medical leave to public employees to
enable compliance with COVID-19 public health precautions.
• COVID-19-related expenses of maintaining state prisons and county jails, including as relates
to sanitation and improvement of social distancing measures, to enable compliance with
COVID-19 public health precautions.
• Expenses for care for homeless populations provided to mitigate COVID-19 effects and
enable compliance with COVID-19 public health precautions.
5. Expenses associated with the provision of economic support in connection with the COVID-19
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.
• Expenditures related to a State, territorial, local, or Tribal government payroll support
program.
• Unemployment insurance costs 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.
6. Any other COVID-19-related expenses reasonably necessary to the function of government that
satisfy the Fund's eligibility criteria.
Nonexclusive examples of ineligible expenditures'
The following is a list of examples of costs that would not be eligible expenditures of payments from the
Fund.
1. Expenses for the State share of Medicaid.3
2. Damages covered by insurance.
3. Payroll or benefits expenses for employees whose work duties are not substantially dedicated to
mitigating or responding to the COVID-19 public health emergency.
2 In addition, pursuant to section 5001(b) of the CARES Act, payments from the Fund may not be expended for an
elective abortion or on research in which a human embryo is destroyed, discarded, or knowingly subjected to risk of
injury or death. The prohibition on payment for abortions does not apply to an abortion if the pregnancy is the result
of an act of rape or incest; or in the case where a woman suffers from a physical disorder, physical injury, or
physical illness, including a life -endangering physical condition caused by or arising from the pregnancy itself, that
would, as certified by a physician, place the woman in danger of death unless an abortion is performed.
Furthermore, no government which receives payments from the Fund may discriminate against a health care entity
on the basis that the entity does not provide, pay for, provide coverage of, or refer for abortions.
3 See 42 C.F.R. § 433.51 and 45 C.F.R. § 75.306.
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4. 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.
5. Reimbursement to donors for donated items or services.
6. Workforce bonuses other than hazard pay or overtime.
7. Severance pay.
8. Legal settlements.
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Yakima CARES Money for the Relief of Economic Hardship in Our
Community
June 16, 2020
Kay Funk, MD
For the purpose of this document:
City = Yakima city government
city = Yakima as a community
It is true that navigating Federal Aid program rules involves considerable staff time and
expertise. This is, in part, because bureaucratic designs, especially when written in a hurry, are
often self-contradictory and at cross purposes. It's enough to make you want to play the Dad -
gum Guv'ment song (https:Ilwww.youtube.comlwatch?v=C5n8OQb4tS8).
In this case, the federal money has been awarded to the City of Yakima. But the guidelines
pretty much prohibit the city from spending it, even though our city as a community has been hit
viciously hard. It is up to us - as policy makers separate from staff function - to push for
clarification and do what ought to be done.
City expenses that our pretty clearly covered, but do little to cover our community losses:
• Materials purchased that were not budgeted, face masks, gloves, cleaning supplies,
sanitizer, plexiglass barriers
• COVID-related meetings and related expenses
• COVID-related time logged by all employees using the timecard system for later
eligibility review EOC staffing
Council suggestions for relief of the economic impact on the
community:
Utility relief of those impact by COVID-19 (lost revenue is not eligible)
My Comment: The guidelines clearly endorse the use of CARES money for "individuals facing
economic hardship to allow them to pay their utility fees and thereby continue to receive
essential services." "Subsidy payments" are allowed; "revenue replacement" is not allowed. In
accounting, those two are different; in reality, they are exactly the same.
Federal FAQ: May Fundpayments be used to replace foregone utility fees? If not, can Fundpayments
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.
families directly impacted by a loss of income due to the COVID-19 public health emergency?
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May recipients use Fund payments to provide emergency financial assistance to individuals and
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.
Individual unemployment, reduced employment hours, childcare expenses, etc.
(these are not allowable expenses incurred by the City eligible for
reimbursement)
My Comment: These are mentioned as markers of economic hardship; these were not
considered as reimbursable losses.
Small business closure or reduced revenue (not allowable expenses incurred by
the City, ineligible for reimbursement)
My Comment: These are mentioned as markers of economic hardship; these were not
considered as reimbursable losses. However, The guidelines clearly endorse the use of CARES
money for "assisting small businesses with the costs of business interruption". With regard to
utilities, the comparison of allowed "grants" vs. ineligible "revenue replacement" is the same as
above. In reality, they are exactly the same.
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 ineant by a "small business," and is the Guidance intended to refer only to expenditures to
cover administrative expenses of such a grant program?
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.
Landlords for nonpayment of rent by impacted renters (not allowable expenses
incurred by the City, ineligible for reimbursement)
My comment: Landlords are (frequently) small businesses.
Standard of Record Keeping
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.