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HomeMy WebLinkAbout06/16/2020 11B Eligibility for CARES Act Coronavirus Relief FundBUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEM ENT 1 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 2 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 3 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. 1 4 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. 2 5 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. 3 6 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. 4 7 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? 8 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.