CC - Item 6A - Coronavirus Relief Fund (CRF) Summary Report 5 6 M F
9 ROSEMEAD CITY COUNCIL
. , CIVIC PRIDE STAFF REPORT
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/NCORpORATED A059
TO: THE HONORABLE MAYOR AND CITY COUNCIIL
FROM: GLORIA MOLLEDA, CITY MANAGER „3i\N i •
DATE: AUGUST 25, 2020
SUBJECT: CORONAVIRUS RELIEF FUND (CRF) SUMMARY REPORT
SUMMARY
The City of Rosemead has been allocated $671,227 in Coronavirus Relief Fund (CRF) as part of
the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. This report
provides a summary and status of the CRF programming, guidelines, and funding allocation.
DISCUSSION
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was
signed into law providing over $2 trillion economic relief package to respond to the public health
and economic impacts of COVID-19. In part, the CARES Act allocated $150 billion for the
Coronavirus Relief Fund (CRF) to assist the state, local and tribal governments navigate the
impact of the COVID-19 outbreak. Jurisdictions with a population over 500,000 received direct
CRF payments from the U.S. Department of the Treasury (Treasury). In California, only the
following cities received direct CRF payments: Fresno, Los Angeles, Sacramento, San Diego,
San Francisco, and San Jose. The remaining California cities are to receive CRF funding
through the State Department of Finance (DOF). The total CRF allocation to Rosemead is
$671,227, and to-date Rosemead has received on July 30, the first of six scheduled installments
in the amount of$111,871. Additional installments are anticipated in the forthcoming months.
The CRF is intended to provide ready funding to address unforeseen financial needs and risks
created by the COVID-19 public health emergency, subject to the Treasury's guidance and in
compliance with the State's public health requirements. The funds must be used for necessary
expenditures incurred due to the COVID-19 public health emergency and cannot be used for
ineligible expenses, such as to backfill lost revenues or capital infrastructure. The funds must
also be used for expenses incurred between March 1, 2020, and December 30, 2020, and any
unspent funds must be returned. The Treasury's six expenditure categories are as follows:
1. Medical Expenses—Such as testing, including serological/anti-body testing; etc.
AGENDA ITEM 6.A
City Council Meeting
August 25,2020
Page 2 of 3
2. Public Health Expenses — Including communication/enforcement-public health orders;
purchase and distribution of medical and protective supplies (PPE/cleaning supplies);
disinfection of public areas; technical assistance on mitigation; public safety measure in
response; etc.
3. Substantially Dedicated Payroll Expenses — Includes public safety, public health and
similar employees. Public health and public safety are presumed to be "substantially
dedicated."
4. Comply with Public Health Measures and Mitigate the Effects of COVID-19 — Food
delivery to seniors and vulnerable populations; telework capabilities for public
employees; caring for homeless; etc.
5. Economic Support — Grants to small businesses for business interruption; payment of
overdue rent/mortgage to avoid eviction; etc.
6. Other — Any other COVID-19 expenses "reasonably necessary" to the function of
government that satisfies the broader eligibility criteria.
On March 13, 2020, the City Council adopted Resolution 2020-08, proclaiming the existence of
an emergency situation and local emergency due to the worldwide spread of the Coronavirus
(COVID-19). Pursuant to the said Resolution, the City Manager, as the Director of Emergency
Services, is authorized to exercise her powers and duties as provided in Chapter 2.40
(Emergency Services) of the Rosemead Municipal Code or in state and federal laws.
Accordingly and pursuant to Treasury's CRF expenditure eligibility guidelines, the following
initial allocations for the $671,227 CRF monies have been prepared:
Medical Expenses
- Testing $110,000
Public Health Expenses
- Communication/enforcement-public health orders $40,000
- Protective supplies(PPE/cleaning) $15,000
- Disinfection of public areas $20,000
- Technical assistance on mitigation(legal) $80,000
Substantially Dedicated Payroll Expenses
- Public safety(LA County Sheriff's Dept.) $200,000
- Part-time employees COVID-19 activities $10,000
- Contract employees COVID-19 activities $46,227
Comply with Public Health Measures&Mitigate Effects
- Senior food delivery $20,000
- Telework computers/scanners $30,000
Economic Support
- Small business grants $100,000
Total $671,227
City Council Meeting
August 25,2020
Page 3 of 3
It is noted that DOF is requiring that by September 1St, the CRF recipients submit an expenditure
report and a plan on how the funds will be spent. At the time of writing this report, DOF has not
yet released the reporting guidelines; however, staff will monitor and submit the report as
appropriate. DOF has also stated that any recipient funds not spent by October 30th may be
reallocated to other jurisdictions or to the State. Staff will pursue the potential opportunity to
secure any unspent funds by other recipient(s) should it be available. Lastly, the second phase
HEROES / HEALS Act is making its way through congress and Staff will monitor for any
additional funding opportunities.
STAFF RECOMMENDATION
Receive and file.
FISCAL IMPACT
The $671,227 Coronavirus Relief Fund (CRF) allocation to Rosemead is released by the State
Department of Finance (DOF) after the City's adoption of the FY20-21 budget and thus is not
reflected as a revenue. The CRF monies are released by DOF to Rosemead in six installments
beginning July 30th and monthly thereafter. Additionally, the CRF funds are to be expended by
October 30th, or by December 31St with DOF extension. Staff will bring before the Council the
final CRF revenue and expenditure amounts as part of the mid-year budget review in early 2021.
STRATEGIC PLAN IMPACT
The use of Coronavirus Relief Fund (CRF) is consistent with a key organizational goal of the
Strategic Plan to, "Enhance Public Safety and Quality of Life."
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process.
Attachment A: Coronavirus Relief Fund (CRF) Frequently Asked Questions—08/10/2020
Attachment B: State Department of Finance—PowerPoint presentation on Coronavirus Relief
Funds (CARES Act Requirements and Treasury Guidance)
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Attachment A
Coronavirus Relief Fund (CRF) Frequently Asked
Questions — 08/10/2020
Coronavirus Relief Fund
Frequently Asked Questions
Updated as of July 8,2020
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").1 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
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.
'The Guidance is available at https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-
State-Territorial-Local-and-Tribal-Governments.pdf.
1
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.
2
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.
3
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.
4
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 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.
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 Fund payments. 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.
5
Could Fund payments be used for capital improvement projects that broadly provide potential
economic development in a community?
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 "[pjayroll 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 COVID-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.
Must a stay-at-home order or other public health mandate be in effect in order for a government to
provide assistance to small businesses using payments from the Fund?
No.The Guidance provides,as an example of an eligible use of payments from the Fund,expenditures
related to the provision of grants to small businesses to reimburse the costs of business interruption
caused by required closures. Such assistance may be provided using amounts received from the Fund in
the absence of a requirement to close businesses if the relevant government determines that such
expenditures are necessary in response to the public health emergency.
6
Should States receiving a payment transfer funds to local governments that did not receive payments
directly from Treasury?
Yes,provided that the transferred funds are used by the local government for eligible expenditures under
the statute. To facilitate prompt distribution of Title V funds,the CARES Act authorized Treasury to
make direct payments to local governments with populations in excess of 500,000,in amounts equal to
45%of the local government's per capita share of the statewide allocation. This statutory structure was
based on a recognition that it is more administratively feasible to rely on States,rather than the federal
government,to manage the transfer of funds to smaller local governments. Consistent with the needs of
all local governments for funding to address the public health emergency, States should transfer funds to
local governments with populations of 500,000 or less,using as a benchmark the per capita allocation
formula that governs payments to larger local governments. This approach will ensure equitable
treatment among local governments of all sizes.
For example, a State received the minimum$1.25 billion allocation and had one county with a population
over 500,000 that received$250 million directly. The State should distribute 45 percent of the$1 billion
it received, or$450 million,to local governments within the State with a population of 500,000 or less.
May a State impose restrictions on transfers of funds to local governments?
Yes,to the extent that the restrictions facilitate the State's compliance with the requirements set forth in
section 601(d)of the Social Security Act outlined in the Guidance and other applicable requirements such
as the Single Audit Act,discussed below. Other restrictions are not permissible.
If a recipient must issue tax anticipation notes(TANs)to make up for tax due date deferrals or revenue
shortfalls,are the expenses associated with the issuance eligible uses of Fund payments?
If a government determines that the issuance of TANs is necessary due to the COVID-19 public health
emergency,the government may expend payments from the Fund on the interest expense payable on
TANs by the borrower and unbudgeted administrative and transactional costs, such as necessary
payments to advisors and underwriters, associated with the issuance of the TANs.
May recipients use Fund payments to expand rural broadband capacity to assist with distance learning
and telework?
Such expenditures would only be permissible if they are necessary for the public health emergency. The
cost of projects that would not be expected to increase capacity to a significant extent until the need for
distance learning and telework have passed due to this public health emergency would not be necessary
due to the public health emergency and thus would not be eligible uses of Fund payments.
Are costs associated with increased solid waste capacity an eligible use of payments from the Fund?
Yes,costs to address increase in solid waste as a result of the public health emergency, such as relates to
the disposal of used personal protective equipment,would be an eligible expenditure.
May payments from the Fund be used to cover across-the-board hazard pay for employees working
during a state of emergency?
No. The Guidance says that funding may 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. Hazard pay is a form of payroll
expense and is subject to this limitation, so Fund payments may only be used to cover hazard pay for such
individuals.
7
May Fund payments be used for expenditures related to the administration of Fund payments by a
State,territorial,local,or Tribal government?
Yes, if the administrative expenses represent an increase over previously budgeted amounts and are
limited to what is necessary. For example,a State may expend Fund payments on necessary
administrative expenses incurred with respect to a new grant program established to disburse amounts
received from the Fund.
May recipients use Fund payments to provide loans?
Yes, if the loans otherwise qualify as eligible expenditures under section 601(d)of the Social Security Act
as implemented by the Guidance. Any amounts repaid by the borrower before December 30,2020,must
be either returned to Treasury upon receipt by the unit of government providing the loan or used for
another expense that qualifies as an eligible expenditure under section 601(d)of the Social Security Act.
Any amounts not repaid by the borrower until after December 30,2020,must be returned to Treasury
upon receipt by the unit of government lending the funds.
May Fund payments be used for expenditures necessary to prepare for a future COVID-19 outbreak?
Fund payments may be used only for expenditures necessary to address the current COVID-19 public
health emergency. For example, a State may spend Fund payments to create a reserve of personal
protective equipment or develop increased intensive care unit capacity to support regions in its
jurisdiction not yet affected,but likely to be impacted by the current COVID-19 pandemic.
May funds be used to satisfy non-federal matching requirements under the Stafford Act?
Yes,payments from the Fund may be used to meet the non-federal matching requirements for Stafford
Act assistance to the extent such matching requirements entail COVID-19-related costs that otherwise
satisfy the Fund's eligibility criteria and the Stafford Act. Regardless of the use of Fund payments for
such purposes,FEMA funding is still dependent on FEMA's determination of eligibility under the
Stafford Act.
Must a State,local,or tribal government require applications to be submitted by businesses or
individuals before providing assistance using payments from the Fund?
Governments have discretion to determine how to tailor assistance programs they establish in response to
the COVID-19 public health emergency. However,such a program should be structured in such a manner
as will ensure that such assistance is determined to be necessary in response to the COVID-19 public
health emergency and otherwise satisfies the requirements of the CARES Act and other applicable law.
For example, a per capita payment to residents of a particular jurisdiction without an assessment of
individual need would not be an appropriate use of payments from the Fund.
May Fund payments be provided to non profits for distribution to individuals in need of financial
assistance,such as rent relief?
Yes,non-profits may be used to distribute assistance. Regardless of how the assistance is structured,the
financial assistance provided would have to be related to COVID-19.
May recipients use Fund payments to remarket the recipient's convention facilities and tourism
industry?
Yes,if the costs of such remarketing satisfy the requirements of the CARES Act. Expenses incurred to
publicize the resumption of activities and steps taken to ensure a safe experience may be needed due to
8
the public health emergency. Expenses related to developing a long-term plan to reposition a recipient's
convention and tourism industry and infrastructure would not be incurred due to the public health
emergency and therefore may not be covered using payments from the Fund.
May a State provide assistance to farmers and meat processors to expand capacity,such to cover
overtime for USDA meat inspectors?
If a State determines that expanding meat processing capacity,including by paying overtime to USDA
meat inspectors,is a necessary expense incurred due to the public health emergency,such as if increased
capacity is necessary to allow farmers and processors to donate meat to food banks,then such expenses
are eligible expenses,provided that the expenses satisfy the other requirements set forth in section 601(d)
of the Social Security Act outlined in the Guidance.
The guidance provides that funding may 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. May Fund payments be used to
cover such an employee's entire payroll cost or just the portion of time spent on mitigating or
responding to the COVID-19 public health emergency?
As a matter of administrative convenience,the entire payroll cost of an employee whose time is
substantially dedicated to mitigating or responding to the COVID-19 public health emergency is eligible,
provided that such payroll costs are incurred by December 30,2020. An employer may also track time
spent by employees related to COVID-19 and apply Fund payments on that basis but would need to do so
consistently within the relevant agency or department.
May Fund payments be used to cover increased administrative leave costs of public employees
who could not telework in the event of a stay at home order or a case of COVID-19 in the
workplace?
The statute 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. As stated in the Guidance, 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 is for a substantially different use from any expected
use of funds in such a line item, allotment, or allocation. If the cost of an employee was
allocated to administrative leave to a greater extent than was expected,the cost of such
administrative leave may be covered using payments from the Fund.
Questions Related to Administration of Fund Payments
Do governments have to return unspent funds to Treasury?
Yes. Section 601(0(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?
9
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
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.
Are Fund payments to State,territorial,local,and tribal governments considered grants?
No. Fund payments made by Treasury to State,territorial,local,and Tribal governments are not
considered to be grants but are"other financial assistance"under 2 C.F.R. §200.40.
Are Fund payments considered federal financial assistance for purposes of the Single Audit Act?
Yes,Fund payments are considered to be federal financial assistance subject to the Single Audit Act(31
U.S.C. §§7501-7507)and the related provisions of the Uniform Guidance,2 C.F.R. § 200.303 regarding
internal controls, §§200.330 through 200.332 regarding subrecipient monitoring and management, and
subpart F regarding audit requirements.
Are Fund payments subject to other requirements of the Uniform Guidance?
Fund payments are subject to the following requirements in the Uniform Guidance(2 C.F.R.Part 200):2
C.F.R. § 200.303 regarding internal controls,2 C.F.R. §§200.330 through 200.332 regarding subrecipient
monitoring and management, and subpart F regarding audit requirements.
Is there a Catalog of Federal Domestic Assistance(CFDA)number assigned to the Fund?
Yes.The CFDA number assigned to the Fund is 21.019.
If a State transfers Fund payments to its political subdivisions, would the transferred funds count
toward the subrecipients'total funding received from the federal government for purposes of the
Single Audit Act?
Yes. The Fund payments to subrecipients would count toward the threshold of the Single Audit Act and 2
C.F.R.part 200,subpart F re: audit requirements. Subrecipients are subject to a single audit or program-
10
specific audit pursuant to 2 C.F.R. §200.501(a)when the subrecipients spend$750,000 or more in federal
awards during their fiscal year.
Are recipients permitted to use payments from the Fund to cover the expenses of an audit conducted
under the Single Audit Act?
Yes, such expenses would be eligible expenditures,subject to the limitations set forth in 2 C.F.R. §
200.425.
If a government has transferred funds to another entity,from which entity would the Treasury
Department seek to recoup the funds if they have not been used in a manner consistent with section
601(d)of the Social Security Act?
The Treasury Department would seek to recoup the funds from the government that received the payment
directly from the Treasury Department. State,territorial,local,and Tribal governments receiving funds
from Treasury should ensure that funds transferred to other entities,whether pursuant to a grant program
or otherwise,are used in accordance with section 601(d)of the Social Security Act as implemented in the
Guidance.
11
E M
441M 7
CIVIC PRIDE
Attachment B
State Department of Finance — PowerPoint
presentation on Coronavirus Relief Funds
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CARES Act Requirements and Treasury Guidance
Finance Process Overview l:
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C'a k FO Rro
Objectives
• Overview of Federal CARES Act Requirements for
Coronavirus Relief Funds (CRF)
• Certification and Allocation Timelines
• Eligible Expenditures - US Treasury Guidance
• Compliance with State Public Health Requirements
• Reporting and Records Retention
• Questions and Answers
2
CARES Act Requirements
• Necessary expenditures incurred due to the
COVID-i9 public health emergency.
• Direct response
• Second order effects such as economic support
• Not accounted for in the most recently approved
budget, except COVID-related supplemental
appropriations or budget adjustments
• Expenses incurred between March 1, 2020 and
December 30, 2020.
3
CARES Act Limitations
• Funds cannot be used to backfill lost revenue
• Cannot be used as non-federal share of Medicaid
• Payroll or benefits for employee duties not
"substantially dedicated"
• Workforce bonuses
• Damages covered by insurance
• Assistance to owners to pay property taxes
• Items disallowed in US Treasury FAQs
• Continue to receive updates (Last one 7/8/20)
4
F `
State Responsibilities for CRF
• As the direct recipient of CRF, any disallowances
will initially be recouped from the State
• Required to gather information and report to the
federal government on use of funds
• Required to perform subrecipient monitoring,
including audits
• Certification, reporting, and Control Section 11.90
established to share that risk with local
government and other recipients of CRF and
comply with these federal requirements
5
gip
Six Expenditure Categories
i - Medical Expenses
• Treatment of COVID-i9 and related expenses in
public hospitals or clinics
• Temporary medical facilities
• Testing, including serological/anti-body testing
• Emergency medical response, including
emergency medical transportation
• Establishing and operating public telemedicine
capabilities
6
Six Expenditure Categories
z - Public Health Expenses
• Communication/enforcement-public health orders
• Acquisition and distribution of medical and
protective supplies (PPE/cleaning supplies) for
various public health and safety staff
• Disinfection of public areas and other facilities
• Technical assistance on mitigation
• Public safety measures in response to COVID-19
• Quarantining individuals
Six Expenditure Categories
3 - Substantially Dedicated Payroll Expenses
• Includes: public safety, public health, health care,
human services, and similar employees
• Public health and public safety are presumed to be
"substantially dedicated"
• Provide ready funding to address unforeseen financial
needs and risks created by COVID-i9
• For employees in these area "administrative
convenience" that underlying assumption that they
are all deemed "substantially dedicated"
8
Substantially Dedicated
Let's explore this a bit more :
• Less documentation of the work being performed if
public health and public safety staff
• CARES Act does not allow backfill of lost revenue -
the "administrative convenience" provides a tool to
assume that these staff could be paid for by the CRF,
potentially freeing up general purpose funds (or
offsetting lower receipts)
• Full payroll and benefits can be paid by CRF
9
_ _
,......................,...__......_............._._..._._____________
Substantially Dedicated
Let's explore this a bit more - other staff:
• This can also include staff that were "repurposed" to
previously "unbudgeted" function instead of laid off
• Could include overtime if those additional hours are
outside normal/historical duties
• There is no percent threshold - some discretion,
with appropriate documentation, like time keeping
system or rationale for change in duties/functions
• Can use the CRF to other funds that may have
incurred the initial expense
10
Substantially Dedicated
Examples at the state level:
• Staff stopped our program reviews to track federal
funds related to COVID-i9.
• Staff who could not telework were redeployed to
help with UI program and set up for medical surge
• Staff at all state agencies being trained and
redirected to support contact tracing
• IT staff that were directed to support COVID-i9
tracking, reporting, and new online services
previously requiring in person visits
Six Expenditure Categories
4 -Comply with Public Health Measures and
Mitigate the Effects of COVID-i9:
• Food delivery to seniors and vulnerable populations
• Telework capabilities for public employees
• Providing paid sick, paid family and medical leave to
public employees
• Maintaining county jails such as sanitation and
improvement of social distancing measures
• Caring for homeless
12
Six Expenditure Categories
5 - Economic Support
• Grants to small businesses for costs of business
interruption
• Grant or financial assistance - payment of overdue
rent/mortgage to avoid eviction or funeral expense
• Payroll support program
• Unemployment insurance (UI) costs if those costs
are not reimbursed by federal government -
generally applies to local governments using
"reimbursement method" to finance UI
�3
Six Expenditure Categories
6 -Other
• Any other COVID-i9 expenses "reasonably
necessary" to the function of government that
satisfies the broader eligibility criteria:
• Hazard pay and overtime if substantially dedicated
• Increased workers compensation costs due to COVID
• Leases renewed solely to respond to COVID-i9
• Public health emergency recovery planning
• Support for private hospitals (grant/short-term loan)
• Enrollment in government benefit programs
4
Costs Incurred ( 3/ 1 12/30/ 20 )
• Initial guidance required funds to be "spent" by
December 30, 2020 (not just obligated)
• Recent revision (6/30/2020) allows for a
liquidation period (generally go days)
• Performance/delivery must be during the covered
period
• Bulk purchases can be used beyond December if
portion is used during the covered period
• Recognizes supply chain disruptions may result in
delays beyond recipient's control
• Grants and loans must be during this window
5
Unspent Funds
• Unspent funds must be returned to the US Treasury
• Subrecipients are also bound by this requirement -
that means all expenses must be incurred during the
covered period
• An obligation or award is not considered spent
• The direct recipient of the funds (state) is ultimately
responsible for compliance with this limitation on the
use of the funds
• Unspent funds may be reallocated by the state -
based on September i expenditure reports
i6
Stafford Act — Match for FEMA
• Most recent Treasury guidance notes that CRF may
be used to meet the non-federal Stafford Act match
• Applicants for FEMA Public Assistance (PA) have
flexibility to determine the federal fund source that
best meets response needs
• FEMA may decide to not pay for certain costs and
may direct entities to another agency/fund source
• FEMA has determined that contract tracing is more
appropriately paid from either CRF or CDC funding.
• Coordinate closely with Ca1OES to use CRF as a PA
match - both CRF and FEMA eligibility must be met
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Process and T ( CS11_ . 9O )
• All counties/cities completed certification by 7/10/20
• Use funds consistent with federal CARES Act
• Adhere to state EOs and California Department of Public
Health orders, directives, and guidance
• Report on expenditures and summarize regional
collaboration and non-duplication of efforts by
September 1, 2020
• Return unspent funds by October 30, 2020 unless
extended by Finance based on reported expenditures
• Repay any costs disallowed after federal review
• Retain records (5 years) to support reported expenditures
and participate in state and federal audits
i8
Process and Timeline
Adherence to Public Health Orders
• Monthly attestation for GF backfill of realigned
programs will be used for compliance determination
• Finance will coordinate with CDPH and Ca1OES to
verify county compliance
• State may withhold (and redirect) funds if not in
compliance
• State officials will collaborate with local leaders to
encourage compliance
No county ordinances or resolutions inconsistent
with state's stay-at-home orders �9
Process and Timeline
Public Health Conditions - Counties Must Meet
• Meeting current requirements for county variance:
• At least 15 staff per ioo,000 people trained and
available for contract tracing
• Ability to isolate positive cases (quarantine contacts)
• Ability to shelter at least 15 percent of residents who
are experiencing homelessness
• Ability to test 1.5 per i,000 residents daily
• Testing sites close to where most residents live
• Evidence of a plan to contain the virus
20
Process and Timeline
Public Health Conditions - Counties Must Meet
• Actively participate in County Data Monitoring
Program:
• Currently required commitment to participate
• Undertaking efforts advised by the state if on the
County Data Monitoring List
• Source of disease transmission
• Action plan and timelines
• Ready to reinstitute non-pharmaceutical
interventions [NPIs] (e.g. closure of indoor spaces) as
needed 21
Process and Timeline
• Initial Payment - i/6 of overall amount ($215 M)
• Prepare schedule and notification this week
• Given size of payment both the Controller and
Treasurer have been notified to speed up processing
• Controller should allocate in 10-14 days
• Additional i/6 of overall amount to counties that
remain in compliance on August 1 and September i
• Balance of Funds ($65oM) will paid after report and
summary from locals in compliance with health
orders and federal laws - likely before October i
22
Mr*'m
Reporting Process
1
• Report to the State by September i, 202o per CS11.90
• Will cover expenditures from March 1, 2020 through
June 30, ZOZo - assuming CRF will reimburse
• Will need this for detailed federal eport due g/zi
• Also reportexpended or obligated since July i
• Project expenditures through December 30, e en
2(1,1 ,• Demonstrate a realistic plan for spending by thd
of the year to avoid reallocation
• Majority of funds expected to be spent early on
• Summary: regional collaboration/unduplicated costs
23
sS"t
Reporting
• State (other direct recipients) must report on CRF
expenditures between March 1 and June 3o, 2020
• For the interim report (due July 17) the state would
report on amount identified for local governments
Category of spending Amount
Transferred to other governments $0.00
Payroll for public health and safety employees $0.00
Budgeted personnel and services diverted to a substantially different use $0.00
Improvements to telework capabilities of public employees $0.00
Medical expenses $0.00
Public health expenses $0.00
Distance learning $0.00
Economic support $0.00
Expenses associated with the issuance of tax anticipation notes $0.00
All items not listed above $0.00
Total $0.00
24
i Quarterly Reporting Process
• By September 21, 2020 state must submit detailed
quarterly report (3/1/20 - 6/30/20)
• Next quarterly report (7/1/20 - 9/30/20) due to
federal government by October 13, 2020
• Current guidance requires reporting on funds
expended or obligated for each project or activity
• Detailed list (Name/Description) projects/activities
• Detailed list of loans issued; contracts and grants
awarded; transfers to other government entities; and
direct payments made by recipient over $SoK
�5
Records Retention
• Retain records 5 years after final payment is made;
make available on request for audits
• All documents and financial records sufficient to
establish compliance : (i) Necessary, (2) Not in
recent budget, (3) Incurred 3/1/20 - 12/30/20
• General ledger, subsidiary ledger
• Budget records 2019 and 2020
• Payroll and time keeping records
• Receipts of purchases
• Contracts and subcontracts, including any performance outcomes
• Documentation of reports, audits, monitoring of recipients
• All CRF internal and external e-mail/electronic communications
26
Other CRF Information
• CFDA Number: 21.019
• Funds can be in interest bearing accounts; interest
proceeds must be used for same purposes
• Assets purchased may be retained (e.g. homeless)
• Funds are subject to the Single Audit Act
• Must follow Uniform Guidance regarding
subrecipient monitoring
• Funds may be used to cover expense related to audit
conducted under the Single Audit Act
• Competitive bidding is not required
27
Local Government Unit:
CRFApplications@dof.ca.gov
Federal Reporting/Research Unit:
COVIDFederalTracking@dof.ca.goviiimommum_
GF Realignment Backfill:
CountyGFAllocations@dof.ca.gov
US Treasury/OIG CRF Information: TM
https://home.treasury.gov/policy-issues/cares/state-and-local-
overnments ,