[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Notices]
[Pages 4182-4194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00827]


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DEPARTMENT OF THE TREASURY


Coronavirus Relief Fund for States, Tribal Governments, and 
Certain Eligible Local Governments

AGENCY: Department of the Treasury.

ACTION: Coronavirus Relief Fund program guidance.

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SUMMARY: The Department of the Treasury (Treasury) is re-publishing in 
final form the guidance it previously made available on its website 
regarding the Coronavirus Relief Fund for States, tribal governments, 
and certain eligible local governments.

FOR FURTHER INFORMATION CONTACT: Stephen T. Milligan, Deputy Assistant 
General Counsel (Banking & Finance), 202-622-4051.

SUPPLEMENTARY INFORMATION: Section 601 of the Social Security Act, as 
added by section 5001(a) of Division A of the Coronavirus Aid, Relief, 
and Economic Security Act (``CARES Act'') established the Coronavirus 
Relief Fund (the ``Fund'') and appropriated $150 billion for payments 
by Treasury to States, tribal governments, and certain local 
governments.
    The Secretary of the Treasury has adopted this guidance for 
recipients of payments from the Fund pursuant to his authority under 
the Social Security Act to adopt rules and regulations as may be 
necessary to the efficient administration of the functions with which 
he is charged under the Social Security Act. 42 U.S.C. 1302(a). This 
guidance primarily concerns the use of payments from the Fund set forth 
in section 601(d) of the Social Security Act. Treasury's Office of 
Inspector General (OIG) will use this guidance in its audits of 
recipients' use of funds. Section 601(f)(2) of the Social Security Act 
provides that if the Treasury OIG determines that a recipient of 
payments from the Fund has failed to comply with the use of funds 
provisions of section 601(d), the amount equal to the amount of funds 
used in violation of such subsection shall be booked as a debt of such 
entity owed to the federal government.
    The guidance published below is unchanged from the last version of 
the guidance dated September 2, 2020,\1\ and the frequently asked 
questions document dated October 19, 2020,\2\ each of which was 
published on Treasury's website, except for the following changes. The 
introduction of the guidance and frequently asked questions have been 
modified to reflect this publication in the Federal Register; the 
guidance and frequently asked questions have been revised throughout to 
reflect that the end date of the period during which eligible expenses 
may be incurred has been extended to December 31, 2021; \3\ footnote 2 
of the guidance has been revised to reflect additional restrictions 
imposed by section 5001(b) of Division A the CARES Act; FAQ A.59 has 
been updated to correct the cross-reference to Treasury OIG's FAQs; and 
the application of FAQ B.6 has been clarified. Treasury is also adding 
to the guidance instructions regarding the return to Treasury of unused 
Coronavirus Relief Fund payments.
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    \1\ As noted previously on Treasury's website, on June 30, 2020, 
the guidance provided under ``Costs incurred during the period that 
begins on March 1, 2020, and ends on December 30, 2020'' was 
updated. On September 2, 2020, the ``Supplemental Guidance on Use of 
Funds to Cover Payroll and Benefits of Public Employees'' and 
``Supplemental Guidance on Use of Funds to Cover Administrative 
Costs'' sections were added.
    \2\ As noted previously on Treasury's website, on August 10, 
2020, the frequently asked questions were revised to add Questions 
A.49-52. On September 2, 2020, Questions A.53-56 were added and 
Questions A.34 and A.38 were revised. On October 19, 2020, Questions 
A.57-59 and B.13 were added and Questions A.42, 49, and 53 were 
revised.
    \3\ Section 1001 of Division N of the Consolidated 
Appropriations Act, 2021 amended section 601(d)(3) of the Social 
Security Act by extending the end of the covered period for 
Coronavirus Relief Fund expenditures from December 30, 2020 to 
December 31, 2021.
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Administrative Procedure Act

    The Administrative Procedure Act (APA) provides that the notice, 
public comment, and delayed effective date requirements of 5 U.S.C. 553 
do not apply ``to the extent that there is involved . . . a matter 
relating to agency management or personnel or to public property, 
loans, grants, benefits, or contracts.'' 5 U.S.C. 553(a). The rule 
involves a matter relating to public property, loans, grants, benefits, 
or contracts and is therefore exempt under the terms of the APA.

[[Page 4183]]

Regulatory Flexibility Analysis

    The Regulatory Flexibility Act does not apply to a rulemaking when 
a general notice of proposed rulemaking is not required.

Paperwork Reduction Act

    The final rule contains no requirements subject to the Paperwork 
Reduction Act.

Authority and Issuance

    42 U.S.C. 1302(a).

Coronavirus Relief Fund Guidance for State, Territorial, Local, and 
Tribal Governments

    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 31, 2021.\1\
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    \1\ See Section 601(d) of the Social Security Act, as added by 
section 5001 of the CARES Act and as amended by section 1001 of 
Division N of the Consolidated Appropriations Act, 2021.
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    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 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 31, 2021

    Finally, the CARES Act provides that payments from the Fund may 
only be used to cover costs that were incurred during the period that 
begins on March 1, 2020, and ends on December 31, 2021 (the ``covered 
period''). Putting this requirement together with the other provisions 
discussed above, section 601(d) may be summarized as providing that a 
State, local, or tribal government may use payments from the Fund only 
to cover previously unbudgeted costs of necessary expenditures incurred 
due to the COVID-19 public health emergency during the covered period.
    Initial guidance released on April 22, 2020, provided that the cost 
of an expenditure is incurred when the recipient has expended funds to 
cover the cost. Upon further consideration and informed by an 
understanding of State, local, and tribal government practices, 
Treasury is clarifying that for a cost to be considered to have been 
incurred, performance or delivery must occur during the covered period 
but payment of funds need not be made during that time (though it is 
generally expected that this will take place within 90 days of a cost 
being incurred). For instance, in the case of a lease of equipment or 
other property, irrespective of when payment occurs, the cost of a 
lease payment shall be considered to have been incurred for the period 
of the lease that is within the covered period but not otherwise. 
Furthermore, in all cases it must be necessary that performance or 
delivery take place during the covered period. Thus the cost of a good 
or service received during the covered period will not be considered 
eligible under section 601(d) if there is no need for receipt until 
after the covered period has expired.
    Goods delivered in the covered period need not be used during the 
covered period in all cases. For example, the cost of a good that must 
be delivered in December in order to be available for use in January 
could be covered using payments from the Fund. Additionally, the cost 
of goods purchased in bulk and delivered during the covered period may 
be covered using payments from the Fund if a portion of the goods is 
ordered for use in the covered period, the bulk purchase is consistent 
with the recipient's usual procurement policies and practices, and it 
is impractical to track and record when the items were used. A 
recipient may use payments from the Fund to purchase a durable good 
that is to be used during the current period and in subsequent periods 
if the acquisition in the covered period was necessary due to the 
public health emergency.
    Given that it is not always possible to estimate with precision 
when a good or service will be needed, the touchstone in assessing the 
determination of need for a good or service during the covered period 
will be reasonableness at the time delivery or performance was sought, 
e.g., the time of entry into a procurement contract specifying a time

[[Page 4184]]

for delivery. Similarly, in recognition of the likelihood of supply 
chain disruptions and increased demand for certain goods and services 
during the COVID-19 public health emergency, if a recipient enters into 
a contract requiring the delivery of goods or performance of services 
by December 31, 2021, the failure of a vendor to complete delivery or 
services by December 31, 2021, will not affect the ability of the 
recipient to use payments from the Fund to cover the cost of such goods 
or services if the delay is due to circumstances beyond the recipient's 
control.
    This guidance applies in a like manner to costs of subrecipients. 
Thus, a grant or loan, for example, provided by a recipient using 
payments from the Fund must be used by the subrecipient only to 
purchase (or reimburse a purchase of) goods or services for which 
receipt both is needed within the covered period and occurs within the 
covered period. The direct recipient of payments from the Fund is 
ultimately responsible for compliance with this limitation on use of 
payments from the Fund.

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.
    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 \2\
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    \2\ In addition, pursuant to section 5001(b) of Division A of 
the CARES Act, payments from the Fund are subject to the 
requirements contained in the Further Appropriations Act of 2020 
(Pub. L. 116-94) for funds for programs authorized under section 330 
through 340 of the Public Health Service Act (42 U.S.C. 254 through 
256). Section 5001(b) thereby applies to payments from the Fund the 
general restrictions on the Department of Health and Human Services' 
appropriations. Of particular relevance for the Fund, payments may 
not be expended for an abortion, for health benefits coverage--
meaning a package of services covered by a managed health care 
provider or organization pursuant to a contract or other 
arrangement--that includes coverage of abortion, for the creation of 
a human embryo or embryos for research purposes, or for research in 
which a human embryo is destroyed, discarded, or knowingly subjected 
to risk of injury or death greater than that allowed for research on 
fetuses in utero under 45 CFR 46.204(b) and 42 U.S.C. 289g(b)). The 
prohibition on payment for abortions and health benefits coverage 
that includes coverage of abortion 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. These provisions do not 
prohibit the expenditure by a State, locality, entity, or private 
person of State, local, or private funds (other than a State's or 
locality's contribution of Medicaid matching funds). These 
provisions do not restrict the ability of a managed care provider 
from offering abortion coverage or the ability of a State or 
locality to contract separately with such a provider for such 
coverage with State funds (other than a State's or locality's 
contribution of Medicaid matching funds). 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. Except with 
respect to certain law enforcement and adjudication activities, no 
funds may be used to maintain or establish a computer network unless 
such network blocks the viewing, downloading, and exchanging of 
pornography. No payments from the Fund may be provided to the 
Association of Community Organizations for Reform Now (ACORN) or any 
of its affiliates, subsidiaries, allied organizations, or 
successors. For the full text of these requirements, see Title V of 
Pubic Law 116-94 (133 Stat. 2605 et seq.), available at https://www.congress.gov/116/plaws/publ94/PLAW-116publ94.pdf.
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    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\
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    \3\ See 42 CFR 433.51 and 45 CFR 75.306.
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    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.

[[Page 4185]]

    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.

Supplemental Guidance on Use of Funds To Cover Payroll and Benefits of 
Public Employees

    As discussed in the Guidance above, the CARES Act provides that 
payments from the Fund must be used only to cover costs that were not 
accounted for in the budget most recently approved as of March 27, 
2020. As reflected in the Guidance and FAQs, Treasury has not 
interpreted this provision to limit eligible costs to those that are 
incremental increases above amounts previously budgeted. Rather, 
Treasury has interpreted this provision to exclude items that were 
already covered for their original use (or a substantially similar 
use). This guidance reflects the intent behind the Fund, which was not 
to provide general fiscal assistance to state governments but rather to 
assist them with COVID-19-related necessary expenditures. With respect 
to personnel expenses, though the Fund was not intended to be used to 
cover government payroll expenses generally, the Fund was intended to 
provide assistance to address increased expenses, such as the expense 
of hiring new personnel as needed to assist with the government's 
response to the public health emergency and to allow recipients facing 
budget pressures not to have to lay off or furlough employees who would 
be needed to assist with that purpose.

Substantially Different Use

    As stated in the Guidance above, Treasury considers the requirement 
that payments from the Fund be used only to cover costs that were not 
accounted for in the budget most recently approved as of March 27, 
2020, to be met 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.
    Treasury has provided examples as to what would constitute a 
substantially different use. Treasury provided (in FAQ A.3) that costs 
incurred for a substantially different use would include, for example, 
the costs of redeploying 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.

Substantially Dedicated

    Within this category of substantially different uses, as stated in 
the Guidance above, Treasury has included payroll and benefits 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. The 
full amount of payroll and benefits expenses of substantially dedicated 
employees may be covered using payments from the Fund. Treasury has not 
developed a precise definition of what ``substantially dedicated'' 
means given that there is not a precise way to define this term across 
different employment types. The relevant unit of government should 
maintain documentation of the ``substantially dedicated'' conclusion 
with respect to its employees.
    If an employee is not substantially dedicated to mitigating or 
responding to the COVID-19 public health emergency, his or her payroll 
and benefits expenses may not be covered in full with payments from the 
Fund. A portion of such expenses may be able to be covered, however, as 
discussed below.

Public Health and Public Safety

    In recognition of the particular importance of public health and 
public safety workers to State, local, and tribal government responses 
to the public health emergency, Treasury has provided, as an 
administrative accommodation, that a State, local, or tribal government 
may presume that public health and public safety employees meet the 
substantially dedicated test, unless the chief executive (or 
equivalent) of the relevant government determines that specific 
circumstances indicate otherwise. This means that, if this presumption 
applies, work performed by such employees is considered to be a 
substantially different use than accounted for in the most recently 
approved budget as of March 27, 2020. All costs of such employees may 
be covered using payments from the Fund for services provided during 
the period that begins on March 1, 2020, and ends on December 31, 2021.
    In response to questions regarding which employees are within the 
scope of this accommodation, Treasury is supplementing this guidance to 
clarify that public safety employees would include police officers 
(including state police officers), sheriffs and deputy sheriffs, 
firefighters, emergency medical responders, correctional and detention 
officers, and those who directly support such employees such as 
dispatchers and supervisory personnel. Public health employees would 
include employees involved in providing medical and other health 
services to patients and supervisory personnel, including medical staff 
assigned to schools, prisons, and other such institutions, and other 
support services essential for patient care (e.g., laboratory 
technicians) as well as employees of public health departments directly 
engaged in matters related to public health and related supervisory 
personnel.

Not Substantially Dedicated

    As provided in FAQ A.47, a State, local, or tribal government 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. This means, for example, that a 
government could cover payroll expenses allocated on an hourly basis to 
employees' time dedicated to mitigating or responding to the COVID-19 
public health emergency. This result provides equitable treatment to 
governments that, for example, instead of having a few employees who 
are substantially dedicated to the public health emergency, have many 
employees who have a minority of their time dedicated to the public 
health emergency.

Covered Benefits

    Payroll and benefits of a substantially dedicated employee may be 
covered using payments from the Fund to the extent incurred between 
March 1 and December 31, 2021.
    Payroll includes certain hazard pay and overtime, but not workforce 
bonuses. As discussed in FAQ A.29, hazard pay may be covered using 
payments from the Fund if it is provided for performing hazardous duty 
or work involving physical hardship that in each case is related to 
COVID-19. This means that, whereas payroll and benefits of an employee 
who is substantially dedicated to mitigating or responding to the 
COVID-19 public health emergency may generally be covered in full using 
payments from the Fund, hazard pay specifically may only be covered to 
the extent it is related to COVID-19. For example, a recipient may use 
payments from the Fund to cover hazard pay for a police officer coming 
in close contact with members of the public to enforce public health or

[[Page 4186]]

public safety orders, but across-the-board hazard pay for all members 
of a police department regardless of their duties would not be able to 
be covered with payments from the Fund. This position reflects the 
statutory intent discussed above: the Fund was intended to be used to 
help governments address the public health emergency both by providing 
funds for incremental expenses (such as hazard pay related to COVID-19) 
and to allow governments not to have to furlough or lay off employees 
needed to address the public health emergency but was not intended to 
provide across-the-board budget support (as would be the case if hazard 
pay regardless of its relation to COVID-19 or workforce bonuses were 
permitted to be covered using payments from the Fund).
    Relatedly, both hazard pay and overtime pay for employees that are 
not substantially dedicated may only be covered using the Fund if the 
hazard pay and overtime pay is for COVID-19-related duties. As 
discussed above, governments may allocate payroll and benefits of such 
employees with respect to time worked on COVID-19-related matters.
    Covered benefits include, but are not limited to, the costs of all 
types of leave (vacation, family-related, sick, military, bereavement, 
sabbatical, jury duty), employee insurance (health, life, dental, 
vision), retirement (pensions, 401(k)), unemployment benefit plans 
(federal and state), workers compensation insurance, and Federal 
Insurance Contributions Act (FICA) taxes (which includes Social 
Security and Medicare taxes).

Supplemental Guidance on Use of Funds To Cover Administrative Costs

General

    Payments from the Fund are not administered as part of a 
traditional grant program and the provisions of the Uniform Guidance, 2 
CFR part 200, that are applicable to indirect costs do not apply. 
Recipients may not apply their indirect costs rates to payments 
received from the Fund.
    Recipients may, if they meet the conditions specified in the 
guidance for tracking time consistently across a department, use 
payments from the Fund to cover the portion of payroll and benefits of 
employees corresponding to time spent on administrative work necessary 
due to the COVID-19 public health emergency. (In other words, such 
costs would be eligible direct costs of the recipient). This includes, 
but is not limited to, costs related to disbursing payments from the 
Fund and managing new grant programs established using payments from 
the Fund.
    As with any other costs to be covered using payments from the Fund, 
any such administrative costs must be incurred by December 31, 2021, 
with an exception for certain compliance costs as discussed below. 
Furthermore, as discussed in the Guidance above, as with any other 
cost, an administrative cost that has been or will be reimbursed under 
any federal program may not be covered with the Fund. For example, if 
an administrative cost is already being covered as a direct or indirect 
cost pursuant to another federal grant, the Fund may not be used to 
cover that cost.

Compliance Costs Related to the Fund

    As previously stated in FAQ B.11, recipients are permitted to use 
payments from the Fund to cover the expenses of an audit conducted 
under the Single Audit Act, subject to the limitations set forth in 2 
CFR 200.425. Pursuant to that provision of the Uniform Guidance, 
recipients and subrecipients subject to the Single Audit Act may use 
payments from the Fund to cover a reasonably proportionate share of the 
costs of audits attributable to the Fund.
    To the extent a cost is incurred by December 31, 2021, for an 
eligible use consistent with section 601 of the Social Security Act and 
Treasury's guidance, a necessary administrative compliance expense that 
relates to such underlying cost may be incurred after December 31, 
2021. Such an expense would include, for example, expenses incurred to 
comply with the Single Audit Act and reporting and recordkeeping 
requirements imposed by the Office of Inspector General. A recipient 
with such necessary administrative expenses, such as an ongoing audit 
continuing past December 31, 2021, that relates to Fund expenditures 
incurred during the covered period, must report to the Treasury Office 
of Inspector General by the quarter ending September 2022 an estimate 
of the amount of such necessary administrative expenses.

Instructions for State, Territorial, Local, and Tribal Governments To 
Return Unused Coronavirus Relief Fund Payments to the Department of the 
Treasury

    Any remaining amount of payments from the Fund not used for 
eligible expenses incurred during the covered period must be returned 
to Treasury in one of three ways, set forth below.
    Please note that these instructions are for Fund recipients to 
return the balance of unused Fund payments to Treasury. If the Treasury 
Office of Inspector General determines that a Fund recipient has failed 
to comply with the use restrictions set forth in section 601(d) of the 
Social Security Act, the Fund recipient should follow the instructions 
provided by the Treasury Office of Inspector General for satisfaction 
of the related debt rather than following these instructions.
    1. Fedwire receipts--Treasury can accept Fedwire payments for the 
return of funds to Treasury.
    Please provide the following instructions to your Financial 
Institution for the remittance of Fedwire payments to the Department of 
the Treasury.

                          Fedwire Instructions
------------------------------------------------------------------------
      Fedwire field tag        Fedwire field name   Required information
------------------------------------------------------------------------
{1510{time} ................  Type/Subtype........  1000
{2000{time} ................  Amount..............  (enter payment
                                                     amount)
{3400{time} ................  Receiver ABA routing  021030004
                               number *.
{3400{time} ................  Receiver ABA short    TREAS NYC
                               name.
{3600{time} ................  Business Function     CTR
                               Code.
{4200{time} ................  Beneficiary           820010001000
                               Identifier (account
                               number).
{4200{time} ................  Beneficiary Name....  DEPARTMENT OF THE
                                                     TREASURY
{5000{time} ................  Originator..........  (enter the name of
                                                     the originator of
                                                     the payment)
{6000{time} ................  Originator to         (enter information
                               Beneficiary           to identify the
                               Information--Line 1.  purpose of the
                                                     payment)
{6000{time} ................  Originator to         (enter information
                               Beneficiary           to identify the
                               Information--Line 2.  purpose of the
                                                     payment)
{6000{time} ................  Originator to         (enter information
                               Beneficiary           to identify the
                               Information--Line 3.  purpose of the
                                                     payment)

[[Page 4187]]

 
{6000{time} ................  Originator to         (enter information
                               Beneficiary           to identify the
                               Information--Line 4.  purpose of the
                                                     payment)
------------------------------------------------------------------------
* The financial institution address for Treasury's routing number is 33
  Liberty Street, New York, NY 10045.

    2. ACH receipts --Treasury can accept ACH payment for the return of 
funds to Treasury.
    Please provide the following instructions to your Financial 
Institution for the remittance of Automated Clearing House (ACH) 
credits to the Department of the Treasury.

                                             ACH Credit Instructions
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    NACHA record type code        NACHA field       NACHA data element name            Required information
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5.............................               3  Company Name...................  (enter the name of the payor)
5.............................               6  Standard Entry Class Code......  CCD
5.............................               9  Effective Entry Date...........  (enter intended settlement
                                                                                  date)
6.............................               2  Transaction Code *.............  22
6.............................           3 & 4  Receiving DFI Identification     051036706
                                                 (ABA routing #).
6.............................               5  DFI Account Number.............  820010001000
6.............................               6  Amount.........................  (enter payment amount)
6.............................               8  Receiving Company Name.........  Department of the Treasury
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* ACH debits are not permitted to this ABA routing number. All debits received will be automatically returned.

    3. Check receipts (not preferred)--Checks may be sent to one of the 
following addresses (depending on the method of delivery).

                    U.S. Mail/Parcel Delivery Address
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                                             Parcel delivery address--
      U.S. Mail address--processing                 processing
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Fiscal Accounting Program, Admin &        Fiscal Accounting Program,
 Training Group.                           Admin & Training Group.
Avery Street A3-G, Bureau of the Fiscal   Avery Street A3-G, Fiscal
 Service, P.O. Box 1328, Parkersburg, WV   Service Warehouse &
 26106-1328.                               Operations Center Dock 1, 257
                                           Bosley Industrial Park Drive,
                                           Parkersburg WV 26106.
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Frequently Asked Questions

    The following answers to frequently asked questions supplement 
Treasury's Coronavirus Relief Fund Guidance for State, Territorial, 
Local, and Tribal Governments.

A. Eligible Expenditures

1. 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.
2. 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.
3. 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.
4. 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

[[Page 4188]]

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.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
11. 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.
12. 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 31, 2021, is an eligible expense.
13. 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.
14. 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.
15. 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.
16. Are expenses associated with contact tracing eligible?
    Yes, expenses associated with contact tracing are eligible.

[[Page 4189]]

17. 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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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.
24. 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.
25. 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.
26. 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.
27. 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.
28. 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

[[Page 4190]]

COVID-19 treatment capacity or improve mitigation measures, including 
related construction costs.
29. 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.
30. The Guidance provides that ineligible expenditures include 
``[p]ayroll 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.
31. 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.

32. 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.
33. 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.
34. 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, such as restrictions on reopening that do not directly 
concern the use of funds, are not permissible.
35. 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.
36. 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.
37. 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.
38. May payments from the Fund be used to cover across-the-board hazard 
pay for employees working during a state of emergency?
    No. Hazard pay means additional pay for performing hazardous duty 
or work involving physical hardship, in each case that is related to 
COVID-19. Payments from the fund may only be used to cover such hazard 
pay.
39. 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.
40. 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 31, 2021, 
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

[[Page 4191]]

Security Act. Any amounts not repaid by the borrower until after 
December 31, 2021, must be returned to Treasury upon receipt by the 
unit of government lending the funds.
41. 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.
42. 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, including FEMA's 
Emergency Management Performance Grant (EMPG) and EMPG Supplemental 
programs, 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.
43. 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.
44. 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.
45. 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 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.
46. 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.
47. 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 31, 2021. 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.
48. 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.
49. Are States permitted to use Coronavirus Relief Fund payments to 
satisfy non-federal matching requirements under the Stafford Act, 
including ``lost wages assistance'' authorized by the Presidential 
Memorandum on Authorizing the Other Needs Assistance Program for Major 
Disaster Declarations Related to Coronavirus Disease 2019 (August 8, 
2020)?
    Yes. As previous guidance has stated, 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. States are fully permitted to use payments from 
the Fund to satisfy 100% of their cost share for lost wages assistance 
recently made available under the Stafford Act. If a State makes a 
payment to an individual under the ``lost wages assistance'' program 
and later determines that such individual was ineligible for the 
program, the ineligibility determination has the following 
consequences:
     The State incurs an obligation to FEMA in the amount of 
the payment to the ineligible individual. A State's obligation to FEMA 
for making an improper payment to an individual under the ``lost wages 
assistance'' program is not incurred due to the public health emergency 
and, therefore, payments made pursuant to this obligation would not be 
an eligible use of the Fund.
     The ``lost wages assistance'' payment to the ineligible 
individual would be deemed to be an ineligible

[[Page 4192]]

expense for purposes of the Fund, and any amount charged to the Fund 
(e.g., to satisfy the initial non-federal matching requirement) would 
be subject to recoupment.
50. At what point would costs be considered to be incurred in the case 
of a grant made by a State, local, or tribal government to cover 
interest and principal amounts of a loan, such as might be provided as 
part of a small business assistance program in which the loan is made 
by a private institution?
    A grant made to cover interest and principal costs of a loan, 
including interest and principal due after the period that begins on 
March 1, 2020, and ends on December 31, 2021 (the ``covered period''), 
will be considered to be incurred during the covered period if (i) the 
full amount of the loan is advanced to the borrower within the covered 
period and (ii) the proceeds of the loan are used by the borrower to 
cover expenses incurred during the covered period. In addition, if 
these conditions are met, the amount of the grant will be considered to 
have been used during the covered period for purposes of the 
requirement that expenses be incurred within the covered period. Such a 
grant would be analogous to a loan provided by the Fund recipient 
itself that incorporates similar loan forgiveness provisions. As with 
any other assistance provided by a Fund recipient, such a grant would 
need to be determined by the recipient to be necessary due to the 
public health emergency.
51. If governments use Fund payments as described in the Guidance to 
establish a grant program to support businesses, would those funds be 
considered gross income taxable to a business receiving the grant under 
the Internal Revenue Code (Code)?
    Please see the answer provided by the Internal Revenue Service 
(IRS) available at https://www.irs.gov/newsroom/cares-act-coronavirus-relief-fund-frequently-asked-questions.
52. If governments use Fund payments as described in the Guidance to 
establish a loan program to support businesses, would those funds be 
considered gross income taxable to a business receiving the loan under 
the Code?
    Please see the answer provided by the IRS available at https://www.irs.gov/newsroom/cares-act-coronavirus-relief-fund-frequently-asked-questions.
53. May Fund recipients incur expenses associated with the safe 
reopening of schools?
    Yes, payments from the Fund may be used to cover costs associated 
with providing distance learning (e.g., the cost of laptops to provide 
to students) or for in-person learning (e.g., the cost of acquiring 
personal protective equipment for students attending schools in-person 
or other costs associated with meeting Centers for Disease Control 
guidelines).
    Treasury recognizes that schools are generally incurring an array 
of COVID-19-related expenses to either provide distance learning or to 
re-open. To this end, as an administrative convenience, Treasury will 
presume that expenses of up to $500 per elementary and secondary school 
student are eligible expenditures, such that schools do not need to 
document the specific use of funds up to that amount.
    If a Fund recipient avails itself of the presumption in accordance 
with the previous paragraph with respect to a school, the recipient may 
not also cover the costs of additional re-opening aid to that school 
other than those associated with the following, in each case for the 
purpose of addressing COVID-19:
     Expanding broadband capacity;
     hiring new teachers;
     developing an online curriculum;
     acquiring computers and similar digital devices;
     acquiring and installing additional ventilation or other 
air filtering equipment;
     incurring additional transportation costs; or
     incurring additional costs of providing meals.
    Across all levels of government, the presumption is limited to $500 
per student, e.g., if a school is funded by a state and a local 
government, the presumption claimed by each recipient must add up to no 
more than $500. Furthermore, if a Fund recipient uses the presumption 
with respect to a school, any other Fund recipients providing aid to 
that school may not use the Fund to cover the costs of additional aid 
to schools other than with respect to the specific costs listed above.
    The following examples help illustrate how the presumption may or 
may not be used:
    Example 1: State A may transfer Fund payments to each school 
district in the State totaling $500 per student. State A does not need 
to document the specific use of the Fund payments by the school 
districts within the State.
    Example 2: Suppose State A from example 1 transferred Fund payments 
to the school districts in the State in the amount of $500 per 
elementary and secondary school student. In addition, because State A 
is availing itself of the $500 per elementary and secondary school 
student presumption, State A also may use Fund payments to expand 
broadband capacity and to hire new teachers, but it may not use Fund 
payments to acquire additional furniture.
54. May Fund recipients upgrade critical public health infrastructure, 
such as providing access to running water for individuals and families 
in rural and tribal areas to allow them to maintain proper hygiene and 
defend themselves against the virus?
    Yes, fund recipients may use payments from the Fund to upgrade 
public health infrastructure, such as providing individuals and 
families access to running water to help reduce the further spread of 
the virus. As required by the CARES Act, expenses associated with such 
upgrades must be incurred by December 31, 2021. Please see Treasury's 
Guidance as updated on June 30 regarding when a cost is considered to 
be incurred for purposes of the requirement that expenses be incurred 
within the covered period.
55. How does a government address the requirement that the allowable 
expenditures are not accounted for in the budget most recently approved 
as of March 27, 2020, once the government enters its new budget year on 
July 1, 2020 (for governments with June 30 fiscal year ends) or October 
1, 2020 (for governments with September 30 year ends)?
    As provided in the Guidance, 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.
    Furthermore, the budget most recently approved as of March 27, 
2020, provides the spending baseline against which expenditures should 
be compared for purposes of determining whether they may be covered 
using payments from the Fund. This spending baseline will carry forward 
to a subsequent budget year if a Fund recipient enters a different 
budget year between March 27, 2020 and December 31, 2021. The

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spending baseline may be carried forward without adjustment for 
inflation.
56. Does the National Environmental Policy Act, 42 U.S.C. 4321 et seq, 
(NEPA) apply to projects supported by payments from the Fund?
    NEPA does not apply to Treasury's administration of the Fund. 
Projects supported with payments from the Fund may still be subject to 
NEPA review if they are also funded by other federal financial 
assistance programs
57. Public universities have incurred expenses associated with 
providing refunds to students for education-related expenses, including 
tuition, room and board, meal plans, and other fees (such as activities 
fees). Are these types of public university student refunds eligible 
uses of Fund payments?
    If the responsible government official determines that expenses 
incurred to refund eligible higher education expenses are necessary and 
would be incurred due to the public health emergency, then such 
expenses would be eligible as long as the expenses satisfy the other 
criteria set forth in section 601(d) of the Social Security Act. 
Eligible higher education expenses may include, in the reasonable 
judgment of the responsible government official, refunds to students 
for tuition, room and board, meal plan, and other fees (such as 
activities fees). Fund payments may not be used for expenses that have 
been or will be reimbursed by another federal program (including, for 
example, the Higher Education Emergency Relief Fund administered by the 
Department of Education).
58. May payments from the Fund be used for real property acquisition 
and improvements and to purchase equipment to address the COVID-19 
public health emergency?
    The expenses of acquiring or improving real property and of 
acquiring equipment (e.g., vehicles) may be covered with payments from 
the Fund in certain cases. For example, Treasury's initial guidance 
referenced coverage of the costs of establishing temporary public 
medical facilities and other measures to increase COVID-19 treatment 
capacity, including related construction costs, as an eligible use of 
funds. Any such use must be consistent with the requirements of section 
601(d) of the Social Security Act as added by the CARES Act.
    As with all uses of payments from the Fund, the use of payments to 
acquire or improve property is limited to that which is necessary due 
to the COVID-19 public health emergency. In the context of acquisitions 
of real estate and acquisitions of equipment, this means that the 
acquisition itself must be necessary. In particular, a government must 
(i) determine that it is not able to meet the need arising from the 
public health emergency in a cost-effective manner by leasing property 
or equipment or by improving property already owned and (ii) maintain 
documentation to support this determination. Likewise, an improvement, 
such as the installation of modifications to permit social distancing, 
would need to be determined to be necessary to address the COVID-19 
public health emergency.
    Previous guidance regarding the requirement that payments from the 
Fund may only be used to cover costs that were incurred during the 
period that begins on March 1, 2020, and ends on December 31, 2021 
focused on the acquisition of goods and services and leases of real 
property and equipment, but the same principles apply to acquisitions 
and improvements of real property and acquisitions of equipment. Such 
acquisitions and improvements must be completed and the acquired or 
improved property or acquisition of equipment be put to use in service 
of the COVID-19-related use for which it was acquired or improved by 
December 30. Finally, as with all costs covered with payments from the 
Fund, such costs must not have been previously accounted for in the 
budget most recently approved as of March 27, 2020.
59. If a small business received a Small Business Administration (SBA) 
Payment Protection Program (PPP) or Economic Injury Disaster Loan 
(EIDL) grant or loan due to COVID-19, may the small business also 
receive a grant from a unit of government using payments from the Fund?
    Receiving a PPP or EIDL grant or loan for COVID-19 would not 
necessarily make a small business ineligible to receive a grant from 
Fund payments made to a recipient. As discussed in previous Treasury 
guidance on use of the Fund, a recipient's small business assistance 
program should be tailored to assist those businesses in need of such 
assistance. In assessing the business' need for assistance, the 
recipient would need to take into account the business' receipt of the 
PPP or EIDL loan or grant. If the business has received a loan from the 
SBA that may be forgiven, the recipient should assume for purposes of 
determining the business' need that the loan will be forgiven. In 
determining the business' eligibility for the grant, the recipient 
should not rely on self-certifications provided to the SBA.
    If the grant is being provided to the small business to assist with 
particular expenditures, the business must not have already used the 
PPP or EIDL loan or grant for those expenditures. The assistance 
provided from the Fund would need to satisfy all of the other 
requirements set forth in section 601(d) of the Social Security Act as 
discussed in Treasury's guidance and FAQs, and the business would need 
to comply with all applicable requirements of the PPP or EIDL program.
    Treasury's Office of Inspector General has provided the following 
guidance in its FAQ no. 75 on reporting and recordkeeping that would 
apply to the recipient:
    The prime recipient is responsible for determining the level and 
detail of documentation needed from the sub-recipient of small business 
assistance to satisfy [the requirements of section 601(d) of the Social 
Security Act], however, there would need to be some proof that the 
small business was impacted by the public health emergency and was thus 
eligible for the CRF funds.
    In the above OIG FAQ, ``sub-recipient'' refers to the beneficiary 
of the assistance, i.e., the small business.

B. Questions Related to Administration of Fund Payments

1. 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 31, 2021, as required by the 
statute, those funds must be returned to the Department of the 
Treasury.
2. 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.
3. May recipients deposit Fund payments into interest bearing accounts?
    Yes, provided that if recipients separately invest amounts received 
from

[[Page 4194]]

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.
4. 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.
5. 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 31, 2021, 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.
6. Are Fund payments to State, territorial, local, and tribal 
governments subject to the provisions of the Uniform Guidance 
applicable to grant agreements?
    No. Fund payments made by Treasury to State, territorial, local, 
and Tribal governments do not entail grant agreements and thus the 
provisions of the Uniform Guidance (2 CFR part 200) applicable to grant 
agreements do not apply. The payments constitute ``other financial 
assistance'' under 2 CFR 200.40.
7. 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 CFR 200.303 regarding 
internal controls, Sec. Sec.  200.330 through 200.332 regarding 
subrecipient monitoring and management, and subpart F regarding audit 
requirements.
8. Are Fund payments subject to other requirements of the Uniform 
Guidance?
    Fund payments are subject to the following requirements in the 
Uniform Guidance (2 CFR part 200): 2 CFR 200.303 regarding internal 
controls, 2 CFR 200.330 through 200.332 regarding subrecipient 
monitoring and management, and subpart F regarding audit requirements.
9. 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.
10. 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 CFR part 200, subpart F re: 
audit requirements. Subrecipients are subject to a single audit or 
program-specific audit pursuant to 2 CFR 200.501(a) when the 
subrecipients spend $750,000 or more in federal awards during their 
fiscal year.
11. 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 CFR 200.425.
12. 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.
13. What are the differences between a subrecipient and a beneficiary 
under the Fund for purposes of the Single Audit Act and 2 CFR part 200, 
subpart F regarding audit requirements?
    The Single Audit Act and 2 CFR part 200, subpart F regarding audit 
requirements apply to any non-federal entity, as defined in 2 CFR 
200.69, that receives payments from the Fund in the amount of $750,000 
or more. Non-federal entities include subrecipients of payments from 
the Fund, including recipients of transfers from a State, territory, 
local government, or tribal government that received a payment directly 
from Treasury. However, subrecipients would not include individuals and 
organizations (e.g., businesses, non-profits, or educational 
institutions) that are beneficiaries of an assistance program 
established using payments from the Fund. The Single Audit Act and 2 
CFR part 200, subpart F regarding audit requirements do not apply to 
beneficiaries.
    Please see Treasury Office of Inspector General FAQs at https://www.treasury.gov/about/organizational-structure/ig/Audit%20Reports%20and%20Testimonies/OIG-CA-20-028.pdf regarding 
reporting in the GrantSolutions portal.

    Dated: January 11, 2021.
Alexandra H. Gaiser,
Executive Secretary.
[FR Doc. 2021-00827 Filed 1-14-21; 8:45 am]
BILLING CODE 4810-25-P