[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
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Fedwire field tag Fedwire field name Required information
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{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)
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* 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
----------------------------------------------------------------------------------------------------------------
NACHA record type code NACHA field NACHA data element name Required information
----------------------------------------------------------------------------------------------------------------
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
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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