Article

CARES Act: sorting through the details for state and local governments

The Coronavirus Aid, Relief and Economic Security (CARES) Act enacted on March 27, 2020, provides significant funding to states, local governments and tribes as they navigate through the myriad of operational and financial challenges presented by the coronavirus pandemic.

The Coronavirus Relief Fund received an appropriation of $150 billion for states, local governments, tribes, the District of Columbia and U.S. territories. These funds have been allocated based on predetermined amounts and formulas that result in a minimum of $1.25 billion paid to each state, with higher population states receiving larger amounts. In addition, local governments that support populations over 500,000 will receive a share of this funding, which is also based on population.

Payments received through the relief fund are required to be used as follows:

  • For necessary expenditures incurred due to the COVID-19 public health emergency
  • For costs that were not accounted for in the recipients’ budgets as of March 27, 2020
  • For costs incurred between March 1, 2020 and December 30, 2020

The U.S. Department of Treasury has released guidance in relation to the relief fund, available here:

In addition to the Coronavirus Relief Fund, the CARES Act included $340 billion in emergency appropriations to federal agencies to prevent, prepare for and respond to the coronavirus crisis. Federal agencies can use these appropriations for operations such as salaries and program management as well as granting funds to states, local governments, tribes and other nonfederal entities.

Examples of funding reaching the local government level include:

  • $25 billion in transit assistance from the U.S. Department of Transportation
  • $100 billion in health provider relief from the U.S. Department of Health and Human Services
  • $45 billion in disaster relief from the U.S. Department of Homeland Security (FEMA division)

There has also been a number of appropriations made to other existing programs, including child nutrition, SNAP (food stamps), law enforcement, firefighter assistance, Indian health services, child care block grant, public health, public housing and rental assistance.  

Funds usage resulting from the emergency appropriations will depend on the program requirements passed down from the related federal agency. Some funds may supplement an existing program while others may result in new programs with new requirements.

Sorting through and understanding all of the available funding, including the compliance requirements, can be challenging, and organizations will need to determine how to apply funding to the various expenditures incurred so that payments are fulfilled while still meeting allowability guidelines. One particularly complex area involves the procurement of products and services. There are a number of federal requirements that dictate the specific mandatory contract language as well as any exceptions for using sole-sourced, or noncompetitive, contract awards during the time of a declared emergency. For more information, FEMA has issued some guidance on this subject.

Before accepting federal assistance, organizations should review the requirements involved with the available funding to determine if the terms and conditions can be met. Enforcing compliance policies for the documentation of costs incurred, as well as procurement processes followed, are critical to help ensure that appropriated dollars are used properly.

For more information on this topic, or to learn how Baker Tilly public sector specialists can help,  contact our team.

 

Amanda R. Blomberg
Firm Director, CPA
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