Treasury Issues Guidance and FAQs Surrounding the Coronavirus Relief Fund
Section: Washington Update




Last week the U.S. Treasury Department issued guidance on use of funds provided to state and local governments through the CARES Act $150 billion dollar Coronavirus Relief Fund. While broad in nature, the guidance makes it clear that the funds are NOT to be used for revenue replacement.
 
The CARES Act requires that the payments from the Coronavirus Relief Fund only be used to cover expenses that:
 
  1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
  2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the state or government; and
  3. were incurred during the period that begins on March 1, 2020 and ends on December 30, 2020. 

The guidance document addresses necessary expenditures incurred due to the public health emergency by clarifying that expenditures addressing medical or public health needs are allowable and that expenditures incurred to respond to second-order effects of COVID -19, such as economic support of individuals or businesses, could be allowed. The guidance provides that “the expenditure be reasonably necessary for its intended use in the reasonable judgment of the government officials responsible for spending Fund payments.”
 
The guidance provides that a cost “cannot lawfully be funded using a line item, allotment, or allocation within that budget or the cost is for a substantially different use from any expected use of funds in such a line item, allotment, or allocation.”
 
The guidance further addressed items that could be a covered cost, including things such as health expenses and certain COVID 19 payroll costs. The guidance concludes with a nonexclusive list of activities/items that would NOT be covered such as expenses that have been or will be reimbursed under any federal program and payroll costs of employees whose duties are not substantially related to COVID 19.
 
The Frequently Asked Questions document is brief providing clarification on unspent funds, assets, local government transfers and documentation requirements.
 
Unfortunately, the guidance document likely prompts additional questions and further clarification will be necessary. NASACT is requesting that you forward any questions you may have so that we can provide those to Treasury for clarification.
 
NASACT will continue to inform the membership of any additional guidance as it becomes available.