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Item 9ACITY OF SOUTHLAK To: Subject: MEMORANDUM May 26, 2020 Shana Yelverton, City Manager Sharen Jackson, Chief Financial Officer An Interlocal Cooperation Agreement with Tarrant County for municipal direct expense funding. Action Requested: Approval an Interlocal Cooperation Agreement with Tarrant County for municipal direct expense funding under the CARES Act. Background Information: The purpose of this item is to seek Council approval of an interlocal cooperation agreement with Tarrant County to provide for the distribution of funds under the federal CARES Act. The Tarrant County Commissioners Court authorized a $55 per capita distribution of CARES Act Coronavirus Relief Funds (CRF) to partner cities that did not receive a direct distribution. Based on population data received from the NCTCOG, Tarrant County calculated the distribution to each city except the City of Fort Worth, who obtained their own direct funding. Staff is preparing a spending proposal for these funds, based on the guidelines provided by the U.S. Department of the Treasury. Funds may be used as reimbursement for COVID-related expenditures or anticipated eligible expenses through December 31, 2020. Funds may not be used (at this time) to offset City revenue loss attributable to the pandemic. Financial Considerations: Coronavirus Relief Funding up to $1.6 million Strategic Link: B2: Collaborate with select partners to implement service solutions F1: Adhere to financial management principles and budget Citizen Input/ Board Review: None required Legal Review: N/A Page 2 of 2 Alternatives: Deny the interlocal agreement which would result in the city not being eligible to receive the allocation from Tarrant County. Supporting Documents: Letter from GK Maenius, Tarrant County Administrator Interlocal Agreement Guidance and FAQs regarding Tarrant County distribution Coronavirus Relief Fund Guidance and FAQs from the U.S. Department of the Treasury Staff Recommendation: Approval of interlocal agreement MAENIUS COUNTY ADMINISTRATOR Ama�� On May 12, 2020, the Tarrant County Commissioners Court approved the distribution of CARES Act Coronavirus Relief Funds (CRF) to our city partners who did not get a direct CRF distribution. As you are aware, the State of Texas decided not to provide a direct CRF funds distribution for municipalities within Tarrant County. Many cities in Texas will receive a direct distribution of $55 per capita from the State. 111sing the state' s distribution guidelines, the Commissioners Court approved a $55 per capita municipal CRF funds distribution method for the portion of each city's population residing in Tarrant County with the exception of Fort Worth. We used 2019 NCTCOG population data that includes split cities information, The County will distribute $61,308,720 to our non -direct distribution cities. A signed interlocal agreement, budget of proposed expenditures, and regular expenditure reporting will be required from each city in order to receive CRF distribution. The County retains the responsibility of overseeing the proper usage of CRF funds. The funds may be used for expenses the city incurred directly or may incur due to the COVID-19 pandemic. Updated CRF guidance is made available frequently on the U.S. Treasury website. Along with this letter, I am including the following items: • an interlocal agreement for your city to execute; • CRF guidance based on questions received from Tarrant County cities; and • CRF guidance and FAQ documents from the U.S. Treasury, available as of the date of this letter. Please execute three (3) originals of the interlocal agreement and return it to my office, Once we receive the agreement, we will have the Commissioners Court execute it. If you need additional information, please contact us. TARRANT COUNTY ADMINISTRATION BUILDING 100 E. WEATHERFORD, FORT WORTH, TEXAS 817/884-1733 FAX 817/884-1702 INTERLOCAL COOPERATION AGREEMENT FOR MUNICIPAL DIRECT EXPENSE FUNDING As provided for by Chapter 791 of the Texas Government Code, this Interlocal Cooperation Agreement ("Agreement") is entered into by and between. Tarrant County, Texas (the "County") and the City of Southlake, Texas (the "City") and shall be effective on the date that the signature of the last party is affixed. The County and the City have reviewed the Agreement, and each make the following findings: WHEREAS, on March 11, 2020, the World Health Organization declared COVID-1.9 a worldwide pandemic; and WHEREAS, President Donald Trump, Governor Greg Abbott, and County Judge Glen Whitley have issued Declarations of Disaster for the United States, the State of Texas, and the COUNTY, respectively; an WHEREAS, on March 27, 2020, President Donald Trump signed the Coronavirus Aid Relief and Economic Security Act ("CARES ACT") providing financial aid to those impacted by the COVID-1.9 pandemic, including local governments; and WHEREAS, the COUNTY has received CARES Act funds to reduce the impact of necessary expenditures incurred due to the public health emergency with respect to COVID-19; and WHEREAS, on May 12, 2020, the Tarrant County Commissioners Court designated a portion of its CARES Act funds to provide FIFTY-FIVE DOLLARS ($55) per capita for direct COVID-19 related expenditures to municipalities located in Tarrant County ("Direct Costs Program"); and WHEREAS, the 2019.population of the City that resides in Tarrant County, as reported by the North Central Texas Council of Governments, is 30,010; and WHEREAS, assisting municipalities within the County in recovering their costs directly incurred in responding to the COVID-1.9 emergency is a legitimate and lawful use of the CARES ACT funding. NOW, THEREFORE, for and in consideration of the mutual undertaking hereinafter set forth and for adequate consideration given, the County and City agree to the following: 1. Grant and Funding to City. Subject to the terms and conditions of this Agreement, the County agrees to grant and transfer to the City the sum of ONE MILLION SIX HUNDRED FIFTY THOUSAND FIVE HUNDRED FIFTY DOLLARS ($1,650,550) of its CARES ACT funding ("Municipal Funds"). The City agrees to deposit these Municipal Funds into a separate, segregated account created solely for holding and dispersing these Municipal Funds. If Municipal Funds are deposited into an interest-bearing account, all interest earned must be used exclusively as outlined in item two below for COVID-19 expenditures already paid and incurred, and for expenditures to assist the City with its ongoing responses to COVID-19 as detailed in the CARES ACT. 2. Use of Municipal Funds. The City may use its Municipal Funds to reimburse itself for COVID-1.9 expenditures already paid and incurred, and for expenditures to assist with its ongoing response to COVID-19 as detailed in the CARES ACT, the Direct Costs Program, the U.S. Department of Treasury's Coronavirus Relief Fund ("CRF") Guidance for State, Territorial, Local, and Tribal Governments, and this Agreement. It is the responsibility of the City to remain informed of and act in accordance with all updates or amendments to CARES ACT and U.S. Department of Treasury CRF Guidance. City's Obligations relating to its Use of the Municipal Funds. The City agrees to: a) only use the Municipal Funds in compliance with this Agreement and for eligible expenditures related to the COVID-19 emergency; b) reimburse and return to the Municipal Funds account within thirty days of notice by County any portion of the Municipal Funds that the County, the U.S. Department of Treasury, or their designee, deems were not used for COVID-19 purposes, or not used pursuant to the terms of this Agreement, or if the City's Municipal Funds account is already closed out, the reimbursement and return of the ineligible expenditure shall be made to the County; C) document and justify that each expenditure from its Municipal Funds was an. eligible expenditure under this Agreement and the CARES ACT. All documentation and the final report of expenditures shall be delivered to the County no later than January 15, 2021, and shall be kept by the City for a minimum of four years from the close of the Direct Costs Program; d) allow inspection of all documentation and records related to its expenditure of its Municipal Funds by the County or the U.S. Department of Treasury upon reasonable request; e) use the Municipal. Funds only for eligible expenditures made between March 1, 2020 and 11:59 p.m., December 30, 2020; f) by November 1, 2020, provide to the County a report of all funds the City determines it may be unable to spend prior to December 30, 2020. Any and all of such funds may be collected and redistributed at County's discretion; g) return and re pay within thirty days to the County any Municipal Funds not expended by 11:59 p.m., December 30, 2020; h) acknowledge and recognize that the source of these Municipal Funds is Tarrant County and its CARES ACT allocation for any public programs or initiatives using these Municipal Funds; i) coordinate with the County any public programs or initiatives so that no duplication of services, initiatives, or programs occurs. 4. Reports. The City shall provide to the County, within thirty (30) days of award, a Proposed Budget for use of the funds. The City shall also provide expenditure reports starting 60 days after award and continuing for every 30 -day period until December 31, 2020. 5. Eligibility Issues. If the City is not sure that an expenditure will qualify, it should seek an opinion from its City Attorney prior to making the expenditure. 6. Nature of Funding. The CARES ACT funding is being received from the County to the City as a sub -recipient. As a sub -recipient of CARES ACT funding the City acknowledges that its use of the funds is subject to the same terms and conditions as the County's use of such funds. The City hereby agrees to comply with all terms and conditions of the CARES ACT funding, and to hold the County harmless against any repayments, penalties, or interest incurred as a result of the City's failure to comply with all terms and conditions of the CARES ACT funding. Funds spent in non-compliance with the 2 CARES ACT are subject to recapture by the County for return to the Direct Costs Program or for return to the U.S. Treasury Department. 7. Attorney's Fees and Costs. In accordance with the Program, the County shall be entitled to recover its reasonable and necessary attorney's fees and costs against the City if it is required to undertake litigation to enforce the terms of this Agreement to the extent allowed by law. 8. Law and Venue. The laws of the State of Texas shall govern this Agreement, except where clearly superseded by federal law. Exclusive venue of any dispute shall be in a state court of competent jurisdiction in Tarrant County, Texas. No Assignment. The City may not assign this Agreement. 10. Entire Agreement. This Agreement supersedes and constitutes a merger of all prior oral and/or written agreements and understandings of the parties on the subject matter of this Agreement and is binding on the parties and their legal representatives, receivers, executors, successors, agents, and assigns. 11. Amendment. Any amendment of this Agreement must be by written instrument dated and signed by both parties. 12. Severability. No partial invalidity of this Agreement shall affect the remainder unless the public purpose to be served hereby is so greatly diminished thereby as to frustrate the object of this Agreement. 13. Waiver. No waiver by either party of any provision of this Agreement shall be effective unless in writing, and such waiver shall not be construed as or implied to be a subsequent waiver of that provision or any other provision. TARRANT COUNTY, TEXAS By: B. Glen Whitley, County Judge Date 3 CITY OF SOUTHLAKE, TEXAS By: City's Authorized Signatory Printed Name Date ATTEST: City Secretary APPROVED AS TO FORM: CERTIFICATION OF AVAILABLE FUNDS $ Criminal District Attorney's Office* Tarrant County Auditor *By law, the Criminal District Attorney's Office may only approve contracts for its clients. We reviewed this document as to form from our client's legal perspective. Other parties may not rely on this approval. Instead those parties should seek contract review from independent counsel. 4 Tarrant County Direct Costs Program General Guidelines and FAQ General Guidelines Funds may only be used to cover expenses that: 1. Are necessary and eligible 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; 3. Are not duplicated with any other Federal reimbursement request, such as FEMA -PA; and 4. Were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Funds may not be used for: 1. Revenue replacement; or 2. Property tax payments, or to pay state taxes (franchise) or fees to cities/county/state. Frequently Asked Questions How were the population numbers in the interlocal agreements determined? Tarrant County used 2019 NCTCOG population data to determine municipal distribution amounts under the Direct Costs Program. Other data sources were evaluated, but only NCTCOG population estimates included current, split city population counts. The split cities will only receive funding for the portion of their population inside Tarrant County. Why was $55 per capita used to calculate the distribution to cities? The Commissioners Court used the per capita distribution strategy used by the State of Texas. Will school districts have access to any of these funds through their respective city(ies)? Do cities need to address school district requests or will school districts receive funding from other sources? It is not the County's intent for funds to go to school districts. School districts should contact the Texas Education Agency (TEA) with questions or for guidance related to CARES Act funding. What type of documentation requirements does Tarrant County have for using the CARES Act Funds? How often will jurisdictions have to submit this documentation? Some of this information is provided in the Interlocal Agreement; however, the County Auditor's and County Administrator's Offices will be working with cities to outline documentation needs and transmission requirements. Common governmental accounting practices will be utilized while considering federal requirements. Additionally, cities will be required to follow uniform guidance for Federal grants, as outlined in the Code of Federal Regulations, 2 CFR Part 200. Do all the Direct Costs Program funds expensed have to have occurred within each respective city and within Tarrant County? Generally, yes, but the County is open to discussing this issue. It is understood that the County may need to work with split cities to address their individual situations. The table below provides information based on questions received from cities. The examples are not an exhaustive list; the County may provide updates as additional information is received. Examples of Eligible and Ineligible Expenses COVID-19 Expenses Response Attorney fees If the fees are directly related to COVID-19 issues, they may be allowed with proper documentation. COVID-19 related overtime Yes Pandemic time off, hazard pay, federally Yes. Expenses of providing paid sick and paid family and mandated sick leave and FMA benefits medical leave to public employees to enable compliance with COVID-19 public health precautions. Yes. Payroll expenses for public safety, public health, health COVID dedicated payroll expenses care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID19 public health emergency. Temporary employees Yes Unemployment charges for furloughed or We currently do not have guidance on this issue. laid -off employees Employee telecommuting enhancements Yes Utility billing late payment penalties and This could be a revenue issue since the city could waive them. interest Other utility assistance programs are available. Testing and quarantine costs for first Yes responders and employees Self-insurance medical costs for COVID- Yes 19 employees Employee and customer social distancing Temporary signage, barriers, shields, tents, etc. that encourage or provide social distancing are allowed. Hand sanitizer, masks, face shields, Yes owns, gloves, thermometers, wipes, etc. Disinfection supplies and/or services Yes Advertising and marketing materials Yes Interpretation services Yes Drop boxes for customers Yes Business discounts at conference center This could be a revenue issue and not allowed. Infrastructure needs If you would like to include them in your budget proposal, we will research their eligibility. Yes. Expenses for food delivery to residents, including, for Food delivery example, senior citizens and other vulnerable populations, to enable compliance with COVID-19 public health precautions. Yes. Expenses for care for homeless populations provided to Care of homeless populations mitigate COVID-19 effects and enable compliance with COVID- 19 public health precautions. Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments April 22, 2020 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— 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 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 ' See Section 601(d) of the Social Security Act, as added by section 5001 of the CARES Act. 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 30, 2020 A cost is "incurred" when the responsible unit of government has expended funds to cover the cost. Nonexclusive examples of eligible expenditures Eligible expenditures include, but are not limited to, payment for: 1. Medical expensessuch 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 expensesfor 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 ofe conomic 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 expenditurres2 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 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. 2 In addition, pursuant to section 5001(b) of the CARES Act, payments from the Fund may not be expended for an elective abortion or on research in which a human embryo is destroyed, discarded, or knowingly subjected to risk of injury or death. The prohibition on payment for abortions 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. 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. 'See 42 C.F.R. § 433.51 and 45 C.F.R. § 75.306. 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. M Coronavirus Relief Fund Frequently Asked Questions Updated as of May 4, 2020 The following answers to frequently asked questions supplement Treasury's Coronavirus Relief Fund ("Fund") Guidance for State, Territorial, Local, and Tribal Governments, dated April 22, 2020, ("Guidance").' Amounts paid from the Fund are subject to the restrictions outlined in the Guidance and set forth in section 601(d) of the Social Security Act, as added by section 5001 of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Eligible Expenditures Are governments required to submit proposed expenditures to Treasury for approval? No. Governments are responsible for making determinations as to what expenditures are necessary due to the public health emergency with respect to COVID-19 and do not need to submit any proposed expenditures to Treasury. The Guidance says that funding can be used to meet payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. How does a government determine whether payroll expenses for a given employee satisfy the "substantially dedicated" condition? The Fund is designed to provide ready funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency. For this reason, and as a matter of administrative convenience in light of the emergency nature of this program, a State, territorial, local, or Tribal government may presume that payroll costs for public health and public safety employees are payments for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency, unless the chief executive (or equivalent) of the relevant government determines that specific circumstances indicate otherwise. The Guidance says that a cost was not accounted for in the most recently approved budget if the cost is for a substantially different use from any expected use of funds in such a line item, allotment, or allocation. What would qualify as a "substantially different use"forpurposes 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 ' The Guidance is available at https://bonie.treasuryy.gov/system/files/136/Coronaviius-belief-Fund-Guidance-fcr- State-Territorial-Local-and-Tribal-Governments. pdf. 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. May a State receiving a payment transfer funds to a local government? Yes, provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act. Such funds would be subject to recoupment by the Treasury Department if they have not been used in a manner consistent with section 601(d) of the Social Security Act. May a unit of local government receiving a Fund payment transfer funds to another unit of government? Yes. For example, a county may transfer funds to a city, town, or school district within the county and a county or city may transfer funds to its State, provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example, a transfer from a county to a constituent city would not be permissible if the funds were intended to be used simply to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify as an eligible expenditure. Is a Fund payment recipient required to transfer funds to a smaller, constituent unit of government within its borders? No. For example, a county recipient is not required to transfer funds to smaller cities within the county's borders. Are recipients required to use other federal funds or seek reimbursement under other federal programs before using Fund payments to satisfy eligible expenses? No. Recipients may use Fund payments for any expenses eligible under section 601(d) of the Social Security Act outlined in the Guidance. Fund payments are not required to be used as the source of funding of last resort. However, as noted below, recipients may not use payments from the Fund to cover expenditures for which they will receive reimbursement. Are there prohibitions on combining a transaction supported with Fund payments with other CARES Act funding or COVID-19 relief Federal funding? Recipients will need to consider the applicable restrictions and limitations of such other sources of funding. In addition, expenses that have been or will be reimbursed under any federal program, such as the reimbursement by the federal government pursuant to the CARES Act of contributions by States to State unemployment funds, are not eligible uses of Fund payments. Are States permitted to use Fund payments to support state unemployment insurance funds generally? To the extent that the costs incurred by a state unemployment insurance fund are incurred due to the COVID-19 public health emergency, a State may use Fund payments to make payments to its respective state unemployment insurance fund, separate and apart from such State's obligation to the unemployment insurance fund as an employer. This will permit States to use Fund payments to prevent expenses related to the public health emergency from causing their state unemployment insurance funds to become insolvent. W Are recipients permitted to use Fund payments to pay for unemployment insurance costs incurred by the recipient as an employer? Yes, Fund payments may be used for unemployment insurance costs incurred by the recipient as an employer (for example, as a reimbursing employer) related to the COVID-19 public health emergency if such costs will not be reimbursed by the federal government pursuant to the CARES Act or otherwise. The Guidance states that the Fund may support a "broad range of uses" including payroll expenses for several classes of employees whose services are "substantially dedicated to mitigating or responding to the COVID-19 public health emergency." What are some examples of types of covered employees? The Guidance provides examples of broad classes of employees whose payroll expenses would be eligible expenses under the Fund. These classes of employees include public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. Payroll and benefit costs associated with public employees who could have been furloughed or otherwise laid off but who were instead repurposed to perform previously unbudgeted functions substantially dedicated to mitigating or responding to the COVID-19 public health emergency are also covered. Other eligible expenditures include payroll and benefit costs of educational support staff or faculty responsible for developing online learning capabilities necessary to continue educational instruction in response to COVID-19-related school closures. Please see the Guidance for a discussion of what is meant by an expense that was not accounted for in the budget most recently approved as of March 27, 2020. In some cases, first responders and critical health care workers that contract COVID-19 are eligible for workers' compensation coverage. Is the cost of this expanded workers compensation coverage eligible? Increased workers compensation cost to the government due to the COVID-19 public health emergency incurred during the period beginning March 1, 2020, and ending December 30, 2020, is an eligible expense. If a recipient would have decommissioned equipment or not renewed a lease on particular office space or equipment but decides to continue to use the equipment or to renew the lease in order to respond to the public health emergency, are the costs associated with continuing to operate the equipment or the ongoing lease payments eligible expenses? Yes. To the extent the expenses were previously unbudgeted and are otherwise consistent with section 601(d) of the Social Security Act outlined in the Guidance, such expenses would be eligible. May recipients provide stipends to employees for eligible expenses (for example, a stipend to employees to improve telework capabilities) rather than require employees to incur the eligible cost and submit for reimbursement? Expenditures paid for with payments from the Fund must be limited to those that are necessary due to the public health emergency. As such, unless the government were to determine that providing assistance in the form of a stipend is an administrative necessity, the government should provide such assistance on a reimbursement basis to ensure as much as possible that funds are used to cover only eligible expenses. May Fund payments be used for COVID-19 public health emergency recovery planning? Yes. Expenses associated with conducting a recovery planning project or operating a recovery coordination office would be eligible, if the expenses otherwise meet the criteria set forth in section 601(d) of the Social Security Act outlined in the Guidance. Are expenses associated with contact tracing eligible? Yes, expenses associated with contract tracing are eligible. To what extent may a government use Fund payments to support the operations of private hospitals? Governments may use Fund payments to support public or private hospitals to the extent that the costs are necessary expenditures incurred due to the COVID-19 public health emergency, but the form such assistance would take may differ. In particular, financial assistance to private hospitals could take the form of a grant or a short-term loan. May payments from the Fund be used to assist individuals with enrolling in a government benefit program for those who have been laid off due to COVID-19 and thereby lost health insurance? Yes. To the extent that the relevant government official determines that these expenses are necessary and they meet the other requirements set forth in section 601(d) of the Social Security Act outlined in the Guidance, these expenses are eligible. May recipients use Fund payments to facilitate livestock depopulation incurred by producers due to supply chain disruptions? Yes, to the extent these efforts are deemed necessary for public health reasons or as a form of economic support as a result of the COVID-19 health emergency. Would providing a consumer grant program to prevent eviction and assist in preventing homelessness be considered an eligible expense? Yes, assuming that the recipient considers the grants to be a necessary expense incurred due to the COVID-19 public health emergency and the grants meet the other requirements for the use of Fund payments under section 601(d) of the Social Security Act outlined in the Guidance. As a general matter, providing assistance to recipients to enable them to meet property tax requirements would not be an eligible use of funds, but exceptions may be made in the case of assistance designed to prevent foreclosures. May recipients create a `payroll support program "for public employees? Use of payments from the Fund to cover payroll or benefits expenses of public employees are limited to those employees whose work duties are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. May recipients use Fund payments to cover employment and training programs for employees that have been furloughed due to the public health emergency? Yes, this would be an eligible expense if the government determined that the costs of such employment and training programs would be necessary due to the public health emergency. May recipients use Fund payments to provide emergency financial assistance to individuals and families directly impacted by a loss of income due to the COVID-19 public health emergency? Yes, if a government determines such assistance to be a necessary expenditure. Such assistance could include, for example, a program to assist individuals with payment of overdue rent or mortgage payments to avoid eviction or foreclosure or unforeseen financial costs for funerals and other emergency individual needs. Such assistance should be structured in a manner to ensure as much as possible, within the realm of what is administratively feasible, that such assistance is necessary. The Guidance provides that eligible expenditures may include expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures. What is meant by a "small business, " and is the Guidance intended to refer only to expenditures to cover administrative expenses of such a grant program? Governments have discretion to determine what payments are necessary. A program that is aimed at assisting small businesses with the costs of business interruption caused by required closures should be tailored to assist those businesses in need of such assistance. The amount of a grant to a small business to reimburse the costs of business interruption caused by required closures would also be an eligible expenditure under section 601(d) of the Social. Security Act, as outlined in the Guidance. The Guidance provides that expenses associated with the provision of economic support in connection with the public health emergency, such as expenditures related to the provision of grants to small businesses to reimburse the costs of business interruption caused by required closures, would constitute eligible expenditures of Fund payments. Would such expenditures be eligible in the absence of a stay-at-home order? Fund payments may be used for economic support in the absence of a stay-at-home order if such expenditures are determined by the government to be necessary. This may include, for example, a grant program to benefit small businesses that close voluntarily to promote social distancing measures or that are affected by decreased customer demand as a result of the COVID-19 public health emergency. May Fund payments be used to assist impacted property owners with the payment of their property taxes? Fund payments may not be used for government revenue replacement, including the provision of assistance to meet tax obligations. May Fund payments be used to replace foregone utility fees? If not, can Fund payments be used as a direct subsidy payment to all utility account holders? Fund payments may not be used for government revenue replacement, including the replacement of unpaid utility fees. Fund payments may be used for subsidy payments to electricity account holders to the extent that the subsidy payments are deemed by the recipient to be necessary expenditures incurred due to the COVID-19 public health emergency and meet the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example, if determined to be a necessary expenditure, a government could provide grants to individuals facing economic hardship to allow them to pay their utility fees and thereby continue to receive essential services. Could Fund payments be used for capital improvement projects that broadly provide potential economic development in a community? In general, no. If capital improvement projects are not necessary expenditures incurred due to the COVID-19 public health emergency, then Fund payments may not be used for such projects. However, Fund payments may be used for the expenses of, for example, establishing temporary public medical facilities and other measures to increase COVID-19 treatment capacity or improve mitigation measures, including related construction costs. The Guidance includes workforce bonuses as an example of ineligible expenses but provides that hazard pay would be eligible if otherwise determined to be a necessary expense. Is there a specific definition of "hazard pay"? Hazard pay means additional pay for performing hazardous duty or work involving physical hardship, in each case that is related to COVID-19. The Guidance provides that ineligible expenditures include "[playroll 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-1.9 public health emergency. May counties pre pay with CARES Act funds for expenses such as a one or two year facility lease, such as to house staff hired in response to COVID-19? A government should not make prepayments on contracts using payments from the Fund to the extent that doing so would not be consistent with its ordinary course policies and procedures. Questions Related to Administration of Fund Payments 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 30, 2020, as required by the statute, those funds must be returned to the Department of the Treasury. What records must be kept by governments receiving payment? A government should keep records sufficient to demonstrate that the amount of Fund payments to the government has been used in accordance with section 601(d) of the Social Security Act May recipients deposit Fund payments into interest bearing accounts? Yes, provided that if recipients separately invest amounts received from the Fund, they must use the interest earned or other proceeds of these investments only to cover expenditures incurred in accordance with section 601(d) of the Social Security Act and the Guidance on eligible expenses. If a government deposits Fund payments in a government's general account, it may use those funds to meet immediate cash management needs provided that the full amount of the payment is used to cover necessary G9 expenditures. Fund payments are not subject to the Cash Management Improvement Act of 1990, as amended. May governments retain assets purchased with payments from the Fund? Yes, if the purchase of the asset was consistent with the limitations on the eligible use of funds provided by section 601(d) of the Social Security Act. What rules apply to the proceeds of disposition or sale of assets acquired using payments from the Fund? If such assets are disposed of prior to December 30, 2020, the proceeds would be subject to the restrictions on the eligible use of payments from the Fund provided by section 601(d) of the Social Security Act. 7