The US Dept of the Treasury has released a Frequently Asked Questions (FAQ) concerning the use of the Federal assistance provided to State and local governments through the Federal CARES Act. The CARES Act funds have been transferred to the states at this point, and now each state is in the process of distributing those funds. However, questions arose about the expenses for which CARES Act funding may be used. The FAQ attempts to describe eligible expenses and program rules.
In general, the CARES Act assistance can only be used to cover expenses that:
- are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
- 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
- were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.
The FAQ provides more detail about the eligible expenditures. Townships should treat CARES Act money as a restricted fund, similar to State Gas Tax funding, that can be used only for its intended purposes and never transferred to an ineligible purpose. The money cannot be used for revenue replacement, so it cannot be used to pay resident’s property tax bills or utility bills.
Two of most relevant answers from that document are below:
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 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.
More Information can be found at the US Dept of the Treasury’s Webpage for CARES Act support of Local Governments, here.
The maximum amount that each township is eligible to receive through direct distribution (state to township) is found here: CARES Act Fund Distribution to Townships. Townships that do not have a Distribution Amount listed are still eligible for an indirect distribution (county to township).