Urgent: CARES Act funds must be used by December 30, 2020 or they will be lost
As summer turns to fall, the time remaining for local governments to use the CARES Act for Covid-19 related expenses is rapidly running out, with a December 30 use-it or lose-it deadline looming.
As we discuss in the ebook “CARES Act Funds for Cloud Technology,” governments across the country, including Huron, OH, Bingham County, ID, and many others are using this funding to upgrade their ability to serve their communities with modern technology in a variety of ways. For example, in Middlesex County, the Covid-19 pandemic is playing out like another crisis: “It hit like Superstorm Sandy, from a financial point of view, creating a process and documentation nightmare,” describes CFO & Treasurer Joe Pruiti. Now, learning from past experience, the County is leading its communities to recovery with OpenGov.
The Coronavirus Relief Fund (CRF), part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) provides funding for local governments for services or goods related to Covid-19. The U.S. Treasury Office of the Inspector General (OIG) is responsible for assigned responsibility to conduct monitoring and oversight of the receipt, disbursement, and uses of CRF payments.
A broad range of uses is allowed under CRF, but each expenditure must be “reasonably necessary for its intended use in the reasonable judgment of the government officials responsible for spending Fund payments“ according to OIG. It is also important to keep in mind that expenses must be incurred by December 30, 2020. Initial guidance released on April 22, 2020, said costs are incurred when funds are expended. OIG has now clarified that the actual payment need not be made by December 30.
As the Covid-19 response evolves “local municipalities are struggling because they have not made critical investments in technology,” says John Pulomena, County Administrator for Middlesex County, NJ. CRF gives Local governments a singular opportunity to modernize important technology to better support their communities through this crisis. State and local leaders from Middlesex and elsewhere validated the use of funds for technology upgrades with CRF in a webinar we recorded this summer.
Governments can use CRF to purchase durable goods like technology for use “during the current period and in subsequent periods if the acquisition in that period was necessary due to the public health emergency.” OIG recognized that it is not always possible to estimate when goods or services will be needed and “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,” by local decision-makers.
Middlesex County received $144M in CARES Act funding for local businesses and municipalities. The County is using funds to cover financial shortfalls and bridge technology shortcomings. Mainstreet businesses (generally 1-20 employees) were shut down for nearly 60 days in Middlesex County, and sustaining them was critical to saving jobs and the local economy. Middlesex adopted OpenGov to efficiently award competitive grants of $30k to help those who were not utilizing federal programs.
OIG continues to issue guidance on the CRF at a furious pace (see a September 2 item in the links below) including requiring prime recipients to file quarterly reports using their on-line portal. The expenditure categories required by OIG reporting are derived from the early guidance, falling into two broad categories:
- Direct emergency needs, such as by addressing medical or public health needs
- 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
Certain categories may be particularly relevant to governments seeking technology upgrades to meet the demands of the pandemic, including Cloud-based communications with residents, remote-work solutions, CARES Act subrecipient grant administration, and better reporting and transparency in government operations (including CRF tracking and reporting). Specific allowable expenses from the guidance include:
- Public health expenses such as expenses for communication by governments of public health orders related to COVID-19.
- Expenses of actions to facilitate compliance with COVID-19-related public health measures, such as expenses to improve telework capabilities for public employees to enable compliance with COVID-19 public health precautions.
- 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.
- Any other COVID-19-related expenses reasonably necessary to the function of government that satisfy the Fund’s eligibility criteria.
OIG requires prime recipients to select the specific categories for all expenses in their mandated on-line quarterly reporting process for themselves and their subrecipients. Categories of particular interest to governments needing technology upgrades to meet the urgent demands of the pandemic are highlighted in the full list:
- Administrative Expenses
- Budgeted Personnel and Services Diverted to a Substantially Different Use
- COVID-19 Testing and Contact Tracing
- Economic Support (Other than Small Business, Housing, and Food Assistance)
- Expenses Associated with the Issuance of Tax Anticipation Notes
- Facilitating Distance Learning
- Food Programs
- Housing Support
- Improve Telework Capabilities of Public Employees
- Medical Expenses
- Nursing Home Assistance
- Payroll for Public Health and Safety Employees
- Personal Protective Equipment
- Public Health Expenses
- Small Business Assistance
- Unemployment Benefits
- Workers’ Compensation
- Items Not Listed Above – to include other eligible expenses that are not captured in the available expenditure categories
As we mentioned above, OpenGov’s ebook, CARES Act Funds for Cloud Technology, explores five specific use-cases for the application of CRF funding to the needs of local government:
- Subrecipient Grant programs further distribute CARES Act funds to other agencies, businesses, and individuals
- Remote work (telework) upgrades to ERPs to improve Coronavirus-related operating and planning capabilities
- Virtual permitting, licensing, and code enforcement (PLC) services necessary to the continuity of government
- Virtual budget collaboration and community engagement
- Transparency in CARES Act reporting
The time left to act is short, but we are prepared to help your government expedite their purchase process and put our modern Cloud-based solutions to work for your community:
- Increasing the productivity of remote “telework” staff
- Enhancing public communications with the Internet and social media
- Simplifying the administration of CRF sub-grant programs
- Improving CRF reporting to prime-recipients and other stakeholders
- Supporting the local business community with on-line permitting, licensing and code enforcement portals
OpenGov is the leader in modern cloud ERP software for our nation’s cities, counties, and state agencies. On a mission to power more effective and accountable government, OpenGov serves more than 1,000 agencies across the U.S. Built exclusively for the unique budgeting, financial management, and civic services needs of the public sector, the OpenGov ERP Cloud makes organizations more collaborative, digitizes mission-critical processes, and enables best-in-class communication with stakeholders.
Links to the latest Treasury documents and other CARES Act resources
Coronavirus Relief Fund
Frequently Asked Questions Related to Reporting and Recordkeeping
Department of the Treasury Office of Inspector General
August 28, 2020
Coronavirus Relief Fund
Prime Recipient Quarterly GrantSolutions Submissions
Monitoring and Review Procedures Guide
August 31, 2020
Coronavirus Relief Fund
Guidance for State, Territorial, Local, and Tribal Governments
Updated September 2, 2020
GASB Techncial Bulletin No. 2020-1 Accounting and Financial Reporting issues Related to the CARES Act