Recovery Coronavirus Aid, Relief, and Economic Security Act (CARES Act), H.R. 748

As part of the declaration of the COVID-19 pandemic as a national emergency, the CARES Act makes funding available to state and local governmental entities through a variety of programs. The primary mechanisms through which financial assistance will be provided include increased funding to existing programs and grants, funding through the Coronavirus Relief Fund, and direct loans, as further detailed below.

Increased Funding to Existing Programs and Grants:

This division of the CARES Act primarily funds existing programs and grants and expands their criteria to include those affected by COVID-19. Specific programs, grants and funding are further detailed below.

State and Local Law Enforcement Activities

$850 million will be distributed/awarded pursuant to the formula allocation that was used in fiscal year 2019 for the Edward Byrne Memorial Justice Assistance Grant (Byrne JAG) program.

Allowable use of funds:
  • PPE
  • Overtime for Officers
  • Medical Supplies
  • A full list of allowable uses can be found here: JAG FAQ Sheet

FEMA

Provides $45 billion to the Disaster Relief Fund administered by FEMA.

Allowable use of funds:
  • Emergency medical care and transport, including services, supplies, facilities and equipment
  • Emergency Operation Center Costs
  • Employee training specific to COVID-19
  • Sanitation of eligible public facilities
  • Security (barricades, fences, and law enforcement)
  • Overtime labor costs
  • A full list of allowable uses can be found here: Coronavirus (COVID-19) Pandemic: Eligible Emergency Protective Measures

Department of Health and Human Services (HHS)

Provides $3.5 billion in funding for Child Care and Development Block Grant.

Allowable use of funds:
  • Supplement state, territory, and tribal general revenue funds for child care assistance
  • Financial support to child care providers in the case of decreased enrollment or closures related to COVID-19
  • Child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during Covid-19 response

Provides for $100 billion in funding to the Public Health and Social Services Emergency Fund.

Allowable use of funds:
  • Reimburse healthcare providers for healthcare-related expenses
  • Reimburse for lost revenues that are directly related to COVID-19

Provides for $1 billion in funding to carry out services under the Community Services Block Grant Act.

Allowable use of funds:
  • Allow local community action agencies to provide services to low-income families hurt by the economic crisis as a result of COVID-19, such as:
  • Rental assistance
  • Food assistance
  • Support for paying utilities
  • Housing support for the homeless who are particularly vulnerable to COVID-19

Provides $750 million in additional Head Start funding to allow programs to meet emergency staffing needs where necessary.

Allowable use of funds:
  • Care for children
  • Provide flexibility in enrollment
  • Facility maintenance (cleaning)
  • Ongoing quality improvement training and development

Department of Education

Provides for $30.75 billion in funding for Education Stabilization Fund.

Allowable use of funds:
  • Costs associated with significant changes to the delivery of instruction due to Covid-19 (cannot include payment to contractors for the provision of pre-enrollment recruitment activities, endowments, or capital outlays associated with athletic facilities).

Funds are distributed as follows:

  • $13.5 billion in formula funding to the Elementary and Secondary School Emergency Fund
  • $15 billion in Higher Education Emergency Relief
  • $3 billion in Governor’s Emergency Relief

Department of Housing and Urban Development (HUD)

Applicable Grants:

  • $5 billion in additional funding for the Community Development Block Grant (CDBG)
  • $4 billion Homeless Assistance Grants (HAG)

Child Nutrition Cluster

$8.8 billion will be distributed to the Child Nutrition Programs (which includes the National School Lunch Program, the School Breakfast Program, the Special Milk Program, the Child and Adult Care Food Program, and the Summer Food Service Program) to fund food purchases and demonstration projects for schools through September 30, 2021 to account for and respond to the impact of COVID-19.

Supplemental Nutrition Assistance Program (SNAP)

$15.8 billion will be distributed to SNAP through September 30, 2021 to account for and respond to the virus.

Economic Development Assistance Programs

$1.5 billion in additional funding for the Economic Development Assistance Programs to be available until September 30, 2022 through the Department of Commerce.

Emergency Food Assistance Program

$450 million to prevent, prepare for, and respond to coronavirus, domestically or internationally, for the emergency food assistance program; to be available until September 30, 2021.

Coronavirus Relief Fund:

Provides for $150 billion to states, the District of Columbia, US territories, and local and tribal governments. Allocation is based on population, with a minimum of $1.25 billion per state that is to be divided between state governments and local general governments. Local governments with populations of 500,000 or greater can receive their allocation directly (eligible governments). A local government includes a county, municipality, town, township, village, parish, borough, or other unit of general government below the state level. All local governments with populations less than 500,000 will receive their allocation from the state.

Allowable use of funds:
  • Necessary expenditures incurred due to COVID-19
  • Costs that were not accounted for in the budget most recently approved as of March 27, 2020
  • Costs incurred between March 1, 2020 and December 30, 2020

In order to receive a payment under this section, eligible governments shall provide the Secretary with a certification signed by the Chief Executive for the unit of government and that government’s proposed uses of the funds consistent with the three uses of funds highlighted above.

Eligible governments must provide payment information and supporting documentation electronically by 11:59pm EDT by April 17, 2020.

The form can be accessed at: https://forms.treasury.gov/caresact/stateandlocal

The Secretary of the Treasury will pay to each state, local and tribal government their allocation directly, on or before April 26, 2020.

Direct Loans:

Provides for $454 billion, as well as any amounts available but not used for direct lending, for loans, guarantees, and investments in support of the Federal Reserve’s lending facility to eligible businesses, states and municipalities. These loans will not be subject to loan forgiveness. The process for distribution of these loans is still under development.

Optimizing Available Funding:

While certain details related to distribution of funding under the CARES Act are still forthcoming, based on guidance available to date, the allowable activities and most other compliance requirements of the existing funding sources remain the same. To maximize available funding, governmental entities are encouraged to take action on the following:

  • Seek and apply for available funding
  • Separate accounting by CFDA (fund, cost center, bank account)
  • Know the Uniform Guidance
  • Understand the Program
  • Allowable activities/uses of funds
  • Match requirements
  • Reporting requirements
  • Revisit internal controls
  • Properly procure
  • Document, document, document!

On April 21, the U.S. Senate passed the Paycheck Protection Program and Health Care Enhancement Act, also known as the “COVID-19 3.5” relief package. The $484 billion package, which was originally designed to only be a $250 billion stopgap measure, is the second largest of the four coronavirus response bills Congress has passed so far.

The package includes additional funding to support small businesses, hospitals and enhance COVID-19 testing.

  • New funding for small businesses. $320 billion to replenish the Small Business Administration’s (SBA) Paycheck Protection Program (PPP), a loan initiative aimed at helping small businesses weather the economic fallout from the COVID-19 response. Lawmakers had allocated $349 billion to PPP as part of the $2 trillion CARES Act, but the program ran out of money less than 3 weeks after it was authorized. Of this amount, $60 billion would be set aside for smaller lending institutions such as credit unions and other community-based real financial institutions, with the goal of reaching underbanked businesses.

    The package would also appropriate an additional $50 billion for SBA’s Disaster Loans Program Account and $10 billion for Emergency Economic Injury Disaster grants, while increasing the authorization level for the emergency economic grants from $10 billion to $20 billion. SBA would also receive more than $2 billion to cover salaries and expenses for federal employees.
  • More support for hospitals and healthcare providers. The interim relief package would provide an additional $75 billion to support local hospitals and health care providers by providing reimbursements for COVID-19 related expenses, lost revenue and public health services for uninsured Americans who have been infected by COVID-19. This new wave of funding is in addition to the $100 billion allocated under the CARES Act and will be distributed under the Public Health and Social Services Emergency Fund,

    The U.S. Department of Health and Human Services (HHS) is in the process of developing formulas for additional targeted distributions to health care entities hit hard by the COVID-19  outbreak, namely rural providers, and important for counties – providers who predominately serve the Medicaid population.
  • New funding for target COVID-19 testing in rural areas and for the uninsured. The interim package would provide $25 billion for “necessary expenses to research, develop, validate, manufacture, purchase, administer and expand capacity for COVID–19 tests” to help effectively monitor and suppress the COVID-19 pandemic. Of the total amount allocated, the package would provide:
  • $11 billion in direct funding for states, localities and territories to scale up the administration’s COVID-19 testing, laboratory capacity, contact tracing and support employer testing
  • $225 million in direct funds to rural health clinics through grants and other mechanisms
  • Up to $1 billion to cover the cost of testing for the uninsured
  • Under this provision, the legislation also directs that these funds be allocated within 30 days of the bill’s enactment, and that $2 billion of the $11 billion for state and local funding be distributed using the Public Health Emergency Preparedness (PHEP) Fiscal Year (FY) 2019 grant formula under the Centers for Disease Control and Prevention (CDC). Of the remaining funds, $4.25 billion would be distributed using a formula based on COVID-19 cases and $750 million would be provided directly to tribes and tribal organizations.

    Funding for increased testing capacity is critical during this time, and is especially pertinent for rural counties, as hospital systems in these areas have experienced increased financial strain due to loss revenue streams from non-COVID-19 related care.
  • Mandates states and localities to report how resources will be used for testing and COVID-19 community mitigation policies. Alongside increased funding for testing, the legislation would also require that state and localities that receive funds provide a plan for COVID-19 testing to the HHS Secretary no later than 30 days following the bill’s enactment. Specifically, the plan must outline how states and localities will utilize these funds for the remainder of the 2020 calendar year related to – the number of tests needed on a monthly basis; a monthly estimate of laboratory and testing capacity including related workforce, equipment and supplies, and available tests; and a description of how you will use resources for testing and community mitigation efforts.

The interim relief package did not include another round of much-needed aid to state and local governments or funding to offset the drastic state and local revenue shortfalls that state and local governments are experiencing across the country. Prior to the Senate’s release of the COVID-19 3.5 package, NACo, along with other state and local national organizations, released a statement calling on Congress to provide robust and flexible relief as part of an interim relief package for the COVID-19 pandemic.

Now that the package has passed the Senate, the House will vote on the bill this coming Thursday, April 23, where it is expected to pass.

As Congress moves to pass another package, NACo will continue to press for robust flexible funding directly to counties of all sizes, because we are on the front lines of responding to this pandemic. County governments are responsible for emergency operations centers, human services, jail management, 911 services, coroners, and medical examiners. Counties also operate nearly 1,000 public hospitals, 1,900 local public health departments, more than 800 long-term care facilities and 750 behavioral health departments. Further, NACo estimates that counties will have budget losses of $144 billion through fiscal year 2021 due to COVID-19.  Counties need immediate flexible assistance that allows us to make up for lost revenue as we continue to expend enormous sums fighting COVID-19.

FOOT NOTES

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