By Timothy Sawyer, CPA, CGMA , Partner
As we navigate through these unprecedented times, practice our social distancing, and adapt to the changes associated with a more virtual work environment it is important to have access to information and resources. The news has focused on the recent aid packages and what they can do for the economy, but what assistance is available for our local governments (Counties, Cities, Towns, Boroughs, Townships, School Districts, etc.)?
The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act was signed into law on March 27, 2020. The CARES Act provides relief to several groups impacted by the coronavirus pandemic and provides $2 trillion in aid, broken down as follows:
- Individuals $560 billion
- Big corporations $500 billion
- State and Local governments $339.8 billion
- Small businesses $377 billion
- Public health $153.5 billion
- Education/Other $43.7 billion
- Safety net $26 billion
For state and local governments, the $339.8 billion in aid includes:
- $274 billion toward specific COVID-19 response efforts, including$150 billion in direct aid for those state and local governments running out of cash because of a high number of cases.
- $14 billion for higher education
- $13 billion for K-12 schools
- $5.3 billion for programs for children and families, including immediate assistance to childcare centers
- $5 billion of Community Block Grants
In addition to the aid available to state and local governments through the CARES Act, for the first time in history, the Robert T. Stafford Disaster Relief and Emergency Assistance Act (“the Stafford Act”) has been invoked for a health pandemic to address the size and scale of COVID-19’s impact on the United States. The Stafford Act provides federal funding to aid the response to the COVID-19 response.
At least ten Federal Agencies (DHS, HHS, DOE, DOC, HUD, FCC, DOA, DOJ, DOL, DOT) will issue COVID-19 related grants pursuant to HR6074, HR6201 and HR748 and the emergency declaration. The specific requirements for each grant will vary, but will be governed by cost principles and administrative requirements in Title II of the Code of Federal Regulations (2CFR), including:
- Allowable and Unallowed Costs
- Procurement Rules
- Audit Requirements
- Monitoring & Reporting
- Indirect Costs
Under the Stafford Act, local governments, are eligible to receive federal grants under the act. There are four categories of eligible areas under the Act that a local government can receive assistance from:
- Activities to reduce immediate threats to public health and safety – EOC Costs, Training, Disinfection of Public Facilities
- Emergency Medical Care – Temporary medical facilities, Hospital Surge Capacity, Treatment in a temporary facility, EM Transport
- Medical Sheltering – Only when existing facilities become or expect to be overloaded in the future and cannot meet needs
- Other Essentials – Pet shelters, Food-Water-Medicine, PPE, Security, Law Enforcement, Communication, Search and Rescue
Things for state and local governments to consider when seeking assistance under the Stafford Act include that the federal cost is set at 75% with the remaining to be covered by the state or local government. Most importantly, the request for public assistance must be made within 30 days of the disaster declaration.
Since state and local governments must react quickly in seeking federal assistance, remember these key steps:
- Establish Program Governance
- Get educated on available funding sources, compliance rules, and timelines.
- Assess organizational capabilities and gaps.
- Define staff roles and responsibilities
- Funding Application
- Evaluate funding sources, state/local shares and organizational impact.
- Register and request public assistance.
- Minimize duplication of benefits and audit risks.
- Policies and Procedures
- Develop grant management standard operating procedures.
- Establish process and IT Controls.
- Enable financial systems t track transactions by funding source.
- Grant Operations
- Execute and manage the reimbursement process
- Maintain compliance with grant regulations
- Perform financial reconciliations
- Monitor and report KPIs
- Reporting and Closeout
- Organize grant files and compliance with grant rules.
- Determine and document final claims.
- Respond to OIG audits and grantee monitoring visits.
Finally, here are some tips and leading practices that can be done now to mitigate some of the long-term challenges of managing FEMA grants.
- Track your costs by configuring your financial system to include “job codes” for COVID costs by site or projects.
- Designate an interdepartmental COVID-19 team that understands the Stafford Act guidelines and compliance rules.
- Track your inventory by pulling inventory records as of the date the entity began preparations for COVID-19
- Segregate staff time between overtime related to COVID-9 response activities and regular time
- Track time for temporary employees hired specifically for COVID-19 related activities
- Do not duplicate efforts from FEMA grant funds with assistance received from HHS or CDC
- Avoid cost plus percentage contracts, piggybacking, unreasonable procurements and prohibited contract clauses.
- Prepare justification memo for noncompetitive procurements during the exigency period
- Conduct cost analysis for procurements over the simplified federal acquisition threshold
- Track direct administrative cost with sufficient level of activity level details to maximize grant reimbursements.
- Follow the rules of HHS and CDC for medical sheltering and comply with EHP regulations.
- Account for donated resources for cost share considerations.
If you have additional questions or need assistance, contact us at Barbacane, Thornton & Company and we will assist in any way that we can to answer your questions or help find answers.
Barbacane, Thornton & Company is a highly regarded, regional certified public accounting and consulting firm specializing in auditing and tax services for government agencies and nonprofits.