Cities throughout Kentucky are receiving payments under the Coronavirus Aid, Relief and Economic Security (CARES) Act, which created the Coronavirus Relief Fund (CRF) administered through the Department of the Treasury (Treasury). As mentioned in previous articles, the CARES Act funding is disbursed through the Department for Local Government (DLG) through an application process. KLC continues to work with DLG to keep our cities informed about applying for CRF reimbursement. Seemingly conflicting information regarding eligible expenses appears to prevent many cities from applying to DLG for reimbursement of expenses. This article addresses the CRF application process, disbursements, and some helpful information on expenses that are eligible for reimbursement. View your city’s CRF allocation amount.
DLG’s CRF reimbursement process is initiated by filling out the CRF application and submitting it to DLG. The email address is listed on the top of the application. DLG requests that applicants use the autofill document and not print it out and complete by hand. Cities are not required to pass a resolution authorizing receipt of CRF reimbursement or draft a memorandum of agreement (MOA) prior to submitting the application.
Once the application is processed, the applicant city will receive a letter from DLG providing preliminary approval and requesting that the mayor sign an agreement that the city will pass a resolution to accept CRF funds, enter into an MOA with DLG, certify that it will not duplicate the request for benefits with any other source, and comply with the single audit requirement for receiving federal funding.
Before the mayor returns the document to DLG, the city should pass a CRF resolution. A copy of the resolution and the duplication of benefits certification must be submitted to DLG with the signed letter. DLG will send the city an MOA to sign, at which point the city will be asked to submit a copy of the resolution along with their duplication of benefits certification. DLG will bundle the documents and provide them to a committee that approves CRF reimbursements.
Depending upon the amount of current expenses, a city may not be eligible to request the full amount allocated when the application is submitted. Once the application is approved, the city does not need to file subsequent applications. Instead, the city can request subsequent CRF disbursements from DLG by submitting the CRF Request for Disbursement form. Disbursements can be requested at any time after the MOA receives final approval.
Cities are encouraged to submit all first responder salaries for reimbursement under the CARES Act. A lot of confusion surrounds this recommendation. To be eligible as a reimbursable expense, city expenses must be either an unanticipated expense in the budget that was in effect on March 27, 2020, or an expense that is for a substantially different use than expected when the budget was approved. Any qualifying expenses incurred between March 1, 2020, and December 30, 2020, are eligible for CRF reimbursement.
Treasury FAQs establish a presumption that all public safety personnel payroll costs are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. DLG affixed an addendum to the end of the FAQs clarifying that all public safety payroll expenses are eligible. This includes retirement and FICA but not firefighter stipends or KLEPF funds because those funds are derived from a source other than city revenue. Even with this guidance, many applicant cities are uncertain how to answer questions on the application regarding why the request for public safety payroll expenses qualifies under the act.
Cities that have successfully received CRF reimbursement qualify the expenses as “our total requested expense reimbursement is for eligible first responder payroll including police, emergency medical services (EMS), and fire departments.” Simple and clear statements along with a basic breakdown detailing first responder payroll costs result in relatively quick approval and CRF disbursement by DLG.
Cities may have requested reimbursement for some expenses under FEMA. Generally, FEMA grants are a 75/25 match with the city providing 25% of the matching funds. Matching funds are eligible expenses under the CARES Act as long as the initial expense is one that would qualify for reimbursement if submitted for full reimbursement. KLC has previously advised cities to submit requests for reimbursement for matching funds. Treasury FAQs updated on July 8, 2020, verify that this is an eligible expense for CRF reimbursement. DLG has advised that they are not reimbursing for matching funds for FEMA grants.
It is important to note that the Treasury is regularly updating guidance on what expenses are eligible for CRF reimbursement. Additionally, Congress continues to work on legislation to provide assistance and guidance during the pandemic. KLC will continue to provide regular updates as information becomes available.
As always, KLC Department of Municipal Law staff are available at (859) 977-3700 to assist with any questions.