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BACKGROUND
Through the Coronavirus Relief Fund (CRF) approved by Congress in March 2020, the CARES Act provided for payments to State and Local governments as part of the response to the COVID-19 outbreak. Eligible local governments were defined as those agencies with a population of over 500,000 and thus Yolo County did not initially qualify. However, as part of the approved 2020-21 budget, the State of California is allocating $22,605,000 of CARES Funding to Yolo County, provided that certain public health compliance elements are maintained.
RESTRICTIONS ON FUNDING
The CARES funding comes with several federal restrictions that must be met to be an allowable expenditure including:
- Are necessary expenditures due to the public health emergency with respect to COVID-19; and
- Were not accounted for in the budget most recently approved as of March 27, 2020; and
- Were incurred during the period that begins on March 1, 2020 and ends on December 30, 2020; and
- Expenditures comply with 2 CFR 200 and are subject to Single Audit; and
- Funds cannot be used to supplant costs funded by other sources (i.e. State/Federal grants).
The acceptance of CARES funding also comes with several state restrictions in order to receive the funding:
- Adhere to federal guidance and the state’s stay-at-home requirements and other health requirements as directed in gubernatorial Executive Order N-33-20, any subsequent Executive Orders or statutes, and all California Department of Public Health orders, directives, and guidance in response to the COVID-19 emergency.
- Use the funds in accordance with all applicable provisions of subdivision (d) of Control Section 11.90 of the Budget Act of 2020.
- Report on expenditures and summarize regional collaboration and non-duplication of efforts within the region by September 1, 2020, and return any funds that are unspent by October 30, 2020 (unless extended by the Department of Finance based on reported expenditures to date), and repay the state for any cost disallowed after federal review.
- Retain records to support reported COVID-19 eligible expenditures and participate in audits as outlined by the federal government and State.
BUDGET RESOLUTION
As part of the receipt of the CARES Funding, a budget resolution is required in order to appropriate the funds to be expended within the 2020-21 County Budget. As a result, staff recommends that the Board adopt the budget resolution reflected in Attachment A, which would authorize the appropriation of the total $22.6 million in order to be expended on eligible disaster response activities.
EXPENDITURE PLAN
A proposed expenditure plan for Coronavirus Relief Funds is included in Attachment C. The expenditure plan reflects current proposed funding needs, with the expectation that the plan will be modified as needed during the six month period of CARES funding to ensure that new or emerging needs are addressed, and to ensure that the County is able to expend the full allocation within the required timeframe. Staff collaborated significantly with those departments that have been and are currently engaged in disaster response to ensure that the disaster response needs are addressed. The Department of Financial Services recommends the priority of spending should focus on (1) reimbursing disaster costs where another funding source does not exist, (2) maintaining disaster response, (3) continuing discretionary disaster response programs, and (4) augmenting or adding additional discretionary disaster response programs. This spending priority was previously discussed with the Board Budget Ad-Hoc Committee.
POLICY
Due to the significant dollar amount and short term nature of the CARES funding, the Department of Financial Services has provided in Attachment B a proposed CARES policy that would do several things. This includes establishing a separate fund in order to track and account for the funds, requiring monthly reports to the Board of Supervisors on the expenditures and associated expenditure plan, and allow the County Administrator or designee to adjust the budget between CARES Act projects to ensure that spending occurs timely (thus ensuring no CARES act funding is forfeited).
STATE CARES ALLOCATION
Information from the State Department of Finance is that they expect the first 1/6th allocation of CARES funding to be disbursed toward the end of July. The State will require that Counties certify each month that they are still maintaining compliance with state health orders, executive orders, and other guidance related to COVID-19 in order to receive each of these monthly allocations. In addition, the County will be required to submit periodic expenditure reports to the State on CARES funding and should the County not demonstrate adequate expenses or a plan to expend all funds prior to December 30, 2020, the State reserves the right to withhold funds. The form of these reports and expenditure plan is not yet known. Any adaptations needed to the expenditure plan to meet a state format would be brought back at a future board meeting with the Department of Financial Services CARES reports.
FEMA FUNDING
Prior to the receipt of CARES Funding, the County was pursuing FEMA funding for disaster costs. FEMA generally is the funder of last resort, however, FEMA has provided limited guidance on the pursuit of Public Assistance when other sources of Federal Funding exist. FEMA guidance in June 2020 indicates that FEMA will not deny an eligible cost from a COVID-19 declaration solely because that cost may be eligible under another federal agency's authority. However, FEMA may decide not to pay for certain types of work that it determines are more appropriate to other federal agencies. For example, contract tracing is an eligible emergency protective measure, however, FEMA has determined that the Department of Health and Human Services and Department of Treasury as the most appropriate for State and Local governments seeking funding.
County staff expects additional guidance to come out regarding categories of COVID-19 disaster costs. Thus, Financial Services staff are recommending only continuing to pursue FEMA funding if the County of Yolo disaster costs are expected to exceed the $22.6 million in CARES funding between March 1 to December 30, 2020, and where there is clarity that the activity is eligible for FEMA reimbursement. The determination of how to address costs related to disaster response in calendar year 2021 is still being developed and unclear at the present moment. |