Is Our Share of CARES Act Money Disappearing?

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Two weeks ago in this space, we wrote about a generous genie known as Uncle Sam who is making available $1.25 billion under section 5001 of the CARES Act.  The catch is that the money can be used only to cover costs that (1) are necessary expenditures incurred due to COVID–19; (2) were not accounted for in the government’s budget when the CARES Act became law; and (3) were incurred between March 1 and December 30, 2020.

We wondered out loud if several categories of moneys appropriated in the State’s recently passed budget bill, SB 126 (significant parts of which were line-item vetoed by the Governor) would be eligible for section 5001 federal money.

Buried on the U.S. Treasury’s website is a document that provides several answers.  We certainly hope our lawmakers and government officials know about it – because having to forgo, or pay back, a bunch of that money is not going to be a happy thing.

For example, Treasury says that we can spend our allotted dollars for actions taken to respond to the public health emergency, such as by addressing medical or public health needs, or by responding to the emergency’s effects, such as by providing economic support to those suffering from employment or business interruptions due to COVID-19-related business closures.  They say that these funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the law.

Treasury also says that for a cost to be incurred, the goods and services the money is spent on would need to be performed or delivered by December 30 (with payment up to 90 days later).  Put another way, although our state government usually considers a cost to be drawn against the budget for the year the money was contractually obligated, or “encumbered,” it is not sufficient if the money is encumbered before December 30.  The delivery or performance called for by the contract must occur before December 30.  It is okay if durable goods that are necessary to deal with COVID-19 are delivered before the end of the year even if those goods are not used before the year is out.

Some examples of costs that won’t be reimbursed are:  (1) expenses for the State share of Medicaid; (2) damages covered by insurance; (3) payroll or benefits expenses for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency; (4) expenses that have been or will be reimbursed under any federal program, such as reimbursement of contributions by States to State unemployment funds; (5) reimbursement to donors for donated items or services; (6) workforce bonuses other than hazard pay or overtime; (7) severance pay; and (8) legal settlements.

After all that, do we have a better idea of what cost items to avoid?  Then, lawmakers, it’s time to come together and figure out how to use the genie’s largesse to do the most good.  Let’s not make the mistake of leaving tons of money in limbo land – or in some special fund, which would have the same effect on these dollars.

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