News Flash

Emergency Management & Public Health

Posted on: September 14, 2020

NLC Seeks Clarity on Permitted CRF Funding Uses

The March CARES Act provided direct Coronavirus Relief Fund (CRF) assistance to the State of New Jersey and the State’s nine most populous counties. The law allowed those direct recipients to ‘sub-allocate’ some or all of those monies to other local governments, located therein. The Governor has proposed, in the Budget currently being considered by the Legislature, the sub-allocation of some of the State’s CRF money to municipalities located in the 12 counties that were denied direct funding, and to those counties.

If your municipality receives a share of CRF assistance from either a direct recipient county, or, if approved by the Legislature, through the State program, the monies can only be spent in compliance with Federal rules. Repayment of unauthorized spending of CRF funds to the Federal Government could be ordered.

The problem has been that the U.S. Treasury keeps reinterpreting the rules. That problem has been compounded now, because Treasury’s Office of Inspector General (OIG) – the independent auditing agency of all Treasury spending - recently issued guidance that differs from, and is more restrictive than, the most recent Treasury guidance.

With regards to payroll expenses, Treasury advises that a recipient "…may presume that payroll costs for public health and public safety employees are payments for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency, unless the chief executive (or equivalent) of the relevant government determines that specific circumstances indicate otherwise."

Despite that presumption, OIG advises that it will require a recipient to produce records that "… include, but are not limited to (1) general and subsidiary ledgers used to account for the receipt of CRF payments and subsequent disbursements; and (2) payroll, time, and human resource records to support costs incurred for payroll expenses related to addressing the COVID-19 health emergency. … and any other documents/records that support employee’s function/duties and/or time was substantially dedicated to mitigating the COVID-19 emergency." Effectively, the OIG will not allow a recipient to make any presumption regarding payroll costs, but will instead require detailed documentation.

This is a very confusing situation with many contradictions, but our Federal partners at the National League of Cities (NLC) are working hard to try to sort through it. NLC is taking the lead in drafting a letter to the OIG’s office about this issue in conjunction with other relevant state and local organizations. You can view the letter and here is NLC’s statement.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njlm.org, 609-695-3481 x121.

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