There are some important updates on eligible/ineligible uses of the Coronavirus Relief Funds (CRF) for Local Governments. The guidance has been updated and some of these changes are significant. Please feel free to share this information with your network. Your help getting the word out to the local governments, would be greatly appreciated. If you have any questions or concerns, feel free to reach out directly to the Washington State Department of Commerce.
Indirect Costs:
On September 2, 2020, The US Treasury published updated guidance on the CRF program. In that guidance, they determined that indirect costs are not allowed under these funds. The 9/2/20 guidance states:
“Payments from the Fund are not administered as part of a traditional grant program and the provisions of the Uniform Guidance, 2 C.F.R. Part 200, that are applicable to indirect costs do not apply. Recipients may not apply their indirect costs rates to payments received from the Fund.
Recipients may, if they meet the conditions specified in the guidance for tracking time consistently across a department, use payments from the Fund to cover the portion of payroll and benefits of employees corresponding to time spent on administrative work necessary due to the COVID-19 public health emergency. (In other words, such costs would be eligible direct costs of the recipient). This includes, but is not limited to, costs related to disbursing payments from the Fund and managing new grant programs established using payments from the Fund.”
So what does this mean? This means that any A-19 reimbursement request, submitted to Commerce as of September 2, 2020, going forward, may not include indirect costs. If you have submitted an A-19 to Commerce prior to September 2nd and it included indirect costs, don’t panic. There is nothing for you to do. Any A-19 reimbursement requests submitted to Commerce as of September 2nd or later, cannot include indirect costs. If you have submitted an A-19, that included indirect costs, to Commerce on September 2nd or later, but before this information was made available, then you will need to work with your Commerce project manager to correct the invoice and remove the indirect costs. Your Commerce project manager will be connecting with you directly to identify possible corrections needed and the next steps in doing so.
Public Health and Public Safety employees:
The US Treasury has provided guidance in their past FAQ documents that have stated the following in regard to Public Health and Public Safety employees and how they relate to substantially dedicated COVID-19 staff time:
“The Fund is designed to provide ready funding to address unforeseen financial needs and risks created by the COVID-19 public health emergency. For this reason, and as a matter of administrative convenience in light of the emergency nature of this program, a State, territorial, local, or Tribal government 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.”
Commerce has previously approached this guidance more conservatively and has instructed local governments to take the additional step to make a determination of substantially dedicated upfront instead of after the fact. We have not agreed to make this an automatic determination as the Treasury has described. Our thinking was that this would be a safer approach since we did not fully understand how the program would be audited by the federal government. On September 21, 2020, the Treasury OIG published their own updated guidance on how they will be monitoring the program requirements. In that document, they confirmed that they will be treating Public Health and Public Safety employees in the way the Treasury FAQ describes.
In light of this clarity from the Treasury OIG, Commerce is updating our guidance to mirror that of the Treasury and Treasury OIG. Public Health and Public Safety employees may be automatically deemed substantially dedicated to COVID-19 duties and can charge 100% of those payroll costs unless the chief executive or equivalent determines that is not the case.
Annual Subscriptions:
The updated Treasury guidance from September 2nd provides additional details on incurred costs and how to treat the purchase of certain goods and services. Although this additional context is very helpful in understanding when certain costs are considered incurred, it still leaves some grey areas for interpretation. One of those areas is how to handle annual subscriptions or annual service fees. We’ve developed additional guidance as follows.
If there is a monthly rate option available for a particular services subscription, then you will only be able to pay for the months of service that fall between March 1, 2020 – November 30, 2020. If the service subscription is not offered in a monthly option and can only be purchased as an annual subscription, then the entire amount of that subscription may be charged. As long as the annual subscription cost is incurred between March 1st – November 30th. For example, we have heard of internet providers that have created special packages that offer students an affordable annual subscription to help overcome barriers to remote learning needs. These packages are not offered in a monthly option and are only available if purchased for the year or school year. If the annual cost for that service is incurred between March 1st – November 30th, then the entire amount would be eligible. You would not need to pro-rate the costs for the services received through November 30th.
Download the latest FAQs and Guidance:
