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COVID-19 Funding: Top FAQs for State and Local Governments

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While we promised a 2-part blog series on coronavirus, it’s clear that the spread as well as impacts of the disease are not slowing down anytime soon. As state and local governments try to make sense of all the policy and funding packages in the news cycle, we wanted to continue sharing resources and best practices to implement such funding and deliver aid to communities as quickly as possible. 

With the COVID-19 funding bill (approximately $2 trillion), ICMA data suggests that local governments alone will spend up to $20 billion on COVID-19-related actions. For example, the same data shows that King County in Washington has already spent $50 million while the city of Westerville, Ohio spent $7.5 million so far–just in the span of a week.

For states, there have been discussions of approximately $500 billion in economic stabilization that could go to support major industries as well as an alternative proposal to restore a state fund that focuses more on individuals. Either way, state governments are on the hook for determining the best way to channel those funds for their local counterparts and communities.

Needless to say, there’s an abundance of ambiguity for state, local, and tribal governments alike to navigate. Top of mind for most leaders and stakeholders are how and when grant funding will be available to combat the health and economic impacts of COVID-19. To address these questions, we focused on the top FAQs that state and local governments likely have concerning the latest COVID-19 grant activity. 

What does the latest COVID-19 Executive Memorandum mean?

Remember the March 9 Executive Memo? If not, check out our recent blog to review the 10 provisions of “Administrative Relief for Recipients and Applications of Federal Financial Assistance Directly impacted by COVID-19.” 

On March 19, OMB issued a new EM that expands the scope of recipients “affected by the loss of operational capacity and increased costs” due to COVID-19. Now, federal agencies can offer relief for administrative, financial management, and audit requirements under 2 CFR Part 200. The latest provisions include: 

  1. SAM registration/renewal: Applicants do not have to be registered at time of application, but they do have to be registered at time of award. Current SAM registrants with active registrations expiring before May 16, 2020 will receive a one-time 60-day extension.
  2. Flexibility with application deadlines: Agencies may provide flexibility in application submissions. Such agencies should list guidance on their websites or give contact information for program officials.
  3. Notice of Funding Opportunities: Agencies can shorten the amount of time a Notice of Funding Opportunity (NOFO) is published (less than 30 days).
  4. No-cost extension on expiring awards: Awards which were still active as of March 31, 2020, and scheduled to expire before or on December 31, 2020, may receive an automatic 12-month no-cost extension. Project-specific financial and performance reports will be due 90 days following the end date of the extension.
  5. Non-competitive continuation grants requests: Requests between April 1, 2020 and December 31, 2020 may only require a brief statement verifying recipients are able to resume/restore their project activities and accept the continuation award.
  6. Expenditures for salaries and other project activities: Agencies may allow recipients to continue paying salaries (consistent with recipient’s policy under “unexpected or extraordinary circumstances”) and “other” costs can be charged to the award if necessary to resume project activities. Recipients must continue to document costs (i.e., time and effort) as required by 2 CFR 200.302. 
  7. Allowability of costs not normally charged to awards: Agencies may allow recipients to charge costs incurred by cancellations of grant-related events, travel and other activities. The awarding agencies may list additional guidance on specific types of costs on their websites.
  8. Prior approval: Requirements may be waived to allow the recipient to address the response more effectively. However, costs must remain consistent with cost principles and guidelines (unless waived by this memorandum).
  9. Exemption of certain procurement requirements: Procurement requirements under 2 CFR 200.231(b) (like geographic location) and 2 CFR 200.321 (small and minority businesses, etc.) may be waived.
  10. Extension of financial, performance and other reporting: Finance and other reports may be allowed an additional three months to submit. Drawdowns will not be interrupted if the delay is allowed by the agency. In addition, awarding agencies may waive the requirement for recipients to notify the agency of problems, delays or adverse conditions related to COVID-19 on a grant-by-grant basis.
  11. Extension of currently approved indirect cost rates: Awarding agencies may allow grantees to continue to use the currently approved indirect cost rates (i.e., predetermined, fixed, or provisional rates) to recover their indirect costs on federal awards. Agencies may approve grantee requests for an extension on the use of the current rates for one additional year without submitting an indirect cost proposal. Agencies may also approve grantee requests for an extension of the indirect cost rate proposal submission to finalize the current rates and establish future rates.
  12. Extension of closeout: Awarding agencies may allow the grantee to delay submission of any pending financial, performance and other reports required by the terms of the award for the closeout of expired projects, provided that proper notice about the reporting delay is given by the grantee to the agency. This delay in submitting closeout reports may not exceed one year after the award expires.
  13. Extension of single audit submission: Recipients who have not yet filed their single audits with the Federal Audit Clearinghouse and have a fiscal year-end through June 30, 2020, should receive a six-month extension beyond the normal due date. Recipients do not have to seek approval from agencies for this extension. This delay will still qualify the recipient as a ‘low-risk auditee’ under the criteria of 2 CFR 200.520 (a).

As stated, this memorandum provides similar administrative relief listed in M-20-11 to an expanded scope of recipients especially affected by the COVID-19 crisis. Awarding agencies will post guidance and contact the affected recipients to alert them of the relaxed requirements and more information could be forthcoming from the Administration if deemed necessary.

What additional COVID-19 funds can state and local governments anticipate?

According to data by ICMA and Hagerty Consulting, the latest COVID-19 reimbursement and stimulus funding for state, local, tribal, territorial governments (as well as non-profits) will primarily be channeled through the Federal Emergency Management Agency (FEMA), Small Business Administration (SBA), and Center for Disease Control (CDC). 

FEMA Funding

Rather than having to declare an emergency at the state levels, state, territorial, tribal, and local governments (as well as certain non-profit organizations) are eligible to apply for public assistance from FEMA. FEMA assistance will be provided at a 75 percent federal cost share and requires the execution of a FEMA-State/Tribal/Territory Agreement as deemed appropriate. Local governments and other eligible applicants must apply through their respective state, tribal, or territorial jurisdictions. 

Under the President’s national emergency declaration, FEMA has about $40 billion of disaster relief to support state and local governments in their response efforts against COVID-19, including the opportunity to apply for direct federal assistance, temporary facilities, commodities, equipment, and emergency operation costs. 

Small Business Administration Loans

Recently, SBA announced that it will provide $7 billion of disaster loan assistance for small businesses impacted by COVID-19. This funding is specifically designed to offer economic injury disaster loans, including: 

  • Up to $2 million per loan (which must be repaid)
  • Low interest rates: 3.75% for eligible small businesses and 2.75% for non-profits
  • Loans that can be used to pay fixed debts and payroll

CDC Funding

The initial coronavirus funding bill of $8.3 billion includes $2.2 billion available to the CDC. Additionally, $950 million of the funding are for grants to or cooperative agreements with state, local, and tribal organizations, urban Indian health organizations, as well as health service providers to tribes. 

Keep in mind that $475 million of this funding must be allocated within 30 days of the bill’s signing (March 30, 2020).

How should governments proceed in light of all the different COVID-19 funding streams?

The best way to quickly apply for and implement the funding that is available to state, local, and tribal governments is to (first and foremost) stay informed. The following resources can help you stay on top of all the latest in COVID-19 funding and resources:

  • Resource Guide to Coronavirus for Government Leaders: Government Technology’s Dustin Haisler has compiled a comprehensive list of COVID-19 facts and resources specifically for federal, state, and local government agencies including dashboards tracking the spread of the disease as well as example state and local government responses. This list is being updated on a continual basis.
  • ICMA’s Coronavirus Resource Page: The International City/County Management Association has a dedicated Coronavirus Resource Hub for local governments including the latest COVID-19 news and practical tips to make use of the funding, i.e. carefully documenting and staying up-to-date on all the latest federal procurement requirements.

Rest assured, we will continue to cover the latest grant-related news and activity concerning COVID-19 and its impact on state, local, and tribal governments. Stay tuned for more COVID-19 funding updates. 

Need help navigating your grants management? Reach out to info@ecivis.com to see how we can help.