Treasury Provides Updated Guidance and FAQs on the Use of CARES Act Title V Funding: Tribes Must Comply With Uniform Administrative Requirements

Title V of the CARES Act amended the Social Security Act to establish the Coronavirus Relief Fund (CRF), which will provide financial relief to states, tribes, and local governments for the increased costs associated with the COVID-19 public health emergency. The CRF has an $8 billion set aside for tribal governments.[1] In our previous Client Alert, we described the following statutory uses of the CRF funding:

• "necessary expenditures incurred due to the public health emergency;"
• those expenditures that are "not accounted for" in the tribe's 2020 approved budget; and
• expenditures are incurred between March 1, 2020 and December 30, 2020.

We also remind tribes that the Inspector General of Treasury is authorized to audit any state, tribe or local government's use of the funds. Any funds determined to have been spent in violation of Title V must be re-paid. Treasury has now clarified that while the CRF is not considered a grant program, it is considered "federal financial assistance" and thus subject to some of the Uniform Administrative Requirements found at 2 C.F.R. Part 200.

Treasury Updates Guidance on Eligible and Ineligible Expenditures
Treasury originally issued CRF Guidelines for State, Local, Territorial and Tribal Governments on April 22, 2020. Further guidance was issued through published Frequently Asked Questions (FAQs) May 4, 2020. These FAQs have now been further updated on May 28, 2020. Combined, the guidelines and FAQs represent Treasury's interpretation of "necessary expenditures incurred due to the public health emergency." According to Treasury's updated FAQs, eligible and ineligible expenses now include:

Eligible

• Grant programs for individuals and families for mortgage or rental assistance, utility assistance, funeral assistance and other unforeseen emergency assistance
• Costs to administer CRF funds and grant programs
• Costs for audits under the Single Audit Act

Ineligible

• Payroll support to public employees not "substantially dedicated to responding or mitigating" the COVID-19 public health emergency
• Capital projects not directly related to COVID-19 response
• Economic development projects
• Expansion of broadband project unless directly necessary to respond to the public health emergency

Key Uniform Administrative Requirements
We reiterate our recommendations that Tribes establish well-documented budgets, program descriptions, and separate chart of accounts to keep track of CRF funds received, costs incurred, and funds spent. We now update our recommendation that this documentation should ensure the Tribe can comply with portions of the Uniform Administrative Requirements, 2 C.F.R. Part 200.

Because the Treasury classifies the CRF funds as "other financial assistance" as defined in 2 C.F.R. § 200.400, Treasury has also clarified that fund payments to state, local and tribal governments are subject to the Single Audit Act, 31 U.S.C. §§ 7501-7507. This subjects the fund payments to the following related provisions of the Uniform Administrative Requirements:

• Internal controls requirements in 2 C.F.R. § 200.303;
• Sub-recipient monitoring and management in 2 C.F.R. §§ 200.330 through 200.332; and
• Subpart F regarding audit requirements.

Furthermore, any payments to sub-recipients would count toward the threshold of the Single Audit Act and 2 C.F.R. part 200, subpart F (audit requirements). Sub-recipients are subject to a single audit or program-specific audit pursuant to 2 C.F.R. § 200.501(a) when the sub-recipients spend $750,000 or more in federal awards during their fiscal year. Thus, if a Tribe provides a grant program to tribal businesses, the grant amount will count towards any other federal funding the tribal business receives for purposes of the Single Audit Act.

We are prepared to assist our Tribal Government and tribal enterprise clients with navigating the particular requirements for obtaining and using its CRF funds consistent with Title V of the CARES Act. Please don’t hesitate to reach out to us if you have any further questions about Title V, or any other aspect of the CARES Act.

Please stay safe and continued good luck to your tribal community during this public health emergency.

This is a fluid and rapidly changing situation and these resources are current only as of the date of publication. We recommend that you contact your local Quarles & Brady attorney regarding the most up-to-date information or with any other questions regarding this subject matter, or contact

• Pilar Thomas: (520) 770-8744 / pilar.thomas@quarles.com.