Treasury Issues Guidelines for Use of CARES Act Title V Funding: How Tribes Can Prepare to Spend These Funds

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 $8 billion set aside for Tribal Governments.[1] Funding for the tribes is determined by the Secretary of Treasury and is based on the increased expenditures relative to Fiscal Year 2019 actual aggregate expenditures. To ensure all the funds are distributed to tribes, the Secretary has indicated that this funding will likely be based on an allocation formula to distribute funding amongst the tribes that have submitted certification forms. However, while the funding was supposed to be distributed by 30 days after enactment - April 26 - to date the Secretary has neither published the allocation method nor distributed any funds to tribes.

In addition to a funding mechanism, Title V also creates statutory guidelines for how funds can be used by States, Tribes, and local governments. In short, CRF funds can only be used for:

• "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.

Furthermore, 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 Guidelines on Eligible and Ineligible Expenditures
In anticipation of CRF funds distribution and use of funds, on April 22 Treasury issued CRF Guidelines for State, Local, Territorial and Tribal Governments. These guidelines represent Treasury's interpretation of "necessary expenditures incurred due to the public health emergency." Treasury has segmented expenditures into 5 types of permitted uses:

1. Medical expenses
2. Public health expenses
3. Payroll expenses for public health, safety, direct responders, others dedicated to responding to the public health emergency
4. Expenses to help facilitate compliance with public health measures
5. Economic support for small businesses, government employee payroll support, and unemployment insurance

Treasury also identifies "ineligible expenses" such as certain payroll costs and expenses that will be reimbursed by another federal program.

Key Recommendations for Tribal Leaders and Department Leadership
Before a Tribe spends any funds from its CRF allocation, we recommend that the Tribe consider taking the following steps:

• Develop a budget - at the expense line level - of the types of direct expenditures it has incurred since March 1, and will likely incur before December 30, 2020. The budget might be further segregated by topic area. For ease of reporting, the budget might also be held at the Tribal Council or Tribal CEO level, rather than at the department or program level.
• Develop program descriptions for any economic support funding. For example, if the Tribe wants to establish a grant program for businesses (which can include the tribal owned businesses), the grant program should be designed to meet the parameters of the Treasury guidance.
• Obtain Tribal Council approval of the programs and budgets. This approval should be by written resolution. The written resolution might also include the following recitals:
  • The Tribe's specific COVID-19 issues;
  • Whether a public emergency was declared;
  • Major steps taken to address the public emergency;
  • Costs incurred to date;
  • Estimated future costs (based on the budget);
  • FY 2020 approved budget amount;
  • FY 2019 expenditures;
  • Determination of types of programs necessary to respond to the public emergency; and
  • Business interruption impacts on tribal owned, or tribal member owned businesses.
• Set up a separate chart of accounts to track CRF revenue and specific expenditures. This will support any reporting required or assist with the response to any audit.

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.

For more information regarding the Guidelines for Use of CARES Act Title V Funding, please contact your Quarles & Brady attorney or:

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