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4.a COVID Expenditure Staff Report Staff Report Date of Meeting: November 4, 2020 To: City Council From: Colleen Firkus Re: CARES Act Expenditures for Approval Background: On June 25, 2020, Gov. Tim Walz used executive powers to distribute $841.5 million of CARES Act funds to counties, cities, and townships over 200. Cities and townships under 200 population are allowed to seek reimbursement for any eligible costs—up to a maximum per capita amount—from their home county. Necessary expenditures incurred due to the public health emergency. The requirement that expenditures be incurred “due to” the public health emergency means that expenditures must be used for actions taken to respond to the public health emergency. These may include expenditures incurred to allow the State, territorial, local, or Tribal government to respond directly to the emergency, such as by addressing medical or public health needs, as well as expenditures incurred to respond to second-order effects of the emergency, such as by providing economic support to those suffering from employment or business interruptions due to COVID-19-related business closures. Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute. Although a broad range of uses is allowed, revenue replacement is not a permissible use of Fund payments. The statute also specifies that expenditures using Fund payments must be “necessary.” The Department of the Treasury understands this term broadly to mean that the expenditure is reasonably necessary for its intended use in the reasonable judgment of the government officials responsible for spending Fund payments. The Guidance says that funding can be used to meet payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency. How does a government determine whether payroll expenses for a given employee satisfy the “substantially dedicated” condition? 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. Proposal Details: Attached is a spreadsheet with documented, unbudgeted expenditures that meet the guidelines for CARES Act reimbursement. The requirements have been interpreted to presume that payroll costs for public safety employees are substantially dedicated to responding to the COVID-19 public health emergency and the only documentation required are the number of hours worked by such employees. This means that all the contract deputy’s hours, not including other expenses in the contract, as well as the Fire Chief and Firefighters hours worked from March 1, 2020 to November 15, 2020, may be submitted for reimbursement. Those calculations are not complete but an estimated has been provided. Fiscal Impact: Total expenses incurred to be reimbursed to date are $229,644.12. Estimated wages for the Deputy, Fire Chief and Firefighters would be an additional $162,035. Unused CARES Act funds must be returned to Washington County by November 20, 2020. Recommendation: Approve expenditures to date, and expenditures anticipated by November 15, 2020.