|The California State Budget for Fiscal Year 2020-21 included a $500 million appropriation of CARES Act funds to assist Cities in covering public health and safety impacts associated with COVID-19. CARES funds were allocated to local governments based on May 2020 population estimates. To receive funding, municipalities were required to complete a State Department of Finance Certification process. The City of Pacific Grove completed this requirement and was allocated $188,479 in CARES Act funds, which is scheduled to be received in four payments. To date, the City has received $62,286 which represents two disbursements. Remaining CARES funds are expected to be received by the end of October. All funds received by the City must be spent by December 30, 2020 or returned to the State.
The CARES Act requires payments from the Coronavirus Relief Fund (CRF) be used only to cover costs under the following circumstances:
- Necessary expenditures are incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);
- Expenditures cannot be accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and
- Expenditures must be incurred during the period beginning March 1, 2020 and ending December 30, 2020.
Additional guidance states eligible costs are considered to meet CRF requirements if either (a) the cost cannot lawfully be funded using a line item, allotment, or allocation within the approved budget or (b) the cost is for a substantially different use from any expected use of funds in such a line item, allotment, or allocation within the budget. Specified expenditure fall within categories related to CRF funding and reporting requirements are shown on Attachment 1. Categories most relevant to the City are highlighted for reference.
To support potential reimbursements, staff coded timesheets and invoices to identify COVID-19 expenditures. The amount of costs coded to COVID-19 activities through August 24, 2020 approximates $446,000. Current active funding opportunities are through the CRF and the Federal Emergency Management Agency (FEMA); however the FEMA criteria is much more restrictive and only 75% of approved costs can be reimbursed. Based on the CRF requirements, approximately $345,000 in City expenditures could be eligible for CRF funding; however this amount would be reduced by reimbursements from the Federal Emergency Management Agency (FEMA). As of this report, FEMA provided only preliminary reimbursement approval of $17,000 to support personal protective equipment, police overtime, and disinfection supplies and services. An overview of the expenditure categories are listed below:
|COVID Expenditures from March through August, 2020
CARES Act Expenditures
|Disinfect / Sanitize
| FEMA Preliminary Reimbursement
| Revised Amount
The City is actively working with FEMA to determine the extent to which $110,000 in COVID-19 legal expenditures may be reimbursed, as well providing additional documentation for reimbursement for two new electronic signs. While discussions regarding the signs have been promising, it is anticipated the majority of legal costs may need to be recovered through an alternative source or absorbed by the General Fund. It should be noted invoices for the electronic signs, as well as additional COVID-19 legal services are still pending; and are not included in the current list of expenditures.
At the time of this report, staff received conflicting information as to whether the City needs to submit a formal spending plan to the State or follow the City’s existing budgetary policies related to CRF revenues and expenditures. Staff initiated this concept review to begin discussion on use of these funds. Staff believes eligible expenditures will exceed the City’s share of CRF funds. Additional qualifying costs will be incurred through December. Council may also be interested in supporting alternate priorities. Sample funding scenarios are provided in Attachment 2 to assist with that discussion. The scenarios align with Council’s goals of Financial Stability, Help Local Businesses Thrive; and Community Responsiveness.