ARPA Funding: Eligible Uses, Tracking and Reporting
7:51PM Nov 18, 2021
Good morning everyone. My name is Shir Peterson I'm working with AFN as the deputy project manager on the navigator program and wanted to welcome you to this afternoon's or today's weekly training on Cares Act and Arbor funding. We are just waiting for a few more people. So if you hang tight we'll start in just a few minutes. Thanks so much
Hello, this is Chris. I apologize for being a couple minutes late.
No worries Chris. Thank you. So I think we can go ahead and get started. I was giving it just a few more minutes as people are still being admitted into the into today's session, but we'll just do a little bit of housekeeping as we're folks are still joining. So this is part of AFM navigator program weekly training that we that Alaska Municipal League and AFN have developed the these weekly trainings will go now until December 21. So, from Thursdays from 11 to 12. And coming up next week and the week of Christmas instead of on Thursdays it'll be held on Tuesdays so just please visit the AFN navigator program events and training work calendar and register through that and see what all the other opportunities and trainings that are coming up. I also encourage everyone to take a look at Ahmed AFN Navigator Program website. We'll include that in the chat so everyone has that link, but the funding opportunities the federal grants and funding opportunities webpage that we've developed that identifies the various grants that are coming out through ARPA and other sources that are specific to Alaska. And then when I say specific to Alaska, geared for tribes, Alaska Native corporations, native and tribal entities, so we've created a system that you can sort through by consort by category deadline, grant amount, eligible recipient, and also the level of effort We've color coded so that to try to make it easier for those grants that are easier to apply for and those that are a little bit more complicated. may need more time. We are also sending out a weekly newsletter that has updates, announcements, deadlines, training dates and funding deadlines that are coming up. So if you're not receiving that, please include your email in the in the chat and I will make sure that we add you to the mailing list. So with that, I'm going to turn it over to Chris Lottie Chris Lottie is a partner with the law firm Schwabe Williamson and buy it and forget the web. And so he is going to be talking today on Cares Act. And give us a little bit of update on that and also a few updates on our pub. So with that, I'm going to turn it over to you Chris.
Thank you very much Sarah. Appreciate the opportunity to present to this group again. And as I said, we're going to talk a little bit about the Cares Act and a little bit about ARPA, including providing an update on the what we hope is going to be an extension of the time to the time the deadline to use Cares Act funds by a lot for Alaska Native corporations and tribal entities
Okay, so you should have in front of you my PowerPoint presentation. So again, my name is Chris Lottie. I'm a shareholder probably once in a while but we work I work primarily with Alaska Native corporations and tribal entities, including on a lot of different Cares Act issues at ARPA issues as well. We're going to talk today about the Cares Act guidelines. And we're going to do kind of an overall summary and then I'm going to try to address some of the compliance and reporting issues that have come kind of come up that we become aware of us in a time between you know, August when folks least on the agency side, started receiving kurzick phones and to date. So in general, you can only use Cares Act funds to cover costs that are necessary expenditures incurred due to the public health emergency with respect to COVID-19 are not were not accounted for in your budget as of March 27 2020 and are incurred between March 1 2020 and December 31 2021. So really, the key here is for using Kerouac money is to find this thread of that connects COVID That your use of the funds and COVID-19 that the thread doesn't need to be direct. It could be indirect in some circumstances, but it doesn't need to be there. You do have as a recipient of the Cares Act funds a significant amount of discretion in determining that connection and whether or not there is a connection. Treasury has advised that you can only use Cares Act funds. Correct funds have to be expenditures of carriers and funds have to be necessary to respond to COVID-19. But they define necessary very broadly as including anything that is reasonably necessary for the intended use in the reasonable judgment of the officials responsible for spending Coronavirus relief funds so you see a lot of reasonable references to reasonable you know the word reasonable in there. And that really what it comes down to is you need to be able to make a straight face to a good faith argument that you're spending money on something that will respond to in some way COVID-19 They include actions such as addressing the medical or public health needs related to COVID-19 or providing economic support to those suffering, employment or business interruptions due to COVID-19. Again, these are pretty broad categories and they do a 40 a lot of discretion, provided that again you have that kind of through line or that thread of between spending the money and responding to COVID-19. One of the requirements is that the cost could not have been accounted for in your budget as of March 27 2020. Now one issue that has been kind of come up that has come up with this is well that was in March 20, March of 2020. It's now 2021 And a lot of organizations have adopted new budgets. And so what how does this restriction apply to new budgets? And essentially what Treasury has said is your new budgets kind of irrelevant. The only Treasury will only look at your budget that's in place as of March of 2020 and say, Hey, was this cost accounted for in that budget? So if you let's say for fiscal year 2021, you adopted a new budget that included a line item for Cares Act expenditures, or for items for which you would seek reimbursement from the Cares Act from Cares Act monies that is permissible, include inclusion of that line item in your budget. is not going to preclude you in your 2021 budget is not going to preclude you from seeking reimbursement from from from using repairs, funds to reimburse you yourself for those expenditures. Really, what Treasury's what Treasury and the Cares Act is trying to say is that if you were already going to spend money on on the project, as of March of 2020, you can't then kind of use the fortuitous occasion of the Cares Act funds to pay for that project. So use of CRF funds. I'm going to give you some examples. What What sorry, I'm sorry so that as I said before, they're gently have broad discretion to use the Cares Act funds on a variety of different projects provided that there's a connection to COVID-19. And if you're looking for some examples of that the National Conference of State Legislatures has a database kind of listing generally how other states have used Coronavirus relief funds, it Cares Act funds and there's the link to it is there now that the database is relatively general in its description, but it does give you some idea as to other states have used their funds and is a potential kind of area to look at for kind of innovative uses, particularly if the deadline to use the Cares Act funds is extended to 2022.
I didn't want to put out I found a couple instances and only a couple instances of treasury posting kind of public rip public reports. On, on on on situations in which Treasury has rejected a use of a character excellent is found that a use of characters I thought it was ineligible for the expense. One was an Iowa so the state of Iowa had a new accounting and human resources computer system and they tried to spend allocate $20 million of care tech funds towards the cost of the purchase and implementation of that that new HR system. The rationale for why was kind of necessarily incurred because of COVID was that it would better permit their employees to work from home and work remotely. And Treasury didn't really take issue with the use of the Cares Act. Funds for that purpose. Instead Treasury rejected I was use of pairs of funds for this new HR system, because the contract for the new system was signed in 2019 before March of 2020, and the system would not have been available until 2022 after expiration of the covered period. So treasury was again not challenging the idea that hey Cares Act funds can be a challenge the idea of using Cares Act funds to upgrade your HR computer systems to better permit telework but rather was challenging I was using those funds for that purpose because of the timing. They both had already made the decision to buy the system before before COVID And it wasn't even going to be available for use until after December 31 2021. The other example that I found was Treasury rejected America's small American Samoa's use of Cares Act funds to make $10,000 grants to members of the legislature to permit them to telework from their homes. And again, the issue wasn't necessarily the provision of money to legislators so they can work from home. But rather in this case, the legislators kind of offices were already under construction before March of 2020. And so they were already working from home before COVID and charge we said well they're already we're going to be working from home before COVID and therefore you can't kind of use Kerouac funds to pay for those costs because you are going to incur those costs anyways. So just a couple of examples of rejected uses by Treasury and these are the only two published rejected uses that I've been able to find. So there are generally kind of a couple different buckets that agencies have been using agencies and tribes have been using to to spend down their Cares Act funds. A primary one is reimbursement of past expenses, which are essentially unbudgeted expenses incurred since March of 2020. That were necessary due to COVID-19. And these could be expenses such as extra paid sick leave it improvements to permit telework, maybe some deep cleaning or air filtration systems that have been installed. Oh, those would be unbudgeted expenses. necessary to do COVID-19 and eligible for reimbursement. Now, for for your purposes, when you're trying to determine or time to document why you're using your Cares Act funds for these reimbursement of past expenses. We do think that it's advisable to document what you're reimbursing yourself and why and really, for every kind of category of expense or item of expense, you're going to want to document how much you're reimbursing yourself for the date the expenses incurred, because you want to make sure that it was after March of 2020. And then you want to have a short description of why the expense was necessary due to COVID-19. And again, it is there's you have a lot of discretion to determine what expenses were necessary due to COVID-19 provided you can make that connection, but I do think it's helpful to put it in writing either in for example, an Excel spreadsheet, which is the notes column next to each expense or a memo to file for each general category, but having some type of internal documentation so that if you do get audited, you can show either your external auditor or Treasury, the rationale that you were applying at the time I would note that if you're reimbursing yourself for an expense that for which you previously claimed a deduction on your tax return the amount of that reimbursement may be characterized as taxable income. Another large category of course bucket that most agencies and tribes are using their Cares Act funds is on providing direct financial assistance to their member tribal members or shareholders. As a reminder we can only provide tribe direct financial assistance to a tribal member or shareholder if they certify that they have a need for it. Because of COVID-19, ie they submit an application in which they certify that they've been negatively impacted by COVID 19 and that the negative impacts that for which they are seeking financial assistance have not been reimbursed are covered by other Cares Act funds.
So everyone's kind of project pretty much is pretty well aware of the issues related to that application process. It's a pretty simple process, but some additional issues that have arisen over the last couple months. One question that we've gotten relatively regularly is what about minor shareholders or shareholders with guardians or conservators? And there are certainly significant issues that arise with trying to provide financial assistance particularly to minor shareholders. So what are those issues? Well, the application is essentially a contract between the native corporation or the tribe and the applicant, because the applicant is making certain legal representations to the tribe or the ANC in exchange for getting for receiving the financial assistance. And the idea of the application is that well, if the applicant is lying, then the Alaska Native corporation or tribe has the ability to recover the amount of funds that were inappropriately provided. To that applicant. And that is an important aspect of the application for purposes of your kind of meeting any audit or Treasury requirements. However, for minor shareholders or shareholders with guardians or conservators, it raises an additional issue because minor shareholders and shareholders with a guardian or conservator are large quite large in many cases, not going to have the legal ability to sign a contract. And so having applications that are signed by minor shareholders raised significant issues over the validity of their application, both in terms of can they really make the representations that they're there they're making and can you rely on them because they're a minor or someone who has a guardian or conservator, or if they do lie on the application do not have really any way to enforce it because it's not an enforceable contract. One way around that is of course, having the parent or guardian sign on their behalf and that is how some agencies have approached this. If you do that, you do want to make it clear that the parent or guardian is seeking assistance for expenses or losses incurred by the applicant as opposed to the parent or guardian. Because again, if you're sending a check to a minor or a person with a guardian or conservator, really that support is supposed to be for COVID-19 related expenses or losses incurred by the applicant and not by a family member. However, that does raise an issue, additional issue. Can a miner really have COVID-19 related expenses or income? And there certainly are certain circumstances in which they can, you know, we could easily examine a 17 year old for example, losing their job or having reduced hours maybe they're working at a fast food establishment. Or stores like that, and they either got laid off or get had reduced hours. A 17 year old, certainly, they may be a minor, but they probably almost certainly had COVID-19 related expenses or losses and would be eligible. But what about the six year old right does a six year old shareholder really have COVID-19 related expenses or income or those expenses really on losses? Something incurred by their parents and not by the actual applicant? Isn't that does raise an issue, that maybe there's a potential kind of compliance concern in that Treasury or you're single otter may pluck those six year old shareholder applicants to the extent you have any out in question your use of the Cares Act funds on on providing support to that individual person. One workaround is providing for household applications, ie someone's applying on behalf of the entire household, including any children or providing that only shareholders or tribal members who are 18 or older can apply and that those with dependents can maybe get an additional amount beyond what what your your kind of flat amount is. For example, let's say you're providing $1,000 A financial support for applicants. Maybe you could say $1,000 for applicants and then if you have dependents, you get an extra $200 per dependent or something along those lines. That's permissible. And one way to make sure that those those applicants would families, who we can logically assume will have higher COVID-19 related losses or expenses than single ended single household single person households. get additional financial assistance. One significant question that a lot of people have had is what do we do about child support orders? Right? If you're a native corporation or a tribe and you're you received a child support order directing you to kind of withhold distributions or dividends based on a child support obligation. Do you have to comply with that when providing Cares Act assistance cares ACH payments? Well, a variety of agencies reached out to Treasury try to get guidance on that. And treasurer responded by stating that agencies must comply with garnishment orders as applied to Keres ACH payments. So to the extent you do have child support orders on file, you do have to comply with them when issuing and sending out your Cares Act checks. What about taxation recipients? It is our view that the Cares Act of citizens that you're providing to your individual shareholders or individual tribal members. Should be non taxable as a general welfare benefit. However, if you're providing Cares Act assistance in the form of grants to a small business or other kind of entity, that likely will constitute taxable income to that entity.
What about deceased shareholders and this issue actually come up a lot, but it did. I did have one question about it. The kind of the issue as well if a shareholder has passed away after submit or before submitting an application, can their estate submit an application? It's a little bit of a gray area, I would generally think that they could, but the estate should be represented by a personal representative appointed by a probate court. And most Alaska Native Corporation shareholders and tribal members are most people in general and up don't really if they have a if someone passes away, then don't seeking probate or having a formal personal representative appointed. So that may not be feasible, but you should not be accepting applications on behalf of deceased shareholders that's just filed by for example, a spouse or a family member, they really should be if you're going to accept them, the application should be signed by and submitted by a personal representative of the estate. Now what about if a shareholder passes away after submitting an application? Are they eligible to receive care practices in my view, they should be particularly if your application process is reimbursing them for cares that expenses they incurred before they submit the application. However, you know, you'd want to make sure that the that the check the assistance check is going to as a state versus a family member, which could cause issues regarding to probate or actually having them to cash that check. But from a compliance perspective, I do think that that check to should be going out kind of made out to the estate, as opposed to just a family member or spouse. Nonprofit assistance so this is another large category, that agencies and tribal member and some tribes are trying are using to try to expend the funds before the December 31 2120 21 deadline. And really the key that I wanted to raise about here is understanding that are you providing support to a nonprofit? In the context are you are they going to be a beneficiary or a sub recipient because there are different rules and obligations that apply that apply? Under the Cares Act? A sub recipient is an entity to whom you provide Cares Act funds that they're going to use for a forward looking project. And this is an example let's say you have a nonprofit, you want to give them money and they're going to go maybe do a provide housing assistance, or maybe they're going to use the money to provide food to elders or provide maybe a youth program or something like that, but something that's going to happen after the date that you give them the money. If that's the situation, that nonprofit is what's going to be called a sub recipient. Because essentially, they're going to be expending the funds on your behalf for the project for which that they've identified. However, because they're spending the funds on your behalf, you are still ultimately responsible for the way they spend the money and and particularly that they have to spend the money in compliance with the Cares Act, and that if they go and spend the money for an ineligible use, or if they spend the money currently after December 31, you are responsible for they're ineligible use the money and may have to reimburse Treasury for the money that they spent. So essentially, the funds that you give to a sub recipient remain subject to the requirements of the Cares Act and you're going to want to have a grant agreement with those sub recipients in which they agree contractually, to comply with the Cares Act rules in terms of spending their money and that they agree to reimburse you if they violate those rules. Now, the other option is let's say you're giving money to a nonprofit but you're reimbursing them for money. They've already spent, let's say the nonprofit spent a bunch of money over the last year on PPE or on cleaning or on doing kind of changes to their struck their infrastructure to provide for social distancing. When they're just coming up. Hey, this is the money we spent. We want to get reimbursed for this COVID-19 related expenses. Well, if you're reimbursing them for past losses or expenses, they're actually a beneficiary. And you'll and once you reimburse them for that money, once they get the reimbursement, then that money is unrestricted in their hands. They could use it for any purpose. So when you're kind of receiving grant applications from nonprofits, one way to think about it is well, maybe the they want to use this money on a on a on a project going forward that is kind of in a gray area of being permissible under the Cares Act, and you don't want to take that risk. Well try to figure out are there expenses or losses that they incurred historically, since 20, to March of 2020, for which you can reimburse them and they can then use that money? That is as a reimbursement, it's unrestricted, they can then apply that money to the project they're going to use going forward. So there's some kind of strategic kind of approach you could take to nonprofit assistance. As I said before, if you're giving money to a nonprofit and they're going to be a sub recipient, ie they're going to use the money going forward. You want to have a grant agreement, an obligation that requires them to comply with Cares Act fund limitations on the use of the funds, it poses record keeping and reporting obligations and includes an indemnity and agreement to return and reimburse the Cares Act funds in the event they violate those Cares Act rules.
One additional thing to note is that for reporting to Treasury through the portal, right, you have to you have to you have an elevated reporting obligation for a grants that are in excess of $50,000. You have to provide certain individual items individual reports individual information about those specific projects. But for projects in which each for kind of Cares Act programs in which individual payments are less than 50,000. You only report those on an aggregate basis. And so if you're looking at if you want to kind of limit your your audit risk or limit your exposure to the extent you can keep your nonprofit grants less than $50,000 per nonprofit, you can kind of lump them into an aggregate nonprofit support program and don't necessarily have to rely on significant detail regarding the individual awards or individual programs funded under that under that nonprofit kind of aggregate program. When you're looking at grants, you could also take them in two different approaches you can set structure them as reimbursable, which means the recipients going to first incur the expense and then seek reimbursement from you. This provides you to greatest oversight and control but does require the recipient to have the funds to kind of front for the program which may not be feasible. Another alternative is you provide them a lump sum payment upfront and then they go spend that money on the program. That is probably the more likely approach because a lot of nonprofits are simply not going to have the cash to spend it and then seek reimbursement. But it does provide a does expose you to additional risk because you may have you're kind of relying on the nonprofit to properly spend the money and you may have difficulty in climbing back the funds if they are used improperly. You do want to identify in any type of award or grants either to a beneficiary or sub recipient, what you're giving the money for so if you're giving money to a nonprofit as reimbursement for past expenses, you want to send them a letter identifying Hey, you submitted this application for these past losses. And expenses. You have certified that those losses inspect expenses were incurred due to COVID-19 you agree to reimburse the corporation if you make any false or misleading statement in your application, you agree to document keep documentation of your expenses or losses and provided to the ANC or tribe upon request. And that then when and that kind of documents their status as a beneficiary. So when Treasury or your Seagull auditor comes in and says Why did you give money to this person, you've got a grant on award letter kind of detailing that out and can explain it easily to them. So auditing legal expenses related to COVID and 19. That's another bucket of expenses for which are an eligible use of Cares Act funds. Essentially, the cost of managing Cares Act funds is a reimbursable expense, including the cost of related it or other infrastructure like you used to hire a web developer to set up an online application process for your grant for your financial assistance, Grant financial assistance applications. That's an eligible expense that you can reimburse yourself using Cares Act funds. More importantly, to the extent your employees are working on developing, issuing, managing and processing applications. The time they spent doing so is also a reimbursable expense. And if you have employees who that's the only thing they do, then their entire cost of their cost, their entire cost is reimbursable. If you have employees who do other non Cares Act things but also process applications or or grant applications, they're going to want to record their time on a minimum of an hourly basis. And the amount of time that they spend specifically on Cares Act issue is a reimbursable expense. To the extent you're subject to a single audit, and you need to hire an outside auditor, that is a reimbursable expense, even if you incur that expense in 2022. Similarly, if you hire a lawyer to help you develop an application process or to respond to an audit or to answer questions about the eligibility of Cares Act expenses or use of cares like money, that is also an reimbursable expense.
So let's talk about new projects, which is becoming kind of more and more problematic, given the time of the year. In general Cares Act funds can be used for Real Property Acquisition and improvement so you can go out and buy a building you want and buy a truck and buy an ATV. You can buy different different equipment and facilities provided that the facilities are going to and equipment is going to be used for COVID-19 related purposes. And it is put into service by December 31 2021. And you cannot meet the need arising from COVID-19 in a cost effective manner by leasing property or equipment or by improving property audio audio versus purchasing it. Essentially what what Treasury is saying is that if you're going to buy something, you're going to need to be able to document that buying it was the most cost effective way versus leasing it or using some other method. And that the kind of the common example is let's say you wanted to have a truck so you could transfer a van to transport shareholders maybe from their homes to the to the village clinic or to a hospital. Well, it may be the treasurer is going to want you to come in and be able to say hey, it was more cost effective to go out and buy that van versus leasing one. And as we get closer and closer to the deadline for using the funds December 31 2021 It becomes harder and harder to justify purchasing versus leasing given a short period of time. However, you know, one thing to consider in that cost benefit analysis is is there it can you even lease anything. Can you Is there a building to lease is there equipment to lease to meet the COVID-19 need and if there's no way to lease anything to meet that need you can only do it by buying it. That is one way to kind of sidestep the the cost benefit analysis.
As I said we're considering availability lease options you want to consider when you're doing this cost benefit analysis, the amount of use are you going to using it once or twice a month or frequent or more often, it's only once or twice a month, maybe that suggests that you can lease it on an as needed basis versus if using it every day. Maybe that's not feasible and purchase makes more sense. To the extent that the dollar value goes higher, it's going to cost more then you're going to require more justification for purchasing versus leasing.
So prepaying 2120 21 for services that you would receive in 2021 and 2022 is a gray area in certain cases. One the Treasury does state and it's question and answer that can entities including agencies and tribes prepay with Cares Act funds for expenses such as a one or two year facility lease, such as the how staff hired in response to COVID-19 the responses the government should not make prepayments on contracts using payments for the fun to the extent that doing so would not be consistent with its ordinary course, policies and procedures. So that suggests Hey, you can prepay at some places. But other aspects of the guidance states that well for leases, if you pay for a full year lease now let's say in November of 2021 only that portion of the lease that falls within the cupboard period, which is expired, which ends on December 31 2021. Is an eligible cares ACA spent so you can only kind of reimburse yourself for a proportional share of that that full year's lease. So that's just that at least as to leases. You probably can't prepay a full year's lease that extends into 2022. Currently, although the q&a suggests there may be other situations in which there are certain items which you can prepay now. Even though that kind of surface is going to extend it to 2022. It's a very much a gray area. It's very much a high risk area. And so you'd really want it to look at it very costly and have you know, Will you will you really be taking a significant risk if you're buying a service now and you're preparing it for full full year, and that service is going to extend in 2022. So what's the one thing I really want to kind of spend some time on is this extension of the deadline to use Cares Act funds, because this thing is going to be extremely helpful to agencies and tribes. So, it on October 19 2021, the United States Senate passed Senate Bill 3011 by unanimous consent, which means it didn't even come up for a vote technically really a vote on the floor of the Senate. It was just passed by 100 essentially 101 100 to zero. It got passed out of the Senate. A Senate Bill 303011 does a couple of other things, but for purposes of the Cares Act, it extends the deadline for tribes and Native corporations to use Cares Act funds until December 31 2020 2020 22 and is currently waiting on House passage. There have been multiple house sponsors. New House new sponsors of the bill have been added. I mean, obviously Don Young is a sponsor, co sponsor, many other influential, both Republicans and Democrats are co sponsors of the bill. And so there's some hope that will get passed before the end of the year. However, we do know that Congress can be relatively dysfunctional at times, and maybe a kind of a political casualty, not due to the merits of its own what it's trying to do, but rather for unrelated political reasons. You know, to the extent that you do have contact with common members of Congress, particularly in the house, you know, urging them to act on this bill and pass it would certainly be helpful. We really don't know of anybody who was opposed to it. The only thing I think I think Sarah had a note to me, she advised that even the even some of the cities and governors are going to be are supportive of this provided that kind of the extension of time is also extended to include state and local governments, which it currently does not currently, it only provides permits tribes and agencies to spend Cares Act funds in 2022. So that's where we're at where it's currently pending in the house. We're waiting on House passage if it passes the House and is signed by the President, then you have an additional year to use Cares Act funds, at which time I think it really opens up the world to a lot of agencies and tribes to kind of more effective long term our use of the funds Cares Act funds to make a more of a long term impact, including potentially if you have access care's funds, a second round of financial assistance, there's nothing in the Cares Act says that you only get one one attempt to provide financial assistance to your shareholders or tribal members. If this extension is granted and you have additional shares or funds you want to spend, you can certainly have a new round of financial support for your shareholders. Again, they're going to need to certify that this new support they're getting is for costs or losses incurred due to COVID-19 that have not been reimbursed by other payments including the prior payment. But as long as they can make that certification they'd be able to receive enough second round of financial assistance.
In addition to extending the deadline to expend funds by agencies and tribes, Senate Bill 3001103011 also makes material changes to ARPA, and most importantly for the folks on this call, is that it would permit tribes to use the first two 10 million of ARPA funds that they received for the quote provision of government services. So really, it doesn't define government services but it clearly includes roads, infrastructure, etc. It really kind of anything on government could spend money on. So it's Senate Bill 33 011 is passed by the try by that by the house for most tribes in Alaska. It will basically eliminate almost any restriction on your use of ARPA funds. So when that's another kind of significant reason to support Senate Bill 3011 is that it will greatly expand the ability of tribes and Alaska to use their opera funds on general infrastructure development on roads and infrastructure and not be tied by even the permissive restrictions that is currently contained in art.
Let's talk a little about some reporting and guidance issues. So what you have in front of here is some you know that Department of the Treasury Office of Inspector General has issued some updates and some guidance on reporting and record keeping requirements. If you just kind of Google the sites on this page, you'll be able to find those very easily. If you would like copies you could also feel free to reach out to me or Sarah and I'm sure either of us will be able to provide you two copies of these documents. Really, the key is you're going to have to document report to Treasury how you're spending the money. Now, as we noted before, performance of delivery of a service or good purchase using Cares Act funds has to occur between March 120 20 and December 30 2021. Assuming Senate Bill 3011 is not passed. But please note when they're talking about incurring or purchasing is you basically signed a contract to buy it and it's been delivered. You can pay the bill within 90 days after you're incurring it. So if you let's say you're buying some masks or you're buying some PPE, and you get it delivered before December 31 2021 And then they get you but your invoice is not received until January or you don't pay the invoice until January or February. That's not going to be a problem in terms of your eligible use of cares funds. Were the only place where you get a problem as if you don't get delivery. You don't actually don't have the service or the product available for us before December 31 2021. So if you're using a third party administrator to kind of administer your funds, maybe you hired somebody to be a grant administrator to kind of administer your financial assistance program. You don't have to request verify 100% of the applications that are approved by the third party administrator. It's kind of you're responsible for deciding what level of review you need or want, but you are responsible for maintaining documentation to support the use of the funds and you are ultimately responsible for compliance with the Cares Act restrictions. So again, you're not going to you don't have to verify 100% of the applications approved by a third party, but you're still ultimately on the hook if they're inappropriate if there's any application that a third party gives me inappropriately approved on your behalf. Let's say that the extension of time to use the Cares Act fund is not extended wondering and have to return unused care cares I funds no specific guidance is provided. But they're the Cares Act reporting by Native corporations and tribes does extend to kind of either the, the last quarter after you have used all your expenses or repay them to Treasury or to September 30 2022, whichever comes first. Quarterly, we think that the deadline to return unused cares like funds is likely to be earlier of when all of your cares expenses have actually been paid and you don't have anything else to pay. Like when all your financial assistance checks have been cashed etc. or September 30 2022. All your records regarding Cares Act use of Cares Act funds including invoices, checks payments grant applications financial assistance applications from shareholders, your future written your written policies on use of kiradech funds, etc. All your Ledger's your general Ledger's, your journal entries. All of those should be maintained for a minimum of five years after your final payment is made using using Cares Act funds either to applicants or recipients. Or back to Treasury. And this five year kind of record retention requirement applies to both you as the agency or tribe and also to any of your sub recipients or grantees. It's likely does not apply to beneficiaries. But we do recommend including some record retention requirement in any of your shareholder assistance applications or small business applications or nonprofit assistance applications. Only the primers only the prime recipient reports as to their use of Cares Act funds received directly from Treasury so if you get Cares Act funds as an agency or tribe from someone else like maybe a your regional Corporation provided some assistance to a village corporation of Kazakh funds, while the regional corporation will have to report on use of those Cares Act funds. But the village corporation does not that village corporation only needs to report on its use of cares that funds that directly received from Treasury. You're going to report on an accrual basis. Ie when you incur the expense unless your practice is traditionally put on a cash basis for all of its financial reporting, to kind of follow how you traditionally report and record your expenses. As I said before, grants of 50,000 or more must be separately reported, while grants less than 50,000 must be reported only in the aggregate so for example, if you have a shareholder assistance program in which individual application is maybe $1,000, and the aggregate support provided is maybe $100,000 or $200,000. Well, that's each individual application or each individual payment is less than $50,000. So you're going to when you're in Grant Solutions, when you report those expenditures, you report them in the aggregate, how much have you paid to the shareholders in total, and not an individual basis?
One issue I wanted to talk about was ARPA and Cares Act coordination particularly if Senate Bill 3011 is passed. And we have an additional year for agencies and tribes to use Cares Act funds. So under ARPA, a tribes have received funding money from the COVID state fiscal Recovery Fund, which is designed to assist tribal governments to mitigate the fiscal effects stemming from COVID-19 pandemic. Under ARPA, the tribes have a much broader ability to use funds than they do under cares under the Cares Act. And this is even going to be even more true if Senate Bill 3011 is passed. But even if Senate Bill 3011 is not passed, or if that portion that amendments arco was carved out and for some reason, ARPA has a very broad use of Cares Act. Funds. You can use Kazakh funds on public health emergency or negative economic impacts. Used to pay premium paid workers performing essential work and you can use it for water sewer or broadband infrastructure. And in particularly, tribes can use public ARPA funds for housing infrastructure and affordable housing, including buying housing, providing housing assistance, you know, helping respond to homeless, proper population issues, etc. You can use ARPA funds on for water and wastewater projects, really kind of very broadly defined, and you have a significant amount of time and I'm sorry, and also for broadband, all which are categories of uses that are significantly in the gray area when you're trying to use Cures Act funds on them, and so may not be eligible. And more importantly, ARPA funds, tribes have until 2026 To spend all the money as opposed to either December 31 2021 are the best December 31 2022 for agencies and the Cares Act funds. So what this means is that there's definitely an opportunity for agencies and tribes to kind of coordinate and project and adopt a strategic approach to funding opportunities. And kind of considering the different timelines and applications. And kind of, for example, if a project can be funded using both Cares Act and ARPA funds, you may want to use Cares Act funds to fund it right now. So if you could free up ARPA funds to be used for the broader projects that are not eligible projects under the Cares Act. So I think if you're a tribe and have both Cares Act and ARPA funds, or if your agency and have a close relationship with your related tribe, and they have ARPA funds, and you have cares that funds I think there's opportunities for strategic coordination to target the Cares Act. funds on those kind of clearly eligible expenditures to free up as opposed to using ARPA funds on those because that would free up ARPA funds to be used for the broader projects. I didn't want to identify you know, we there are certainly a lot of funding resources out there. Sarah mentioned that Alaska Native Alaska Federation natives has its navigator program. That's a great resource. In addition to that under ARPA, the the Alaska Municipal League at Alaska arpa.org has a lot of good information about potential grant opportunities, both under ARPA and just kind of in general. And we also know that with the recent the recent infrastructure bill has a lot of money. It has essentially set aside for tribal entities, including Alaska Native corporations, particularly in the areas of broadband. And there's also some opportunities for water infrastructure and energy infrastructure. So as the infrastructure bill kind of gets implemented as the agencies have published their guidance on on the different grant opportunities, there's a huge opportunity. There's a basically a large pool of federal money out there that is going to be available to both tribal entities and Alaska Native corporations to provide for infrastructure and other kind of similar development in your villages in other areas. You know, I think that there's really a good opportunity here to kind of seize this federal funding and provide significant long term infrastructure improvements to both interior Alaska and then also kind of just for general business development for corporations either because they're receiving grant funds and they can now fund projects or because maybe now they there's gonna be more construction or more development, and that they can provide supports as a general contractor or as a subcontractor, etc.
One thing on the ARPA reporting on that the Treasury has updated it. So tribes that have received less than $30 million in ARPA funds. Now only need to submit their project and expenditure reports annually, whereas before you had to report them quarterly. So for anything, most tribes and Alaska probably received less than $30 million in ARPA funds. So for those tribes in Alaska that did receive less than $30 million, your, your first deadline kind of your initial project and expenditure report is not going to be due until April 30 2022, and will cover the period of March 3 2021 to march 31 2022. And then subsequent annual reports must be submitted to Treasury by April 30 of each year. Then I've got kind of the deadlines here on that slide in front of you. So just if you're a tribe that received less than $30 million in ARPA funds, kind of put April 30 2020 2020 22 As your initial deadline to file your project, your initial project and expenditure reports. When you submit and your annual project expenditure reports, you're gonna generally have to include the same data as you're submitted that far in connection with the Cares Act funds. For projects that include some project specific data like a short description of it, your current period and cumulative obligations and expenditures, the status of the project I as you started it or not, is it less than 50% more than 50% Complete or complete? For suborders greater than $50,000 You're going to have to have additional information. And this has specific data is supposed to say specific data for different categories of projects will be required as well. But again, for your for tribes and Alaska that have received less than $30 million of ARPA funds. Your initial deadline reporting deadline is going to be is going to be April 30 2022. Alright, so that's the conclusion of my PowerPoint. And I was going to at this point looks like we may have some chat questions. So and also if anybody wants to ask a question, unmute and ask your question in front of everybody. Please let please do please. Unmute. And, and before
I Hi Chris. This is Sarah. I am trying to respond to some of the questions in the chats. I don't see. We already talked about the Alaska ARPA webpage for tracking as far as the broadband funds for the state of Alaska, I would Brenda I would recommend reaching out to Niels with the Alaska Municipal League. I know there was a broadband group so he may have some information as to what exactly the state is doing.
And one thing too about that the infrastructure bill. So a lot of the kind of the grant applications of the programs developed an infrastructure bill. A lot of them say like Alright, here's here's a pot of money going to this state or it's going to the state or it's going for these grant programs or it's going to this department for this grant programs. And then that state or that department has, you know, 90 to 100 days or 90 to 180 days to actually roll out the grant program. So, for infrastructure bill, we typically you're going to have there's going to be a delay between passage of the bill and when that the various departments actually publish there. Here are the terms of the grant application. This is how you actually applied for the grant.
In terms of the question, I think about I think there's a question about from Minto about you know, where, what, where it gets happened to broadband funds? Again, I think, you know, looking at the NTIA FCC website is a great place to start. I'm going to AFS navigator program. I know that we've got some, some information about broadband gaps there I believe, I believe I think Alaska arpa.org The one that website maintained by Municipal League has similar information. But I think starting with the FCC is probably a good place. We do know that they've gotten a significant portion of the money in infrastructure bill is dedicated to broadband or really want to try to, you know, make extend a digital connections and, and it's both for providing you know, last mile service and financial assistance to individuals who want to get internet service, but also a middle mile, which I think is where a lot of agencies and tribes, maybe there's a good opportunity there where you could serve to provide the middle mile service. There's certainly an opportunity there both to get service to your your your locales, and also maybe a business opportunity.
I see a question for direct assistance to shareholders Is there a limit to how much that can be? So under Cares Act, the limit is it has to be an amount that is that they haven't can't be more than the losses that they have incurred due to COVID-19. There's no specific documentation. And essentially, if you wanted to try to give $10,000 to a shareholder, you could provided that that shareholder can actually document they suffered that amount of loss through like a letter from their employer bills, invoices, etc. That's typically not has not really been feasible for Alaska Native corporations and tribes to kind of provide this type of a try to provide that support. So instead, what most Alaska Native corporations and tribes have done is said well you know, we think it's administratively feasible to say if they certify that they have suffered a loss of up to x and we can provide that check to them that assistance without requiring requiring any receipts or invoices or bills or something like that. There's no specific bright lines as well can't be more than this, that that kind of blanket amount. Typically, we've seen the mouse pay between $300 $1,500 $1,800 Maybe $2,000. Kind of that is the range that we've seen a lot of native corporations and tribes kind of do in terms of providing the financial assistance under ARPA, it's a little bit more you're a little bit under arpa. They say, Well, you can provide financial assistance, but you're going to want to look at what the federal government has done and kind of not be more than that necessarily. And that would be that 1400 $1,600 range. So again, for financial assistance, your shoulders, that three, you know, kind of up to 1415 $1,600 range. I think you'll be very comfortable and having a shoulder assistance program that's providing that type of assistance.
So there's another question, are there exemption provisions for single source contractor and Alaska? Can't get three estimates unless you go out of state if you're talking about the deadline to use the Cares Act funds by the end of the year, there is no exemption, or exception. Treasury has said that well, if you've already if you sign the contract, and let's say you sign a contract for delivery on December 15, and then for an unexpected reason that delivery gets delayed to January 15. Well, that's going to be permissible that's not out of your control. You could still pay for that kind of expense or that that product using Cares Act funds. But if you sign the contract for that product, knowing that it's not going to be delivered until after January after December 31. That's not going to be an eligible expense. So they don't really have any exceptions from what we know everybody's wherever the significant supply chain issues that Alaska is dealing with right now.
So the question is for the ARPA exception, um, oh, so I guess maybe the question is, you need to get three estimates to use ARPA funds. And no, you do not want you don't need to get federal approval before you spend ARPA funds for Cares Act funds for that matter. And really, for ARPA funds, if you're talking about the Coronavirus statement, fiscal relief fund, you know, your use of those funds is really kind of up to you. In terms of your procurement policies. Now, multiple bids multiple estimates is certainly warranted and certainly appropriate. But if you're if it's not feasible to have them, and there's no statutory requirement or regulatory requirement that you do, so. You wouldn't want to document that. I think just to make sure that if you did have an auditor come in and say, Why didn't you get multiple estimates? I say, Well, I couldn't because there weren't any other. There weren't any available in Alaska. It wasn't feasible to go out and see.
And Chris, I would just ask the group as well as if they're any less restricted Cares Act fund and given the status of the extension. In one of the previous sessions, Alaska Municipal League provided an Excel summary or an Excel spreadsheet of different uses of Cares Act funds. So if we can make that available on this recording as well, you know, on on the calendar, after we that when we post this recording, I can make sure that those material that material is there as well. So if you are trying to find ideas of how to use any remaining Cares Act funds, the spreadsheet was a good use to scroll through and see how different people use some of the funding so
we had another question like for mortgage help utilities, help at the shoulders are behind their bills because of loss of work that should qualify them for help. I've seen cities helping for up to three months of help. Yes, providing, you know mortgage assistance or utility assistance. Would it be an eligible expense under both Cares Act and ARPA funds? Again for the Cares Act? I think you'd have to limit it through the end of the year for ARPA funds, you could provide additional support going into 2022. So if you're seeing some cities providing help for up to three months, you know, that may be using Arca funds, letting them push beyond December 31 2021. And that's just a good reminder that ARPA funds are much, much broader as a tribe. Tribes are under ARPA tribes were given broader eligibility in terms of their use of the funds, broader discretion, broader categories of permissible use, and one of permissible use of ARPA funds is providing financial assistance to shareholders, either in the form of direct financial assistance, or providing utility assistance, mortgage assistance, heating, oil, heating assistance, electrical assistance, etc. And, you know, to a large degree, there's a way to set up your use of the ARPA funds in a way that does not require individual applications. Or certainly not require certifications have kind of impact by COVID. So there's, if you're a tribe and you have unused DARPA funds and you want to provide financial assistance to shareholders, you have even broader ability to do so. In ARPA than you did. On our Cares Act.
So the question is, so if your shareholder is behind on the mortgage payments, so long as we can catch them up by the end of December that should work? Yes, provided that they can certify that they are behind on mortgage payments because of COVID. And you'd want to have kind of a specific application from them rather than just paying their mortgage. You know, you want something in writing by them certifying that they are they're unable to do this because of COVID and that they they have not been reimbursed for these COVID losses by other means. So for ARPA, I think they're I think there's a way to set it up where the application process is, is not in the same is not the same as under the Cares Act because under ARPA, I'm sorry, we got a question in the chat says Does that mean applications aren't needed for Member Assistance? payments through ARPA ARPA says that you can kind of determine that everybody who has a low or moderate income has been negatively affected by COVID-19 and is therefore eligible for assistance. So I think there's a way to structure that program to either have a much more minimal type of application process or even providing general general assistance to a group of shareholders or tribal members. Kind of particularly if you focus it on like everybody in this community, in a remote community for example.
Like Chris, I don't know if you responded to there's a question from Janet, regarding the website to the financial reports. And yeah, if you're referring to the the Treasury portal, Reporting Portal.
So I'm not sure this is the same one, but I'm going to put in the link to the National Conference of State Legislatures on that has a summary of how states have spent cares I'm not sure if that's the one she's referring to, but that's where I'll go.
So sorry, sir, is it is a yes to Chris, the financial reports and how the money's being spent or is it on the Treasury portal? The Reporting Portal.
Chris, do you have that quickly on hand or I can
because Janet, you're absolutely right. The Treasury Reporting Portal is not easy to find.
Attach it right now.
And that's where your art for reporting.
I'm going to put in the chat also the link to the Treasury Treasury's kind of submissions monitoring and review procedures guide so this might provide some information about what Treasury is looking at when they're reviewing your submissions.
All right, well, with that we're we've reached the end of today's training session if you have any other questions or think about anything, after the session today. Feel free to to email navigator at native federation.org. And we will be able to respond to any of those questions.