The Baker-Polito administration announced on May 14 that it will distribute up to $502 million from the federal Coronavirus Relief Fund – part of the CARES Act – to local cities and towns for eligible costs related to the COVID-19 response effort.

The administration is also providing guidance to municipalities on the formal distribution process and establishing protocols to maximize the use of federal resources and promote compliance with federal restrictions.

According to the administration, this distribution, plus funds allocated directly to Boston and Plymouth County, represents approximately 25% of the state’s allocation from the Coronavirus Relief Fund, and, in most cases, is expected to be sufficient to address incurred or expected eligible COVID-related expenses.

The application deadline is June 5, but submissions will be reviewed and approved on a rolling basis. The administration intends to distribute money to municipalities “quickly and efficiently, and maintain necessary flexibility to allocate additional funds if unanticipated needs arise, or if federal rules change.”

The administration intends to distribute money to municipalities “quickly and efficiently, and maintain necessary flexibility to allocate additional funds if unanticipated needs arise, or if federal rules change.”

These resources will also help ease municipal cashflow pressures, according to the administration.

The distribution process allows municipalities to apply for estimated fiscal 2020 needs. These funds will help address any existing emergency-related deficits in fiscal 2020, thereby avoiding the need to use reserves to fund a deficit or carry one into fiscal 2021. Municipalities will have the opportunity to request funding for fiscal 2021 eligible COVID-19 costs at a later date.

These funds must be used by municipalities consistent with parameters established by the federal Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) and guidance from the U.S. Treasury Department.

The CARES Act authorized $150 billion through the Coronavirus Relief Fund for state and local governments, including $2.7 billion for Massachusetts. Aside from large local government units (Boston and Plymouth County), funds have been sent first to the state, with the expectation that the state will use funds for its own expenses and those of municipalities.

Under federal law, eligible uses must meet three conditions:
1. They must be “necessary expenditures incurred due to the public health emergency with respect to … COVID-19.”
2. The expenditures must not have been budgeted as of March 27, when the CARES Act was enacted.
3. The expenditures must be incurred between March 1 and Dec. 30, 2020.

Beginning on May 15, municipalities, through their chief executive officer, can complete a web-based application form. The application and complete CARES Act information can be found on the Division of Local Services website.

FEMA match
In a call with municipal leaders on May 19, Administration and Finance Undersecretary Catharine Hornby shared the news that funding from the CARES Act can be used to cover the 25% match required for emergency aid from the Federal Emergency Management Agency. Until the new guidance was released from the Treasury Department, it was unclear what the relationship was between the two programs.

Hornby said rules against using CARES Act funds for non-COVID related purposes, such as revenue loss, have not changed as yet. For fiscal 2020, anything that wasn’t budgeted and is COVID-related, “is a potentially appropriate use of those funds.”

On May 14, representatives from the Executive Office for Administration and Finance and the DLS held an hour-long webinar for local officials, arranged by the MMA, to explain the process. The webinar presenters were Administration and Finance Secretary Michael Heffernan; Hornby; Heath Fahle, special director for federal funds at A&F; and Sean Cronin, senior deputy commissioner at the Division of Local Services.

Eligible uses of the federal Coronavirus Relief Fund may overlap with allowable uses of other federal grants and reimbursements. The Executive Office for Administration and Finance will be working with the state COVID Command Center, state agencies, and municipalities to optimize the use of federal funds.

As a condition of accepting federal Coronavirus Relief Fund money, municipalities must maximize FEMA reimbursements. In other words, for costs that appear eligible under the federal Coronavirus Relief Fund as well as for FEMA reimbursement, municipalities must apply for FEMA reimbursement. Federal dollars cannot under any circumstances be claimed twice for the same spending.

The DLS has additional general municipal finance guidance related to the current state of emergency.