- Legislative proposals to extend the expenditure period and implement a lost revenue component remain on the bargaining table.
- Delayed funding and initial lack of guidance left tribal nations reaching out to other tribal nations, professional accounting firms, and law firms seeking solutions.
- Treasury has released additional guidance loosening some of the initial restrictions on expenditures.
With Coronavirus Aid, Relief, and Economic Security (CARES) Act funds disbursed, tribal governments across the country continue to roll out relief programs to address the needs of their people and surrounding communities. However, lingering questions about allowable expenditures and how to address tribal government financial stability still exist. So far, these have not been addressed by legislation.
Need help with fiscal oversight for coronavirus relief funds?
Since the release of our previous article, “The CARES Act: Strategies and Guidance for Tribal Nations,” Treasury has expanded guidance through FAQ updates on July 8, 2020, and August 10, 2020. These updates cleared some questions in Indian Country, ultimately loosening some of the initial restrictions on allowable expenditures. Let’s review the highlights.
Treasury FAQ updates
- Funds from the Coronavirus Relief Fund (the “Fund”) may be used to satisfy non-federal matching requirements for Stafford Act assistance to the extent the expenditures are related to COVID-19 and meet the requirements of both the Fund and the Stafford Act.
- Costs related to small business assistance programs are considered incurred when the full amount is advanced to the borrower in the covered period and the proceeds are used by the borrower in the covered period.
- Fund payments may be made to nonprofits to provide assistance related to COVID-19.
- The entire payroll cost of employees substantially dedicated to mitigating or responding to the COVID-19 public health emergency are eligible expenditures.
- Funds can be used to cover the cost of administrative leave for public employees who could not telework. The cost allocated to administrative leave must be greater than what was expected.
- A government grant to support businesses is generally taxable, except when made by a federally recognized tribe to a member in order to expand an Indian-owned business on or near a reservation. See IRS FAQs.
- Loan proceeds to support businesses are generally not taxable. However, portions forgiven by the government will be taxable unless they are excluded from income by Section 108 of the Internal Revenue Code or other federal law. See IRS FAQs.
Key provisions needed in Indian Country remain in legislative limbo
Tribes have continued to advocate for broadening allowable expenditures of CARES Act funds, including a much-needed extension of the December 30, 2020, covered period end date. When the Senate recessed in August, it left proposals for two much-needed provisions on the bargaining table.
One such provision is extending the covered expenditure period to December 30, 2022. The prolonged time between the passage of the CARES Act and Treasury’s disbursement of funds created a compressed time period to expend the funds, which left tribes scrambling to identify programs on which to properly use the funds. Given the pandemic has no immediate end in sight and there are lingering concerns about future appropriation cuts, tribes need the proposed extension of the covered expenditure period.
Dating back to conversations during the negotiation of the CARES Act, tribes lacking a tax base actively advocated for a revenue replacement provision that would allow them to expend CARES Act funds to supplement lost revenue. Such a provision has remained on the table for future legislation, but the likelihood of the provision ending up in the final bill is still in question. Tribal advocates believe this is the quickest way to stabilize the financial situation of tribal governments during the pandemic.
Coronavirus relief programs across Indian Country
Tribes have scrambled to create relief programs, often relying on advice from their peers in other tribal nations and trusted advisors in professional accounting and law firms. We compiled a list of programs we have seen in Indian Country.
Electricity bill assistance
Payments are normally paid by the tribe on behalf of a tribal member who has applied for the program and identified the need due to increased electricity use related to the pandemic.
Burial assistance programs
These programs help cover funeral costs for the families of loved ones lost to the coronavirus.
Foster care assistance
Payments are made to foster parents to care for a child who tested positive for COVID-19.
Minor care assistance
These programs normally consist of one-time payments for each minor living in the household.
Quarantine and isolation assistance
Payments are made to the affected family, with additional assistance per child, to comply with quarantine and isolation requirements. These programs normally apply to families where the head of household lacks paid time off.
The tribal housing authority may provide rental waivers or programs for individuals who lost their job, were furloughed, or were directed to quarantine or isolate.
Employment income support programs
Some tribes have opted to make either one-time or ongoing payments to each tribal member who has demonstrated need due to lost income as a result of the COVID-19 public health emergency.
Temporary Assistance for Needy Families (TANF) expansion programs
Existing TANF programs have been expanded to meet the needs of seniors or families with minors. The TANF program recipients must often meet requirements such as job loss, furlough, or generally being out of work, but actively seeking employment.
Disability food security programs
Some tribes are providing monthly allowances for groceries to tribal members enrolled in the Social Security Disability Insurance Program who have been negatively affected by the COVID-19 public health emergency.
Elder food security programs
This program provides monthly allowances for groceries to elderly tribal members who have been negatively affected by the COVID-19 pandemic.
Tribal tax relief programs
Some tribes that collect local sales, privilege, lodging, and other taxes have implemented relief and waiver programs to support small businesses on their lands.
Student assistance programs
This program provides an allowance for school clothes, masks, and other necessary school supplies for children who have been negatively affected by the COVID-19 public health emergency.
Technology assistance programs
These programs equip elementary and secondary school students with technology tools, laptops, and internet access due to distance learning. Other programs for post-secondary students cover those same technology costs, in addition to housing insecurity and overcrowding costs, extra travel costs, online fees, lost wages, professional consulting, and tutoring costs.
Capital improvements and infrastructure
Many tribes have plans to retrofit facilities, build out information technology infrastructure, add space for social distancing, improve water and sewer infrastructure to allow proper sanitation, and other capital improvement projects. Projects of this nature should be completed during the covered period (March 1, 2020, through December 30, 2020) to ensure allowability at this time.
How we can help
As tribal leaders and financial professionals continue to roll out coronavirus relief programs, tribal nations must employ the proper strategies and institute effective oversight for use of the funds. Our CLA tribal services team can help. Get in touch if you have any questions on funding usage or additional needs.