Agenda - Council Work Session - 03/08/2022

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4436 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations requested clarity on which Fund.379 Recipients may use SLFRF with standard accounting practices and administrative expenses are permissible funds to fund the principal of the loan the Uniform Guidance. uses of funds and how recipients should and in that case must track repayment G. Use of Funds for Match or Cost-Share structure administrative costs. of principal and interest(i.e., "program Requirements In the final rule,Treasury is clarifying income,"as defined under 2 CFR 200). that direct and indirect administrative When the loan is made,recipients must As a general matter and as referenced expenses are permissible uses of SLFRF report the principal of the loan as an in the SUPPLEMENTARY INFORMATION to funds and are a separate eligible use expense. the interim final rule,funds provided category from"[e]xpenses to improve Repayment of principal may be re- under one federal program may not be efficacy of public health or economic used only for eligible uses and is subject used by a recipient to meet the non- relief programs,"which refers to efforts to restrictions on the timing of the use federal match or cost-share to improve the effectiveness of public of funds. Interest payments received requirements of another federal health and economic programs through prior to the end of the period of program. use of data,evidence,and targeted performance will be considered an However,Treasury has since consumer outreach. For details on addition to the total award and may be determined that,consistent with this permissible direct and indirect used for any purpose that is an eligible general principle and the requirements administrative costs,recipients should use of funds under the statute and final of the Uniform Guidance at 2 CFR refer to Treasury's Compliance and rule.Recipients are not subject to 200.306(b)(5),the funds available under Reporting Guidance.378 Costs incurred restrictions under 2 CFR 200.307(e)(1) sections 602(c)(1)(C) and 603(c)(1)(C) of for the same purpose in like with respect to such payments. the Social Security Act for the provision circumstances must be treated For loans with maturities longer than of government services,up to the consistently as either direct or indirect December 31, 2026,the recipient must amount of the recipients reduction in costs. estimate the cost to the recipient of revenue due to the public health extending the loan over the life of the emergency,generally may be used to F. Treatment of Loans loan.In other words,at origination,the meet the non-federal cost-share or The interim final rule allowed recipient must measure the projected matching requirements of other federal recipients to use SLFRF funds to make cost of the loan and may use SLFRF programs. Federal funds that constitute loans for uses that are otherwise eligible funds for the projected cost of the loan. revenue sharing to state and local governments may generally be used to (for example,for small business Recipients have two options for meet non-federal match assistance). Subsequent guidance estimating this amount:They may requirements.381 The broad eligible uses clarified how recipients must track and estimate the subsidy cost(i.e.,net of the SLFRF funds available under dispose of program income from loans, present value of estimated cash flows) sections 602(c)(1)(C) and 603(c)(1)(C) of consistent with the statutory or the discounted cash flow under the Social Security Act,combined with requirements for the timing of SLFRF current expected credit losses (i.e., the purpose of these provisions (which expenditures. CECL method). See further guidance is to provide general fiscal assistance to SLFRF funds must be used to cover issued by Treasury for further governments facing revenue losses due "costs incurred"by the recipient explanation.380 to the public health emergency), between March 3, 2021 and December Public Comment:Many commenters demonstrate that these funds are 31, 2024.The interim final rule asked for further clarification on the revenue sharing.They thus should provided that SLFRF funds must be treatment of loans and the calculation of generally be permitted to be used to obligated by December 31, 2024 and "costs incurred." Some commenters meet the non-federal match and cost- expended by December 31, 2026.In requested that grants made for eligible share requirements of other federal using SLFRF funds to make loans, activities prior to December 31, 2024 to programs. As such,the SLFRF funds recipients must be able to determine the a revolving loan fund,an economic available for the provision of amount of funds used to make a loan development corporation, a land bank, government services,up to the amount and must comply with restrictions on or a similar facility should be of the recipient's reduction in revenue the timing of the use of funds and with considered obligated and expended at due to the public health emergency, restrictions in the Uniform Guidance. the time of the grant.This would allow may be used to meet the non-federal When SLFRF funds are used as the funds to be expended by the grantee match requirements of the Drinking principal for loans,there is an beyond the covered period and for Water State Revolving Fund and Clean expectation that a significant share of funds returned to the grantee to be re- Water State Revolving Fund programs the loaned funds will be repaid.Thus, invested in further uses outside of the administered by the EPA, for example. recipients may not simply consider the covered period. Pursuant to 2 CFR 200.306(b) of the full amount of loaned funds to be Treasury Response:The final rule Uniform Guidance,if funds are legally permanently expended and must maintains the treatment of loans from available to meet the match or cost- appropriately account for the return of the interim final rule and subsequent share requirements of an agency's loaned funds. guidance, as discussed above. This federal program, such awarding agency For loans that mature or are forgiven approach is consistent with the is required to accept such funds for the on or before December 31, 2026,the statutory requirement that funds be used purpose of that program's match or cost- recipient must account for the use of for costs incurred for eligible purposes share requirements except in the funds on a cash flow basis, consistent by December 31, 2024 and is consistent circumstances enumerated in that with Treasury's guidance regarding section. The Office of Management and loans made by recipients using 379 Coronavirus Relief Fund for States,Tribal Budget has authority under 2 CFR payments from the Coronavirus Relief Governments,and Certain Eligible Local Governments,86 FR at 4192. 381 See U.S.Government Accountability Office, 38o See FAQ 4.11.Coronavirus State and Local Principles of Federal Appropriations Law,Third recovery funds/recipient-compliance-and-reporting- Fiscal Recovery Funds,Frequently Asked Edition,Volume II,p.10-99,GAO-06-382SP responsibilities. Questions,as of July 19,2021;https:// (February 2006),https://www.gao.govlassetslgao- 378Id. home.treasury.gov/system/files/136/SLFRPFAQ.pdf. 06-382sp.pdf.