KBS Reference Desk: Eligible Expenses Under Coronavirus Relief Fund

Q:        Our district has been hard at work since June trying to prepare and put into place distance learning education options for the fall due to COVID-19 safety precautions. As of now, we’ve incurred more costs than what were budgeted for technology this year and, due to the high demand, equipment that we’ve ordered (such as laptops, improved internet equipment, etc.) are on back order and not available for delivery until sometime in October. Will the district be able to apply for CARES Act funding to cover these additional costs?

A:        Yes. The district is eligible to apply for Coronavirus Relief Funds established under the CARES (Coronavirus Aid, Relief, and Economic Security) Act, in coordination with the Texas Education Agency, to pay for these expenditures for school reopenings this fall.

The Coronavirus Relief Fund is a fund established under the CARES Act in which $150 billion dollars is appropriated from the Act to the fund for use by state and local governments (interpreted to include independent school districts). School districts, also known as local education agencies under the Act, must use payments from the fund to cover costs that: (1) are deemed necessary expenditures incurred due to the COVID-19 public health emergency; (2)  were not accounted for in the district’s most recent approved budget, approved as of March 27, 2020 (the CARES Act date of enactment); and (3)were incurred during the period of March 1, 2020 through December 30, 2020.

On September 2, 2020, the U.S. Department of Treasury released updated guidance and Frequently Asked Questions (“FAQ”) clarifying the use of Coronavirus Relief Funds for the “covered period” designated for allowable expenditures under the fund. https://home.treasury.gov/policy-issues/cares/state-and-local-governments. School districts may incur expenses associated with the safe reopening of schools that satisfy the above criteria and are  payable by the fund, such as, for example, costs associated with providing distance learning (costs of laptops for students) or for in-person learning (costs for acquiring personal protective equipment in meeting CDC guidelines). This new guidance also states that the U.S. Department of Treasury will presume that such expenses, up to $500 per elementary and secondary school student, are eligible expenditures as an administrative convenience—meaning districts do not need to document the specific use of funds up to that threshold amount, per student.

This differs from previous Department of Treasury guidance, where a district incurred costs for an expenditure only when the district expended actual funds (emphasis added). Now, the cost is considered to be incurred as long as performance or delivery of service occurs during the covered period of March 1, 2020 through December 30, 2020, even though payment of funds by the district is not actually made during that time. Additionally, the Department of Treasury recognizes the increased demand for certain items and the potential for supply chain disruptions by assuring that any vendor’s failure to complete delivery or services before the end of the covered period will not affect the district’s ability to use payments from the fund to cover such costs, if the delay is due to circumstances beyond the district’s control.

It is important to note, however, that this updated guidance and FAQ from the Department of Treasury is separate and distinct from the Texas Division of Emergency Management’s Coronavirus Relief Fund Local Education Agency Reimbursement Program. That program is designed to reimburse school districts for supplemental allowable expenditures for the covered period of March 1, 2020 through May 20, 2020.  

For specific questions or additional information regarding allowable expenditures under the Coronavirus Relief Fund or COVID-19-related expense reimbursement programs that may be available to the district, please consult with your local school law attorney.

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