CSBG-DCL-2022-43 Expending CSBG CARES Funds FY 2022

DATE:  August 4, 2022

TO: CSBG Grant Recipients; CSBG Eligible Entities; CSBG National T/TA Providers

SUBJECT: Expending CSBG CARES Funds

ATTACHMENT(S):  NCAP - Strategies to Transition to Pandemic Recovery 

Dear Colleague,

The Office of Community Services (OCS), together with the Community Services Block Grant (CSBG) national training and technical assistance (T/TA) partners - the Community Action Partnership Legal Services, Inc. (CAPLAW), the National Community Action Partnership (NCAP), the National Association for State Community Services Programs (NASCSP) — as well as our Tribal T/TA provider - LUX, Inc. — has developed additional guidance and resources to help  CSBG grant recipients and eligible entities effectively utilize their remaining Coronavirus Aid, Relief, and Economic Security (CARES) Act funds to meet the needs of individuals and families with low incomes.

While some states and entities have already obligated and/or spent all of their CARES funding, it is imperative that all of the CSBG CARES funds are obligated by September 30, 2022 and liquidated by December 30, 2022. Over the next 57 days the CSBG Network should continue to work collaboratively to ensure that CARES funding is fully utilized to reach individuals, families, and communities with low incomes impacted by the COVID-19 pandemic. OCS will continue to utilize the Payment Management System (PMS) to monitor remaining balances and  guide outreach to states, territories, and Tribes.

RELATED REFERENCES

Community Services Block Grant Act, 42 U.S.C. 9901 et seq.; Coronavirus Aid, Relief, and Economic Security Act, 2020, Public Law 116-36; Department of Health and Human Services Block Grant Regulations, 45 CFR Part 96 .

BACKGROUND

The COVID-19 pandemic has uniquely impacted our nation and each community. The health impacts have been devastating, with over one million lives lost and approximately 92 million experiencing illness as of August 2022. The economic impact has been equally staggering, with many individuals and families facing unemployment or uncertainty around future work. While the nation begins to recover, the cost of living has continued to rise, further straining our most vulnerable communities.

CSBG FUNDING IS FLEXIBLE

Throughout the COVID-19 pandemic, the CSBG Network has underscored the fact that community needs are continuously evolving and may differ between each locality. With an explicit and overarching goal of reducing poverty, the flexibility of CSBG provides significant opportunities to meet immediate community needs. The flexibility of CSBG extends to CARES funding, meaning eligible entities can support a broad array of services for the prevention, preparation, and response to COVID-19. This includes gap-filling services to address unmet needs such as mobile food delivery for the home-bound, innovative strategies such as the creation of community gardens or provision of mental health services on-site, and rapid responses to help families and individuals achieve self-sufficiency, find and maintain adequate housing, and other necessary activities to reduce the impact of the causes of poverty.

OCS and the national T/TA partners continue to encourage the CSBG Network to explore innovative ideas and uses for the remaining CSBG CARES funds. Attached is a non-exhaustive, but illustrative list developed by NCAP of approaches that can be implemented by eligible entities to meet the needs of communities impacted by COVID-19. OCS also suggests reviewing the April and July CARES Act Spending Webinars that OCS participated in with the national T/TA  partners to share effective strategies and recommendations for responding to the increased needs of low-income households.

FREQUENTLY ASKED QUESTIONS About CARES SPENDING

Below are four of the questions CAPLAW has been asked frequently with regards to the use of CARES CSBG funds. ]

1. Can CARES CSBG funds be used to provide gift cards to clients?

Providing gift cards to individuals affected by an emergency such as COVID-19 is an established practice that furthers the priority of CSBG CARES funding to support a robust and flexible community response to urgent needs. Inflation triggered by the pandemic severely impacts individuals and families with low incomes, and gift cards can help to alleviate that impact by enabling them to meet basic needs.

Of note, an eligible entity must have sufficient internal controls that account for the purchase and disbursement of such cards. Policies and procedures may include records accounting for the purchase and disbursement of gift cards; applications and attestations by clients establishing need and eligibility; and reasonable limits on gift card amounts. Once a gift card has been awarded, an eligible entity is not required to monitor the client’s use of the gift card but may note the intended purpose for purposes of documenting client outcomes associated with this use of CARES funding.

2. How does an eligible entity provide employee incentive compensation with CARES CSBG funds?

Given the nationwide labor shortage and the ongoing demand for the services and benefits provided by eligible entities, it is critical to support eligible entities in employee recruitment and retention efforts. Incentive compensation is an allowable cost and an effective approach to addressing the impact of COVID-19 on eligible entity operations. Examples of permissible incentive compensation include a bonus for above-average performance, hiring bonuses, and referral incentives for existing staff.

Eligible entities may provide incentive compensation to employees so long as they issue payments that are (1) reasonable; (2) based on a permissible purpose such as, but not limited to, cost reduction, efficient performance, suggestion awards, or safety awards; and (3) provided pursuant to an established implied or written policy or agreement prior to the issuance of any payments (45 C.F.R. § 75.430(f)). Eligible entities should be able to show that they followed their incentive compensation policy and that the policy identifies a permissible purpose for awarding incentive compensation.

3. Must an eligible entity use all supplies purchased with CARES CSBG funds prior to September 30, 2022?

Eligible entities are allowed to have some residual inventory at the end of a funding period, so long as the amount remaining is reasonable and not excessive. An eligible entity must be prepared to show how its purchase during the CARES CSBG funding period was (1) reasonable and (2) supported by sufficient documentation (45 C.F.R. § 75.403). Such documentation could include information detailing the CAA’s need for the amount purchased (which may include larger amounts for distribution in ongoing emergencies); any applicable volume discounts; or the CAA’s plans for distribution during the grant period.

Generally, if there is residual inventory of unused supplies when the funding period ends, the supplies may be used for another CSBG Federal award without having to reallocate the cost of the supplies to that award. For example, prior to the end of the CSBG CARES funding period, an eligible entity may purchase diapers to distribute to clients. If the eligible entity does not distribute all purchased diapers before the end of the CARES CSBG funding period, it may retain them for use for another CSBG Federal award without having to reallocate the cost of the diapers to that funding award. An eligible entity will likely be able to use its regular CSBG funding to continue some, if not most, of the work that CARES CSBG funding supported, given the broad purposes of CSBG for the reduction of poverty, the revitalization of low-income communities, and the empowerment of low-income families and individuals in rural and urban areas to become fully self-sufficient.

4. Can CSBG CARES funds pay for a benefit or service that extends beyond September 30, 2022?

Like supplies, a benefit or service with a use that extends beyond September 30, 2022, is a permissible CARES CSBG purchase if it is shown to be reasonable and necessary and sufficient documentation is provided to support the need to enter the arrangement (45 C.F.R. § 75.403).

1. Example 1: Entering a two-year arrangement for electronic signature for client intake purposes. Such software facilitates coordination of multiple programs and services, which is an explicit goal of CSBG, and enables remote service delivery, which is a recognized response to COVID-19. Documentation for this purchase may include information detailing typical business practices such as the vendor’s standard agreement term, or any applicable term length discounts.
2. Example 2:School tuition payments which are typically paid in specific increments and in advance of the course beginning. Documentation may include COVID-19 reasons for going to a particular school (education loss, social distancing/smaller class sizes, etc.) and the school's payment schedules and practices.

OCS remains committed to providing support to the CSBG Network as the Network responds to the increased need across communities due to COVID-19. Together, we can ensure that households impacted by the COVID-19 pandemic can access the resources they need to recover.

Please reach out to your program specialist and visit OCS’ CSBG CARES Act Grantee Toolkit for additional information, guidance, and resources.

Thank you for your attention to these matters. OCS looks forward to continuing to provide high-quality services to OCS partners.

/s/
Charisse Johnson
Director, Division of Community Assistance
Office of Community Services

[1] For the “small states” and tribes impacted by the minimum allotment provision, please see the Terms and Conditions on the respective Notice of Award for CSBG CARES distribution in FY20 and FY21. The terms and conditions note: Funds obligated for the FY21 award action must stay with the eligible entity for the next two federal fiscal years and remain available for expenditure through Sept 30, 2023. However, funds obligated under the FY20 award action must stay with the eligible entity and remain available for expenditure through September 30, 2022. Eligible entities must liquidate all FY21 funds by Dec. 29, 2023 and FY20 funds by December 29, 2022.