What are best practices for reporting payroll expenses within the treasury portal for projects within negative economic impact category?

Municipalities should ensure that costs are eligible and all reporting elements in the portal are accounted for when reporting payroll expenses within the “negative economic impact category.”[1] This expenditure category permits municipalities to identify and remedy an adverse economic impact caused by COVID-19.[2] Before reporting payroll expenses, municipalities should determine whether the payroll expenses are eligible, and should carefully consult the underlying rules, regulations and guidance at issue. 

Determining Eligibility

For expenses to be eligible under negative economic impact category, the Coronavirus State and Local Fiscal Recovery Fund (“CSLFRF”) Final Rule states:

First, there must be a negative economic impact, or an economic harm, experienced by an individual or a class. The recipient should assess whether, and the extent to which, there has been economic harm, such as loss of earnings or revenue, that resulted from the COVID–19 public health emergency. A recipient should first consider whether economic harm exists and then whether this harm was caused or made worse by the COVID–19 public health emergency. This approach is consistent with the text of the statute, which provides that funds in this category must be used to “respond to the public health emergency with respect to… its negative economic impacts…”[3]

As set forth above, municipalities should determine if the negative economic impact resulted from the COVID-19 public health emergency. If there is a nexus between the negative economic impact and the pandemic, municipalities may claim expenses to this expenditure category.[4] In addition to providing the nexus, municipalities must also ensure the response is reasonable and proportional to the harm experienced.[5] The Final Rule further elaborates below:

Responses must also be related and reasonably proportional to the extent and type of harm experienced; uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses. Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not be reasonably proportional for a cash assistance program to provide assistance in a very small amount to a group that experienced severe harm and in a much larger amount to a group that experienced relatively little harm.[6]

Furthermore, the Final Rule specifically enumerates payroll and benefits expenses to support public sector capacity within the negative economic impact category.

(E) Expenses to support public sector capacity and workforce, including:

(1) Payroll and covered benefit expenses for public safety, public health, health care, human services, and similar employees to the extent that the employee’s time is spent mitigating or responding to the COVID-19 public health emergency;

(2) Payroll, covered benefit, and other costs associated with programs or services to support the public sector workforce and with the recipient.[7]

Reporting Payroll Expenses

The requirements for reporting payroll expenses may vary depending on the project’s details and purpose. In addition to the regular reporting requirements such as project name, project completion status, obligation amount, etc., some projects may require additional reporting for programmatic data[8]. Municipalities are encouraged to understand the requirements and be prepared to report on additional programmatic data if needed. The reporting portal can be found at https://portal.treasury.gov/compliance/.

For payroll expenses of public employees, municipalities should report how funds are being used to support public sector workforce and capacity. This includes reporting “the number of government FTEs [full-time employees] responding to COVID-19 supported under this authority.”[9] Finally, municipalities are encouraged to utilize the corresponding bulk upload template when reporting payroll expenses. The bulk upload template will guide municipalities of reporting requirements for each expenditure category and can potentially ease the administrative burden for reporting large amounts of data.[10]

CSLFRF funds may only be used for costs incurred within a specific time period, starting on March 3, 2021, with all funds obligated by December 31, 2024 and all funds spent by December 31, 2026.[11] Recipients should refer to Treasury’s User Guide for the Project & Expenditure report for detailed instructions on reporting requirements for CSLFRF funded projects.[12] Treasury has typically released updated user guides ahead of reporting deadlines on their website.[13]

Last Updated: March 24, 2023