ProgramCOVID-19 Federal Assistance e311
TopicsCompliance & Reporting, Program Administration
Funding SourceAmerican Rescue Plan Act, CARES Act, FEMA
What are some best practices our municipality can undertake to help us recoup reimbursable costs traceable to COVID-19 oversight and compliance?
For most federal grants, allowances for administrative costs are generally eligible, though usually up to a capped percentage of the total award. This includes costs associated with ensuring compliance with the terms and conditions of the funding, including collecting and maintaining documentation; preparing and submitting required reporting; and establishing policies, procedures, and processes to manage the funding.
Administrative costs vary between funding sources, with some having specific requirements or additional conditions for recipients. For example:
- The Federal Emergency Management Agency (“FEMA”) Public Assistance can reimburse up to 5% of an applicant’s total obligated funding for a given disaster, based on direct, documented costs. Submitted as a separate project, FEMA can cover documented costs at 100% federal cost share for contract, labor (including regular time and overtime for internal employees), supplies, or equipment used for specific activities to develop, manage, report on, and close out FEMA Public Assistance grants. However, FEMA will not cover indirect costs or costs that cannot be allocated to specific grant management activities.
- The U.S. Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Fund (“CSLFRF”) generally permits the use of funds for program administration. Treasury includes the cost of facilities, administrative functions (e.g., a director’s office), and the costs of consultants to support effective management and oversight as indirect costs that represent the overhead cost of administering the CSLFRF program.
- HUD’s Community Development Block Grants (“CDBG”) funding, including Disaster Recovery (“DR”) and COVID-19 (“CV”) programs generally permit the use of funds for administrative costs to include direct costs, indirect costs, and planning costs up to 20% of their CDBG allocation. HUD makes a distinction between Activity Delivery Costs – the actual costs necessary for the direct provision of a HUD funded program – and Program Administration Costs – eligible costs for the management of the funding overall, including developing policies and procedures, reporting and financial management, collecting and maintaining documentation, and monitoring compliance.
When preparing to track and manage costs associated with oversight and compliance, some considerations municipalities should consider include:
- Reviewing the funding source’s or grant’s terms and conditions, guidance, and Frequently Asked Questions (“FAQs”) provided by the funding agency for specific details on allowable management or program administration costs.
- Developing and monitoring a budget specific for management costs for the fund, including staffing, additional resources, or technical assistance your municipality may need.
- Updating local policies and procedures specific to the management of federal funding to include policies, procedures, and processes to track, allocate, and document management costs, including directions to employees tracking or allocating their time to the management of the funds.
- If a federal fund permits the allocation of indirect costs to the management of federal funds, check that the indirect cost rate is consistent with the permissions outlined by the terms and conditions of the grant or the Federal Agency’s Negotiated Indirect Cost Rate and federal regulation on indirect cost calculation.
- Establishing specific codes for timekeeping or purchasing specific to management of funds to help track and allocate costs.
- Documenting costs clearly and with sufficient detail to demonstrate how it was related to the management of the federal fund. Management costs, like other federally funded costs, are generally subject to federal regulations on Cost Principles (2 CFR 200 Subpart E), must be justified as necessary and reasonable, and subject to audit.
Last Revised: March 31, 2022
 FEMA, Public Assistance Management Costs (Interim) FEMA Recovery Policy FP 104-11-2, available at: https://www.fema.gov/sites/default/files/2020-05/PA_Management_Costs_Interim_Policy_11-15-201830.pdf.
 Department of Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (revised February 28, 2022), at 8–9, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.
 United States Department of Housing and Urban Development, “Chapter 16: Financial Management,” available at: https://www.hudexchange.info/sites/onecpd/assets/File/Basically-CDBG-State-Chapter-16-Financial-Management.pdf.
 Uniform Guidance 2 C.F.R. Part 200, “Indirect (F&A) Costs,” available at: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-E/subject-group-ECFRd93f2a98b1f6455/section-200.414.