On May 6, 2020, the Ohio Senate passed Senate Bill 310 (the “Bill”), which is currently being considered in committee in the Ohio House of Representatives. If passed by the House of Representatives and signed by Governor DeWine, the Bill will appropriate funds to municipalities which have been allocated to the state by the federal Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) for certain pandemic related expenses.
OHIO SB 310 SUMMARY
- The State will distribute $350 million in CARES Act funds to counties.
- Each county will then distribute the funds to municipalities with populations less than 500,000. Municipalities having more than a population of 500,000 have already received federal funding via other legislation.
- To receive funds, a municipality must pass a resolution or ordinance affirming:
- The funds will be used exclusively for expenditures made necessary by the coronavirus health emergency;
- That such expenditures were not in the municipality’s 2020 budget; and
- The expenditures were made between March 1, 2020 and December 30, 2020.
- The municipality must create a local coronavirus relief fund (“LCR Fund”) and the money in the fund must be used in accordance with the affirmation in the municipality’s legislation.
- Any unencumbered funds in a municipality’s LCR Fund as of October 15, 2020, must be returned to the county to be redistributed.
- Any money in a municipality’s LCR Fund that remains unspent as of December 28, 2020, must be returned to the State treasury.
WHAT IS SB 310?
Through the CARES Act, the federal government directed funds to states and more populous local governments to defray the costs of necessary expenditures due to the coronavirus public health emergency. Ohio’s local governments with populations of 500,000 or more received direct payments from the federal government. Additionally, pursuant to the CARES Act, the State of Ohio will receive $4.53 billion in funds to pay for the State’s response to the coronavirus pandemic.
Of the $4.53 billion Ohio will receive in CARES Act funds, the Bill allocates $350 million to local governments. Under the Bill, the State’s Director of Budget and Management will remit CARES Act funds to each county’s treasurer to deposit into a designated coronavirus relief distribution fund. The amount of the CARES Act funds allocated to each county is based on the proportion of the county’s share of all county undivided Local Government Funds (LGF) that the State allocated in 2019.
Under the Bill, the Ohio Director of Budget and Management will remit each county’s share of CARES Act funds to all 88 counties. Within a week of receiving the funds from the State, the county auditor will distribute a portion of the funds to be used by the county government, if it did not receive CARES Act funds directly from the federal government, and to qualified municipalities within the county.
HOW DO MUNICIPALITIES QUALIFY TO RECEIVE CORONAVIRUS RELIEF FUNDS UNDER SB 310?
To qualify to receive the funds, municipalities must meet two conditions. First, qualified municipalities must have populations of less than 500,000. Second, qualified municipalities must have adopted legislation, a resolution or ordinance, that affirms the funds will be used exclusively for expenses: (i) necessary due to the public health emergency with respect to the coronavirus; (ii) were not accounted for in the municipality’s most recent budget; and (iii) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. While each municipality will be required to adopt this legislation, and comply with its standards, the distribution of the funds is to occur automatically after the passage of the bill.
HOW MUCH WILL MUNICIPALITIES BE ELIGIBLE TO RECEIVE UNDER SB 310?
The amount a municipality is eligible to receive in CARES Act funds is the proportion of the total amount of the county’s CARES Act funds equal to the proportion of the county’s undivided LGF that the municipality received in 2019.
ARE THERE ANY RESTRICTIONS ON THE USE OF SB 310 FUNDS?
Under the Bill, a municipality must use CARES Act funds exclusively to pay for necessary expenses incurred between March 15, 2020 and December 30, 2020, due to the coronavirus emergency that the municipality did not include in its most recent budget. As stated above, the municipality must pass legislation affirming that it will use the CARES Act funds exclusively for such expenses. CARES Act funds may not be used for ordinary expenses or to fill gaps in the municipality’s budget. For example, CARES Act funds may not be used to pay the expenses for safety forces payroll that is already budgeted for or that is not a direct consequence of or response to the coronavirus emergency. On the other hand, a municipality may use CARES Act funds to pay for expenses like overtime pay for firefighters covering shifts of sick personnel or to meet increased demand due to COVID-19.
IS THERE A DEADLINE TO USE SB 310 FUNDS AND WHAT ARE THE CONSEQUENCES IF A MUNICIPALITY DOES NOT USE THE FUNDS BY THE DEADLINE?
If any funds in a municipality’s LCR Fund remain unencumbered as of October 15, 2020, the fiscal officer must be remit the balance of such unencumbered funds to the county treasurer. Within a week of collecting the local government unencumbered funds, the county auditor shall redistribute twenty-five percent (25%) of the total of such funds to the county government, if the county government did not receive CARES Act funds directly from the federal government, and then to the qualified municipalities in proportion to each qualified municipality’s population in respect of the total population of all qualified municipalities receiving such funds.
Any unspent funds in a municipality’s LCR Fund as of December 28, 2020 must be returned to the State.
WHAT DO YOU DO IF YOU HAVE QUESTIONS ABOUT OHIO SB 310?
While this advisory is not legal advice, you can call your SMDK attorney for advice regarding your specific situation. We are available to assist you in answering questions about Ohio SB 310 or the CARES Act and how they may affect you or your organization.