What Should You Do With a Surplus? What Should You Do With a Surplus?

Local officials aren’t sure they can spend the money before the deadline.

FLOYD- Virginia’s cities and counties all got part of the state’s CARES Act funding. That meant about $3.31 billion, given as part of the March stimulus package. But that money came with a deadline. If a city or county doesn’t spend their share by Dec. 30, it reverts back to the federal government. 

You can’t just spend it on anything, however. It has to be only on “eligible expenses,” something tied to the pandemic. But across the state, local officials say the U.S. Treasury Department hasn’t explained what kind of expenses are eligible. And so, less than a month before the deadline, many of them still have millions left unspent, despite the needs in their communities. 

No Guidance for CARES

That was what the Floyd County Board of Supervisors discussed in their Dec. 8 meeting. County leaders still have more than $500,000 left from their $2.75 million in CARES Act money. It isn’t just the deadline concerning local leaders. If a city or county spends the CARES Act funds on something eventually deemed ineligible, they have to pay that money back.

As Floyd’s supervisors navigated decisions about how to allocate remaining funds, they looked to Scott Wickham for guidance. Wickham performed the countywide audit this year and had plenty of insights to share during Tuesday’s meeting. As for the pending audit of CARES spending? No such luck.

“As of today, there is no audit guidance for CARES money,” Wickham told the Board of Supervisors. Wickham said original guidelines for allowable expenditures came from the Department of Treasury, but were limited. Officials expected clarification from the Office of Management and Budget in late summer. Then fall. They’re still waiting. 

“The guidance would’ve been nice before all the money was required to be spent, but that’s not what happened,” Wickham said. 

Waiting Game 

Floyd County allocated about $425,000 of its remaining CARES funding on Tuesday—but that still leaves more than $130,000. Also, just because counties budgeted money, that doesn’t mean it’s been spent. This is a sticking point for local governments throughout the New River Valley. 

According to Floyd’s Assistant County Administrator Cindy Ryan, the county did not receive its first round of CARES funding until June 3, 2020. The second half of the money arrived in August. Initially, Ryan said, localities struggled to spend money because items that appeared allowable, such as PPE, were unavailable.  

“If you could find the items, they were exorbitant and we were unsure if an expense would be deemed allowable if it had been marked up that high,” she said. 

Today, localities deal with the fact some items they purchased months ago are still on backorder. Ryan said it leaves public officials unsure if they’ll be able to submit receipts by the Dec. 30 deadline.

The Town of Blacksburg and City of Radford had more luck allocating their CARES money, but face the same problem when it comes to spending it. Public officials in both places said they’ve allocated nearly all the money they received. 

“We’ve allocated our money. We’re working to get every expense taken care of,” said Radford Mayor David Horton. “It’s tricky, because it has to be spent by Dec. 30, so we’re working through some challenges with that,” he added.

He said there may be delays with purchases being delivered in the coming weeks.

“What if there’s a snowstorm?” he asked.

Blacksburg Deputy Town  Manager Chris Lawrence was more confident. 

“We’re spending all of our money,” he said assuredly, but caveated that Blacksburg has “tens of thousands” of dollars remaining. He also conceded that the process has been confusing. “Yes, there’s confusion, and anything we’ve done, we’ve been very careful to give it as much thought as possible,” he said. “We’ve run things by our auditors, who in the end are going to have to audit us.”

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Towns Take on Risk

Ultimately, the deadline to spend the money matters to localities for two reasons. First, the federal money is a needed boon for towns and counties that have struggled economically since the pandemic struck. So they want to take full advantage. Second, if localities spend money in a way that isn’t compliant with CARES guidance, or they allocate but fail to spend it by Dec. 30, they’re on the hook for those payments. In Floyd, local officials have debated whether certain expenses would qualify—for example, hazard pay for solid waste employees or upgrades to the public water system. 

“It seems that every couple of weeks further ‘Frequently Asked Questions’ were released,” Ryan recounted. She said Floyd officials have done their best to spend the money wisely and in accordance with the rules. “Nobody wanted to have to repay for expenditures that were deemed unallowed,” she said, but it’s been tough. 

“We’ve spent a lot of time on the front end to document our decision process,” said Lawrence. But if the Treasury Department rejects the expenses after audit? “We’ll just have to deal with it,” he said. “There’s really no clear answer. That is a risk that we have taken into account, but we haven’t let it stop us from making decisions. If the money’s not spent in two more weeks, we’ve got to give it back.”

CARES Money Had Big Impact 

Throughout the New River Valley, CARES money achieved its goal of buoying local governments and citizens. Leaders in Floyd, Radford and Blacksburg detailed grant programs for local businesses; hazard pay for first responders; grants for nonprofits and daycares; upgrades to technology and HVAC systems; PPE and testing supplies; food distributions and utility bill assistance. 

Horton said Radford has used its money to “try to keep people as whole as possible.” He continued, “If you have all these folks who fall by the wayside, there’s certainly a human toll but also an economic toll.” 

Horton understands, too, why the federal government set a short timeline for spending the money. They wanted to provide immediate economic relief. They wanted to get money into people’s hands as soon as possible. In light of current circumstances, though, he felt extending into January would be appropriate and helpful. 

Congress Mulls an Extension 

On Nov. 30, Virginia Attorney General Mark Herring joined 49 other AGs  in urging Congress to extend the deadline for CARES spending. 

“(This) time frame likely made sense in late March when the CARES Act was passed, but we have learned a great deal about COVID-19 in the past seven months,” the letter said.  “Among other things, we know that the pandemic will continue to challenge communities well beyond December 30, 2020 – a deadline that now seems unreasonable.”

Individual representatives, including Virginia Congresswoman Abigail Spanberger (D-07) have likewise advocated for an extension. 

Lawrence said government employees everywhere are working hard on the CARES Act spending process. However, he mused that the burden to meet the tight deadline is probably heavier on smaller localities like Floyd. In Blacksburg, he said, they’ve been able to redirect entire positions to focus solely on CARES money. 

Ryan detailed difficulties the rural county has faced. “Floyd County has strived to use the CARES money wisely but tight timeframes, unavailability of items, and constantly changing information has made it difficult to spend all the money received,” she said. 

Ashley Spinks Dugan is a freelance reporter for Dogwood. You can reach her at info@vadogwood.com.