July 20, 2020
The Coronavirus Relief Fund for Tribes: Administrative Leave
The new Treasury Guidance has opened a door for Tribes
to continue providing for their employees’ financial needs without having to
deplete their reserves.
The Coronavirus Relief Fund for Tribes
The Coronavirus Relief Fund
for Tribes - July 8 Update
The Department of the Treasury issued
updated Guidance on July
8, 2020, that contained just one new provision (on page 9), as follows.
May Fund payments be used to cover increased administrative
leave costs of public employees who could not telework in the event of a
stay-at-home order or a case of COVID-19 in the workplace?
The statute requires that payments be used only to cover costs
that were not accounted for in the budget most recently approved as of March 27,
2020. As stated in the Guidance, a cost meets this requirement if either (a) the
cost cannot lawfully be funded using a line item, allotment, or allocation
within that budget or (b) the cost is for a substantially different use from any
expected use of funds in such a line item, allotment, or allocation. If the cost
of an employee was allocated to administrative leave to a greater extent than
was expected, the cost of such administrative leave may be covered using
payments from the Fund.
We interpret the language to mean that Tribes can recoup from
the Fund the cost of administrative leave that they provided to government
employees due to the stated reasons. Under that interpretation, Tribes can
recover the costs of providing administrative leave to employees who have been
unable to work during the entire time that their operations have been shut down
during stay-at-home orders or due to occurrences of COVID-19 in the workplace.
We have consulted with colleagues in the accounting and legal professions who
are advising Tribes in CARES Act matters, and they concur with our
We note that there is no restriction regarding the job duties or
classifications of the affected employees. This is a major departure by
Treasury, which has included restrictive language in other sections of the
Guidance regarding payment of wages and fringes using the Fund. This may be a
game-changer for Tribes and may even portend further relaxation of Fund
eligibility requirements down the road.
Tribes will need to structure their administrative leave
programs to create a strong documentation trail. Here are essential elements to
Adopt an administrative leave policy that specifies the
conditions under which employees qualify to receive leave.
Coordinate the policy with other leave policies. For instance,
consider the impact of vacation and sick leave accruals and whether to require
that other leave be taken before an employee may take administrative leave.
Establish a special pay code in your payroll system to isolate
wages paid and fringe benefit costs incurred under the program.
Identify and document the employees who have been sent home
and are unable to work.
Determine the effective dates for the program. The earliest
beginning date should be the initial award of administrative leave on or after
the date of the initial shutdown or stay-at-home mandate, but there may not be
continuous eligibility due to reopening and reclosing.
Create a time record for each affected employee in each pay
cycle to support their continued participation in the program.
Create a separate program in the general ledger to support
The question has arisen: Can or should Tribes transfer wages and
fringes from other federal awards for the affected employees? The corollary
question is: Must they apply the same approach to all federal awards equally?
There are pros and cons to consider.
The wages and fringes will not earn indirect costs if they are
transferred (unless Treasury allows indirect costs, indirect-type costs, or
administrative charges down the road).
The wages and fringes may already have been reported to the
awarding agencies, which will necessitate revised reports.
There is guidance from the Office of Management and Budget,
the Department of Labor and the Department of Justice (to name a few) that they
are allowing wages and fringes for employees who cannot work.
The transfer is likely to result in many awards with spending
below budget, with an ensuing administrative burden related to the carryover
We believe that the case is clear cut in favor of transferring
the allowable wages and fringes from the general fund to the Fund. Tribes just
need to recognize that transferring wages from the indirect cost pool will
reduce the actual indirect costs earned during the year, which will create an
over-recovery that factors into the negotiated rate two years from now.
On balance, for the reasons stated above, we tend not to favor
transferring wages and fringes from other awards into the Fund. However, we
believe that it is allowable and that each Tribe must decide based on its
individual facts and circumstances. For Tribes that decide to transfer federal
money, we strongly encourage adopting a consistent approach across all awards.
The new Treasury Guidance has opened a door for Tribes to
continue providing for their employees’ financial needs without having to
deplete their reserves. This is a welcome development in a time of great need.