We would like to share our answers to the top FIVE questions we’ve received regarding the Coronavirus State and Local Fiscal Recovery Funds to be administered directly to counties, cities, and tribal governments by the U.S. Treasury. If you have additional questions, please contact us here, and we will do our best to answer them.

1. How much money is my entity going to get, and when will it arrive?

Once Congress passes the bill, the U.S. Treasury will create a list of potential recipients. Our federal government partners tell us
the funds could be released by mid-March. Local governments would receive approximately $130 billion, split evenly between cities and counties, resulting in a direct allocation, based on a population, of $65.1 billion. If you are a county government and would like to see an estimate of your its share, please click here.

2. Will there be restrictions on how the funds are held, managed, or spent?

Expect four main options for spending the money:

(a) to pay for present or future expenditures to respond to the COVID pandemic or to mitigate its spread;

(b) to reimburse the city or county for past COVID-related expenses;

(c) to replace lost or reduced revenues; or,

(d) to compensate for the broad economic impacts of COVID to the community.

3. Since we won’t know how and when my Board will allocate or spend the funds, should I just play it safe and leave the money liquid?

Definitely no. There are tools available to increase the value of these funds for your taxpayers. In keeping with your entity’s liquidity data, forward cash forecast, the net change in cash data, and written investment policy, now is the time to maximize the benefit these funds will provide. Every entity should be incorporating proactive cash-management procedures such as those recommended by three+one and your state’s fiscal accountability office. You should allow liquidity data to provide the transparency and framework you need to practice a sound and comprehensive cash-management strategy.

If your Board has plans to spend these potential monies, the funds will not be spent at once, so increasing the value on them is imperative. It could be possible, depending on your state, that your state may pass additional costs on to your entity, so having a strategy on maximizing the funds’ benefit for the long term for your entity is vital.

4. Can I make the reasonable assumption that I can put at least some of the money to work in a series of laddered fixed-income investments? If so, how much, and for how long? And where can I find the best available options?

Yes. Let three+one® provide you with up-to-date peer-benchmark comparisons offered across various investment options. Our cashvest^® reports and MC Forecast^® model provide data on how much liquidity you will have available and how long those funds will be available. This is not just based on historical data, but also applies forward forecasting using many statistical methodologies that have been proven accurate throughout the pandemic. As three+one® continues to aggregate data, our forward forecasting becomes even more accurate, so planning for borrowing, budgeting, or investment purposes is much easier and more reliable.

5. What about these cash-management audits that I have heard about from my state’s fiscal accountability office? How do I keep my entity from being criticized for our liquidity procedures on managing this new cash 12 months or 18 months from now?

That’s true. Some states are conducting a series of cash-management audits of local governments. Their auditors are investigating whether municipalities regularly performed a monthly cash-flow analysis to determine how much cash they had available, whether they actively pursued the highest available competitive interest-rate quotes, and whether they had maximized the value of that cash. Using the cashvest® services of three+one® and implementing the continuously provided data, you will never have to worry about the negative impact of a cash-management audit.