jeff Waybright From: Kent Hartsog Sent: Tuesday, January 31, 2023 1003 AM To: Jeff Waybright Subject: FW: Use of funds reimbursed by CRF Attachments: Memo re CARES Act Funding and Legislative Appropriation.pdf From: Bentley, Berkeley Sent: Wednesday, September 14, 2022 4:22 PM To: Kent Hartsog Ce: Urling, Ann V ; David Sull ; Vincent Smith ‘Subject: Re: Use of funds reimbursed by CRF | External Email: Please use caution when clicking embedded hyperlinks or opening attachments. If you suspect this email of containing malicious links or attachments immediately report this email with the report phishing button. Kent, All: Please find attached a memorandum regarding CARES Act, CRF funding and legislative appropriation. In short, any transaction such as that proposed in the thread, below, remain exempt from the requirement for legislative appropriation introduced into statute after receipt of CRF funds. Please call or email with any questions. Thanks, Berkeley J. Berkeley Bentley Office of Governor Jim Justice Office: 304-558-2000 Berkeley, Bentley@wv.gov | Governor.wv.gov mall correspondence to end from this email address is subject to the West Viginia Freedom of Information Act and may be disclosed, n whole oF in part to thied partes by an authorized State offical may aso be privileged or otherwise protected by work product Immunity or other legal rules, Unauthorized disclosure of health, legally privileged, or otherwise confidential information, is prohibited by law. f you have received this email in eror, plesse notify the sender Immediately and delete all records ofthis email —- Forwarded message ~ From: Kent Hartsog CC: David Sull , Vincent Smith ‘Ann, on the attached transaction and similar in the future, could you please attach this email, plus a memo from counsel stating that this transfer is appropriate and not subject to legislative appropriation. These two along with the letter from the Governor. .athese would have 3 attachments. As always, appreciate the help and please let me know if you would like to discuss. From: Urling, Ann V ‘Sent: Tuesday, September 13, 2022 8:54 AM To: Kent Hartsog Subject: Fwd: Use of funds reimbursed by CRF External Email: Please use caution when clicking embedded hyperlinks or opening attachments. If you suspect this ‘email of containing malicious links or attachments immediately report this email with the report phishing button. Good morning Kent, As requested, I'm sharing the em additional. elow from BDO. Let me know if you have any questions or need anything Thank you, Forwarded message ~ From: David Clark Date: Mon, Aug 22, 2022 at 3:43 PM Subject: Use of funds reimbursed by CRF To: Urling, Ann V Ann,To follow-up on our phone conversation, | wanted to document the response regarding use of CRF funding as we approach the end of the budget period. Throughout the response to COVID, the State has worked to prioritize spending needs for areas in response to COVID, but has incurred other expenses that could be claimed against the CRF were more funding available. As we near the deadtine to spend the CRF funding (expenses incurred by 9/30/22), the State is starting to look at historical costs that it has been tracking which would be eligible uses but were not prioritized compared to other desired uses of the funding. As we reconcile the final amounts needed and/or used for the established programs, the State will be left with a certain amount of unspent CRF funds. These unspent funds can be used to go back and reimburse the “tracked” eligible expenses not yet claimed against the CRF or other sources (e.g., FEMA, insurance claims, etc. ‘Once an expense is considered charged to the CRF, the State is able to reimburse itself for the original funding source used for that expense. This means that, for every dollar claimed against the CRF for costs already paid by the State, the State will be reimbursed that amount and have such funding available for use as State funding again (since that was ce of the original mon: nse). As the federal dollars are associated with the specific expenses claimed against them, the money reimbursed to the State is able to be used as deemed necessary by the State following any of it’s normal spending processes and is no longer restricted by Treasury or other requirements. As such, the State may associate new expenses against this reimbursed funding and those expenses could similarly later be determined to be reimbursable by another federal source (e.g., FEMA or ARPA) and such expenses would not be considered to have already been charged to the federal government. Similarly, the State could use the reimbursed funding to pay for non-COVID expenses without any compliance concern involved. Hopefully this makes sense and aligns with the conversation we had, but let me know if you have any questions or need any additional clarifications. Best, David David Clark Mng Dir, Industry Spec Svcs 703-770-1008 (Direct) 333-1008 (Internal) 703-862-7479 (Mobile) 703-893-2766 (Fax) dclark@bdo.com BDO £8401 Greensboro Drive, Suite 800 McLean, VA 22102 UNITED STATES 703-893-0600 wwew.bdo.com ‘BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. £800 is the brand name for the BDO network and for each of the BDO Member Firms. 3IMPORTANT NOTICES The contents of this email and any attachments to it may contain privileged and confidential information from BDO USA, LLP. This information is only forthe viewing or use of the intended recipient. if you are not the intended recipient, you are hereby notified that any disclosure, copying, distribution or use of, or the taking of any action in reliance upon, the information contained in tis e-mail, or any of the attachments to this e-mail is strictly prohibited and that this e-mail and all ofthe ‘attachments to this e-mail if any, must be immediately returned to BDO USA, LLP or destroyed and, in either case, this e-mail ‘and all attachments to this e-mail must be immediately deleted fom your computer without making any copies hereof. If you have received this e-mail in error, please notify BDO USA, LLP by e-mail immediately. ‘Ann Urling Deputy Chief of Staff Office of Governor Jim Justice State Capitol 4 Boulevard, E. laston, i 304-558-2000 (office) 304-342-7025 (Fax) Governor.wv.gov ‘Email correspondence to and from this email ares is subject tothe West Virginia Freedom of Information Act and maybe disclosed, in whole on part to hid pars by anauoriaed Stat official It may els be privileged or oherwise protected by work product immunity or othe legal rules. Unautorized disclosure of ‘eats, legally privileged, or otherwise confidential information, i roibited bylaw. Ifyou have received this email in eor, please notify the sender immediately and delete all eords of tis emai, Ann Urling Deputy Chief of Staff Office of Governor Jim Justice State Capitol 1900 Kanawha Boulevard, E. Charleston, WV 25305 304-558-2000 (office) 304-342-7025 (fax) Governorwv.govmall correspondence to and rom hs ema adress subject tthe West Vigila Freedom of information Act and maybe daz, n whole or in par to thi amie ban authorized State ofl tay also be pvieged or otherwise protected by work product immunity or ater eal les, Unauthorized disclosure of Feria pleged, otherwise confidential information, prohibited by aw. you hae reeived this emalin ror, please not the ender immediately and delete all records ofthis ema,| To: File | From: Berkeley Bentley, General Counsel? | ‘Samantha Willis, Deputy General Counsel Re: _ CARES Act Monies and Legislative Appropriatic ‘This memorandum summarizes the posture of any monies received from the U.S. Department of Treasury by the State as Coronavirus Relief Funds (“CRF”) under the federal Coronavirus Aid, Relief, and Economic Security (“CARES”) Act (2020), with respect to formal Legislative appropriation. Jn short, any CRF monies received by the State under the CARES Act are not subject to Legislative appropriation and may be expended for any lawful purpose at the direction of the Governor as the chief executive officer of the State. ‘The CARES Act implemented a variety of programs to address issues related to the onset of the COVID- 19 pandemic, an was passed by Congress on March 25, 2020, and signed into law on March 27, 2020. The Consolidated Appropriations Act (2021) was passed by Congress on December 21, 2020, and signed into Taw on December 27, 2020, and made certain changes to provisions relating to CRF funds (¢.., the date by ‘which expenses must have been incurred was extended from December 30, 2020, to December 31, 2021). ‘The CARES Act, as amended, requires that the payments from the Coronavirus Relief Fund only be used to cover expenses that meet the following criteria: 1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); 2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and 3, were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021. Chapter 4, Article 11 of the West Virginia Code generally requires that federal funds be expended “pursuant to specific appropriations by the Legislature, except as may be hereinafter provided.” W. Va. Code §4-11-5(@). ‘The State received CRF funding from the US Department of Treasury on April 20, 2020. At the time this ‘money was received, West Virginia Code § 4 -11-6(3) provided that “[flederal funds made available to the state for costs and damages resulting from natural disasters, civil disobedience or other occurrences declared State Capitol | 1900 Kanawha Blvd., East, Charleston, WV 25305 | (304) 558-2000Orrice of THE GovERNOR by the Governor a a state of emergency” were excluded from the provisions of Chapter 4, Article 11 of the West Virginia Code. Govemor Justice declared a state of emergency relating to the COVID-19 pandemic on March 16, 2020, triggering the exclusion from Legislative appropriation of any federal funds made available to the State to help respond to the COVID-19 pandemic. ‘During the 2021 Regular Session of the West Virginia Legis ‘House Bill 2014 amended West Virginia Code § 4-11-6, among other statutory provisions, ‘the above-stated absolute exclusion from ‘Legislative appropriation for federal funding granted in response to a state of emergency. In place ofthe absolute exclusion previously existing at West Virginia Code § 411-6, the Legislature ended provisions of West Virginia Code §4-11-, relating to appropriation authority when federal funds tasome qvailable to.a spending unit while the Legislature is not in session. Specifically, the Legislature provided, ina new subsection (6), that “no amount of... federal funds ... made available to the sate for costs and damages resulting from an emergency . . . that scourfs] and are received while the Legislature is Got in session and that are declared by the Governor as a stato of emergency in excess of $150 million» may be expended without appropriation by the Legislature enacted following receipt of the funds.” W. Va. Code § 4-11-5(0). Declared effective from passage on March 31, 2021, House Bill 2014 now mandates federal funds relating fo an emergency, in excess of $150 million, be formally appropriated by the Legislature. During the {evelopment of louse Bll 2014, and througout the Legislative process its application was consistent y described to bo prospective in nature only. That is, eny federal emergency monies received prior to the SFeative date, March 31, 2021, were nt to be affected and would remain excluded from the necessity of formal appropriation, but any federal emergency monies received after the effective date of House Bill 2014 ‘would be suibject to its terms. Further, the triggering event described in West Virginia Code § 4-11-5(¢) for when appropriation fs appropiate for federal funds received for an emergency is the moment of the “receipt of the funds.” As aaeeviped above, the State received CRF funds on April 20, 2020, and immediately began expending funds fo respond to the COVID-19 pandemic in West Virginia, These monies, having been received prior to the Hootie date of House Bill 2014 (March 31, 2021), are subject to the law in existence at the time of reocipt Sftbe funds, This treatment is consistent withthe intent of House Bill 2014, as described during the 2021 Regular Session. IK should also be noted that the Legislature has not attempted to appropriate any CRF funding received by the State, further evidencing this intent. In contrast, the Governor has submitted several bills to the Lepislature and the Legislature bas considered and passed appropriations bills for other federal funds provided in response to the COVID-19 pandemic that were received by the State after the effective dete of House Bill 2014 (March 31, 2021) —namely, Coronavirus State and Local Fiscal Recovery finds received by the State as a part of the American Rescue Plan Act. ‘The fact that the State must continue accounting for expenditures and processing transactions of CRF monies does not change the conclusion that these monies are not subject to Legislative appropriation. As {Yeseribed herein, the controlling concept relating to the change in law occasioned under House Bill 2014 is ‘uhen the funds are received by the State from the federal government. The CRF monies were received ‘April 20, 2020, prior to the effective date of House Bill 2014, and are therefore exempt from Legislative appropriation. Should anyone have questions, please direct them to the Governor's Office of General Counsel.