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COVID-19 Blog: Managing County Finances in the Wake of COVID-19

As Counties move through this crisis, it icritical to begin the process of managing county revenues now.

 

The COVID-19 outbreak is a seismic event in American life, unlike anything that's been seen since possibly WWII or the Great Depression. Though we remain in the early days of this crisis and its full implications for local, state and federal government are yet to be see, it's clear that the abrupt economic slowdown that is part and parcel of the mitigation strategies like social distancing is more abrupt than typical recessions.  As Counties move through this crisis, it is critical to begin the process of managing county revenues now.  

Below, you'll find some suggestions from NYSAC and our partners for how to begin that process. 

Track Your Coronavirus Expenses 

NYSAC is advising counties to track all coronavirus expenses that you may be accruing. The President declared a national emergency on March 13, 2020 regarding the pandemic. At that point, FEMA's Public Assistance program became activated. Some of the basic information from FEMA on the coronavirus emergency declaration includes the following:  

“In accordance with section 502 of the Stafford Act, eligible emergency protective measures taken to respond to the COVID-19 emergency at the direction or guidance of public health officials' may be reimbursed under the agency's Public Assistance program. FEMA will not duplicate assistance provided by the Department of Health and Human Services (HHS), including the Centers for Disease Control and Prevention, or other federal agencies. FEMA assistance will be provided at the 75 percent Federal cost share.” [emphasis added] 

Cash Management 

If your county is not already doing so, NYSAC suggests that county fiscal teams get a system set up that enables them to easily monitor their cash position. Fiscal staff should be looking at historical cash by day and by month. If they don't have a spread sheet that tracks cash by day, we recommend setting it up going back several years. Look for the highs and lows and their cause over course of the year. Then track current going forward and compare to historical. If things get tight, fiscal and admin folks need to manage very closely. Need to know when payments go out, when payments come in. 

Be aware of, and prepared for, the possibility of New York State lagging payments and closely monitor accounts receivable and accounts payable. 

CashVest by Three+One  can help with liquidity analysis 

During these challenging times, three+one (A NYSAC partner) is working to working to bring solutions to its client counties and public entities to help them to continue to operate with minimal disruption.  

The ability to determine the change in one's liquidity is essential when calculating the effects of a crisis on a community, especially the lingering effects of a crisis, most notably when it comes to cash needs. The cashVest forecast model will allow an entity to view its liquidity during and after a challenging budget period, especially when evaluating lower sales tax revenue or government reimbursements. 

Easing the fear of liquidity or lack of cash when you need it can be extremely stressful. During the 2008 financial crisis, the fear of not knowing if you need cash was top of mind to most entities, leading to a run on the banks and financial instruments. During that period, many entities had to wait for portfolios to unravel maturities, creating a level of fear and uncertainty in access to cash. Three+one's cashVest liquidity data will make you more confident by knowing when cash will actually be needed. The ability of having cash on hand, even in time of crisis, will offer the peace of mind you need. 

You can learn more about their services at their website: https://threeplusone.us/. Or contact Bill Cherry at wec@threeplusone.us (585-484-0311 X709) or Garrett McDonald at GAM@threeplusone.us (585-484-0311 X704). 

Staff Shifting 

Counties should examine shifting non-essential personnel to essential personnel roles. In addition to public health, DSS staff is going to struggle to monitor and manage programs as caseloads in TA, PA, SN, SNAP programs greatly increase. 

Purchasing 

  • Counties should examine postponing non-essential vehicle/equipment purchases. 

  • Postpone capital projects that can be delayed.  

  • Review mandated areas, are there any creative ideas to reduce any of the cost centers? 

Property Tax Collections  

Some counties taking reports of business leagues seeking deferral without penalty of property taxes.  This could prove problematic for county operations. We flag this as some business reps may approach the state to declare. 

Other ideas include: 

  • Maximizing Attrition Opportunities 

  • Creating Early Retirement Incentives 

  • Maximizing Investment Return Revenues 

Use of a P-Card for supplies could generate rebate revenue  

Counties are making a lot of supplies purchases right now, and many of those purchases will be reimbursable by the Federal Emergency Management Association (FEMA). If your county has a purchasing card, you may want to consider using it to make some or many of the supplies purchases you are making right now.  

Your p-card could do two things for your county: 1 streamline your purchasing process, and 2. Generate rebate revenue at a time when we are seeing a drop in revenue across the board. As long as you have a way to track those purchases that could potentially be reimbursed, at the end of the year you could be eligible for a higher rebate.  

NYSAC has a p-card that is administered through PFM Asset Management. But several counties have a p-card with another bank or administrator. It doesn't matter what kind of p-card you have. If you can generate a rebate with the purchases that you are making right now, you should consider it.  

One major caveat: the county must make sure that your purchasing department is able to track those purchases through your financial system so that you can get properly reimbursed later by FEMA. It is important to track and keep all receipts! 

Check in with your p-card administrator. It may take a couple of days to order more cards or increase your credit limit.  If you are using the NYSAC P-Card, check in with Beth Smith at (516-246-1210). 

Property Tax Collections  

Some counties taking reports of business leagues seeking deferral without penalty of property taxes.  This could prove problematic for county operations. We flag this as some business reps may approach the state to declare. 

Other ideas include: 

  • Maximizing Attrition Opportunities 

  • Creating Early Retirement Incentives 

  • Maximizing Investment Return Revenues 

As we move through this crisis, NYSAC is here for you. If you have any questions regarding these issues or anything else related to the COVID-10 pandemic, please reach out to us at coronavirus@nysac.org

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