A possible delay in the quarterly billing process may make it impossible for cities to use their federal Coronavirus Relief Fund money for unemployment costs.
Many cities are planning to use federal Coronavirus Relief Fund (CRF) money to cover portions of unemployment costs incurred during the pandemic. The state of Minnesota notified cities last week that they are unsure whether calculations of amounts owed will be ready before the Nov. 15 CRF spending deadline.
The CRF was created as part of the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. Federal guidelines require cities to spend the funds by Nov. 15.
Reimbursable employer calculations
Cities are typically “reimbursing employers,” which means unemployment benefits paid to employees are charged to the city’s unemployment account. This year, with increased layoffs due to the pandemic and federal funding to assist with unemployment insurance costs, the process to bill cities and others has become more challenging for the state.
As a result, there may be delays in the quarterly billing process that make it impossible for cities to use their CRF money for unemployment costs by the deadline. Quarterly billings may not resume until early 2021.
Minnesota Unemployment Insurance (MNUI) has received federal funding to offset part of the cost of unemployment benefits at the state level. Cities’ billings will be adjusted for unemployment costs covered by the federal government.
MNUI will begin making the adjustments to city’s unemployment accounts on Oct. 25. However, this process will take time. Once the process is complete, cities can expect to receive a letter detailing the adjustments. Cities may also view their account online.
If your city is planning to use CRF money for unemployment costs, consider monitoring your unemployment account online. This will be the quickest way to find the balance due following the application of credits from state and federal funding sources.
Issue payment for the balance of claims related to COVID-19 unemployment by Nov. 15 to meet the CRF requirements. If adjustments are made to the city’s unemployment account after payment is issued, the city will receive a refund from MNUI. They city may be required to remit the refund to the federal government.
Cities waiting to pay unemployment costs until billed in early 2021 are encouraged to consider budget implications. For cities on the cash basis of accounting unable to accrue the 2020 unemployment expense, consider adjusting the 2021 budget to include the added expense.