Montana State Legislature

FAQ: Federal CARES Act Analysis

Legislative Analysis and Background Materials: Federal CARES Act

FAQ: Use of the Coronavirus Relief Fund


Information for Legislators: Federal Legislation

  • Coronavirus Relief Fund Guidance  (CARES Act) for State, Territorial, Local, and Tribal Governments - April 22, 2020
  • NCSL Review of the Paycheck Protection Program and Health Care Enhancement Act - April 22, 2020
  • Coronavirus Aid, Relief, and Economic Security Act ‘‘CARES Act"  ( H.R. 748 )
    • Providing emergency assistance and health care response for individuals, families and businesses affected by the 2020 coronavirus pandemic.
  • Coronavirus Preparedness and Response Supplemental Approp. ( H.R. 6074 )
    • FDA, SBA, Disaster Loans, Centers for Disease Control and Prevention, National Institute Of Allergy And Infectious Diseases (NIH), Public Health and Social Services Emergency Fund, International Programs, Telehealth Services
  • Families First Coronavirus Response Act ( H.R. 6201 )
    • Nutrition Waivers, Emergency Family And Medical Leave Expansion Act, Emergency Unemployment Insurance Stabilization And Access Act Of 2020, Emergency Paid Sick Leave Act, Health Provisions,Tax Credits For Paid Sick And Paid Family And Medical Leave

Information for Legislators:  Legislative Services Division

 

As a short answer, a private elementary or secondary school receiving funds under ESEA Title I will be entitled to the same “equitable services” under the CARES Act. A private school might also receive some aid under the Governor’s discretionary education funds for “other educational entities”, to be expended for limited purposes. Private postsecondary institutions will receive money under the CARES Act, of which 50% must go directly to students.

Here is a list of different sources of funding available for K-12 schools and higher education:

  • CARES Act Coronanvirus Relief Funds, $150 billion
  • ESSERF, $13.2 billion (Elementary and Secondary School Education Relief Fund)
  • HEERF, $14.25 billion (Higher Education Emergency Relief Fund)
  • GEERF, $3 billion (Governors Emergency Education Relief Fund)

Next, is information about the specific amounts of funding coming to Montana and any parameters on spending or guidance from the US Department of Education that are currently available:

CARES Act Coronavirus Relief Funds

  • Montana will receive $1.25 billion under section 5001 of the CARES Act
  • These funds may only be used to cover the following expenses:
    • Necessary expenditures incurred due to the public health emergency with respect to COVID-19
    • Expenses that were not accounted for in the state budget most recently approved as of 3/27/2020 (CARES Act enactment date)
    • Expenses incurred between March 1 and December 30, 2020.
  • The Treasury Department has published a guidance document and a Frequently Asked Questions (FAQs) sheet for state and local governments
  • According to the guidance, expenditures “due to” the public health emergency include first-order expenditures as well as second-order expenditures, such as providing economic support to people suffering employment or business interruptions due to COVID-19
  • Eligible expenses include expenses for actions taken to facilitate compliance with COVID-19-related public health measures, such as expenses to facilitate distance learning, including technological improvements, in connection with school closings to enable compliance with COVID-19 precautions

The Education Stabilization Fund is the umbrella fund for the various Education Emergency Relief Funds. The total amount appropriated is $30.75 billion. The language for the Education Stabilization Fund, which is administered by the Department of Education (DOE), starts on page 284 of this PDF of the CARES Act. The following is a summary of the Education Stabilization Fund sections:

GEERF

  • Montana will receive $8.7 million under section 18002 of the CARES Act
  • The governor can use the funds for 3 purposes:
    • Emergency grants to school districts most significantly impacted by COVID-19
    • Emergency grants to higher education institutions most significantly impacted by COVID-19
    • Financial support to any other school district, higher education institution, or other education entity that is essential for carrying out emergency educational services to students for authorized activities for:
      • Individuals with Disabilities Education Act (IDEA)
      • Adult Education and Family Literacy Act
      • Perkins Career and Technical Education Act
      • McKinney-Vento Homeless Assistance Act
      • Provision of child care and early childhood education
      • Social and emotional support
      • Protection of education-related jobs
  • The cover letter from Education Secretary Betsy DeVos to the governors noted that these emergency block grants are “extraordinarily flexible” and the US Department of Education “will not micromanage” the governors’ spending to best meet the needs of “students, schools (including charter schools and non-public schools), postsecondary institutions, and other education-related organizations[.]”

ESSERF

  • Montana will receive just under $41.3 million under section 18003 of the CARES Act
    • $37.1 million (90%) goes directly to school districts (through OPI) using the Title 1 formula (estimated school district allocations here)
    • $4.1 million (10%) goes to OPI, of which $206,000 (1/2 of 1% of the total amount received) can be spent on administrative costs; the rest must be spent on emergency needs to address issues related to COVID-19
  • Under section 18005, non-public schools are entitled to receive equitable services from their local school district in the same manner as those equitable services are already provided under Title 1 (20 U.S.C. 1117; Elementary and Secondary Education Act of 1965) (see below under Section 18005 for more information).
  • The CARES Act provides 12 categories of acceptable expenditures for ESSERF money:
    • The same activities as authorized for GEERF (IDEA, Perkins CTE, McKinney-Vento, etc.)
    • Coordinating preparation and response efforts of school districts with public health departments and other relevant agencies
    • Providing school leaders with resources to address the needs of their individual schools
    • Addressing the unique needs of low-income students, students with disabilities, English learners, racial and ethnic minorities, homeless students, and students in foster care
    • Developing and improving procedures and systems for preparedness and response efforts of school districts
    • Training for school staff on sanitation and minimizing the spread of infectious diseases
    • Purchasing cleaning and sanitation supplies for school district facilities, including buildings operated by a school district
    • Planning and coordinating long-term closures, including:
      • Providing meals to eligible students
      • Providing technology for online learning for all students
      • Guidance for carrying out requirements under IDEA
      • Ensuring educational services continue consistent with all federal, state, and local requirements
    • Purchasing educational technology (hardware, software, connectivity) to aid in regular and substantive interactions between students and their classroom instructors
    • Providing mental health services and supports
    • Planning and implementing activities related to summer learning and supplemental afterschool programs
    • Other activities necessary to maintain the operation and continuity of services in school districts and continuing to employ existing school district staff
  • DOE issued some guidance as part of the Certification and Agreement State Educational Agencies (e.g. OPI) are required to sign.  The packet includes separate parts for programmatic, fiscal, and reporting assurances (Part B); uses of ESSERF (Part C); and other assurances and certifications (Part D)
  • Under Part B, DOE considers the following to be ineligible expenditures:
    • Subsidies or offsets for executive salaries and benefits of individuals who are not employees of OPI or school districts
    • Expenditures related to state or local teacher or faculty unions or associations

HEERF

  • Montana will receive $31.6 million under section 18004 of the CARES Act; the funds go directly to the higher education institutions
  • Higher education institutions include public and nonprofit private colleges, universities, and trade programs that provide not less than a 1-year program of training to prepare students for gainful employment in a recognized occupation
  • The list of recipient Montana institutions and the amounts awarded are included in a chart at the bottom of this email.
  • The HEERF funds are split into two categories: emergency financial aid grants to students and grants to higher education institutions
  • Emergency Grants to Students (link to DOE FAQs):
    • At least 50% of the funds must be used to provide emergency aid grants to students for expenses related to the disruption of campus operations due to coronavirus
    • Includes eligible expenses under a student’s cost of attendance, including food, housing, course materials, technology, health care, and child care
    • These funds cannot be used to reimburse higher education institutions for any refunds to students for room and board, tuition, or other fees
  • Institutional Grants (link to DOE FAQs):
    • The rest of the funds (up to 50%) may be used to cover any costs associated with significant changes in delivery of instruction due to the coronavirus
    • Ineligible costs include:
      • Payment to contractors for providing pre-enrollment recruitment activities, including marketing and advertising
      • Endowments
      • Capital outlay associated with facilities related to athletics, sectarian instruction, or religious worship

Section 18005: Non-Public Schools

  • This section specifically addresses non-public schools. As mentioned above, a local school district that receives any GEERF or ESSERF funds must continue to provide equitable services in the same manner as already provided under section 117 of Title I of the ESEA. These equitable services are determined in consultation with representatives of the non-public schools.
  • OPI must ensure a public agency maintains control of funds for the services and assistance provided to a non-public school
  • The public agency must have title to any materials, equipment, and property purchased with ESSERF money
  • OPI must ensure that services provided to a non-public school with ESSERF money will be provided by a public agency directly or through a contract with another public or private entity.

 

Section 18006

  • Under this section of the CARES Act, any school district, higher education institution, state, or other entity that receives funds under the Education Stabilization Fund (the umbrella fund for ESSERF, HEERF, GEERF, etc.) must continue to pay employees and contractors during the period of any disruptions or closures related to coronavirus to the greatest extent practicable.

    As a short answer, a private elementary or secondary school receiving funds under ESEA Title I will be entitled to the same “equitable services” under the CARES Act. A private school might also receive some aid under the Governor’s discretionary education funds for “other educational entities”, to be expended for limited purposes. Private postsecondary institutions will receive money under the CARES Act, of which 50% must go directly to students.

    Here is a list of different sources of funding available for K-12 schools and higher education:

  • CARES Act Coronanvirus Relief Funds, $150 billion
  • ESSERF, $13.2 billion (Elementary and Secondary School Education Relief Fund)
  • HEERF, $14.25 billion (Higher Education Emergency Relief Fund)
  • GEERF, $3 billion (Governors Emergency Education Relief Fund)
  •  
  •  
  • Next is some information about the specific amounts of funding coming to Montana and any parameters on spending or guidance from the US Department of Education that are currently available:
  • CARES Act Coronavirus Relief Funds

  • Montana will receive $1.25 billion under section 5001 of the CARES Act
  • These funds may only be used to cover the following expenses:
    • Necessary expenditures incurred due to the public health emergency with respect to COVID-19
    • Expenses that were not accounted for in the state budget most recently approved as of 3/27/2020 (CARES Act enactment date)
    • Expenses incurred between March 1 and December 30, 2020.
  • The Treasury Department has published a guidance document and a Frequently Asked Questions (FAQs) sheet for state and local governments
  • According to the guidance, expenditures “due to” the public health emergency include first-order expenditures as well as second-order expenditures, such as providing economic support to people suffering employment or business interruptions due to COVID-19
  • Eligible expenses include expenses for actions taken to facilitate compliance with COVID-19-related public health measures, such as expenses to facilitate distance learning, including technological improvements, in connection with school closings to enable compliance with COVID-19 precautions
  • The Education Stabilization Fund is the umbrella fund for the various Education Emergency Relief Funds. The total amount appropriated is $30.75 billion. The language for the Education Stabilization Fund, which is administered by the Department of Education (DOE), starts on page 284 of this PDF of the CARES Act. The following is a summary of the Education Stabilization Fund sections:

    GEERF

  • Montana will receive $8.7 million under section 18002 of the CARES Act
  • The governor can use the funds for 3 purposes:
    • Emergency grants to school districts most significantly impacted by COVID-19
    • Emergency grants to higher education institutions most significantly impacted by COVID-19
    • Financial support to any other school district, higher education institution, or other education entity that is essential for carrying out emergency educational services to students for authorized activities for:
      • Individuals with Disabilities Education Act (IDEA)
      • Adult Education and Family Literacy Act
      • Perkins Career and Technical Education Act
      • McKinney-Vento Homeless Assistance Act
      • Provision of child care and early childhood education
      • Social and emotional support
      • Protection of education-related jobs
  • The cover letter from Education Secretary Betsy DeVos to the governors noted that these emergency block grants are “extraordinarily flexible” and the US Department of Education “will not micromanage” the governors’ spending to best meet the needs of “students, schools (including charter schools and non-public schools), postsecondary institutions, and other education-related organizations[.]”
  • ESSERF

  • Montana will receive just under $41.3 million under section 18003 of the CARES Act
    • $37.1 million (90%) goes directly to school districts (through OPI) using the Title 1 formula (estimated school district allocations here)
    • $4.1 million (10%) goes to OPI, of which $206,000 (1/2 of 1% of the total amount received) can be spent on administrative costs; the rest must be spent on emergency needs to address issues related to COVID-19
  • Under section 18005, non-public schools are entitled to receive equitable services from their local school district in the same manner as those equitable services are already provided under Title 1 (20 U.S.C. 1117; Elementary and Secondary Education Act of 1965) (see below under Section 18005 for more information).
  • The CARES Act provides 12 categories of acceptable expenditures for ESSERF money:
    • The same activities as authorized for GEERF (IDEA, Perkins CTE, McKinney-Vento, etc.)
    • Coordinating preparation and response efforts of school districts with public health departments and other relevant agencies
    • Providing school leaders with resources to address the needs of their individual schools
    • Addressing the unique needs of low-income students, students with disabilities, English learners, racial and ethnic minorities, homeless students, and students in foster care
    • Developing and improving procedures and systems for preparedness and response efforts of school districts
    • Training for school staff on sanitation and minimizing the spread of infectious diseases
    • Purchasing cleaning and sanitation supplies for school district facilities, including buildings operated by a school district
    • Planning and coordinating long-term closures, including:
      • Providing meals to eligible students
      • Providing technology for online learning for all students
      • Guidance for carrying out requirements under IDEA
      • Ensuring educational services continue consistent with all federal, state, and local requirements
    • Purchasing educational technology (hardware, software, connectivity) to aid in regular and substantive interactions between students and their classroom instructors
    • Providing mental health services and supports
    • Planning and implementing activities related to summer learning and supplemental afterschool programs
    • Other activities necessary to maintain the operation and continuity of services in school districts and continuing to employ existing school district staff
  • DOE issued some guidance as part of the Certification and Agreement State Educational Agencies (e.g. OPI) are required to sign.  The packet includes separate parts for programmatic, fiscal, and reporting assurances (Part B); uses of ESSERF (Part C); and other assurances and certifications (Part D)
  • Under Part B, DOE considers the following to be ineligible expenditures:
    • Subsidies or offsets for executive salaries and benefits of individuals who are not employees of OPI or school districts
    • Expenditures related to state or local teacher or faculty unions or associations
  • HEERF

  • Montana will receive $31.6 million under section 18004 of the CARES Act; the funds go directly to the higher education institutions
  • Higher education institutions include public and nonprofit private colleges, universities, and trade programs that provide not less than a 1-year program of training to prepare students for gainful employment in a recognized occupation
  • The list of recipient Montana institutions and the amounts awarded are included in a chart at the bottom of this email.
  • The HEERF funds are split into two categories: emergency financial aid grants to students and grants to higher education institutions
  • Emergency Grants to Students (link to DOE FAQs):
    • At least 50% of the funds must be used to provide emergency aid grants to students for expenses related to the disruption of campus operations due to coronavirus
    • Includes eligible expenses under a student’s cost of attendance, including food, housing, course materials, technology, health care, and child care
    • These funds cannot be used to reimburse higher education institutions for any refunds to students for room and board, tuition, or other fees
  • Institutional Grants (link to DOE FAQs):
    • The rest of the funds (up to 50%) may be used to cover any costs associated with significant changes in delivery of instruction due to the coronavirus
    • Ineligible costs include:
      • Payment to contractors for providing pre-enrollment recruitment activities, including marketing and advertising
      • Endowments
      • Capital outlay associated with facilities related to athletics, sectarian instruction, or religious worship
  • Section 18005: Non-Public Schools

  • This section specifically addresses non-public schools. As mentioned above, a local school district that receives any GEERF or ESSERF funds must continue to provide equitable services in the same manner as already provided under section 117 of Title I of the ESEA. These equitable services are determined in consultation with representatives of the non-public schools.
  • OPI must ensure a public agency maintains control of funds for the services and assistance provided to a non-public school
  • The public agency must have title to any materials, equipment, and property purchased with ESSERF money
  • OPI must ensure that services provided to a non-public school with ESSERF money will be provided by a public agency directly or through a contract with another public or private entity.
  • Section 18006

  • Under this section of the CARES Act, any school district, higher education institution, state, or other entity that receives funds under the Education Stabilization Fund (the umbrella fund for ESSERF, HEERF, GEERF, etc.) must continue to pay employees and contractors during the period of any disruptions or closures related to coronavirus to the greatest extent practicable.

Under authority of the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Secretary of the U.S. Department of Health and Human Services (HHS) issued privacy regulations (Privacy Rule) governing the disclosure of individually identifiable health information, known as protected health information or PHI, by covered entities.

Individual identifiable health information means "information that is a subset of health information, including demographic information collected from an individual, and:

1. Is created or received by a health care provider, health plan, employer, or health care clearinghouse; and

2. Relates to the past, present, or future physical or mental health or condition of an individual; the provision of health care to an individual; or the past, present, or future payment for the provision of health care to an individual; and

            i. That identifies the individual; or

            ii. With respect to which there is a reasonable basis to believe the information can be used to identify the individual." (45 CFR 160.103)

A covered entity "means:

1.  A health plan.

2.  A health care clearinghouse.

3.  A health care provider who transmits any health information in electronic form in connection with a transaction covered by [45 CFR Subchapter C]". (45 CFR 160.103)

If a covered entity contracts with a business associate to carry out certain activities or functions, the covered entity must have a written contract with the business associate that specifies the business associate's services and requires the business associate to comply with HIPAA's privacy and security provisions. (45 CFR 164.502; 45 CFR 164.504)

In general, a covered entity or business associate may not use or disclose PHI except as permitted by the Privacy Rule or unless the individual who is the subject of the PHI authorizes the disclosure in writing. (45 CFR 164.502) The Privacy Rule authorizes a covered entity to use or disclose PHI without the written authorization of the individual in certain circumstances, including for public interest and benefit activities (45 CFR 164.512), which, in relation to COVID-19, are discussed in more detail below.

Answer: Section 3224 of the CARES Act requires the Secretary of HHS to issue, within 180 days of enactment of the CARES Act, guidance on sharing PHI during the current public health emergency involving COVID-19. The section specifically requires information on complying with the Privacy Rule. For your reference, I have included the entirety of that section below and have inserted bold font for emphasis:

Not later than 180 days after the date of enactment of this Act, the Secretary of Health and Human Services shall issue guidance on the sharing of patients' protected health information pursuant to section 160.103 of title 45, Code of Federal Regulations (or any successor regulations) during the public health emergency declared by the Secretary of Health and Human Services under section 319 of the Public Health Service Act (42 U.S.C. 247d) with respect to COVID–19, during the emergency involving Federal primary responsibility determined to exist by the President under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5191(b)) with respect to COVID–19, and during the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et seq.) with respect to COVID–19. Such guidance shall include information on compliance with the regulations promulgated pursuant to section 264(c) of the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. 1320d–2 note) and applicable policies, including such policies that may come into effect during such emergencies.

After the CARES Act became law on March 27, 2020, the HHS Office for Civil Rights (OCR), although not specifically citing the CARES Act as authority or as a basis for the actions, has announced two notifications of enforcement discretion:

  1. Notification of Enforcement Discretion for Community-Based Testing Sites During the COVID-19 Nationwide Public Health Emergency (April 9, 2020), in which the OCR announced that it will exercise discretion and not impose penalties for HIPAA violations by covered entities or business associates in connection with good faith participation in COVID-19 testing sites that provide mobile, drive-through, or walk-up COVID-19 only specimen collection or testing services to the public. This notification applies retroactively to March 13, 2020, and remains in effect until the Secretary of HHS declares the public health emergency no longer exists or upon the expiration date of the declared public health emergency.
  2. Notification of Enforcement Discretion to Allow Uses and Disclosures of Protected Health Information by Business Associates for Public Health and Health Oversight Activities During the COVID-19 Nationwide Public Health Emergency (April 2, 2020), in which the OCR announced that it will exercise discretion and not impose penalties for HIPAA violations by health care providers or their business associates for good faith uses and disclosures of protected health information by business associates for public health and health oversight activities during the COVID-19 public health emergency.  This notification and remains in effect until the Secretary of HHS declares the public health emergency no longer exists or upon the expiration date of the declared public health emergency.

In addition, on March 28, 2020, OCR issued a bulletin, which, in part, reiterated guidance issued by OCR and "unprecedented" HIPAA flexibilities recently made available (prior to passage of the CARES Act) by OCR that apply during the COVID-19 public health emergency:

  1. A notification of enforcement discretion allowing providers to service patients through telehealth via commonly used apps such as FaceTime, Skype, and Zoom;
  2. Guidance regarding when a covered entity may disclose, without an individual’s authorization, the PHI of an individual who has been infected with or exposed to COVID-19 to law enforcement, paramedics, other first responders, and public health authorities. Under this guidance, a covered entity may disclose the PHI of an individual who has been infected with or exposed to COVID-19, without the individual's authorization, with law enforcement, paramedics, other first responders, and public health authorities in the following circumstances:
    1. when disclosure is needed to provide treatment;
    2. when notification is required by law (e.g., if there is a state law requiring reporting of confirm or suspected cases of infectious disease to public health officials);
    3. to notify a public health authority to prevent the spread or control spread of disease;
    4. when first responders may be at risk of infection;
    5. when the disclosure of PHI to first responders is necessary to prevent or lessen a serious and imminent threat to the health and safety of a person or the public;
    6. when responding to a request for PHI by a correctional institution or law enforcement official having lawful custody of an inmate or other individual, if the PHI is needed for certain purposes.
  3. Guidance regarding how health care providers can share information with the Centers for Disease Control and Prevention (CDC) and others to address COVID-19. Under this guidance, which was originally issued in February 2020, the OCR notes that PHI may be disclosed without an individual's written authorization in the following instances (relevant to COVID-19):
    1. as necessary to treat the individual or another patient;
    2. for public health authorities for public health activities, such as preventing or controlling disease, injury, or disability;
    3. to persons at risk of contracting or spreading a disease or condition if other law, such as state law, authorizes a covered entity to notify persons to prevent or control the spread of disease or otherwise carry out public health interventions or investigations;
    4. to friends, family, and others involved in an individual's care and to notify friends, family, and others involved in an individual's care about the individual's location, condition, or death; or
    5. to prevent or lessen a serious and imminent threat to the health and safety of a person or the public (consistent with applicable law and a provider's ethical standards of conduct).

Conclusion: The CARES Act requires HHS to provide additional guidance regarding the Privacy Rule in light of the current public health emergency involving COVID-19. It is unclear whether the guidance and notices of enforcement discretion noted above satisfy this requirement or whether additional guidance will be provided in the near future.

There are arguments both ways. However, ultimately reimbursements may be structured to satisfy constitutional muster. There are three constitutional provisions at issue.

            Article II, section 5 of the Montana Constitution provides:

Freedom of religion. The state shall make no law respecting an establishment of religion or prohibiting the free exercise thereof.

Article V, section 11(5) of the Montana Constitution provides:

Bills. … (5) No appropriation shall be made for religious, charitable, industrial, educational, or benevolent purposes to any private individual, private association, or private corporation not under control of the state.

Article X, section 6  of the Montana Constitution provides:

Aid prohibited to sectarian schools. (1) The legislature, counties, cities, towns, school districts, and public corporations shall not make any direct or indirect appropriation or payment from any public fund or monies, or any grant of lands or other property for any sectarian purpose or to aid any church, school, academy, seminary, college, university, or other literary or scientific institution, controlled in whole or in part by any church, sect, or denomination.

            (2) This section shall not apply to funds from federal sources provided to the state for the express purpose of distribution to non-public education.

 

These provisions were previously analyzed by the office and are available upon request. Note that in Espinoza v. Department of Revenue, 393 Mont. 446 (2018), the Montana Supreme Court struck down a statute regarding an individual income tax credit for contributions to a student scholarship organization (SSO), as the money could be transferred by the SSO to a religious school. This case is currently being decided by the United States Supreme Court. As such, analysis regarding whether an SSO is permissible in Montana may not be as relevant.

The first two Constitutional provisions deal with legislation, but regardless, the intent would not be to allow an appropriation by the Executive that is not allowed by the Legislature. Indeed, the power of the Executive to expend money out of the Treasury comes from Legislatively enacted statutory appropriations and budget amendments.

An Attorney General opinion is also instructive. In it, Attorney General Greely determined that alternative renewable energy source grants may not be awarded to any church or to any school, academy, seminary, college, university, or other literary or scientific institution controlled in whole or in part by any church, sect, or denomination. Other religious organizations may be awarded grants if a substantial portion of their functions are secular and grants will only be used for such functions. The following quote from the opinion is particularly instructive:

“Under Article X, section 6, then, the question is not whether the grant funds a religious activity,  or whether religion  permeates the organization being awarded the grant.  Rather, the question is whether the grant aids the church  or institution to whom it is awarded.  It is clear that a grant would aid those organizations financially; the grant frees up funds that otherwise would have been used to carry out the program for which the grant is made.  Thus, for example, a grant to a sectarian  college for heating  a swimming pool by adapting solar technology would aid that institution even though the activity being funded is not religious,  and even though a substantial portion  of the college's functions are not subsumed  in the religious mission.  Such a grant would, nonetheless, be prohibited by Article X, section 6.” 37 A.G. Op. 165 (1978).

Based on the opinion, it appears any religious organization that receives funding from the CARES Act needs to be able to prove that the funding was expended 100% on assisting members of the public in general with the COVID 19 pandemic, and none of the money could benefit any expenses that are tied to religion. For example, if people are fed in a church building, it would be impermissible to charge for a portion of the heat, or to give church members salaries.

Lastly, Montana Welfare Board. v. Lutheran Social Services, 156 Mont. 381, 480 P.2d 181 (1971), is instructive since Article X, section 6, of the Montana Constitution is essentially the same as Article XI, section 8, of the 1889 Montana Constitution, whereby the Montana Supreme Court held that the payment of public funds to persons providing medical, hospitalization, and foster home care to indigent mothers who have sought or received assistance from private rather than public adoptive agencies did not violate Art. XI, sec. 8, 1889 Mont. Const. 

In summary, if structured correctly and the state maintains control over the grants by only reimbursing an entity for qualifying COVID-19 costs, the activity should satisfy the provisions of the Montana Constitution. However, it must also satisfy the federal statute. For example, recent guidance from the federal government mentioned the funding cannot be used for “[r]eimbursement to donors for donated items or services”. https://home.treasury.gov/system/files/136/Coronavirus-Relief-Fund-Guidance-for-State-Territorial-Local-and-Tribal-Governments.pdf (page 4).

 

 

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