NH Municipal Employers: Preparing for the Financial Impacts of COVID-19

Taxes and Money Cut by Red Line

For those New Hampshire municipalities operating on a fiscal year budget, most did not see significant declines in revenue in the way of unpaid property taxes when collections took place for the first half of the year. However, both state and local officials are anticipating the amount of uncollected property taxes to increase for the last half of 2020 and into the 2021 tax year due to the ongoing pandemic and reduction or complete loss of wages for homeowners combined with anticipated abatement requests from both residential and commercial property owners. Government income streams that relied on taxes from tourism via room, meals and other taxes revenue sources have also taken a big hit. Many municipalities are already looking for ways to cut back budgets well in advance of typical budget season. Some have even put tighter restrictions on spending and are carefully reviewing future spending to make certain they are adequately prepared to make any necessary cuts.

Unlike private employers who were provided access to funds via grants and other programs, thus far public employers including towns and cities are not able to utilize any COVID-19 monies to offset their revenue losses. As such, the prospect of possibly needing to make cutbacks is on everyone’s minds. While some savings might be possible by delaying major projects, this is not always an option if matching funds from outside sources is a factor in the equation.

As with most operational budgets, labor comprises a large portion of the day-to-day financial expenditures for public employers.

Reimbursable Labor Costs

Make certain you are keeping track of all reimbursable payroll expenses directly related to coronavirus sick time and family medical leave. Under the FFCRA, this benefit runs through December 31, 2020, and permits employers to make a reimbursement claim for any employees who are eligible for paid sick or FMLA due to the following:

  • Two weeks (up to 80 hours) of paid sick leave at the regular rate of pay for an employee who:
      • is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
      • has been advised by a health care provider to self-quarantine related to COVID-19;
      • is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
      • is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
      • is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
      • is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and Treasury.
  • Two weeks (up to 80 hours) of paid sick leave at two-thirds the regular rate of pay for an employee who has to care for another individual who is required to quarantine due to the same reasons noted above.
  • Up to an additional 10 weeks of leave paid at two-thirds the regular rate of pay for full-time employees who needs to care for a dependent child/children due to COVID-19 mandated school or daycare closure. (This benefit is only available to eligible employees who have been employed for at least 30 days prior to leave).

Note: In New Hampshire, these costs are considered reimbursable through GOFERR as part of Coronavirus Relief Fund Payments to Local Governments: https://www.goferr.nh.gov/sites/g/files/ehbemt366/files/inline-documents/sonh/20200721-local-governments-overview-guidance.pdf

The State of New Hampshire via the FFCRA is also reimbursing payroll and benefit costs for certain workers who have been deemed essential. Due to the emergency nature and as an “administrative convenience,” the entire payroll for the following workers is covered under this program and can be included as part of a municipality’s reimbursement request (next submission due September 15, 2020, for the period from March 1, 2020 through August 31, 2020, for budgets approved as of March 27, 2020):

  • Public safety
  • Public health
  • Health care
  • Human services
  • Other similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency.

Any overtime expenses for fire/police/EMS/Public Health/Public welfare as well as COVID-19 related overtime for any other employees are also reimbursable. Total reimbursement costs for any municipality may not exceed the limits determined for each town/city that are based on 2018 overall population counts. For more information on these reimbursable expenses, please read: https://www.goferr.nh.gov/sites/g/files/ehbemt366/files/inline-documents/sonh/20200721-best-practices.pdf

CheckmateHCM’s virtual workspace includes payroll and time tracking modules that can be configured with cost codes to help you track COVID-19 related sick time and leave. It also allows you to develop other cost codes to track time spent on specific projects, allotted to other departments or under a different job role with a change in pay. Employees can clock in and out from any device with a secure internet connection including contactless time clocks, remote desktops and mobile devices.

Other Reimbursable Costs

As with your COVID-19 labor costs, you should also be tracking any expenditures that are required due to the pandemic and complying with any Federal, State or local guidance such as CDC and OSHA guidelines on keeping your employees safe in the workplace. This can include things like the purchase of PPE, additional cleaning products, HVAC inspections to ensure indoor air quality, etc. These types of costs can be submitted as part of your request for reimbursement under the Municipal & County section of GOFERR. The next reimbursement request deadline is September 15, 2020, for COVID-19 costs incurred from March 1, 2020 through August 31, 2020.

There will also be the potential to recoup election day COVID-19 related costs in the forth (4th) round reimbursement request due to GOFERR during the two-week period from October 16th – 30th. More details on election reimbursement expenses are available here: https://www.nhmunicipal.org/sites/default/files/uploads/court_documents/subgrantee_notice_sn_20.03.pdf

Part-Time or Flexible Work Arrangements

Like many of its private company counterparts, some public employers are also finding it difficult to encourage employees to return to work. Employers may need to get creative with more flexible schedules, permitting work from home and/or implementing job-sharing or utilizing a part-time workforce to try to fill the gaps. With many schools soon reopening either in-person, hybrid or completely remote and the potential that schools may have to return to distance learning throughout the year, trying to strike a balance with serving the public and maintaining your workforce will required a skilled balancing act and diplomacy.

Many municipalities used to be able to rely on retired State or municipal employees who could work part-time and still collect retirement benefits as long as they did not exceed a certain number of hours. While the State has lifted those hour restrictions as further detailed in the “Don’t Forget About Your NHRS Reporting” section below, given their age, many retirees are in a class of “at risk” employees and may not be willing or able to fill in as they once did over health concerns.

Overtime Budgets

In an effort to discourage large gatherings and protect public health, a number of government officials have had to face the tough task of canceling large events and celebrations, some of which are sources of revenue for local businesses and the towns and cities themselves. However, this may also reduce some need for overtime for police and other municipal employees involved in the planning and oversight.

Towns can also take a proactive look at other potential drivers for overtime. With winter just a few months away, this could include taking a look at established Winter Maintenance policies with stakeholders and legal counsel to see if it might be appropriate and still in the interest of public safety to possibly propose modifications to the policy to move from striving for “black tar” removal efforts to permitting a few inches of snow to accumulate before sending out crews.

Reviewing typical overtime costs now and working with your department heads and other team members now to proactive approach to possibly reduce the need for overtime with potential changes to scheduling or by other means could help to avoid more drastic, last-minute decisions down the road. Implementing a system like CheckmateHCM can also provide management and town leadership with alerts as employees near overtime thresholds and provide a better mans for scheduling labor and tracking payroll costs in real time.

Outsourcing and Contract Labor

With worker shortages and many small businesses seeking work, some cities and towns may be able to outsource job functions or certain services for which they are struggling to recruit employees.  Such arrangements can help to reduce operating costs by reducing the costs for employee overhead costs such as benefits, technology and training costs to name a few.

Don’t Forget About Your NHRS Reporting

Some of the additional funding provided under the FFCRA and other Coronavirus relief programs should be included in reporting and contributions as part of your standard NHRS reporting, withholdings and payments. Here is a list of the additional pay that should be reflected as “earnable compensation” and used in any required computations:

  • Sick Time and Expanded FMLA under the FFCRA
  • Accrued leave used to supplement FFCRA sick time or FMLA
  • Any pay outs or buy backs for accrued PTO whether paid due to termination of employment or via a cash out program.

The following financial benefits are not considered reportable compensation:

  • First-Responder COVID-19 Stipend (announced by Governor Sununu on May 4, 2020, providing weekly stipends from May 4, 2020 through June 30, 2020)
  • Payments made directly to employees by the federal government under the CARES Act
  • Payments made to healthcare workers under the New Hampshire’s Long Term Care Stabilization Program

Other important notes on NHRS:

  • During the State of Emergency (most recently renewed August 7, 2020) any hours worked by a retiree for a participating employer do not count toward the annual limits on retiree work hours.
  • Furloughed workers are still considered an NHRS member and may not withdraw benefits, but will not be considered “in service” and service credit time will not be accrued during the furlough period.
  • Employees who are laid off or terminated will be considered “inactive” members, but may continue earning service credits if rehired by the same employer or another participating employer if accumulated contributions have not been withdrawn.

As part of our services for municipal employers, CheckmateHCM offers NHRS reporting. For more information on FAQs for NHRS contributions and reporting requirements related to COVID-19, visit: https://www.nhrs.org/faqs/faq—covid-19-guidance-for-participating-employers

Need a better way to manage your municipal employee time and payrolls?

CheckmateHCM can help. Our all-in-one solution can be tailored to serve small town workforces or scaled to serve large cities with payroll services, time and attendance and/or HR automation. We also provide NHRS reporting functionality and, as a NH-based independent business, we are right here to serve you with personalized support from a dedicated account representative and the ability for you to print or receive live checks for any employees that prefer them over direct deposit.

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