Tuesday night Macon County Manager Derek Roland presented commissioners with a proposal for expending the county’s remaining $1.8 million of ARPA funding which is in line with the federal government’s Revenue Replacement category of allowable expenses. Roland’s proposal would ultimately free up funding within the county’s general fund that would reinstate a $2 an hour retention bonus for county employees.
Commissioner John Shearl responded to Roland’s proposal by accusing him of asking commissioners to “manipulate the budget” to provide employees with a bonus. Commissioner Shearl informed Roland that he had spoken to an attorney at the North Carolina School of Government and according to the attorney, Roland’s proposal was illegal.
Roland assured Shearl that he too had consulted with an attorney at the School of Government when crafting the policy and that the information he provided commissioners with in his proposal was accurate and legal.
Because Roland said that the information Commissioner Shearl claimed to have from the school of government was not accurate, Commissioner Shearl accused Roland of calling him a liar and because of such, called for him to resign from his position as Manager of Macon County.
A public records request for the emails Commissioner Shearl referenced as his basis for accusing Roland of manipulating the county’s budget revealed that Shearl was being untruthful regarding the information he received from the School of Government.
While Shearl claimed the attorney informed him during their correspondence that the county’s plan to spend the money was illegal, the public records request shows that the attorney actually specifically informed Commissioner Shearl that is how the county SHOULD spend the funding.
An email sent to Commissioner John Shearl on November 14 from Rebecca Badgett, Teaching Assistant Professor at the UNC School of Government stated that her email contained an attachment explaining “premium pay and what ARPA funds may be spent on under the revenue replacement category, which allows the funds to be spent on any government service.”
Commissioner Shearl responded the same day acknowledging the receipt of the information and asking the follow-up question, “What could the ARPA funds be used for initially? All-inclusive list if available please.”
Badgett responded the same day and informed Shearl that it would be difficult to provide a comprehensive list because there are many types of projects that are eligible. Badgett then provided details regarding the four allowable categories, projects that respond to the public health and the economic impacts of COVID19, replacing public sector revenue, premium pay, and infrastructure projects. Badgett explained that the revenue replacement category “allows you o spend up to $10 million on any government service/expenditure that the local government would otherwise be authorized to undertake…All local governments that received $10 million or less can spend all of their funds in this category. There are fewer compliance requirements for expenditures in this category. For example, federal procurement rules do not apply.”
She also provided a link to the US Department of Treasury’s website directly to the grant program’s Final Rule Overview.
Badgett then advised how the county SHOULD spend the money by saying, “There’s no reason for your unit to expend funds in any category other than revenue replacement. That’s the easiest way to spend the remainder of the award. This should allow you to free up general fund revenue and expend the freed up funds on projects or programs that you would otherwise be unable to do.”
Shearl almost immediately responded, thanking Badgett for the information. With Badgett specifically informing Shearl that the county CAN and SHOULD spend the funds under the revenue replacement category, as Roland had proposed, Shearl’s follow-up questions suggest that he understood Roland’s proposal to be right and legal, “I have been trying to figure out how much money that Macon County received of the ARPA funds,” Shearl asked. “Does it affect any of this information if they received more than 10 million dollars?”
Badgett told Commissioner Shearl that if the county received more than $10 million, only the first $10 million could be considered revenue loss. Macon County received $6.9 million, less than the $10 million threshold.
During Tuesday night’s meeting Commissioner Shearl continued to claim that according to the Badgett, the funds couldn’t be spent under the allowable category of premium pay after April 2023, which is accurate. However, Shearl’s final email to Badgett reveals that he fully understood that County Manager Derek Roland’s proposal was not seeking to spend the funding on premium pay as it relates to one of the four categories identified by the federal government. Despite acknowledging this in his emails to Badgett, Commissioner Shearl was untruthful regarding the information he was provided, misrepresenting his communication with the attorney.
As per his email to Badgett, he said, “Yes, they spent approximately half of the money received for premium pay. We halted that by the order of the federal government in April 2023. The county manager has this on the agenda to discuss retention pay to employees at $2 per hour. I will let you know how this turns out tomorrow. Thank you for all of your help today.”
A public records request for the email communication Roland referenced during the meeting between himself and an attorney at the UNC School of Government revealed that just as Roland had stated during the meeting, SOG attorney Kara Millonzi advised Roland to spend the remaining funds out of the allowable category of revenue replacement.
“Because the county received under $10 million total allocation, it can spend all of its funds as revenue replacement, Millonzi wrote in her email to Roland. “I suggest keeping the premium pay policy (assuming the board still supports it) but swapping out how you are paying for it. You can legally use your $6.94m to reimburse almost any county expenditure dating back to March 3, 2021. The board could amend (or adopt) its grant project ordinance to reflect the specific reimbursement expenditures totaling the full amount. That legally “obligates and expends” all the ARP funds, which frees up non-grant revenues that can be used to cover all the premium payments.”