COUNTY OF UINTAH

Criteria: Recipients may use CSLFRF payments for any eligible expenses subject to the restrictions set forth in sections 602 and 603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of 2021 (codified as 42 USC 802 and 42 USC 803 respectively), Treasury's Interim Final Rule and Final Rule at 31 CFR sections 35.7 and 35.8, and FAQ's. The following activities are not permitted under CSLFRF: Offset a reduction in net tax revenue (entity cannot reduce existing tax rate); Deposit into pension funds; Debt service or replenishing financial reserves (entity cannot extinguish existing debt beyond normal debt service payments, and may not use these funds to replace funds used for regular debt service); Satisfaction of settlements and judgements; or Programs, services, or capital expenditures that include a term or condition that undermines efforts to stop the spread of COVID-19. Condition and Context: While the county elected to utilize the "standard allowance" under the guidelines for the CSLFRF funds, the County paid off a significant amount of general obligation debt ($25,323,496) as well as decreased the property tax rate (- .001234) over the prior year. As these two actions are specifically prohibited under compliance requirements of the CSLFRF funds and as there is no identifiable method of determining whether these funds were used as part of the decrease in debt or tax replacement, it is assumed that the County used CSLFRF funds to replace other funds allowing the County to reduce debt and lower taxes. Questioned Costs: $25,323,496 Cause and effect: It is uncertain to the Auditor why the County chose to reduce debt and incremental tax rates. However, as these actions occurred near year end, after the Treasury Final Rule had been issued, and as management and governance should have known the compliance requirements of the CSLFRF grant, it appears that the County chose to disregard the compliance requirements in place rendering them in material noncompliance with the compliance requirements referred to above. Repeat Finding: No Recommendation: It is our recommendation that the County set aside the amount received as CSLFRF funds and provide a transparent accounting for how those funds are to be used, without replacing any of the funds that would have been used had they not paid for the reduction of debt or reduced taxes. We also recommend that the County implement controls that will prohibit continued noncompliance with federal awards received in the future. Management and Governance should make themselves aware of all compliance requirements for each federal award received. View of responsible officials: For management response, see signed document at end of schedule of findings and questioned costs.

Finding: 2022-01 Activities allowed or unallowed. Description: While the county elected to utilize the "standard allowance" under the guidelines for the CSLFRF funds, the county paid off a significant amount of general obligation debt ($25,323,496) as well as decreased the property tax rate. Corrective Action Management Response: While the county cannot reissue or reinstate the general obligation bonds, nor can they retroactively increase the property tax rate and therefore cannot correct the allowable costs finding, the County is currently implementing specific controls to prevent this issue in the future. Specifically, a new commission has been elected who are in full agreement that guidelines and compliance must be followed, and compliance controls have been implemented that all county staff and governance will follow. POC: Michael W. Wilkins - Clerk/Auditor Estimated Completion Time: Current fiscal period.