HomeMy WebLinkAbout2.a. Utilization of American Rescue Plan Act Funds
EXECUTIVE SUMMARY
City Council Work Session: June 1, 2021
AGENDA ITEM: Utilization of American Rescue Plan Act
Funds
AGENDA SECTION:
Discussion
PREPARED BY: Logan Martin, City Administrator AGENDA NO. 2.a.
ATTACHMENTS: FAQ Document on ARP Funds APPROVED BY: LJM
RECOMMENDED ACTION: Discuss allowed utilization of ARP Funds and provide
feedback
BACKGROUND
Congress recently authorized the American Rescue Plan (ARP) Act which created the Coronavirus State and
Local Recovery Fund. Similar to the process for 2020’s CARES Act, guidance from the Federal government
on utilization of the ARP funds has been slowly released. Based upon current formulas, the City anticipates
receiving $2.87 million in funding. All funding needs to be utilized by December 31, 2024, which is a
significantly longer time frame than CARES Act funds.
The below list represents general funding categories allowed in the program.
• Responding to the public health emergency.
o Ex: Vaccination programs, medical care, testing, support for vulnerable populations.
• Responding to the negative economic impacts of the pandemic.
o Ex: Assistance to small businesses, impacted industries, mortgage / rent, utilities.
• Premium pay for essential workers.
o Ex: Add’l hourly wages for health care, education, public health & safety. Guidance
prioritizes lower-income workers / industries.
• Replacement of revenue lost due to the pandemic that would be used to provide government
services.
o Ex: Reduced revenues in utilities, taxes, enterprise revenue (facility rentals)
• Necessary investments in water, sewer, and broadband infrastructure.
o Ex: Treatment, transmission, distribution of clean water, including the creation of new
systems (water treatment plant).
o Ex: Broadband improvements are required to produce 100 Mbps download and 100 Mbps
upload speeds to qualify, and they also must serve unserved or underserved areas.
Conversation has been held at the City and County leadership level to ensure that funds or programs created
by our entities do not duplicate or compete with each other. For example, significant funding is available
separately for housing support, so it is likely unnecessary for a city to create a competing program. Also,
numerous business assistance programs exist via this and other Federal / State acts, so funds can likely be
focused elsewhere.
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Upon initial review and consideration, the City would have a direct and somewhat short-term ability to
expend much of the funding on sewer / water infrastructure projects. We also would have some areas of
lost revenue that could be applicable, however guidance continues to be unclear as to whether a year-end
general fund budget deficit is required prior to allocating funds for lost revenue.
Guidance from the Federal government is expected in the near term, and staff will continue to monitor that
information. No decisions are required at this time, however staff would request an initial reaction from the
City Council on the currently available understanding of ARP opportunities.
RECOMMENDATION
Staff requests feedback from the City Council on the opportunities presented by the forthcoming
American Rescue Plan Act funds.
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Coronavirus State and Local Fiscal Recovery Funds
Frequently Asked Questions
AS OF MAY 25, 2021
This document contains answers to frequently asked questions regarding the Coronavirus State
and Local Fiscal Recovery Funds (CSFRF / CLFRF, or Fiscal Recovery Funds). Treasury will
be updating this document periodically in response to questions received from stakeholders.
Recipients and stakeholders should consult the Interim Final Rule for additional information.
• For overall information about the program, including information on requesting funding,
please see https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-
and-tribal-governments
• For general questions about CSFRF / CLFRF, please email SLFRP@treasury.gov
• Treasury is seeking comment on all aspects of the Interim Final Rule. Stakeholders are
encouraged to submit comments electronically through the Federal eRulemaking Portal
(https://www.regulations.gov/document/TREAS-DO-2021-0008-0002) on or before July
16, 2021. Please be advised that comments received will be part of the public record and
subject to public disclosure. Do not disclose any information in your comment or
supporting materials that you consider confidential or inappropriate for public disclosure.
Eligibility and Allocations
1. Which governments are eligible for funds?
The following governments are eligible:
• States and the District of Columbia
• Territories
• Tribal governments
• Counties
• Metropolitan cities
• Non-entitlement units, or smaller local governments
2. Which governments receive funds directly from Treasury?
Treasury will distribute funds directly to each eligible state, territory, metropolitan city,
county, or Tribal government. Smaller local governments that are classified as non-
entitlement units will receive funds through their applicable state government.
3. Are special-purpose units of government eligible to receive funds?
Special-purpose units of local government will not receive funding allocations; however,
a state, territory, local, or Tribal government may transfer funds to a special-purpose unit
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of government. Special-purpose districts perform specific functions in the community,
such as fire, water, sewer or mosquito abatement districts.
4. How are funds being allocated to Tribal governments, and how will Tribal
governments find out their allocation amounts?
$20 billion of Fiscal Recovery Funds was reserved for Tribal governments. The
American Rescue Plan Act specifies that $1 billion will be allocated evenly to all eligible
Tribal governments. The remaining $19 billion will be distributed using an allocation
methodology based on enrollment and employment.
There will be two payments to Tribal governments. Each Tribal government’s first
payment will include (i) an amount in respect of the $1 billion allocation that is to be
divided equally among eligible Tribal governments and (ii) each Tribal government’s pro
rata share of the Enrollment Allocation. Tribal governments will be notified of their
allocation amount and delivery of payment 4-5 days after completing request for funds in
the Treasury Submission Portal. The deadline to make the initial request for funds is
June 7, 2021.
In late-May or shortly after completing the initial request for funds, Tribal governments
will receive an email notification to re-enter the Treasury Submission Portal to confirm or
amend their 2019 employment numbers that were submitted to the Department of the
Treasury for the CARES Act’s Coronavirus Relief Fund. The deadline to confirm
employment numbers is June 21, 2021. Treasury will calculate each Tribal government’s
pro rata share of the Employment Allocation for those Tribal governments that confirmed
or submitted amended employment numbers. In late-June, Treasury will communicate to
Tribal governments the amount of their portion of the Employment Allocation and the
anticipated date for the second payment.
Eligible Uses – Responding to the Public Health Emergency / Negative Economic Impacts
5. What types of COVID-19 response, mitigation, and prevention activities are
eligible?
A broad range of services are needed to contain COVID-19 and are eligible uses,
including vaccination programs; medical care; testing; contact tracing; support for
isolation or quarantine; supports for vulnerable populations to access medical or public
health services; public health surveillance (e.g., monitoring case trends, genomic
sequencing for variants); enforcement of public health orders; public communication
efforts; enhancement to health care capacity, including through alternative care facilities;
purchases of personal protective equipment; support for prevention, mitigation, or other
services in congregate living facilities (e.g., nursing homes, incarceration settings,
homeless shelters, group living facilities) and other key settings like schools; ventilation
improvements in congregate settings, health care settings, or other key locations;
enhancement of public health data systems; and other public health responses. Capital
investments in public facilities to meet pandemic operational needs are also eligible, such
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as physical plant improvements to public hospitals and health clinics or adaptations to
public buildings to implement COVID-19 mitigation tactics.
6. If a use of funds was allowable under the Coronavirus Relief Fund (CRF) to
respond to the public health emergency, may recipients presume it is also allowable
under CSFRF/CLFRF?
Generally, funding uses eligible under CRF as a response to the direct public health
impacts of COVID-19 will continue to be eligible under CSFRF/CLFRF, with the
following two exceptions: (1) the standard for eligibility of public health and safety
payrolls has been updated; and (2) expenses related to the issuance of tax-anticipation
notes are not an eligible funding use.
7. If a use of funds is not explicitly permitted in the Interim Final Rule as a response to
the public health emergency and its negative economic impacts, does that mean it is
prohibited?
The Interim Final Rule contains a non-exclusive list of programs or services that may be
funded as responding to COVID-19 or the negative economic impacts of the COVID-19
public health emergency, along with considerations for evaluating other potential uses of
Fiscal Recovery Funds not explicitly listed. The Interim Final Rule also provides
flexibility for recipients to use Fiscal Recovery Funds for programs or services that are
not identified on these non-exclusive lists but which meet the objectives of section
602(c)(1)(A) or 603(c)(1)(A) by responding to the COVID-19 public health emergency
with respect to COVID-19 or its negative economic impacts.
8. May recipients use funds to respond to the public health emergency and its negative
economic impacts by replenishing state unemployment funds?
Consistent with the approach taken in the CRF, recipients may make deposits into the
state account of the Unemployment Trust Fund up to the level needed to restore the pre-
pandemic balances of such account as of January 27, 2020, or to pay back advances
received for the payment of benefits between January 27, 2020 and the date when the
Interim Final Rule is published in the Federal Register.
9. What types of services are eligible as responses to the negative economic impacts of
the pandemic?
Eligible uses in this category include assistance to households; small businesses and non-
profits; and aid to impacted industries.
Assistance to households includes, but is not limited to: food assistance; rent, mortgage,
or utility assistance; counseling and legal aid to prevent eviction or homelessness; cash
assistance; emergency assistance for burials, home repairs, weatherization, or other
needs; internet access or digital literacy assistance; or job training to address negative
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economic or public health impacts experienced due to a worker’s occupation or level of
training.
Assistance to small business and non-profits includes, but is not limited to:
• loans or grants to mitigate financial hardship such as declines in revenues or
impacts of periods of business closure, for example by supporting payroll and
benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and
other operating costs;
• Loans, grants, or in-kind assistance to implement COVID-19 prevention or
mitigation tactics, such as physical plant changes to enable social distancing,
enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination,
testing, or contact tracing programs; and
• Technical assistance, counseling, or other services to assist with business planning
needs
10. May recipients use funds to respond to the public health emergency and its negative
economic impacts by providing direct cash transfers to households?
Yes, provided the recipient considers whether, and the extent to which, the household has
experienced a negative economic impact from the pandemic. Additionally, cash transfers
must be reasonably proportional to the negative economic impact they are intended to
address. Cash transfers grossly in excess of the amount needed to address the negative
economic impact identified by the recipient would not be considered to be a response to
the COVID-19 public health emergency or its negative impacts. In particular, when
considering appropriate size of permissible cash transfers made in response to the
COVID-19 public health emergency, state, local, territorial, and Tribal governments may
consider and take guidance from the per person amounts previously provided by the
federal government in response to the COVID crisis.
11. May funds be used to reimburse recipients for costs incurred by state and local
governments in responding to the public health emergency and its negative
economic impacts prior to passage of the American Rescue Plan?
Use of Fiscal Recovery Funds is generally forward looking. The Interim Final Rule
permits funds to be used to cover costs incurred beginning on March 3, 2021.
12. May recipients use funds for general economic development or workforce
development?
Generally, not. Recipients must demonstrate that funding uses directly address a negative
economic impact of the COVID-19 public health emergency, including funds used for
economic or workforce development. For example, job training for unemployed workers
may be used to address negative economic impacts of the public health emergency and be
eligible.
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13. How can recipients use funds to assist the travel, tourism, and hospitality
industries?
Aid provided to tourism, travel, and hospitality industries should respond to the negative
economic impacts of the pandemic. For example, a recipient may provide aid to support
safe reopening of businesses in the tourism, travel and hospitality industries and to
districts that were closed during the COVID-19 public health emergency, as well as aid a
planned expansion or upgrade of tourism, travel and hospitality facilities delayed due to
the pandemic.
Tribal development districts are considered the commercial centers for tribal hospitality,
gaming, tourism and entertainment industries.
14. May recipients use funds to assist impacted industries other than travel, tourism,
and hospitality?
Yes, provided that recipients consider the extent of the impact in such industries as
compared to tourism, travel, and hospitality, the industries enumerated in the statute. For
example, nationwide the leisure and hospitality industry has experienced an
approximately 17 percent decline in employment and 24 percent decline in revenue, on
net, due to the COVID-19 public health emergency. Recipients should also consider
whether impacts were due to the COVID-19 pandemic, as opposed to longer-term
economic or industrial trends unrelated to the pandemic.
Recipients should maintain records to support their assessment of how businesses or
business districts receiving assistance were affected by the negative economic impacts of
the pandemic and how the aid provided responds to these impacts.
15. How does the Interim Final Rule help address the disparate impact of COVID-19 on
certain populations and geographies?
In recognition of the disproportionate impacts of the COVID-19 virus on health and
economic outcomes in low-income and Native American communities, the Interim Final
Rule identifies a broader range of services and programs that are considered to be in
response to the public health emergency when provided in these communities.
Specifically, Treasury will presume that certain types of services are eligible uses when
provided in a Qualified Census Tract (QCT), to families living in QCTs, or when these
services are provided by Tribal governments.
Recipients may also provide these services to other populations, households, or
geographic areas disproportionately impacted by the pandemic. In identifying these
disproportionately-impacted communities, recipients should be able to support their
determination for how the pandemic disproportionately impacted the populations,
households, or geographic areas to be served.
Eligible services include:
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• Addressing health disparities and the social determinants of health, including:
community health workers, public benefits navigators, remediation of lead paint
or other lead hazards, and community violence intervention programs;
• Building stronger neighborhoods and communities, including: supportive housing
and other services for individuals experiencing homelessness, development of
affordable housing, and housing vouchers and assistance relocating to
neighborhoods with higher levels of economic opportunity;
• Addressing educational disparities exacerbated by COVID-19, including: early
learning services, increasing resources for high-poverty school districts,
educational services like tutoring or afterschool programs, and supports for
students’ social, emotional, and mental health needs; and
• Promoting healthy childhood environments, including: child care, home visiting
programs for families with young children, and enhanced services for child
welfare-involved families and foster youth.
Eligible Uses – Revenue Loss
16. How is revenue defined for the purpose of this provision?
The Interim Final Rule adopts a definition of “General Revenue” that is based on, but not
identical, to the Census Bureau’s concept of “General Revenue from Own Sources” in the
Annual Survey of State and Local Government Finances.
General Revenue includes revenue from taxes, current charges, and miscellaneous
general revenue. It excludes refunds and other correcting transactions, proceeds from
issuance of debt or the sale of investments, agency or private trust transactions, and
revenue generated by utilities and insurance trusts. General revenue also includes
intergovernmental transfers between state and local governments, but excludes
intergovernmental transfers from the Federal government, including Federal transfers
made via a state to a locality pursuant to the CRF or the Fiscal Recovery Funds.
Tribal governments may include all revenue from Tribal enterprises and gaming
operations in the definition of General Revenue.
17. Will revenue be calculated on an entity-wide basis or on a source-by-source basis
(e.g. property tax, income tax, sales tax, etc.)?
Recipients should calculate revenue on an entity-wide basis. This approach minimizes
the administrative burden for recipients, provides for greater consistency across
recipients, and presents a more accurate representation of the net impact of the
COVID- 19 public health emergency on a recipient’s revenue, rather than relying on
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financial reporting prepared by each recipient, which vary in methodology used and
which generally aggregates revenue by purpose rather than by source.
18. Does the definition of revenue include outside concessions that contract with a state
or local government?
Recipients should classify revenue sources as they would if responding to the U.S.
Census Bureau’s Annual Survey of State and Local Government Finances. According to
the Census Bureau’s Government Finance and Employment Classification manual, the
following is an example of current charges that would be included in a state or local
government’s general revenue from own sources: “Gross revenue of facilities operated by
a government (swimming pools, recreational marinas and piers, golf courses, skating
rinks, museums, zoos, etc.); auxiliary facilities in public recreation areas (camping areas,
refreshment stands, gift shops, etc.); lease or use fees from stadiums, auditoriums, and
community and convention centers; and rentals from concessions at such facilities.”
19. What is the time period for estimating revenue loss? Will revenue losses experienced
prior to the passage of the Act be considered?
Recipients are permitted to calculate the extent of reduction in revenue as of four points
in time: December 31, 2020; December 31, 2021; December 31, 2022; and December 31,
2023. This approach recognizes that some recipients may experience lagged effects of the
pandemic on revenues.
Upon receiving Fiscal Recovery Fund payments, recipients may immediately calculate
revenue loss for the period ending December 31, 2020.
20. What is the formula for calculating the reduction in revenue?
A reduction in a recipient’s General Revenue equals:
Max {[Base Year Revenue* (1+Growth Adjustment)(nt12)] - Actual General Revenuet ; 0}
Where:
Base Year Revenue is General Revenue collected in the most recent full fiscal year prior
to the COVD-19 public health emergency.
Growth Adjustment is equal to the greater of 4.1 percent (or 0.041) and the recipient’s
average annual revenue growth over the three full fiscal years prior to the COVID-19
public health emergency.
n equals the number of months elapsed from the end of the base year to the calculation
date.
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Actual General Revenue is a recipient’s actual general revenue collected during 12-month
period ending on each calculation date.
Subscript t denotes the calculation date.
21. Are recipients expected to demonstrate that reduction in revenue is due to the
COVID-19 public health emergency?
In the Interim Final Rule, any diminution in actual revenue calculated using the formula
above would be presumed to have been “due to” the COVID-19 public health emergency.
This presumption is made for administrative ease and in recognition of the broad-based
economic damage that the pandemic has wrought.
22. May recipients use pre-pandemic projections as a basis to estimate the reduction in
revenue?
No. Treasury is disallowing the use of projections to ensure consistency and
comparability across recipients and to streamline verification. However, in estimating
the revenue shortfall using the formula above, recipients may incorporate their average
annual revenue growth rate in the three full fiscal years prior to the public health
emergency.
23. Once a recipient has identified a reduction in revenue, are there any restrictions on
how recipients use funds up to the amount of the reduction?
The Interim Final Rule gives recipients broad latitude to use funds for the provision of
government services to the extent of reduction in revenue. Government services can
include, but are not limited to, maintenance of infrastructure or pay-go spending for
building new infrastructure, including roads; modernization of cybersecurity, including
hardware, software, and protection of critical infrastructure; health services;
environmental remediation; school or educational services; and the provision of police,
fire, and other public safety services.
However, paying interest or principal on outstanding debt, replenishing rainy day or other
reserve funds, or paying settlements or judgments would not be considered provision of a
government service, since these uses of funds do not entail direct provision of services to
citizens. This restriction on paying interest or principal on any outstanding debt
instrument, includes, for example, short-term revenue or tax anticipation notes, or paying
fees or issuance costs associated with the issuance of new debt. In addition, the
overarching restrictions on all program funds (e.g., restriction on pension deposits,
restriction on using funds for non-federal match where barred by regulation or statute)
would apply.
Eligible Uses – General
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24. May recipients use funds to replenish a budget stabilization fund, rainy day fund, or
similar reserve account?
No. Funds made available to respond to the public health emergency and its negative
economic impacts are intended to help meet pandemic response needs and provide
immediate stabilization for households and businesses. Contributions to rainy day funds
and similar reserves funds would not address these needs or respond to the COVID-19
public health emergency, but would rather be savings for future spending needs.
Similarly, funds made available for the provision of governmental services (to the extent
of reduction in revenue) are intended to support direct provision of services to citizens.
Contributions to rainy day funds are not considered provision of government services,
since such expenses do not directly relate to the provision of government services.
25. May recipients use funds to invest in infrastructure other than water, sewer, and
broadband projects (e.g. roads, public facilities)?
Under 602(c)(1)(C) or 603(c)(1)(C), recipients may use funds for maintenance of
infrastructure or pay-go spending for building of new infrastructure as part of the general
provision of government services, to the extent of the estimated reduction in revenue due
to the public health emergency.
Under 602(c)(1)(A) or 603(c)(1)(A), a general infrastructure project typically would not
be considered a response to the public health emergency and its negative economic
impacts unless the project responds to a specific pandemic-related public health need
(e.g., investments in facilities for the delivery of vaccines) or a specific negative
economic impact of the pandemic (e.g., affordable housing in a Qualified Census Tract).
26. May recipients use funds to pay interest or principal on outstanding debt?
No. Expenses related to financing, including servicing or redeeming notes, would not
address the needs of pandemic response or its negative economic impacts. Such expenses
would also not be considered provision of government services, as these financing
expenses do not directly provide services or aid to citizens.
This applies to paying interest or principal on any outstanding debt instrument, including,
for example, short-term revenue or tax anticipation notes, or paying fees or issuance costs
associated with the issuance of new debt.
27. May recipients use funds to satisfy nonfederal matching requirements under the
Stafford Act? May recipients use funds to satisfy nonfederal matching requirements
generally?
Fiscal Recovery Funds are subject to pre-existing limitations in other federal statutes and
regulations and may not be used as non-federal match for other Federal programs whose
statute or regulations bar the use of Federal funds to meet matching requirements. For
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example, expenses for the state share of Medicaid are not an eligible use. For information
on FEMA programs, please see here.
Eligible Uses – Premium Pay
28. What criteria should recipients use in identifying essential workers to receive
premium pay?
Essential workers are those in critical infrastructure sectors who regularly perform in-
person work, interact with others at work, or physically handle items handled by others.
Critical infrastructure sectors include healthcare, education and childcare, transportation,
sanitation, grocery and food production, and public health and safety, among others, as
provided in the Interim Final Rule. Governments receiving Fiscal Recovery Funds have
the discretion to add additional sectors to this list, so long as the sectors are considered
critical to protect the health and well-being of residents.
The Interim Final Rule emphasizes the need for recipients to prioritize premium pay for
lower income workers. Premium pay that would increase a worker’s total pay above
150% of the greater of the state or county average annual wage requires specific
justification for how it responds to the needs of these workers.
29. What criteria should recipients use in identifying third-party employers to receive
grants for the purpose of providing premium pay to essential workers?
Any third-party employers of essential workers are eligible. Third-party contractors who
employ essential workers in eligible sectors are also eligible for grants to provide
premium pay. Selection of third-party employers and contractors who receive grants is at
the discretion of recipients.
To ensure any grants respond to the needs of essential workers and are made in a fair and
transparent manner, the rule imposes some additional reporting requirements for grants to
third-party employers, including the public disclosure of grants provided.
30. May recipients provide premium pay retroactively for work already performed?
Yes. Treasury encourages recipients to consider providing premium pay retroactively for
work performed during the pandemic, recognizing that many essential workers have not
yet received additional compensation for their service during the pandemic.
Eligible Uses – Water, Sewer, and Broadband Infrastructure
31. What types of water and sewer projects are eligible uses of funds?
The Interim Final Rule generally aligns eligible uses of the Funds with the wide range of
types or categories of projects that would be eligible to receive financial assistance
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through the Environmental Protection Agency’s Clean Water State Revolving Fund
(CWSRF) or Drinking Water State Revolving Fund (DWSRF).
Under the DWSRF, categories of eligible projects include: treatment, transmission and
distribution (including lead service line replacement), source rehabilitation and
decontamination, storage, consolidation, and new systems development.
Under the CWSRF, categories of eligible projects include: construction of publicly-
owned treatment works, nonpoint source pollution management, national estuary
program projects, decentralized wastewater treatment systems, stormwater systems, water
conservation, efficiency, and reuse measures, watershed pilot projects, energy efficiency
measures for publicly-owned treatment works, water reuse projects, security measures at
publicly-owned treatment works, and technical assistance to ensure compliance with the
Clean Water Act.
As mentioned in the Interim Final Rule, eligible projects under the DWSRF and CWSRF
support efforts to address climate change, as well as to meet cybersecurity needs to
protect water and sewer infrastructure. Given the lifelong impacts of lead exposure for
children, and the widespread nature of lead service lines, Treasury also encourages
recipients to consider projects to replace lead service lines.
32. May construction on eligible water, sewer, or broadband infrastructure projects
continue past December 31, 2024, assuming funds have been obligated prior to that
date?
Yes. Treasury is interpreting the requirement that costs be incurred by December 31,
2024 to only require that recipients have obligated the funds by such date. The period of
performance will run until December 31, 2026, which will provide recipients a
reasonable amount of time to complete projects funded with Fiscal Recovery Funds.
33. May recipients use funds as a non-federal match for the Clean Water State
Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF)?
Recipients may not use funds as a state match for the CWSRF and DWSRF due to
prohibitions in utilizing federal funds as a state match in the authorizing statutes and
regulations of the CWSRF and DWSRF.
34. Does the National Environmental Policy Act (NEPA) apply to eligible infrastructure
projects?
NEPA does not apply to Treasury’s administration of the Funds. Projects supported with
payments from the Funds may still be subject to NEPA review if they are also funded by
other federal financial assistance programs.
35. What types of broadband projects are eligible?
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The Interim Final Rule requires eligible projects to reliably deliver minimum speeds of
100 Mbps download and 100 Mbps upload. In cases where it is impracticable due to
geography, topography, or financial cost to meet those standards, projects must reliably
deliver at least 100 Mbps download speed, at least 20 Mbps upload speed, and be
scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed.
Projects must also be designed to serve unserved or underserved households and
businesses, defined as those that are not currently served by a wireline connection that
reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed.
36. For broadband investments, may recipients use funds for related programs such as
cybersecurity or digital literacy training?
Yes. Recipients may use funds to provide assistance to households facing negative
economic impacts due to Covid-19, including digital literacy training and other programs
that promote access to the Internet. Recipients may also use funds for modernization of
cybersecurity, including hardware, software, and protection of critical infrastructure, as
part of provision of government services up to the amount of revenue lost due to the
public health emergency.
Non-Entitlement Units (NEUs)
37. Can states impose requirements or conditions on the transfer of funds to NEUs?
As the statute requires states to make distributions based on population, states may not
place additional conditions or requirements on distributions to NEUs, beyond those
required by the ARPA and Treasury’s implementing regulations and guidance.
For example, states may not impose stricter limitations than permitted by statute or
Treasury regulations or guidance on an NEU’s use of Fiscal Recovery Funds based on the
NEU’s proposed spending plan or other policies, nor permitted to offset any debt owed
by the NEU against its payment. Further, states may not provide funding on a
reimbursement basis (e.g., requiring NEUs to pay for project costs up front before being
reimbursed with Fiscal Recovery Fund payments), because this approach would not
comport with the statutory requirement that states make distributions to NEUs within the
statutory timeframe.
38. Can states transfer additional funds to local governments beyond amount allocated
to NEUs?
Yes. The Interim Final Rule permits states, territories, and Tribal governments to transfer
Fiscal Recovery Funds to other constituent units of government or private entities beyond
those specified in the statute, as long as the transferee abides by the transferor's eligible
use and other requirements. Similarly, local governments are authorized to transfer
Fiscal Recovery Funds to other constituent units of government (e.g., a county is able to
transfer Fiscal Recovery Funds to a city, town or school district within it).
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39. What is the definition of “budget” for the purpose of the 75 percent cap on NEU
payments, and who is responsible for enforcing this cap?
States are responsible for enforcing the “75 percent cap” on NEU payments, which is a
statutory requirement that distributions to NEUs not exceed 75 percent of the NEU’s
most recent budget. Treasury interprets the most recent budget as the NEU’s most recent
annual total operating budget, including its general fund and other funds, as of January
27, 2020. States may rely for this determination on a certified top-line budget total from
the NEU. Funding amounts in excess of such cap must be returned to Treasury.
40. May states use funds to pay for the administrative costs of allocating and
distributing money to the NEUs?
Yes. If necessary, states may use Fiscal Recovery Funds to support the administrative
costs of allocating and distributing money to NEUs, as disbursing these funds itself is a
response to the public health emergency and its negative economic impacts.
41. When will states get their payments for NEUs? When will NEUs get their
payments?
States can find their state-level allocations for NEUs on the Treasury website. Treasury
plans to issue further guidance on distributions and payments to NEUs in the coming
days.
State governments that request their own funds under the Coronavirus State Fiscal
Recovery Fund through Treasury’s Submission Portal will be considered by Treasury to
have requested funding for their non-entitlement units as well.
42. When will NEUs know if they are eligible for payment?
Treasury plans to provide further guidance on distributions and payments to NEUs in the
coming days.
Ineligible Uses
43. What is meant by a pension “deposit”? Can governments use funds for routine
pension contributions for employees whose payroll and covered benefits are eligible
expenses?
Treasury interprets “deposit” in this context to refer to an extraordinary payment into a
pension fund for the purpose of reducing an accrued, unfunded liability. More
specifically, the interim final rule does not permit this assistance to be used to make a
payment into a pension fund if both: (1) the payment reduces a liability incurred prior to
the start of the COVID-19 public health emergency, and (2) the payment occurs outside
the recipient’s regular timing for making such payments.
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Under this interpretation, a “deposit” is distinct from a “payroll contribution,” which
occurs when employers make payments into pension funds on regular intervals, with
contribution amounts based on a pre-determined percentage of employees’ wages and
salaries. In general, if an employee’s wages and salaries are an eligible use of Fiscal
Recovery Funds, recipients may treat the employee’s covered benefits as an eligible use
of Fiscal Recovery Funds.
Reporting
44. What records must be kept by governments receiving funds?
Financial records and supporting documents related to the award must be retained for a
period of five years after all funds have been expended or returned to Treasury,
whichever is later. This includes those which demonstrate the award funds were used for
eligible purposes in accordance with the ARPA, Treasury’s regulations implementing
those sections, and Treasury’s guidance on eligible uses of funds.
45. What reporting will be required, and when will the first report be due?
Recipients will be required to submit an interim report, quarterly project and expenditure
reports, and annual recovery plan performance reports as specified below, regarding their
utilization of Coronavirus State and Local Fiscal Recovery Funds.
Interim reports: States (defined to include the District of Columbia), territories,
metropolitan cities, counties, and Tribal governments will be required to submit one
interim report. The interim report will include a recipient’s expenditures by category at
the summary level and for states, information related to distributions to nonentitlement
units of local government must also be included in the interim report. The interim report
will cover activity from the date of award to July 31, 2021 and must be submitted to
Treasury by August 31, 2021. Nonentitlement units of local government are not required
to submit an interim report.
Quarterly Project and Expenditure reports: State (defined to include the District of
Columbia), territorial, metropolitan city, county, and Tribal governments will be required
to submit quarterly project and expenditure reports. This report will include financial
data, information on contracts and subawards over $50,000, types of projects funded, and
other information regarding a recipient’s utilization of award funds. Reports will be
required quarterly with the exception of nonentitlement units, which will report annually.
An interim report is due on August 31, 2021. The reports will include the same general
data as those submitted by recipients of the Coronavirus Relief Fund, with some
modifications to expenditure categories and the addition of data elements related to
specific eligible uses. The initial quarterly Project and Expenditure report will cover two
calendar quarters from the date of award to September 30, 2021 and must be submitted to
Treasury by October 31, 2021. The subsequent quarterly reports will cover one calendar
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quarter and must be submitted to Treasury within 30 days after the end of each calendar
quarter.
Nonentitlement units of local government will be required to submit the project and
expenditure report annually. The initial annual Project and Expenditure report for
nonentitlement units of local government will cover activity from the date of award to
September 30, 2021 and must be submitted to Treasury by October 31, 2021. The
subsequent annual reports must be submitted to Treasury by October 31 each year.
Recovery Plan Performance reports: States (defined to include the District of Columbia),
territories, metropolitan cities, and counties with a population that exceeds 250,000
residents will also be required to submit an annual recovery plan performance report to
Treasury. This report will include descriptions of the projects funded and information on
the performance indicators and objectives of each award, helping local residents
understand how their governments are using the substantial resources provided by
Coronavirus State and Local Fiscal Recovery Funds program. The initial recovery plan
performance report will cover activity from date of award to July 31, 2021 and must be
submitted to Treasury by August 31, 2021. Thereafter, the recovery plan performance
reports will cover a 12-month period and recipients will be required to submit the report
to Treasury within 30 days after the end of the 12-month period. The second Recovery
Plan Performance report will cover the period from July 1, 2021 to June 30, 2022 and
must be submitted to Treasury by July 31, 2022. Each annual recovery plan performance
report must be posted on the public-facing website of the recipient. Local governments
with fewer than 250,000 residents, Tribal governments, and nonentitlement units of local
government are not required to develop a Recovery Plan Performance report.
Treasury will provide further guidance and instructions on the reporting requirements for
program at a later date.
46. What provisions of the Uniform Guidance for grants apply to these funds? Will the
Single Audit requirements apply?
Most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to this program,
including the Cost Principles and Single Audit Act requirements. Recipients should refer
to the Assistance Listing for detail on the specific provisions of the Uniform Guidance
that do not apply to this program. The Assistance Listing will be available on
beta.SAM.gov.
Miscellaneous
47. May governments retain assets purchased with Fiscal Recovery Funds? If so, what
rules apply to the proceeds of disposition or sale of such assets?
Yes, if the purchase of the asset was consistent with the limitations on the eligible use of
funds. If such assets are disposed of prior to December 31, 2024, the proceeds would be
subject to the restrictions on the eligible use of payments.
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48. Can recipients use funds for administrative purposes?
Recipients may use funds to cover the portion of payroll and benefits of employees
corresponding to time spent on administrative work necessary due to the COVID–19
public health emergency and its negative economic impacts. This includes, but is not
limited to, costs related to disbursing payments of Fiscal Recovery Funds and managing
new grant programs established using Fiscal Recovery Funds.
Eligible Uses – Responding to the Public Health Emergency / Negative Economic Impacts
49. May recipients use funds to pay for vaccine incentive programs (e.g., cash or in-kind
transfers, lottery programs, or other incentives for individuals who get vaccinated)?
Yes. Under the Interim Final Rule, recipients may use Coronavirus State and Local
Fiscal Recovery Funds to respond to the COVID-19 public health emergency, including
expenses related to COVID-19 vaccination programs. See forthcoming 31 CFR
35.6(b)(1)(i). Programs that provide incentives reasonably expected to increase the
number of people who choose to get vaccinated, or that motivate people to get vaccinated
sooner than they otherwise would have, are an allowable use of funds so long as such
costs are reasonably proportional to the expected public health benefit.