American Rescue Plan Act, U.S. Coronavirus State and Local Fiscal Recovery Funds
U.S. Congress enacted the American Rescue Plan Act (ARPA), which included $350 billion in federal assistance for state, local and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency.
Click here to access U.S. Treasury’s webpage for the ARPA Coronavirus State and Local Fiscal Recovery Fund program.
The federal Coronavirus State and Local Fiscal Recovery Funds program (SLFRF) provided direct allocations from U.S. Treasury to all 100 North Carolina counties using a methodology based on population. Click here for county-by-county allocation amounts.
January 6, 2022, U.S. Treasury issued its Final Rule, which outlines detailed eligibility and compliance guidance on allowable expenditures under the ARPA fiscal recovery program. ARPA recipients may obligate funds until December 31, 2024 and may expend funds until December 31, 2026.
- Generally, eligible expenditures fall into four broad categories:
- Responding to the public health emergency or its negative economic impacts,
- Expanding public sector capacity and providing premium pay to workers performing essential work during the COVID-19 public health emergency,
- Investing in water, sewer, and broadband infrastructure, and
- Providing general government services to the extent of revenue loss due to the pandemic.
The Final Rule outlines several prohibited uses including rainy day funds, debt service payments, Medicaid or CHIP program cost share, activities that undermine CDC public health guidance, violations of the federal uniform guidance including conflict of interest rules, and extraordinary pension contributions. The prohibition does not apply to pension contributions that are part of regular payroll contributions for employees whose wages and salaries are an eligible use of Recovery Funds.
Counties must have statutory authority under North Carolina law to undertake a particular activity and use ARPA funds to finance the project. See details below:
- North Carolina General Statutes Chapter on Counties § 153 A
- § 160A-17.1 authorizes the governing body of any city or county to make contracts for and to accept grants-in-aid and loans from the federal and State governments and their agencies for constructing, expanding, maintaining, and operating any project or facility, or performing any function, which such city or county may be authorized by general law or local act to provide or perform.
- § 160D-1311 outlines state authority for local governments to engage in certain community development programs and activities to provide for the “welfare needs of persons of low and moderate income.”
- § 160A-497 gives local governments broad authority to assist senior citizens.
- The North Carolina Constitution states that “Beneficent provision for the poor, the unfortunate, and the orphan is one of the first duties of a civilized and a Christian state.”
- The North Carolina Constitution requires all expenditures of public funds to be “for public purposes only.” It also prohibits “emoluments or privileges” (gifts) unless a public service is provided in return.
- Click here to access NCACC/UNC School of Government document outlining authorized county funding options for Broadband projects.
ARPA Revenue Loss Expenditures
The “Revenue Loss” category allows for the broadest use of ARPA funds and gives counties wide latitude on expenditures. Under this category, counties can fund any expenditure deemed a “general government service.”
General government services include things like construction of schools and hospitals, health services, general government administration, staff and administrative facilities, environmental remediation, the provision of public safety services, and other traditional government services.
- In the Final Rule, Treasury gave every local government two options to claim “revenue loss.”
The first is a “standard allowance” for lost revenue, up to $10 million. This means counties can now designate up to $10 million of their total ARPA allocation as “revenue loss” and use the designated amount for eligible general government services.
The other option allows counties calculate their specific “revenue loss” using a specific formula Treasury adopted in its Final Rule.
ARPA Reporting and Compliance Requirements
Unlike previous federal funds that counties received from the CARES Act, ARPA money comes to counties directly from U.S. Treasury. This means counties are responsible for their own reporting and compliance, and the North Carolina Pandemic Recovery Office, also known as NCPRO, is not involved in administering the county’s ARPA funds.
- Therefore, it’s up to each county to understand and meet ARPA compliance requirements.
In addition to determining the eligibility of a project, counties must also assess whether they have state authority to complete projects, adhere to U.S. Treasury’s reporting requirements, and abide by federal uniform guidance.
Recipients are responsible for effective administration of the federal funds and are accountable to Treasury for oversight of their subrecipients. This includes ensuring subrecipients comply with the fiscal recovery fund statute, fiscal recovery fund Award Terms and Conditions, Treasury’s Final Rule, and reporting requirements as applicable.
Counties must regularly submit reports to U.S. Treasury regarding their expenditures along with any necessary data that justify their eligibility determinations for projects. This rigorous reporting provides publicly available information about projects and expenditures.
Counties with a population over 250,000 must also submit a performance plan describing their efforts to conduct community outreach and improve equity in conjunction with their ARPA expenditures.
These reports are due to Treasury at regular intervals throughout the life of the program. Some county reports are due quarterly and others annually, and they must be posted on a public facing website.
*All ARPA funds, including funds expended under the “revenue loss” category, are subject to federal Uniform Guidance (UG) requirements, and must be tracked and managed separately from the county “general fund account.”
The Uniform Guidance is outlined in the Title 2 of the Code of Federal Regulations Part 200 and ARPA recipients are subject to most of its provisions.
- Click here to access information compiled by UNC School of Government experts on various subparts of the uniform guidance, policies counties must adopt to comply the UG along with customizable sample policy templates.
- Click here to access various blog posts authored by UNC School of Government experts to outline both state and federal rules that apply to ARPA funds.
UNC School of Government American Rescue Plan Office Hours
Each week, the UNC School of Government (SOG) hosts virtual Office Hours sessions for local governments to ask questions and discuss issues related to the ARPA fiscal recovery fund program. NCACC is represented in these sessions and provides timely updates for counties. Click here for more information and upcoming dates for ARP Office Hours and other ARPA training opportunities.
*Please consult with your county manager, attorney, and finance staff before making any commitments. Certain projects may require advance planning, written policies, hiring, or additional staffing duties for compliance, reporting and performance measures.
U.S. Treasury Final Rule Documents
Related links: Final Rule Press Release
Related links: Webinar slides
Related links: NACo Webinar