The Office of Recovery Programs in the U.S. Dept. of the Treasury has issued guidance and supporting documentation for the Coronavirus State and Local Fiscal Recovery Funds included in the American Rescue Plan Act of 2021.
Use the drop-down menus below for common questions and issues addressed by Treasury, as well as a reference to the relevant guidance or provision. These are a selection of questions related to local governments and the Local Fiscal Recovery Funds. More information is available in the complete Interim Final Rule and Treasury FAQs on the Office of Recovery Programs website.
- What is the time period for eligible expenditure of funds?
In general, funds can be used to cover costs incurred between March 3, 2021 and December 31, 2024. See Q11 in the FAQs and Sec. 35.5 in the Interim Final Rule. Treasury is interpreting the requirement that costs be incurred by December 31, 2024 to require that recipients have obligated the funds by that 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. See Q32 in the FAQs and Sec. 35.5 in the IFR.
- What are eligible uses for Local Fiscal Recovery Funds?
• Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff
• Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector
• Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic
• Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors
• Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.
- Are uses that were eligible for Coronavirus Relief Funds (CRF) also eligible for Local Fiscal Recovery Funds?
Generally, yes, with two exceptions: (1) payroll and benefits eligibility has been updated; (2) expenses related to issuance of tax-anticipation notes are not eligible.
Questions 2.14 and 2.15 in the FAQs provide additional clarity and explanation on how certain payroll expenses may be an eligible use of Fiscal Recovery Funds.
- Other than water, sewer, and broadband infrastructure projects, what types of infrastructure investments are eligible?
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. See Qs 16-23 in the FAQs to calculate a reduction in revenue on an entity-wide basis and Sec. 35.6(d) in the IFR.
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). See Q25 in the FAQs and Sections II.C. and II.D in the Supplementary Information of the IFR.
- How is premium pay determined?
- How do you calculate revenue loss?
The guidance compares actual revenue to a counterfactual trend representing what the local government could have expected in the absence of the pandemic. Qs 3.1 through 3.12, and specifically 3.5 in the Treasury FAQs, set out details and a formula to calculate the reduction.
There are also some templates and revenue loss calculators that may be helpful:
There are also some templates and revenue loss calculators that may be helpful:
- What types of water and sewer projects are eligible?
The guidance aligns eligible projects with categories of projects that would be eligible to receive federal assistance through EPA’s Clean Water State Revolving Fund or the Drinking Water State Revolving Fund. For example, treatment, transmission and distribution (including lead service line replacement), source rehabilitation and decontamination, storage, consolidation, and new systems development (DWSRF). And, 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 (CWSRF). See Qs 31-34 in the FAQs and Sec. 35.6(e)(1) in the IFR.
- What types of broadband projects are eligible?
The guidance requires eligible projects to deliver service that meets or exceeds symmetrical upload and download speeds of 100 Mbps. If impracticable, the project should meet or exceed 100 Mbps download speed and between 20-100 Mbps upload speed and be scalable to symmetrical 100 Mbps. Projects must be designed to serve unserved or underserved households and businesses, defined as those not currently served by a wireline connection delivering at least 25 Mbps download and 3 Mbps upload speed. Recipients may use funds to provide assistance to households facing negative economic impacts related to COVID-19 and digital literacy. 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. See Qs 35-36 in the FAQs and Sec. 35.6(e)(2) in the IFR.
- What are reporting requirements for the Local Fiscal Recovery Funds?
Records must be retained for five years after all funds have been expended or returned to Treasury, whichever is later. Recipients will be required to submit one interim report (due August 31, 2021) and thereafter quarterly Project and Expenditure reports.
Recipients with populations over 250,000 must submit annual Recovery Plan Performance reports (first due August 31, 2021, and then annually thereafter).
See this blog post on Accounting, Auditing, and Budgeting Guidance from the LGC Staff Blog for more preliminary guidance.
- What provisions of the Uniform Guidance apply to the Local Fiscal Recovery Funds?
Most of the provisions of 2 CFR Part 200 apply to the Funds.
See Q46 in the FAQs.
Treasury will provide further guidance on reporting and compliance requirements.
- What are ineligible uses for Local Fiscal Recovery Funds?
A pension fund deposit is ineligible. See Q43 in the FAQs and Sec. 35.7 in the IFR. Contributions to rainy day funds, financial reserves, or similar funds are also ineligible. See Q24 in the FAQs. Payments of interest or principal on outstanding debt instruments are not eligible. See Q26 in the FAQs. Funds are subject to pre-existing statutory and regulatory limitations and may not be used as the non-federal match when otherwise barred (e.g., the state share of Medicaid). See Q27 in the FAQs.
Allocation Process & Miscellaneous
- How does a local government request Local Fiscal Recovery Funds?
Local governments other than non-entitlement units should visit the Treasury Submission Portal to begin the identify verification process through ID.me and complete the steps to receive funds. See Qs 49-59 in the FAQs. Local governments will receive one-half of their total allocation this year and the second half will be paid 12 months after the first payment. Non-entitlement units will receive their funds through the State of North Carolina; visit the NC PRO website for details.
- How much will my local government receive?
- Can a local government transfer funds?
Yes, a local government can transfer funds to a private nonprofit organization, a tribal organization, a public benefit corporation involved in the transportation of passengers or cargo, or a special purpose unit of government. Local governments can also transfer funds to other constituent units of government (e.g., a county may transfer to a municipality or school district within it) or to a private entity. A local government recipient that transfers funds to a subrecipient is responsible for the subrecipient’s compliance with the regulations and for reporting on the subrecipient’s use of funds.
- Can local governments use funds for administrative purposes?
Yes, 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.
See Q48 in the FAQs.