Can a municipality spend funds from the second tranche of the Emergency Rental Assistance Program (“ERAP2”) before depleting all funds from the first tranche (“ERAP1”)?

Guidance from the U.S. Department of the Treasury (“Treasury”) does not indicate whether ERAP1 funding must be depleted before beginning to use funds from ERAP2.

To maximize the use of ERAP funding, to the extent that an activity is eligible under ERAP1, a municipality may choose to utilize ERAP1 funds until ERAP1 funds are exhausted. Additionally, ERAP1 funds are available until September 30, 2022, while ERAP2 funds are slated to remain available until September 30, 2025. Further, on October 25, 2021, Treasury announced guidance on the reallocation of ERAP1 funds to ensure “additional funds are made available to grantees with a proven capacity to deliver ERA in jurisdictions where families remain at serious risk of eviction or housing instability.”[1] Notably, grantees should consider prioritizing ERAP1 to prevent jeopardizing funding for reallocation.   

Each ERAP program is intended to support low-income households at risk for homelessness and affected by the COVID-19 pandemic and its economic impacts by helping make rent and utility payments.[2] There are differences, however, between ERAP1 and ERAP2, some of which may make certain activities or costs assignable to one program but precluded from the other. A non-exhaustive list of differences includes:

• ERAP1 and ERAP2 require that eligible households demonstrate financial hardship due, directly or indirectly, to the pandemic; and one or more individuals within the household can demonstrate a risk of experiencing homelessness or housing instability.[3]
• ERAP1 requires the household has income at or below 80% of area median income, while ERAP2 requires the household is a low-income family (as such term is defined in section 3(b) of the United States Housing Act of 1937 (42 U.S.C. 1437a(b)))[4].
• ERAP2 can be offered directly to renters when landlords do not accept ERAP payments.[5]
• ERAP1 requires contact first be made with landlords and utilities before funds are offered to renters, while ERAP2 does not include this requirement.[6]
• ERAP1 limits household eligibility to 12 months (with 3-month extensions available under certain circumstances), while ERAP2 sets a cap of 18 months of household support combined between ERAP1 and ERAP2.[7]

Additional resources for ERAP include:

• Treasury's ERAP Resources Site;
• Treasury's ERAP2 Fact Sheet (May 7, 2021);
• Treasury's FAQ sheet regarding the ERAP1 and ERAP2 programs (May 7, 2021);
• The National Association of Counties’ list of county ERAP programs;
• Questions and Answers on ERA Reporting v 1.0 (September 27, 2021);
• ERA Reporting Guidance v 2.0 (October 7, 2021);
• Addendum to ERA Reporting Guidance – Clarifications and Guidance for Financial Reporting on Recipient and Subrecipient Activities (October 28, 2021); and
• Deputy Secretary of Treasury letter outlining guidance on reallocation of funds (October 25, 2021).

Last Updated: December 27, 2021

What happens if cities commit funds relying on the Interim Final Rule and the guidance changes in the Final Rule?

On January 6, 2022, the U.S. Department of the Treasury (“Treasury”) released the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule[1], accompanied by a Statement Regarding Compliance with the CSLFRF Interim Final Rule and Final Rule (the “Statement”).[2]

The Statement addresses the need to reconcile the scopes of the Interim Final Rule and the Final Rule, clarifying critical areas of flexibility to prevent undue administrative burden and the potential retroactive ineligibility of projects initiated and substantially begun under the Interim Final Rule. It states:

State, territorial, local, and Tribal governments (together, recipients) must comply with the final rule beginning on April 1, 2022, when the final rule takes effect. Prior to April 1, 2022, recipients may take actions and use funds in a manner consistent with the final rule, and Treasury will not take action to enforce the interim final rule if a use of funds is consistent with the terms of the final rule, regardless of when the [CSLFRF] funds were used.[3]

Prior to April 1, 2022, the interim final rule remains in effect. Accordingly, recipients may obligate and expend funds in a manner consistent with the interim final rule prior to April 1, 2022.  In addition, Treasury recognizes that recipients have taken steps to use [CSLFRF] funds for projects in a manner consistent with the interim final rule. To the extent that a recipient has taken significant steps toward obligating [CSLFRF] funds in a manner consistent with the interim final rule prior to January 6, 2022, Treasury will generally not take action to enforce provisions contained in the final rule, to the extent that they are more restrictive than those in the interim final rule. Such significant steps include initiation of procurement or grantmaking actions, detailed planning of projects or programs, appropriation of funds, and other significant planning steps.[4]

To document any decisions made with reference to the scope of the Interim Final Rule, municipalities should consider developing an audit narrative. An audit narrative may include:

• any policy and eligibility decisions made to fund a program under CSLFRF;
• sections of the Interim Final Rule referenced to make an eligibility decision;
• timelines associated with eligibility decisions;
• supporting documentation requirements;
• reporting requirements; and a formal authorization to appropriate CSLFRF funding by the municipality’s Board or senior leadership.

Municipalities should also consider performing regular compliance audits to ensure its audit narrative contains the information above. Proactive compliance audits focusing on the audit narrative and other key documents may help identify gaps in record-keeping that, if gone unnoticed, could result in sanctions from the federal government. It is also a good practice to save copies of all versions of Treasury’s CSLFRF guidance. This allows a municipality to refer to the specific guidance that informed each funding and allocation decision.

Last Updated: January 28, 2022

What is the audit period for federal funds?

Guidance published to date does not set a clear temporal limitation on government clawbacks. The U.S. Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule, which goes into effect on April 1, 2022, does not address this question but states that “the Office of Management and Budget's (OMB) Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly called the ‘Uniform Guidance’) generally applies to” CSLFRF.[1] In light of this guidance, municipalities should review 2 CFR 200 in its entirety to understand audit requirements and scope of audits.

Audits under the Uniform Guidance are typically based on “[f]inancial records, supporting documents, statistical records … pertinent to a Federal award.” These documents must be retained for a period of three years from the date of submission of the final expenditure report (2 CFR 200.334). However, the three-year clock does not start until the grant is complete and a final report is submitted. This could extend the document retention requirement for several years.

Aside from audits that may be conducted by Treasury or the Office of Inspector General, municipalities and its subrecipients should review the annual audit requirements stated in 2 CFR § 200.501: 

(a) Audit required. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions of this part.

(b) Single audit. A non-Federal entity that expends $750,000 or more during the non-Federal entity's fiscal year in Federal awards must have a single audit conducted in accordance with § 200.514 except when it elects to have a program-specific audit conducted in accordance with paragraph (c) of this section.

(c) Program-specific audit election. When an auditee expends Federal awards under only one Federal program (excluding R&D) and the Federal program's statutes, regulations, or the terms and conditions of the Federal award do not require a financial statement audit of the auditee, the auditee may elect to have a program-specific audit conducted in accordance with § 200.507. A program-specific audit may not be elected for R&D unless all of the Federal awards expended were received from the same Federal agency, or the same Federal agency and the same pass-through entity, and that Federal agency, or pass-through entity in the case of a subrecipient, approves in advance a program-specific audit.[2]

The Final Rule indicates a major risk for funding recipients, noting that “[s]ections 602(e) and 603(e) of the Social Security Act provide the Secretary with the power to recoup ‘funds used in violation’ of the Social Security Act.”[3]  

Last Revised: January 25, 2022

Is there a limit on what percentage of ARP funds can be allocated to revenue replacement?

The U.S. Department of Treasury (“Treasury”) does not limit the amount or ratio of Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) that can be allocated for revenue replacement so long as the amount correctly corresponds to the recipient’s determined revenue loss. Treasury’s Final Rule on CSLFRF grants municipalities broad discretion to use payments for the provision of government services, treating these as an eligible use for any or all of the municipality’s CSLFRF allocation up to the amount of revenue that has been lost as revenue replacement.[1] The municipality must calculate its revenue loss according to the formula and guidance provided by Treasury.[2]

Alternatively, the Final Rule allows recipients to choose to use a “standard allowance” of $10 million to spend on government services through the period of performance.[3] This is a one-time allowance.[4] Recipients must choose whether to take the standard allowance or to calculate revenue loss on an annual basis.[5]

The Final Rule also updates how municipalities may perform the revenue loss calculation and the types of revenue loss that should and should not be included. For example, the Final Rule allows recipients to perform the revenue loss calculation on a calendar year or fiscal year basis.[6] Recipients should consult pages 245 to 250 of the Final Rule for more information on these updates when performing the revenue loss calculation.

The Final Rule maintains that

 [g]overnment 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.[7]

Although the Final Rule grants broad latitude to municipalities to use allocated funds as revenue replacement, it does not include an exhaustive list of eligible activities. However, uses must be limited to the provision of government services.[8]

Treasury outlines several ineligible uses. Paying interest or principal on outstanding debt, replenishing rainy day or other reserve funds, or paying settlements or judgments would not be considered provisions of a government service, because 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.[9], [10]

Last Revised: March 25, 2022

What are the guidelines regarding eligibility for premium pay?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule states that municipalities may use Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) to provide premium pay for eligible workers performing essential work.[1] The Final Rule defines “essential work” as work involving regular in-person interactions or regular physical handling of items that were also handled by others. A worker performing telework from a residence, for example, would not be engaged in essential work and may not receive premium pay.[2]

The Final Rule provides a definition of premium pay as follows:

Premium pay means an amount of up to $13 per hour that is paid to an eligible worker, in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker during the COVID-19 public health emergency. Such amount may not exceed $25,000 in total over the period of performance with respect to any single eligible worker. Premium pay may be awarded to non-hourly and part-time eligible workers performing essential work. Premium pay will be considered to be in addition to wages or remuneration the eligible worker otherwise receives if, as measured on an hourly rate, the premium pay is:

1. With regard to work that the eligible worker previously performed, pay and remuneration equal to the sum of all wages and remuneration previously received plus up to $13 per hour with no reduction, substitution, offset, or other diminishment of the eligible worker’s previous, current, or prospective wages or remuneration; or
2. With regard to work that the eligible worker continues to perform, pay of up to $13 per hour that is in addition to the eligible worker’s regular rate of wages or remuneration, with no reduction, substitution, offset, or other diminishment of the worker’s current and prospective wages or remuneration.[3]

The Final Rule also provides the following guidelines recipients can use to assess eligibility for premium pay. First, Treasury clarified that all public employees of recipient governments are already included in the definition of “eligible worker.”[4] Treasury also clarified that the chief executive’s discretion to designate additional sectors as critical relates only to “non-public” sectors, since all public employees are already included in the definition.[5] In order to receive premium pay, these workers must meet additional premium pay requirements (e.g., performing essential work).[6] Further to this point, Treasury clarifies that premium pay can only be paid to employees who have in-person interactions with the public or the workforce, or are involved in regular physical handling of items that were handled by, or are to be handled by the public or the workforce.[7] Employees who exclusively telework are not eligible.[8] Regarding income standards, Treasury leaves in place the previous standard that premium pay cannot be paid to workers earning more than 150% of the state or area median income, whichever is greater. The Final Rule also adds that a written justification is not required if a “worker is not exempt from the Fair Labor Standards Act overtime provisions (29 U.S.C. § 207).”[9]

If an employee does not meet these criteria, recipients may submit a written justification for premium pay. Treasury specifically noted eligibility for front line healthcare workers as likely able to be justified, regardless of income or FLSA status.[10] The Final Rule provides more information related to allowability of premium pay for elected officials and specifically references the requirement that recipients have a conflict-of-interest policy consistent with 2 C.F.R. § 200.318(c).[11] Treasury asserts that this policy prohibits elected officials from steering funds to projects in which they have a financial interest or using funds to pay themselves premium pay.[12]

Last Updated: March 11, 2022

For purposes of calculating revenue, if the municipality owns an asset but does not report the asset on its books (e.g., zoo or performing arts center), should that revenue be included in its calculation?

The U.S. Department of the Treasury (“Treasury”) has not issued specific guidance regarding whether a municipality should include revenues of assets it owns but does not report on its books. Treasury has, however, provided several helpful guidelines which are summarized below.

First, the Final Rule has adopted the definition of “general revenue” as the following:

Money that is received from tax revenue, current charges, and miscellaneous general revenue, excluding refunds and other correcting transactions and proceeds from issuance of debt or the sale of investments, agency or private trust institutions, and intergovernmental transfers from the Federal Government.[1]

The Final Rule creates a standard allowance option of $10 million to ease the administrative burden of calculating revenue loss by “allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount for government services.”[2]

Moreover, the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Frequently Asked Questions (“FAQs”) state that municipalities may “consider the classification and instructions used to complete Census Bureau’s Annual Survey,” and specify that recipients can consider all current charges for the Census Bureau’s Annual Survey as eligible under “general revenue” under the Final Rule. [3] 

Per the Annual Survey, general revenue current charges include “[c]harges of publicly owned commercial enterprises not classified elsewhere, such as markets, cement plants, cemeteries, etc.”[4] Notably, the Annual Survey confirms that the definition of “current charges” includes the “income of commercial enterprises” which might be common revenues from assets owned by a municipality that are unreported. Additionally, the Annual Survey lists revenues that are considered “current charges,” including:

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 o r use fees from stadiums, auditoriums, and community and convention centers; and rentals from concessions at such facilities.[5]

Though the case of assets not reported in a municipality’s books is not explicitly referenced in terms of revenue loss, the guidance suggests that these assets, including zoos and/or performing arts centers, may be included in the general revenue calculation, depending on the circumstances.  Municipalities finding themselves in such circumstances should obtain the advice of licensed accounting and/or legal professionals to ensure their revenue calculations are correct and in accordance with the law.

Last Updated: February 20, 2022

When calculating revenue, how should a municipality account for losses related to individual third-party management agreements with entities such as stadiums, convention centers, and golf courses?

Many third-party management agreements may qualify as “revenue” in municipal revenue loss calculations. The definition of “general revenue” used by the U.S. Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule is based largely on the components reported under “General Revenue from Own Sources” in the Census Bureau’s Annual Survey of State and Local Government Finances.[1]  

When calculating revenue loss, a municipality may consider including actual revenue loss from third-party management agreements together with their other general government revenues. The Final Rule adopts the following definition of “general revenue”:

Money that is received from tax revenue, current charges, and miscellaneous general revenue, excluding refunds and other correcting transactions and proceeds from issuance of debt or the sale of investments, agency or private trust institutions, and intergovernmental transfers from the Federal Government.[2]

For reference, “current charges” are defined as “charges imposed for providing current services or for the sale of products in connection with general government activities,” which include revenues from public education institutions, public hospitals, and tolls.[3] Moreover, “miscellaneous general revenue” includes “all other general revenue of governments from their own sources (i.e., other than utility and insurance trust revenue), including rents, royalties, lottery proceeds, and fines.”[4]

Treasury anticipates releasing updated Frequently Asked Questions (“FAQs”) to provide additional guidance on the Final Rule. In the interim, CSLFRF recipients may refer to FAQ # 3.3, which states that the following types of revenue will be considered “gross revenue”:

• 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.[5]

To ease administrative burden when calculating revenue loss, the Final Rule “offers a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount for government services” over the period of performance.[6]

Taking into consideration the current definition of general revenue provided by the Final Rule, the inclusion of the standard allowance, and the information provided by FAQs, it is likely that municipalities can account for revenue loss from third-party management arrangements as general revenue.

When calculating revenue, how should one-time expenses be treated? Should one-time non-operational expenses be excluded when calculating revenue?

The United States Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule defines general revenue to include “revenue collected by a recipient and generated from its underlying economy, and it would capture a range of different types of tax revenues, as well as other types of revenue that are available to support government services.”[1] Treasury’s definition of general revenue was expanded in the Final Rule to “allow recipients that operate utilities that are part of their own government to choose whether to include revenue from these utilities in their revenue loss calculation” and to add “liquor store revenue to the definition of general revenue.”[2], [3]

While the Final Rule does not address one-time expenses, Treasury states:

In response to requests that the definition of general revenue exclude revenue from special assessments, settlements that make the recipient whole for past expenditures, and one-time revenues such as revenue from the sale of property, Treasury is maintaining its position in the final rule that such revenue is included in general revenue. While such revenues may be less predictable than other sources of revenue (e.g., property taxes), these are not uncommon sources of revenue for recipients, and their inclusion provides a more complete view of the financial health of a recipient government and is consistent with the Census Bureau methodology.[4]

Treasury is expected to issue Frequently Asked Questions (“FAQs”) for the Final Rule at a later date, and it is possible the updated response will provide more guidance on one-time expenses.[5]

Treasury’s definition of general revenue is based on the Census Bureau’s “General Revenue from Own Sources” in the Annual Survey of State and Local Government Finances.[6] Following Treasury’s guidance, recipients that seek further clarification on the definition of general revenue may refer to the classification and instructions used to complete the Census Bureau’s Annual Survey.[7]

Last Revised: March 16, 2022

Can ARP or other federal funds be used to hire a third-party vendor to help ensure proper documentation, tracking, and accountability?

ARP or other federal funds may be used to hire a third-party vendor to help ensure proper documentation, tracking, and accountability. The U.S. Department of Treasury (“Treasury”) has made clear that American Rescue Plan (“ARP”) funds can be used to hire a third-party vendor to help ensure proper documentation, tracking, and accountability. As of June 8, 2021, Treasury’s frequently asked questions (“FAQs”) regarding the Coronavirus Local Fiscal Recovery Funds (“CLFRF”) noted that “[r]ecipients may use funds for administering the [CLFRF] program, including costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements.[1]

The FAQs further note that “[r]ecipients 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.”^[2]

In addition, the Code of Federal Regulations permits recipients to provide administrative services for a one-time program by individuals or entities other than municipal employees.^[3] Municipalities may also consult state and local procurement standards which dictate the utilization of federal grant allowances.  Each municipality should consider consulting the specific Award Terms and Conditions[4] which it will receive from Treasury. Item 6 of that document, titled “Administrative Costs,” authorizes the municipality to use funds provided to cover both direct and indirect administrative costs. 

Finally, Treasury has indicated that it will provide additional guidance. If the municipality determines that it can procure third-party vendors, it should follow its local procurement code which must meet or exceed the standards outlined in the Federal Uniform Guidance, 2 CFR Part 200.[5]

Last Updated: June 9, 2021

Can municipalities use ARP funds to fund educational programs (e.g., Pre-K classrooms or gun violence prevention programs)?

According to guidance issued by the U.S. Department of the Treasury (“Treasury”), the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) from the American Rescue Plan Act of 2021 (“ARP”) can be used to fund educational programs with the goal of addressing the social, emotional, and mental health needs of students within certain parameters.

Treasury’s CSLFRF Final Rule notes that all communities are eligible and would be supported in the development of a comprehensive approach to address violence.[1] The Final Rule’s guidance in addressing crime reduction includes sexual assault, human trafficking, domestic and gun violence as enumerated eligible uses. Eligible uses for violence intervention programs include “funding more intervention workers, increasing their pay, providing training and professional development for intervention workers, and hiring and training workers to administer the programs.”[2]

Regarding funding for educational services (including Pre-K classrooms), CSLFRF funds can be used to pay for government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency.[3] In essence, the amount a municipality is able to claim as a revenue loss due to the pandemic can be used for the provision of government services, including costs for “school or educational services.” [4]

In addition to the lost revenue provision discussed above, Treasury confirms that certain types of educational services are eligible uses within the context of a Qualified Census Tract (“QCT”). The Final Rule identifies “early learning services” and other education services as enumerated eligible uses in disproportionately impacted communities to address educational disparities.[5]

Treasury is maintaining these enumerated eligible uses in the final rule, which are now organized under the heading of “services to address educational disparities. Treasury reiterates that these uses include addressing educational disparities exacerbated by COVID-19, including but not limited to: increasing resources for high-poverty school districts, educational services like tutoring or afterschool programs, summer education and enrichment programs, and supports for students’ social, emotional, and mental health needs.[6]

For more information on eligible uses of CSLFRF pertaining to higher education, see the following Bloomberg Federal Assistance e311 Q&A:

Is assistance with community college, college tuition or other higher education challenges an eligible use of ARP funds?

It should be noted that additional information may be provided when Treasury issues new Frequently Asked Questions (“FAQ”) specific to the Final Rule.[7] In addition, Treasury encourages municipalities to consider the guidance issued in the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Final Rule.[8]

Last Updated: February 16, 2022

May municipalities use CLFRF and/or CRF disbursements to cover the cost of vaccine incentives?

The U.S. Department of the Treasury (“Treasury”) has included vaccination programs as an eligible use of Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”). Treasury’s CSLFRF Final Rule states:

[a] recipient may use funds to respond to the public health emergency…for one or more of the following purposes…Responding to the public health impacts of the public health emergency…including vaccination programs and incentives.[1]

In addition, Treasury addresses this question in the Supplementary Information discussion which accompanies the Final Rule. Treasury states:

Treasury issued guidance (in its publication of the Final Rule) clarifying that “[vaccine] 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.” This use of funds remains permissible under the final rule.[2]

Finally, Treasury published a series of Frequently Asked Questions (“FAQs”) relating to the CSLFRF authorities. FAQ #2.12 addresses this question as follows:

[Vaccine] 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.[3]

While CSLFRF award recipients may use funds for the purpose of eligible vaccine incentive programs, recipients should consider all compliance and reporting requirements enumerated in the Uniform Guidance[4] and Treasury’s Compliance and Reporting Guidance[5] before implementing such programs.

Last Revised: February 16, 2022

Can cities re-use ARP funds if a program expense is reimbursed by FEMA?

If the Federal Emergency Management Agency (“FEMA”) reimburses an expense, a municipality may not use Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) for those same expenses. The municipality must use that portion of their CSLFRF allocation for another eligible purpose to be able to retain those funds. Recipients and subrecipients are ultimately responsible for ensuring that they do not accept payment for the same item of work twice. FEMA applicants must certify in the Public Assistance (“PA”) application process that assistance is not being duplicated. FEMA explicitly states that, when discussing Eligible Emergency Protective Measures for COVID-19, they will not duplicate assistance provided by other federal agencies.[1]

If a recipient has already entered information into the U.S. Department of the Treasury (“Treasury”) portal that needs to be edited due to changes in FEMA reimbursements, the recipient should report changes according to the protocol specified by Treasury:

• for Project and Expenditure Reports, “[r]ecipients will have an opportunity to reopen and provide edits to their submitted Project and Expenditure Reports any time before the reporting deadline. Recipients will then be required to re-certify and submit the report again to properly reflect any edits made;”
• for Recovery Plans, “[r]ecipients will be allowed to reopen and provide an update of their submitted Recovery Plan report record any time before the reporting deadline. They should also provide concurrent updates to the publicly posted version;” and
• “[r]ecipients will then be required to re-certify and submit the report again to properly reflect any edits made.”[2]

It is important for any municipality receiving federal funding to address the COVID-19 public health emergency to perform its due diligence to avoid any duplications of benefits. FEMA has published a fact sheet entitled “Coronavirus Disease 2019 (COVID-19) Public Health Emergency: Coordinating Public Assistance and Other Sources of Federal Funding,” which acknowledges that federal agencies’ funding eligibility for COVID-19 response programs may overlap with FEMA PA eligibility for emergency protective measures.[3]

FEMA applicants should consider which eligible sources of funding are the most appropriate to meet their needs in response to the COVID-19 pandemic. It is important to note that FEMA will not deny a PA-eligible cost under a COVID-19 declaration solely because that cost may be eligible under another federal agency’s authority.[4]

If an applicant applies to FEMA for PA funding and then determines it no longer wants to seek FEMA reimbursement and will instead seek funding from another federal agency, the applicant should notify FEMA as soon as possible.[5] Applicants should withdraw or amend their PA project application if funding has not yet been awarded, or request an updated version to amend their PA project if some funding has been awarded.[6] All federal agencies are prohibited by Section 312 of the Stafford Act from paying state, local, tribal, and territorial entities for the same work twice, and all recipients and subrecipients are responsible for ensuring this.[7]

In addition, the Final Rule states CSLFRF awards can be used for the non-federal match portion of FEMA-reimbursed projects[8] for eligible work performed after July 1, 2022, once the federal cost share for COVID-19 is no longer 100 percent.[9]

Last Revised: April 1, 2022