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COVID-19 Federal Assistance e311

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Fund Planning & Allocation, Program Administration

Are costs to build facilities and establish programs for job training eligible for ARP funding?

The U.S. Department of the Treasury’s (“Treasury”) guidance to date for the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) of the American Rescue Plan Act of 2021 (“ARP”) suggests that it may be permissible to build or renovate infrastructure to provide training space for job training and educational programs and services if they are directly related to reducing the negative economic impacts caused by the COVID-19 pandemic.[1]

Treasury’s Interim Final Rule (the “Rule”) provides a non-exclusive list of programs and services through which the CSLFRF of the ARP can be used to support communities working to reduce and respond to the negative repercussions caused by the COVID-19 pandemic:

The Interim Final Rule implements these provisions by identifying 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 the Fiscal Recovery Funds not explicitly listed. The Interim Final Rule also provides flexibility for recipients to use payments from the Fiscal Recovery Funds for programs or services that are not identified on these non-exclusive lists but that fall under the terms of section 602(c)(1)(A) or 603(c)(1)(A) by responding to the COVID-19 public health emergency or its negative economic impacts.[2]

Treasury’s Frequently Asked Questions (“FAQs”)[3] underscore that the list of programs and services is non-exclusive[4] and contains several questions and answers relevant to the question of training and educational spaces.

Treasury’s FAQs indicate that although fund recipients generally may not use funds for general economic development or workforce development, CSLFRF funds are likely eligible to use for job training activities:

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.[5]

FAQ #2.16 addresses whether recipients may use funds to establish a public jobs program.

The Interim Final Rule permits a broad range of services to unemployed or underemployed workers and other individuals that suffered negative economic impacts from the pandemic. That can include public jobs programs, subsidized employment, combined education and on-the-job training programs, or job training to accelerate rehiring or address negative economic or public health impacts experienced due to a worker’s occupation or level of training.[6]

 FAQ #3.8 in Treasury’s FAQs discusses the use of CSLFRF funds for construction activities to address the needs of low-income students and to facilitate on-the-job training services.

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.[7]

Although this statement does not explicitly address whether CSLFRF funds can be used to build a job training center or similar facility, it suggests that CSLFRF funds could likely be used on education-related construction activities as a component of providing education and training space for low-income students and addressing educational disparities in the community.

Municipalities may also consider building such infrastructure and supporting the described programs and services in areas recognized for disparate negative impacts caused by the COVID-19 pandemic, such as Qualified Census Tracts (“QCT”). Treasury specifically refers to QCTs as recipients of services funded by the CSLFRF:

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.[8]

Notably, the QCT list of eligible programs and services includes: (i) “early learning services”; (ii) increasing resources for high-poverty school districts; (iii) educational services like tutoring or afterschool programs; and (iv) support for students’ social, emotional, and mental health needs.”[9]

If a municipality decides to utilize CSLFRF funds for any given project or service, it must adhere to all compliance and reporting guidance outlined by Treasury’s Compliance and Reporting Guidance for CSLFRF[10] and Portal for Recipient Reporting for CSLFRF.[11] Moreover, municipalities should document all guidance utilized in determining their decisions and ongoing facilitation of CSLFRF. Treasury guidance in the future may change to supersede the current guidance, and municipalities may be required to demonstrate their rationale on the guidance they utilized at the time.

Additionally, municipalities should ensure that they comply with Treasury’s records retention requirements, including that:

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.[12]

Last Updated: August 12, 2021

[2] Id., at 11 (emphasis added).

[3] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021), available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[4] For example, Question No. 2.3 in Treasury’s FAQs asks, “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?” Treasury replies: “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 … respond … to the COVID-19 public health emergency with respect to COVID-19 or its negative economic impacts.” Id., at #2.3. at 4.

[5] Id., at #2.8, at 6 (emphasis added).

[6] Id., at #2.16, at 9 (emphasis added).

[7] Id., at #3.8, at 15 (emphasis added).

[8] Id., at #2.11, at 7 (emphasis added).

[9] Id.

[10] U.S. Department of the Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, (as of June 24, 2021), available at: SLFRF-Compliance-and-Reporting-Guidance.pdf (treasury.gov).

[11] U.S. Department of the Treasury, Treasury’s Portal for Recipient Reporting: State and Local Fiscal Recovery Funds, (as of August 9, 2021), available at: SLFRF_Treasury-Portal-Recipient-Reporting-User-Guide.pdf.

[12] Coronavirus State and Local Fiscal Recovery Funds: Frequently Asked Questions (as of July 19, 2021), - FAQ #9.1 at 35, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.