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 is likely permissible to build or renovate infrastructure to establish training space for job training programs as long as the intended purpose is to "provide assistance to households or populations facing negative economic impacts due to COVID-19."[1]

Treasury's Final Rule on the CSLFRF 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 as it relates to job training, which as Treasury states, "has been re-categorized for increased clarity to the eligible use for 'assistance to unemployed and underemployed workers.'"[2]

Treasury has explicitly stated in its CSLFRF Overview of the Final Rule that it "recognizes the enumerated projects below, which have been expanded under the final rule, [are] eligible to respond to impacts of the pandemic on households and communities."

Assistance to individuals who want and are available for work, including job training, public jobs programs and fairs, support for childcare and transportation to and from a jobsite or interview, incentives for newly-employed workers, subsidized employment, grants to hire underserved workers, assistance to unemployed individuals to start small businesses & development of job and workforce training centers.[3]

Additionally, if these proposed facilities and their respective programs' intended purposes were to target the prevention of violence, then additional enumerated uses include:           

Community violence intervention programs, including…Evidence-based practices like focused deterrence, with wraparound services such as behavioral therapy, trauma recovery, job training, education, housing and relocation services, and financial assistance.[4]

Furthermore, Treasury explicitly states in the Final Rule that it:

is also enumerating that job and workforce training centers are eligible capital expenditures, so long as they adhere to the standards and presumptions detailed in the section Capital Expenditures in General Provisions: Other.[5]

For further information on the "standards and presumptions" related to capital expenditure projects utilizing CSLFRF mentioned above, recipients may reference pages 190 through 208 of the Final Rule. Importantly, Treasury will require projects with total expected capital expenditure costs of $1 million or greater to undergo additional analysis, including a written justification, to justify their capital expenditure.[6]

Treasury's Final Rule underscores that the list of programs and services and their enumerated eligibility are non-exclusive by explicitly stating that:

the eligible use category for responding to the public health and negative economic impacts of the pandemic provides a non-exhaustive list of enumerated eligible uses, which means that the listed eligible uses include some, but not all, of the uses of funds that could be eligible. The Eligible Uses section provides a standard for determining if other uses of funds, beyond those specifically enumerated, are eligible. If a recipient would like to pursue a use of funds that is not specifically enumerated, the recipient should use the standard and other guidance provided in the section Public Health and Negative Economic Impacts to assess whether the use of funds is eligible.[7]

Treasury indicates that although fund recipients generally may not use funds for general economic development or workforce development, CSLFRF funds are likely eligible for job training activities if provided to beneficiaries whom the pandemic has reasonably impacted. The Final Rule states:

Treasury maintains the interim final rule's approach that general economic development or workforce development, meaning activities that do not respond to negative economic impacts of the pandemic and rather seek to more generally enhance the jurisdiction's business climate, would generally not be eligible under this eligible use category. As noted above, to identify an eligible use of funds under this category, a recipient must identify a beneficiary or class of beneficiaries that experienced a harm or impact due to the pandemic, and eligible uses of funds must be reasonably designed to respond to the harm, benefit the beneficiaries that experienced it, and be related and reasonably proportional to that harm or impact.[8]

Concerning whether recipients may use funds to establish a public jobs program, the Final Rule states:

further guidance also provided that "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" are all enumerated eligible uses as assistance to unemployed or underemployed workers.

The interim final rule defined eligible beneficiaries of assistance as "individuals who want and are available for work, including those who have looked for work sometime in the past 12 months or who are employed part time but who want and are available for full-time work." This definition is based on definitions used by the Bureau of Labor Statistics to define individuals currently unemployed, as well as persons marginally attached to the labor force and working part-time for economic reasons. The latter two classifications are types of labor underutilization, or "underemployed" workers. Finally, the interim final rule specified that assistance to unemployed workers included both workers who lost their job during the pandemic and resulting recession and workers unemployed when the pandemic began who saw further deterioration of their economic prospects due to the pandemic.[9]

Thus, the Final Rule "[c]onfirm[s] that job fairs or grants to businesses to hire underserved workers are eligible uses under this section."[10]

Notably, Treasury further explains that it is:

making clear that recipients may provide job training or other enumerated types of assistance to individuals that are currently employed but are seeking to move to a job that provides better opportunities for economic advancement, such as higher wages or more opportunities for career advancement.[11]

It should be noted that additional information may be provided when Treasury issues new FAQs specific to the Final Rule, as indicated in the Interim Final Rule FAQ.[12] In addition, Treasury encourages municipalities to consider the guidance issued in the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule.[13]

Last Updated: March 9, 2022