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COVID-19 Federal Assistance e311

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Federal Funding Streams, Program Administration

Can CLFRF funds be used to pay for staffing costs for work administering non-CLFRF federal funds, e.g., other ARP grants, FEMA funds?

Treasury has not specifically addressed whether CLFRF funds can be used to pay for staffing costs for work administering federal funds that are not CLFRF, but that are otherwise part of COVID response and recovery efforts.

The American Rescue Plan Act (“ARP”) allows for the use of Coronavirus State and Local Fiscal Recovery Funds (“CSFRF” / “CLFRF”) (or Fiscal Recovery Funds (the “FRF”)) in response to the COVID-19 public health emergency and related negative economic impacts. This includes administrative expenses incurred from the implementation of these programs, as described in Section 1003 of the ARP.[1]

The United States Department of Treasury (“Treasury”) stated in the CSFRF / CLFRF Frequently Asked Questions (“FAQs”) that:

“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.”[2]

Further, Treasury outlines the scope of eligible uses to pay the staffing costs for work involving administering and “managing new grant programs established using Fiscal Recovery Funds.”[3]

In addition, Treasury’s Interim Final Rule (the “Rule”), adopted on May 10, 2021, describes an eligible use category as:

“The provision of 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.”[4]

To further support this, Treasury provides additional detail in their FAQs as follows:

“2.9. How can recipients use funds to assist the travel, tourism, and hospitality industries?

Aid provided to tourism, travel, and hospitality industries should respond to the negative economic impacts of the pandemic. For example, a recipient may provide aid to support safe reopening of businesses in the tourism, travel and hospitality industries and to districts that were closed during the COVID-19 public health emergency, as well as aid a planned expansion or upgrade of tourism, travel and hospitality facilities delayed due to the pandemic. AS OF JUNE 10, 2021, 6 Tribal development districts are considered the commercial centers for tribal hospitality, gaming, tourism and entertainment industries.

2.10. May recipients use funds to assist impacted industries other than travel, tourism, and hospitality?

Yes, provided that recipients consider the extent of the impact in such industries as compared to tourism, travel, and hospitality, the industries enumerated in the statute. For example, nationwide the leisure and hospitality industry has experienced an approximately 17 percent decline in employment and 24 percent decline in revenue, on net, due to the COVID-19 public health emergency. Recipients should also consider whether impacts were due to the COVID-19 pandemic, as opposed to longer-term economic or industrial trends unrelated to the pandemic. Recipients should maintain records to support their assessment of how businesses or business districts receiving assistance were affected by the negative economic impacts of the pandemic and how the aid provided responds to these impacts.”[5]

Treasury indicates that recipients can use funds to assist other industries and programs as long as they can prove that their “impacts were due to the COVID-19 pandemic, as opposed to longer-term economic or industrial trends unrelated to the pandemic.”[6] Treasury does not exclude programs or initiatives that previously interacted with any other ARP grants, CRF funds, or FEMA funds.

It is crucial for municipalities to follow Treasury’s guidance, which states: Recipients should maintain records to support their assessment of how businesses or business districts receiving assistance were affected by the negative economic impacts of the pandemic and how the aid provided responds to these impacts.[7]

Municipalities should also take steps to ensure that the costs of administration of these other funding sources were not already covered by those funding sources or any other source. For example, FEMA does allow for a portion of an award to go towards administrative costs.[8] Other programs under the American Rescue Plan may have administrative allowances as well.[9] It is imperative that municipalities keep careful documentation to show the avoidance of any duplications of benefit relating to administrative costs.

Last Updated: June 22, 2021

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801,Section 603(c)(1)(A) et seq.,https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HAECAA3A95C4E4FFAB6AA46CE5F9CB2B5.

[2] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of June 17, 2021) – FAQ #10.2, at 31, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[3] Id.

[5] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of June 17, 2021) – FAQ #2.9, #2.10, at 6, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf..

[6] Id. at FAQ #2.10, at 6.

[7] Id.

[8] FEMA Public Assistance Program and Policy Guide, Version 4, effective June 1, 2020 (FP 104-009-2). Section XVI. Grant Management and Administration Page 93, available at: https://www.fema.gov/sites/default/files/documents/fema_pappg-v4-updated-links_policy_6-1-2020.pdf

[9] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HAECAA3A95C4E4FFAB6AA46CE5F9CB2B5.