Program

COVID-19 Federal Assistance e311

Topics

Program Administration, Vaccine Distribution

Can a municipality use American Rescue Plan Act of 2021 (ARP) funds to provide cash payment incentives to municipality employees who have already been vaccinated?

Current guidance from the U.S. Department of the Treasury (“Treasury”) indicates that vaccine incentive programs are intended for prospective recipients of the vaccine; as such, municipalities should not use ARP funds to support retroactive incentive programs. 

Specifically, Treasury’s Frequently Asked Questions document (“FAQ”) for the ARP Coronavirus Local Fiscal Recovery Funds (“CLFRF”) states:

Under the Interim Final Rule, recipients may use Coronavirus State and Local Fiscal Recovery Funds to respond to the COVID-19 public health emergency, including expenses related to COVID-19 vaccination programs. See 31 CFR 35.6(b)(1)(i). 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.[1]

Though Treasury could potentially provide more clarity on retroactive vaccine payments in the future, current Treasury guidance indicates that municipalities should not use ARP funds to provide cash incentives to municipality employees who have already been vaccinated. If this is a significant concern for a municipality, it may want to consider submitting a comment about the issue to Treasury and request that the subject be addressed in future updates to Treasury’s FAQs or in the Final Rule that Treasury will publish.

Last Revised: August 6, 2021

[1] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #2.12, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.