ProgramCOVID-19 Federal Assistance e311
TopicsHousing & Rental Assistance
Can a municipality use ARP funds to provide funds to residents who have applied for, but not received, unemployment benefits?
The U.S. Department of the Treasury’s (“Treasury”) May 10, 2021 Interim Final Rule (the “Interim Final Rule”) explicitly allows for State Unemployment Trust Fund deposits to decrease the strain on the unemployment insurance systems impacted by the pandemic. The Interim Final Rule states, “replenishing Unemployment Trust Funds up to the pre-pandemic level responds to the pandemic’s negative economic impacts on unemployed workers.” However, the Interim Final Rule, along with the Treasury’s FAQ page, does not address a municipality’s ability to provide funds to residents while waiting for unemployment benefits from a state.
The Interim Final Rule considers assistance to households, particularly cash assistance. Although the “Assistance to Households” does not specifically discuss utilizing funds for unemployment while waiting on unemployment benefit payments from a state, it does consider specific assistance types of “cash assistance” to individuals. Several examples of assistance to households identified by Treasury include:
- food assistance;
- rent, mortgage, or utility assistance;
- counseling and legal aid to prevent eviction or homelessness;
- cash assistance (discussed in further detail below);
- emergency assistance for burials, home repairs, weatherization, or other needs;
- internet access or digital literacy assistance; or
- job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training.
In the examples provided above, Treasury does not list itemized unemployment benefits. However, the cash benefits component is noteworthy. The Interim Final Rule states that “a cash transfer program may focus on unemployed workers or low- and moderate-income families, which have faced disproportionate economic harms due to the pandemic. Cash transfers must be reasonably proportional to the negative economic impact they are intended to address.”
Further, the Interim Final Rule states “[c]ash transfers grossly in excess of the amount needed to address the negative economic impact identified by the recipient would not be considered to be a response to the COVID-19 public health emergency or its negative impacts.”
The Interim Final Rule provides some guidance as to what “grossly in excess of the amount needed to address the negative economic impact” means by stating this is “considering the appropriate size of permissible cash transfers made in response to the COVID-19 public health emergency, State, local and Tribal governments may consider and take guidance from the per person amounts previously provided by the Federal government in response to the COVID-19 crisis. Cash transfers that are grossly in excess of such amounts would be outside the scope of eligible uses under section 602(c)(1)(A) and 603(c)(1)(A) and could be subject to recoupment.”
Last Revised: June 3, 2021
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 32, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.
 U.S. Department of the Treasury, Frequently Asked Questions, as of May 27, 2021, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 33, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf..
 Id. at 33-34.