COVID-19 Federal Assistance e311


Housing & Rental Assistance, Workforce & Economic Development

Funding Source

American Rescue Plan Act, CARES Act

Can a municipality use CRF or ARP funds to establish a Financial Empowerment Center, which provides free financial counseling to low-income residents?

The U.S. Department of Treasury’s (“Treasury”) Final Rule on the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) does not expressly identify Financial Empowerment Centers (“FECs”) as an eligible use of CSLFRF funds. However, FECs may be considered an eligible use of Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), provided that the center’s services and operation comply with Treasury guidance. Municipalities may also consider using other funds, such as the U.S. Coronavirus Relief Funds (“CRF”), or the Department of Housing and Urban Development (“HUD”) Community Development Block Grants (“CDBG”), to support the development of a FEC.

Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”)

The American Rescue Plan Act of 2021(“ARP”) authorizes the use of CSLFRF funds “to respond to the public health emergency [with COVID-19] or its negative economic impacts, including assistance to households, small businesses, and nonprofits.”[1] Treasury’s Final Rule on CSLFRF provides guidance regarding eligible programs that provide such assistance to households, including:

  • Food assistance and food banks;
  • Emergency housing assistance: rental assistance, mortgage assistance, utility assistance, assistance paying delinquent property taxes, counseling and legal aid to prevent eviction and homelessness, and emergency programs or services for homeless individuals, including temporary residences for people experiencing homelessness;
  • Health insurance coverage expansion;
  • Benefits for surviving family members of individuals who have died from COVID-19;
  • 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, and development of job and workforce training centers;
  • Financial services for the unbanked and underbanked;
  • Burials, home repair, and home weatherization;
  • Programs, devices and equipment for internet access and digital literacy, including subsidies for costs of access;
  • Cash assistance;
  • Paid sick, medical, and family leave programs;
  • Assistance in accessing and applying for public benefits or services;
  • Childcare and early learning services, home visiting programs, services for child welfare involved families and foster youth and childcare facilities;
  • Assistance to address the impact of learning loss for K-12 students (e.g., high quality tutoring, differentiated instruction);
  • Programs or services to support long-term housing security: including development of affordable housing and permanent supportive housing; and
  • Certain contributions to an Unemployment Insurance Trust Fund.[2]

For programs providing assistance to households that qualify as “disproportionately impacted,”[3] the Final Rule expands the list of eligible uses to include:

  • Pay for community health workers to help households access health and social services;
  • Remediation of lead paint or other lead hazards;
  • Primary care clinics, hospitals, integration of health services into other settings, and other investments in medical equipment and facilities designed to address health disparities;
  • Housing vouchers and assistance relocating to neighborhoods with higher economic opportunity;
  • Investments in neighborhoods to promote improved health outcomes;
  • Improvements to vacant and abandoned properties, including rehabilitation or maintenance, renovation, removal and remediation of environmental contaminants demolition or deconstruction, greening/vacant lot cleanup and conversion to affordable housing;
  • Services to address educational disparities, including assistance to high-poverty school districts and educational and evidence-based services to address student academic, social, emotional, and mental health needs; and
  • Schools and other educational equipment and facilities.[4]

Treasury has stated that the eligible programs listed in the Final Rule are non-exhaustive and provides award recipients with broad flexibility to both simplify the program and meet the needs of a recipient’s community.

Municipalities must assess and ensure that programs respond to negative economic impacts resulting specifically from the COVID-19 pandemic.[5] A recipient would likely satisfy the Final Rule’s threshold requirement of a “negative economic impact” by:  (i) considering whether an economic harm exists and then whether this harm was caused or made worse by the COVID–19 public health emergency and (ii) designing the response to address the identified economic harm or impact resulting from or exacerbated by the public health emergency.[6]

CSLFRF costs must be incurred on or after March 3, 2021, and before December 31, 2024; however, the fund’s period of performance extends through December 31, 2026.[7] In considering whether a cost is incurred, Treasury indicates that a cost must be obligated and adopts the definition of “obligation” as included in the Uniform Guidance.[8] Treasury has clarified that for eligible assistance provided to households, businesses, and individuals to address the negative economic impacts of the public health emergency, CSLFRF funds may cover expenses incurred by a household, business, or individual prior to March 3, 2021, so long as this cost was not incurred by the municipality prior to March 3, 2021.[9]

Coronavirus Relief Funds (“CRF”)

The period of performance for the CARES Act of 2020 Coronavirus Relief Funds (“CRF”) ended on December 31, 2021. 

Prior to that date, municipalities who qualified for CRF of the CARES Act could consider using those funds to cover the establishment of an FEC. To be eligible for CRF funding, proposed expenditures were required to meet three requirements: (i) be necessary and incurred due to the public health emergency with respect to COVID–19; (ii) not be accounted for in the budget most recently approved as of March 27, 2020, (the date of enactment of the CARES Act) for the State or government; and (iii) be incurred during the period that begins on March 1, 2020, and ends on December 31, 2021.[10]

Generally, Treasury places the responsibility of determining whether a cost is necessary in responding to the COVID-19 public health emergency on the relevant government official.[11] Guidance from Treasury further stated that funds could be used to cover expenses associated with the provision of economic support in connection with the COVID–19 public health emergency and any other COVID–19-related expenses reasonably necessary to the function of government that satisfy the Fund’s eligibility criteria.[12] A municipality could have been able to consider an FEC as provision of economic support in connection with the public health emergency if they were able to justify the connection of the public health emergency response. While the CRF did not provide specific considerations for this justification, municipalities may wish to use the considerations outlined above in relation to the CSLFRF as a starting point for establishing this connection. In some instances, CRF funds had been used by municipalities to create economic support programs such as small business grant programs, programs to help hotels hire new employees, veteran business programs, and more.

Other Sources of Funding and Multiple Sources of Funding

Additionally, a municipality may consider leveraging HUD CDBG dollars to assist in establishing and sustaining an FEC. CDBG funds “supports development of low-cost and affordable housing as well as work to improve and sustain infrastructure in disadvantaged regions and neighborhoods, and to support economic development and community service projects within communities.”[13]  According to the Cities for Financial Empowerment Fund Report,

…cities raised close to $1 million in federal funds for 2016 program operations. Cities also learned from one another in pursuing federal funding: they shared their experiences of leveraging different types of federal funding and were able to point to one another as examples when working in their own local context.  While not without challenges, including additional reporting burdens, these federal funds were important sustainability sources, especially as they represented new uses of federal funding streams for these cities.[14]

A municipality may amend its current CDBG Action Plan to realign existing CDBG dollars and/or apply new CDBG funds received to this activity; however, the activities must be eligible under CDBG.  

If municipalities are deciding between funding programs to cover costs, they should ensure that expenses are covered by one source or the other to prevent duplication of benefits.[15]  A municipality may in certain circumstances use different support funds to cover costs related to the establishment of an FEC; however, specific expenses may only be covered by one funding source. For example, a municipality could use CRF funding to cover eligible equipment and utility costs prior to December 31, 2021, but could switch to using CSLFRF funding to cover equipment and utility costs after January 1, 2022.

Last Updated: March 25, 2022

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801, et seq., at Section 603(c)(1)(A), available at:

[2] Department of Treasury, “Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule,” January 6, 2022, at 18, available at:    

[3] Treas. Reg. 35 CFR 31 at 6, available at:

[4] Id., at 20.

[5] Treas. Reg. 31 CFR 35 at 24, available at:

[6] Id., at 24-25.

[7] Id., at 11.

[8] Id., at 357.

[9] Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions (as of January 2022) – FAQ #4.7, at 21, available at:

[10] Coronavirus Relief Fund for States, Tribal Governments, and Certain Eligible Local Governments, Fed Reg Vol 86, No 10, at 4183, available at

[11] Id.

[12] Id., at 4184.

[13] Cities for Financial Empowerment Fund, “An Evaluation of Financial Empowerment Centers: Building People’s Financial Stability as a Public Service,” at 111, available at:

[14] Id., at 113.

[15] 2 CRF Part 200, “Uniform Guidance”, available at: