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Compliance & Reporting

How can a city fulfill the requirement to demonstrate that it is serving a disadvantaged community? When using CSLFRF to provide services for unhoused persons, are cities required to document the income of service beneficiaries or other data points?

Part 1.

The U.S. Department of the Treasury’s (“Treasury”) Final Rule governs the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) established under the American Rescue Plan Act of 2021 (“ARP”). Under the ARP, a municipality is eligible to receive CSLFRF funds to alleviate the negative public health and economic impacts of the COVID-19 public health emergency on communities. Treasury’s Final Rule identifies populations that are presumed to have been “impacted” or “disproportionately impacted” by the pandemic, which allows CSLFRF recipients to respond to a broad set of households and entities without requiring additional impact analysis.

Recipients are also able to designate additional classes as having been disproportionately impacted by the pandemic outside of these presumptively eligible categories by performing analysis of available research and data. Recipients must then provide reporting to Treasury that justifies these designations.

Presumptively Impacted or Disproportionately Impacted Communities

Treasury’s Final Rule identifies various disadvantaged communities where CSLFRF funds can be applied. Treasury recognizes households qualifying for the following programs as impacted and disproportionately impacted by the pandemic, and thus eligible for CSLFRF assistance:

  • Impacted Households:
    • Children’s Health Insurance Program;
    • Childcare Subsidies through the Child Care and Development Fund Program;
    • Medicaid;
    • National Housing Trust Fund, for affordable housing programs only; and;
    • Home Investment Partnerships Program, for affordable housing programs only.
  • Disproportionately Impacted Households:
    • Temporary Assistance for Needy Families;
    • Supplemental Nutrition Assistance Program;
    • Free and Reduced-Price Lunch and/or School Breakfast programs;
    • Medicare Pard D Low-Income Subsidies;
    • Supplemental Security Income;
    • Head Start and/or Early Head Start;
    • Special Supplemental Nutrition Program for Women, Infants, and Children;
    • Section 8 Vouchers;
    • Low-Income Home Energy Assistance Program; and,
    • Pell Grants.[1]

The Final Rule also identifies communities living in Qualified Census Tracts (“QCTs”) as a “common, readily accessible, and geographically granular method of identifying communities with a large proportion of low-income residents” as a disproportionately impacted group.[2]

Analysis of Impacted or Disproportionately Impacted Communities

In addition to Treasury’s expressly identified populations, a recipient may identify classes of households, communities, or populations that have experienced a disproportionate impact based on academic research or government research publications, through analysis of their own data, or through analysis of other existing data sources. To augment their analysis, or when quantitative data is not readily available, a recipient may also consider qualitative sources like resident interviews or feedback from relevant state and local agencies, such as public health departments or social services departments. In either case, a recipient should consider the quality of the research, data, and applicability of analysis to their determination. To the extent municipalities rely on household income levels as a relevant data point, the Final Rule defines low income as:

(i) income at or below 185 percent of the Federal Poverty Guidelines (FPG) for the size of its household based on the most recently published poverty guidelines by the Department of Health and Human Services (HHS) or (ii) income at or below 40 percent of the Area Median Income (AMI) for its county and size of household based on the most recently published data by the Department of Housing and Urban Development (HUD).[3]

Similarly, the Final Rule defines moderate income as:

(i) income at or below 300 percent of the FPG for the size of its household based on the most recently published poverty guidelines by HHS or (ii) income at or below 65 percent of the AMI for its county and size of household based on the most recently published data by HUD.[4]

For those municipalities that identify one or more disproportionately impacted populations or households, the CSLFRF Compliance and Reporting Guidance states that recipients must respond to the following questions, incorporating in their analysis the definitions and guidelines provided in Treasury guidance:

  • What Impacted and/or Disproportionally Impacted population does this project primarily serve? Please select the population primarily served.
  • If this project primarily serves more than one Impacted and/or Disproportionately Impacted population, please select up to two additional populations served.[5]

When responding to these questions, recipients must select from the options listed on pages 20 and 21 of the Compliance and Reporting Guidance. Additionally, municipalities must “develop and implement effective internal controls to ensure that funding decisions under the [CSLFRF] award constitute eligible use of funds, and document determinations.”[6] Municipalities should familiarize themselves with Uniform Guidance 2 CFR § 200.303 in preparation for developing aid with the creation of internal controls for programs.[7]

Part 2.

The Final Rule states: “[i]n determining whether an individual is eligible for a program designed to address a harm experienced by a class, the recipient need only document that the individual is within the class that experienced a public health impact.”[8]

Further, the Final Rule states:

Recipients may determine whether to measure income levels for specific households or for a geographic area based on the type of service to be provided. For example, recipients developing a program that serves specific households (e.g., a subsidy for internet access, a childcare program) may measure income at the household level. Recipients providing a service that reaches a general geographic area (e.g., a park) may measure median income of that area.[9]

Recipients may need to identify individual household income if the household does not fall in a qualified category or population as described in Part 1 of this Q&A.

Last Updated: May 5, 2022

[1] Treas. Reg. 31 CFR Part 35, at 41, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[2] Id., at 45.

[3] Id., at 30.

[4] Id., at 30-31.

[5] Department of Treasury Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Revised February 28, 2022), at 20, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[6] Id., at 7.

[7] Code of Federal Regulations, 2 CFR § 200.303, available at: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200/subpart-D/section-200.303.

[8] Treas. Reg. 31 CFR Part 35, at 21, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[9] Id., at 31.