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COVID-19 Federal Assistance e311

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Timing of Funds

How can municipalities ensure that received funds reach the public as quickly as possible while making a long-term impact?

Local governments are expected to receive a total of two disbursements from the American Rescue Plan Act of 2021 (“ARP”) under the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”).[1] Local leaders will have an opportunity to invest in future growth and mitigate the impacts of COVID-19 which extend beyond near-term expenditure needs. These near-term needs include replacing lost revenue and/or expenditures that were required in response to COVID-19.[2] The U.S. Department of the Treasury (“Treasury”) will make available the second distribution to states and local governments no sooner than twelve months after the first payment.[3]

To complete a submission on behalf of your jurisdiction, municipalities will be asked to provide the following information when requesting funding through the Treasury submission portal:

  • jurisdiction name, taxpayer ID number, DUNS number, and address;
  • authorized representative name, title, and email;
  • contact person name, title, phone, and email;
  • funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number; and
  • completed certification document (to be signed by the authorized representative).[4]

Municipalities can also consider undertaking a needs-assessment prior to the actual receipt of funds to: (i) determine local priorities; (ii) ensure that the right projects are being funded; and (iii) determine whether any other sources of funding are available. Because most provisions of Uniform Guidance (2 CFR Part 200) apply to these funds,[5] municipalities can also consider taking proactive steps to ensure compliance. Examples of proactive steps that municipalities can take include preparing templates for Requests for Proposals (“RFPs”) and Notices of Funding Availability (“NOFA”) and strengthening internal policies and procedures specific to the management and administration of these funds. Effective internal controls are generally required for recipients of federal funds,[6] and may help ensure funds are distributed effectively, efficiently, and in compliance with the terms and conditions of the CSLFRF program. In addition, municipalities can consider the following good practices to help ensure compliance:

  • identifying resources to provide ongoing eligibility reviews of programmatic costs;
  • providing system infrastructure to support grant management and documentation collection;
  • staging resources to report costs each quarter to Treasury;
  • documenting the use of funds and critical decisions in anticipation of OIG audits; and
  • performing closeout and reconciliation of all costs incurred.

To ensure funds are reaching the public as soon as possible, it is important to make certain that funds are put toward eligible uses. Treasury notes in its Final Rule on CSLFRF that eligible uses include:

  • supporting the public health response;
  • addressing the negative economic impacts of the public health emergency;
  • providing premium pay for essential workers;
  • providing government services to the extent of lost public sector revenue; and
  • investing in water, sewer, and broadband infrastructure.[7]

Further, the Final Rule notes that ineligible uses include:

  • for states and territories, funding cannot be used to directly or indirectly offset a reduction in net tax revenue due to a change in state or territory law;
  • funding a deposit to a pension fund (except for Tribal governments);
  • funding debt service or replenishing financial reserves;
  • using funds for expenditures that conflict with the statutory purpose of the ARP;
  • using funds in violation of the conflict-of-interest requirements; and
  • using funds that are in conflict of federal, state, and local laws and regulations.[8] 

Local governments can consider providing aid to the most impacted industry sectors and the employees in those sectors. For example, the Final Rule states:

from February 2020 to February 2021, the hospitality and leisure industry lost nearly 3.5 million jobs. While the entire industry was impacted, 72 percent of the job losses occurred in the lowest wage service occupations compared to only a 6 percent rate of job loss in the highest wage management and finance jobs.[9]

By continuing to work with existing stakeholders that have been active in communities’ COVID-19 public health emergency response and recovery efforts, local governments may be better able to quickly initiate agreements and expeditiously mobilize funding for their communities. Partnerships with nonprofits and philanthropy groups may enable organizations to quickly distribute funding to the groups most affected by the pandemic.[10]

In addition, municipalities should note that Treasury allows municipalities to incur or obligate costs until December 31, 2024, but provides recipients with a deadline of December 31, 2026, to expend CSLFRF.[11]

Last Revised: April 1, 2022

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., at § 603(b)(7), available at: https://www.congress.gov/bill/117th-congress/house-bill/1319/text#HAECAA3A95C4E4FFAB6AA46CE5F9CB2B5.

[2] Id., at § 603(c).

[3] Id., at § 603(b)(7)(B).

[5] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022) – FAQ #9.3, at 37, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

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

[8] Id., at 10–11.

[9] Id., at 76.

[10] Urban Institute, “How Philanthropy Can Partner with Government to Meet Critical Needs during COVID-19,” available at: https://www.urban.org/urban-wire/how-philanthropy-can-partner-government-meet-critical-needs-during-covid-19.

[11] Treas. Reg. 31 CFR 35 at 414, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.