Program

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 two disbursements from the American Rescue Plan Act (“ARP”) of 2021 over the next twelve months. Local leaders will have an opportunity to: (i) invest in future growth; and (ii) mitigate the impacts of COVID-19 which extend beyond near-term expenditure needs. These near-term expenditure needs include replacing lost revenue and/or expenditures that were required in response to COVID-19. The U.S. Department of the Treasury (“Treasury”) will disburse payments in two installments, or “tranches,” with the first distribution occurring no later than May 11, 2021, and the second distribution expected no later than twelve months after the first payment.[1]

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).[2]

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 the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (as described in 2 CFR Part 200) apply to these funds,[3] municipalities can also consider taking proactive steps to ensure compliance. Examples of proactive steps that municipalities can take include (i) preparing templates for requests for proposals (RFPs) and Notices of Funding Availability (NOFAs); and (ii) strengthen internal policies and procedures specific to the management and administration of these funds. Effective internal controls are generally required for recipients of federal funds,[4] and may help ensure funds are distributed effectively, efficiently, and in compliance with the terms and conditions of the Coronavirus Local Fiscal Recovery Fund (“CLFRF”). In addition, municipalities can consider the following best 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 the U.S. Department of the Treasury;
  • documenting the use of funds and critical decisions in anticipation of OIG audits; and
  • performing closeout and reconciliation of all costs incurred.

In order to ensure funds are reaching the public as soon as possible, it is important to ensure that funds are put toward eligible uses. Treasury notes in the Interim Final Rule that eligible uses include:

  • supporting the public health response;
  • addressing the negative economic impacts caused by the public health emergency;
  • serving the hardest-hit communities and families;
  • replacing lost public sector revenue;
  • providing premium pay for essential workers;
  • investing in water and sewer infrastructure; and
  • investing in broadband infrastructure.[5]

Further, the Rule notes that ineligible uses include:

  • funding used to directly or indirectly offset a reduction in net tax revenue due to a change in law from March 3, 2021 through the last day of the fiscal year in which the funds provided have been spent;
  • funding used to make a deposit to a pension fund;
  • funding debt service, settlements, or judgments;
  • any deposits into rainy day funds of financial reserves; and
  • general spending on infrastructure outside of investments in water, sewer, and broadband.[6] 

Local governments can consider providing aid to the most impacted industry sectors. An example provided in the Rule states, “on net, the leisure and hospitality industry has experienced an approximately 24 percent decline in revenue and approximately 17 percent decline in employment nationwide due to the COVID-19 public health emergency.”[7] Through direct assistance to impacted industries, communities, and employees, the goal is for funds to reach the public as soon as possible. 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.[8]

Treasury allows municipalities to incur costs by December 31, 2024 but provides recipients with a deadline of December 31, 2026 to complete projects funded with Fiscal Recovery Funds[9] - a longer horizon than was provided by the Coronavirus Aid, Relief, and Economic Securities Act (CARES) of 2020 (which has an extended deadline of December 31, 2021).

Last Revised: May 28, 2021

[1] U.S. Department of the Treasury, FACT SHEET: The American Rescue Plan Will Deliver Immediate Economic Relief to Families, https://home.treasury.gov/news/featured-stories/fact-sheet-the-american-rescue-plan-will-deliver-immediate-economic-relief-to-families.

[3] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, as of May 10, 2021, at 15, https://public-inspection.federalregister.gov/2021-10283.pdf.

[4] 2 CFR § 200.303.

[5] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 10-78, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[6] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 78-85, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[7] U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, at 37, https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

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

[9] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions, as of May 10, 2021, at 11, https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.