How should a municipality determine when to use ARP v. FEMA Public Assistance (PA) funding?

The Federal Emergency Management Agency (“FEMA”) Public Assistance (“PA”) program provides federal funding to help communities respond to and recover from federally declared disasters. COVID-19 related FEMA PA funding is limited to costs for Emergency Protective Measures (FEMA Category B) and operates on a reimbursement basis. Reimbursement amounts are based on actual incurred costs for eligible scopes of work rather than an allocation formula. Applicants apply through their respective state, tribal, or territorial jurisdictions. Eligible work includes increasing medical capacity, non-congregate sheltering, and ongoing vaccination efforts.[1] These costs may be reimbursed based on a 100% federal cost share basis through July 1, 2022.[2] Eligible activities have been expanded generally to allow for reimbursement of costs used to support the safe re-opening and operation of eligible facilities as well as vaccination efforts.

For additional information on the FEMA PA program, see:

• https://www.fema.gov/fact-sheet/eligible-emergency-protective-measures
• https://www.fema.gov/press-release/20210203/fema-statement-100-cost-share
• https://www.fema.gov/sites/default/files/documents/fema_covid-19-pandemic-safe-opening-operation-work-eligible-public-assistance-interim-policy.pdf

The American Rescue Plan Act of 2021 (“ARP”) allocated $1.9 trillion for continued COVID-19 response and recovery, including $350 billion for the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), which may be obligated through December 31, 2024, with the period of performance extending through December 31, 2026.[3] The U.S. Department of the Treasury’s (“Treasury”) Final Rule implementing CSLFRF includes a list of broad eligible uses under which recipients may expend CSLFRF funds:

1. To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and non-profits, or aid to impacted industries such as tourism, travel, and hospitality;
2. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;
3. For the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
4. To make necessary investments in water, sewer, or broadband infrastructure.[4]

Within the above categories, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities so long as the use of funds is consistent with the statute, applicable law, and Treasury guidance.

Treasury has published guidance which may assist municipalities in determining which federal funding source to rely on for the municipality’s eligible program or project. As a general matter, when faced with a choice between multiple funding options, municipalities can start the selection process by evaluating the needs of the community — including assessing current finances — and understanding the allowable use of funds for the respective sources. There are many useful and informative summaries that can provide a survey of funds and their allowable uses as a starting point. A few are linked below:

• https://www.naco.org/resources/naco-analysis-american-rescue-plan-act
• https://www.nlc.org/initiative/covid-19-pandemic-response/
• https://www.ncsl.org/ncsl-in-dc/publications-and-resources/american-rescue-plan-act-of-2021.aspx

Before making a final determination as to the best funding source, municipalities should consider conducting a detailed analysis to determine which fund best fits a given project’s cost, timeline, and use category. Municipalities should have a detailed understanding of the applicable statute and published guidance relevant to the respective funds before committing funds to specific uses or projects.

Notably, some expenses may be eligible for funding through multiple funding sources. Municipalities may want to consider factors such as how well a cost fits into the program eligibility criteria, maximizing funding streams, timeline factors including how quickly funds need to be available and fund expenditure deadlines, and the opportunity cost of using funds from a given source. As with all federal aid programs, municipalities must take care to follow the Uniform Guidance as well as ensure that there is no duplication of benefits.[5], [6]

Last Revised: March 11, 2022