Program

COVID-19 Federal Assistance e311

Topics

Compliance & Reporting, Fund Planning & Allocation

If a city decides to use Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) for payments to individual residents impacted by the pandemic, is there any documentation that confirms that the funds are non-countable against existing benefits?

The U.S. Department of the Treasury (“Treasury”) guidance does not clearly indicate whether cash assistance provided to households to address the negative economic impacts of the COVID-19 public health emergency would impact recipients’ income eligibility for other federal benefit programs. Municipalities should consult public guidance issued by other federal agencies regarding specific benefit programs. For example, the U.S. Social Security Administration website states: “COVID-19 emergency financial assistance paid from a federal, state, or local government source will not affect your Social Security benefits.”[1]

Treasury’s Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule allows for the use of funds to address the negative economic impacts of the COVID-19 public health emergency.[2] Such assistance includes direct cash assistance to households or populations.[3] Municipalities can consider cash transfers for those households or populations who experienced disproportionate harms due to the pandemic,[4] noting that such transfers must be reasonably proportional to the negative economic impact they are intended to address.[5] Treasury’s initial approach:

[I]ncluded as an enumerated eligible use cash assistance and provided that cash transfers must be “reasonably proportional” to the negative economic impact they address and may not be “grossly in excess of the amount needed to address” the impact. In assessing whether a transfer is reasonably proportional, recipients may “consider and take guidance from the per person amounts previously provided by the Federal Government in response to the COVID-19 crisis,” and transfers “grossly in excess of such amounts” are not eligible.[6]

Treasury maintains this enumerated eligible use in its CSLFRF Final Rule and states:

Treasury has reiterated in the final rule that responses to negative economic impacts should be reasonably proportional to the impact that they are intended to address. Uses that bear no relation or are grossly disproportionate to the type or extent of harm experienced would not be eligible uses. Reasonably proportional refers to the scale of the response compared to the scale of the harm. It also refers to the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not be reasonably proportional for a cash assistance program to provide assistance in a very small amount to a group that experienced severe harm and in a much larger amount to a group that experienced relatively little harm.[7]

Although Treasury refers to existing federal government programs in relation to direct cash assistance under CSLFRF, it appears to do so only to provide guidance on the appropriate size of permissible cash transfers.

Treasury may provide additional information when it issues new Frequently Asked Questions (“FAQs”) associated with the Final Rule.[8]

Last Revised: April 1, 2022

[1] U.S. Social Security Administration, Coronavirus Disease (COVID-19), Monthly Benefits and Other Financial Help, “Will my Social Security retirement, survivors, or disability insurance benefits be reduced or stopped if I get COVID-19 emergency financial assistance?”, available at: https://www.ssa.gov/coronavirus/categories/monthly-benefits-and-other-financial-help/.

[2] Treas. Reg. 31 CFR 35 at 4, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[3] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022) – FAQ #2.5, at 5, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[4] For more information on which households and populations qualify as having experienced disproportionate harms due to the pandemic, see the Bloomberg e311 Q&A available at: https://bloombergcities.jhu.edu/faqs/how-will-use-funds-category-authorizing-spending-arp-funds-respond-public-health-emergency.

[5] Treas. Reg. 31 CFR 35 at 26, available at: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf.

[6] Id., at 90.

[7] Id., at 90-91.

[8] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of January 2022), at 1, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.