ProgramCOVID-19 Federal Assistance e311
Is there a cap on program administration, whether for the recipient city, or for subrecipients if the City contracts the funds out for services? And are there limitations on what is considered admin (i.e. regular labor, leave, benefits, etc)?
A. Administrative Expenses/Costs and the Interim Final Rule and FAQ Guidance
The Interim Final Rule (the “Rule”) explains that “Expenditures for the mitigation and prevention of COVID-19 include: (i) Expenses related to COVID-19 vaccination programs and sites, including staffing, acquisition of equipment or supplies, facilities costs, and information technology or other administrative expenses.”
Furthermore, expenses which “Improve Efficacy of Public Health or Economic Relief Programs” include “administrative costs associated with the recipient’s COVID-19 public health emergency assistance programs, including services responding to the COVID-19 public health emergency or its negative economic impacts, that are not federally funded.”
According to the U.S. Department of Treasury, “Recipients may use funds to cover the portion of payroll and benefits of employees corresponding to time spent on administrative work necessary due to the COVID–19 public health emergency and its negative economic impacts. This includes, but is not limited to, costs related to disbursing payments of Fiscal Recovery Funds and managing new grant programs established using Fiscal Recovery Funds.”
B. References to CRF
The Rule also indicates that “many of these expenses were also eligible in the CRF. Generally, funding uses eligible under CRF as a response to the direct public health impacts of COVID-19 will continue to be eligible under the ARPA,” with two exceptions spelled out in the Rule. See below for the exceptions.
Additionally, the CRF FAQs indicate administrative expenditures by State, territorial, local or Tribal government may in certain circumstances be allowable: “If the administrative expenses represent an increase over previously budgeted amounts and are limited to what is necessary. For example, a State may expend Fund payments on necessary administrative expenses incurred with respect to a new grant program established to disburse amounts received from the Fund.”
C. Administrative Costs and Mitigating Factors
The Rule acknowledges that the ARP “will generate administrative costs relative to a pre-statutory baseline. This includes, chiefly, costs required to administer Fiscal Recovery Funds, oversee subrecipients and beneficiaries, and file periodic reports with Treasury.”
Treasury expects that the administrative burden associated with this program will:
- “Be moderate, specifically [because] the recipients (direct or indirect) [that] receive funding from Federal government programs may have familiarity with administration and reporting for Federal funds or grant programs; and
- [Recipients] will have received CRF funds and rely heavily on the administrative processes developed over the last year.”
The above suggests that Treasury expects the administrative burden from running these programs to be light.
Furthermore, “Treasury expects to provide technical assistance to defray the costs of administration of Fiscal Recovery Funds to further mitigate burden. In making implementation choices, Treasury has hosted numerous consultations with a diverse range of direct recipients—States, small cities, counties, and Tribal governments—along with various communities across the United States, including those that are underserved. Treasury lacks data to estimate the precise extent to which this Interim Final Rule generates administrative burden for State, local, and Tribal governments, but seeks comment to better estimate and account for these costs, as well as on ways to lessen administrative burdens.” As of now, however, neither the ARP itself nor the guidance released from the Treasury specifies a “cap” on costs of program administration.
While the Rule indicates the above situations where administrative costs are seemingly allowable, there is limited specific guidance and Treasury suggests that the costs should be low. A municipality should ensure any administrative expenditures fit within an eligible use category. Secondly, the Rule indicates that many expenses originally eligible under CRF continue to be eligible under ARP. This fact suggests that key verbiage from the CRF guidelines such as “reasonable” and “necessary” could also apply to administrative expenses under the ARP as well. The CRF FAQs provide further guidance along these lines by indicating administrative expenses which “represent an increase over previously budgeted amounts” and are “necessary” will potentially be eligible. The Treasury, however, does acknowledge the many ways in which administrative expenses have been or should be mitigated to reduce the amounts expended.
Last Revised: May 24, 2021
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 141.
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 18, See, footnote 41 (“two exceptions: 1) the standard for eligibility of public health and safety payrolls has been updated (see details on page 20) and 2) expenses related to the issuance of tax-anticipation notes are no longer an eligible funding use (see discussion of debt service on page 44)).”
 Treasury Coronavirus Relief Fund Frequently Asked Questions Updated as of October 19, 2020, at Q39.
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 122.
 U.S. Department of the Treasury Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule, 31 CFR Part 35 RIN 1505-AC77, §35.6 at 18, See, footnote 41.