What are some of the purposes and sources of federal funds that cities may use to hire outside consultants? Are project management, grant writers, or data support roles eligible uses?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule on the Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) provides guidance on the use of consultants to support management and oversight of CSLFRF. The Final Rule’s Supplementary Information states the following:

Treasury issued Compliance and Reporting Guidance that provided that “recipients may use funds for administering the [CSLFRF] program, including costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements.[1]

In summary, this Treasury guidance clarifies that recipients of CSLFRF assistance can use some of those funds to hire consultants to support management and oversight of eligible projects.

Additionally, the Final Rule identifies eligible uses for Public Sector Capacity and Workforce.[2] These uses include:

• Costs to improve the design and execution of programs responding to the COVID-19 pandemic and to administer or improve the efficacy of programs addressing the public health emergency or its negative economic impacts.[3]

These costs, intended to support effective service delivery, include program evaluation, data, and outreach and administrative expenses.[4]

Further, the Final Rule clarifies several categories of eligible administrative expenses, providing examples of acceptable uses of CSLFRF funding for outside consultants:

• Administrative costs to improve the efficacy of public health or economic relief programs through tools like program evaluation, data analysis, and targeted consumer outreach.
• Administrative costs associated with programs to respond to the public health emergency and its negative economic impacts, including programs that are not funded by CSLFRF or not federally funded.
• Funds for direct and indirect administrative costs for administering the CSLFRF program and projects funded by the CSLFRF program.[5]

Treasury has also indicated that program evaluation, data, and outreach projects could be eligible in some cases, noting that it “recognizes that collecting high-quality data and developing community-driven, evidence-based programs requires resources to hire and build the capacity of staff, adopt new processes and systems, and use new technology and tools in order to effectively develop, execute, and evaluate programs.”[6] The Final Rule provides a non-exhaustive list of eligible uses to address the data, evidence, and program administration needs of recipients. These include:

• program evaluation and evidence resources,
• data analysis resource,
• technology infrastructure,
• community outreach and engagement; and
• capacity building.[7]

Capacity building includes “hiring public sector staff, contractors, academics, consultants, and others with expertise in evaluation, data, technology, and community engagement as well as technical assistance support for public sector staff, staff of subrecipients, and community partners.”[8]

Treasury’s Compliance and Reporting Guidance states that “[r]ecipients may use funds for administering the [CSLFRF] program, including costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements.”[9] The Final Rule upholds this use of funds.[10]

Last Updated: February 1, 2022