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Due Diligence & Fraud Protection

What documentation is a municipality required to supply in order to receive funds? What is the due date for the documentation?

The U.S. Department of the Treasury (“Treasury”) issued its Interim Final Rule (“the Rule”) relating to Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) on May 17, 2021. 

Pursuant to its commitment to providing guidance and instructions on the reporting requirements,[1] on June 24, 2021, Treasury published Version 1.1 of the Compliance and Reporting Guidance (the “Reporting Guidance”) for CSLFRF.[2] The Reporting Guidance clarifies the compliance responsibilities of CSLFRF recipients, and lists three reports that recipients may need to provide by specified deadlines, namely:

  • Interim Report: “Provide initial overview of status and uses of funding. This is a one-time report.”
  • Project and Expenditure Report: “Report on projects funded, expenditures, and contracts and subawards over $50,000, and other information.”
  • Recovery Plan Performance Report: “The Recovery Plan Performance Report (the “Recovery Plan”) will provide information on the projects that large recipients are undertaking with program funding and how they plan to ensure program outcomes are achieved in an effective, efficient, and equitable manner. It will include key performance indicators identified by the recipient and some mandatory indicators identified by Treasury. The Recovery Plan will be posted on the website of the recipient as well as provided to Treasury.” [3]

Recipients will submit required reports via the forthcoming Treasury Reporting CSLFRF portal.[4] On August 9, 2021, Treasury published updated guidance on how to submit reports via the Portal, including both the policy and technical requirements for entering information.[5]

Treasury’s Reporting Guidance currently includes a chart, including due dates, describing reporting requirements for three reports, delineated by CSLFRF recipient type as follows:[6]

Treasury’s Reporting Guidance currently includes a chart, including due dates, describing reporting requirements for three reports, delineated by CSLFRF recipient type

The Reporting Guidance sets a deadline of August 31, 2021, for recipients to provide the one-time Interim Report on CSLFRF expenditures and obligations; this deadline applies to states, U.S. territories, metropolitan cities, counties, and Tribal governments (recipients other than non-entitlement units of local government (“NEUs”)).[7] The Interim Report must reflect a recipient’s expenditures and obligations from the date of award to July 31, 2021, broken down by Expenditure Category (which can be selected from a menu of available options on the CSLFRF portal).[8] For purposes of reporting in the CSLFRF portal, an “expenditure” is an amount incurred as a liability of the entity (e.g., the service has been rendered or the good has been delivered to the entity),[9] and an “obligation” encompasses orders placed for property and services, contracts and subawards made, and similar transactions that require payment.[10] Appendix 1 of the Reporting Guidance contains the Expenditure Categories list.[11]

Treasury also set forth a requirement for Project and Expenditure Reports. The information required for these reports includes information regarding Projects, Expenditures, Project Status, Project Demographic Distribution, Subawards, Civil Rights Compliance, Programmatic Data, and NEU Distributions.[12] Additional information requirements are found on pages 16 to 23 of the Reporting Guidance. For all Tribal Governments, as well as states, U.S. territories, and metropolitan cities and counties that either (1) have a population that exceeds 250,000 residents, or (2) have fewer than 250,000 residents but received more than $5 million in CSLFRF funding, the first report is due October 31, 2021, and subsequent reports are to be filed quarterly as follows:[13]

Project and Expenditure Reports part 1
Project and Expenditure Reports part 2

For NEUs and metropolitan cities and counties with populations lower than 250,000 residents, and that receive less than $5 million in CSLFRF, the first Project and Expenditure Report is due October 31, 2021, and subsequent reports are due annually thereafter,[14] as follows:

Project and Expenditure Reports  for NEUs and metropolitan cities and counties with populations lower than 250,000 residents

Treasury also requires states, U.S. territories, and metropolitan cities and counties with more than 250,000 residents to submit Recovery Plan Performance Reports and to post copies to the municipality’s website by August 31, 2021, and annually thereafter by July 31. This report will provide the public and Treasury with information on the recipient’s planned and ongoing projects funded by its CSLFRF allocation and describe the recipient’s plans to achieve program outcomes in an effective, efficient, and equitable manner.[15] The first report will cover the period ending July 31, 2021.

Treasury sets the following timeline for the submission of Recovery Plan Performance Reports:[16]

Treasury sets the following timeline for the submission of Recovery Plan Performance Reports

In its most recent update on August 2, 2021, Treasury provided additional resources on its Recipient Compliance and Reporting Responsibilities page, including the following:

It is important to note that the NEU Template is not the final version and should not be used for submission.[17] Recipients should use the template that will be posted in the Treasury Submission Portal once it opens to report information.[18]

Municipalities should conduct an in-depth review of the Reporting Guidance, as it provides additional detail regarding the information required to be included in each of these reports and is revised to reflect further reporting requirements as they become available.

Last Revised: August 19, 2021

[1] Previously, the Supplementary Information section preceding the Rule discusses Reporting requirements at a general level, noting, “Treasury will provide additional guidance and instructions on the reporting requirements…at a later date.”  Treas. Reg. 31 CFR 35 at 112, available at: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.

[3] Id., at 12.

[4] Id., at 13 (see footnotes).

[5] U.S. Department of the Treasury, Treasury’s Portal for Recipient Reporting: State and Local Fiscal Recovery Funds, available at: https://home.treasury.gov/system/files/136/SLFRF_Treasury-Portal-Recipient-Reporting-User-Guide.pdf.

[6] Id., at 6.

[7] Id.

[8]  U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds — Compliance and Reporting Guidance, at 13, available at: https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.

[9] Id., (see footnotes).

[10] Id.

[11] Id., at 31.

[12] Id., at 16-23.

[13] Id., at 15-16.

[14] Id., at 16.

[15] Id., at 23-30.

[16] Id., at 23.

[17] U.S. Department of the Treasury, Draft Non-entitlement Units of Government (NEU) Template, available at: https://home.treasury.gov/system/files/136/NEU-Distribution-Templates.xlsx.

[18] Id.