COVID-19 Federal Assistance e311


Program Administration

Funding Source

American Rescue Plan Act

What guidance should a municipality consider regarding the use of ARP funds to cover administrative costs?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule on Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) affirms the use of CSLFRF for administrative expenses. Treasury clarifies:

direct and indirect administrative expenses are permissible uses of CSLFRF funds and are a separate eligible use category from “expenses to improve efficacy of public health or economic relief programs,” which refers to efforts to improve the effectiveness of public health and economic programs through use of data, evidence, and targeted consumer outreach.[1]

In the Final Rule, Treasury provides several categories of eligible administrative expenses. First, recipients may use funds for administrative costs to improve the efficacy of public health or economic relief programs through tools like program evaluation, data analysis, and targeted consumer outreach.[2]

In addition, recipients may use funds for 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.[3] Treasury recognizes that responding to the public health and economic impacts of the pandemic requires many programs and activities, some of which are not funded by CSLFRF. Executing these programs effectively is considered part of responding to COVID-19.

Recipients may also use funds for direct and indirect administrative costs for administering the CSLFRF program and projects funded by the CSLFRF program.[4] Additional information that may be helpful in evaluating the use of CSLFRF for administrative expenses can be found in Treasury’s Compliance and Reporting Guidance.[5] Administrative costs must be reasonable, allocable, and accounted for consistently.[6]

CSLFRF recipients are required to adhere to the requirements of 2 CFR Part 200, Subpart E, Cost Principles.[7] Under 2 CFR Part 200.413, administrative costs that are typically charged to federal awards include, “compensation of employees who work on that award, their related fringe benefit costs, the costs of materials and other items of expense incurred for the Federal award.”[8] Municipalities should consider establishing payroll and finance account codes to track all time charged to activities that will be paid for under CSLFRF. These costs should be separated from work charged to other funding sources including but not limited to FEMA Public Assistance, Coronavirus Relief Funds, or other local, state, and federal funding sources to ensure no duplication of federal benefits. 

Last Revised: March 7, 2022

[2] Id., at 186.

[3] Id., at 185.

[4] Id., at 365.

[5] U.S. Department of Treasury Compliance and Reporting Guidance at 8-9, available at:

[6] Id.

[7] Treas. Reg. 31 CFR 35 at 365, available at:

[8] Office of Management and Budget Code of Federal Regulations Part 200.413, Cost Principles Direct Costs,