What guidelines can a municipality apply to determine which populations, households, or geographic areas have been disproportionately impacted for the funding purposes of the American Rescue Plan Act (“ARP”)?

The U.S. Department of the Treasury’s (“Treasury”) Final Rule to implement the American Rescue Plan Act’s (“ARP”) Coronavirus State and Local Fiscal Recovery Funds “(CSLFRF”) defines disproportionately impacted households as those that experienced a disproportionate, or meaningfully more severe, impact from the COVID-19 pandemic.[1] The Final Rule states that pre-existing disparities in health and economic outcomes magnified the impact of the COVID-19 public health emergency on certain households and communities. Under the Final Rule, recipients may presume that the pandemic disproportionately impacted households that are:

• Located in qualified census tracts (“QCTs”),
• Served by Tribal governments,
• Low-income households,
• Located in the U.S. territories, or
• Served by territorial governments.[2]

Many different geographic, income-based, or poverty-based presumptions could be used to designate disproportionately impacted populations or households. Permitting recipients to use a combination of QCTs, low-income households, and services provided by local governments as presumptions balances these various methods.[3] Specifically, QCTs are a commonly used designation of geographic areas based on low incomes or high poverty rates of households in a community. For recipients providing geographically targeted services, QCTs may provide a simple metric and readily available maps to use for targeting relief. Treasury recognizes that using QCTs alone would not capture all underserved populations for a variety of reasons, including those noted by recipients. Allowing recipients to presume that low-income households were disproportionately impacted, the Final Rule provides greater flexibility to address pandemic impacts in underserved households and communities.[4] Data on household incomes is also readily available at varying levels of geographic granularity (e.g., Census Tracts, counties), again permitting flexibility to adapt to local circumstances and needs.

To ease administrative burdens, Treasury recognizes that recipients may also identify other households, populations, and communities disproportionately impacted by the pandemic based on their eligibility for other programs with similar income tests.[5] The Final Rule recognizes categorical eligibility for the following programs and populations:

Impacted households: Treasury will recognize a household as impacted if it otherwise qualifies for any of the following programs:

• Children’s Health Insurance Program (CHIP),
• Childcare Subsidies through the Child Care and Development Fund (CCDF) Program,
• Medicaid,
• National Housing Trust Fund (HTF), for affordable housing programs only, and
• Home Investment Partnerships Program (HOME), for affordable housing programs only.[6]

Disproportionately impacted households: Treasury will recognize a household as disproportionately impacted if it otherwise qualifies for any of the following programs:

• Temporary Assistance for Needy Families (TANF),
• Supplemental Nutrition Assistance Program (SNAP),
• Free and Reduced-Price Lunch (NSLP) and/or School Breakfast (SBP) programs,
• Medicare Part D Low-income Subsidies,
• Supplemental Security Income (SSI),
• Head Start and/or Early Head Start,
• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC),
• Section 8 Vouchers,
• Low-Income Home Energy Assistance Program (LIHEAP), and
• Pell Grants, and
• For services to address educational disparities, Treasury will recognize Title I eligible schools as disproportionately impacted and responsive services that support the school generally or support the whole school as eligible.[7]

In addition to the “presumptive eligibility” category described above, the Final Rule identifies a pathway to designate other disproportionately impacted classes. To designate other disproportionately impacted classes, Treasury states that:

Recipients may identify classes of households, communities, small businesses, nonprofits, or populations that have experienced a disproportionate impact based on academic research or government research publications, through analysis of their own data, or through analysis of other existing data sources.[8] To augment their analysis, or when quantitative data is not readily available, recipients may also consider qualitative research and sources like resident interviews or feedback from relevant state and local agencies, such as public health departments or social services departments. In both cases, recipients should consider the quality of the research, data, and applicability of analysis to their determination.[9]

Last Updated: January 31, 2022