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American Rescue Plan Act: Coronavirus State & Local Fiscal Recovery Fund FAQs

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    American Rescue Plan Act: Coronavirus State & Local Fiscal Recovery Fund FAQs

    Quick Links

    • Access NACo's Full Analysis
    • Visit the NACo COVID-19 Recovery Clearinghouse

    On May 10, the U.S. Department of Treasury (Treasury) released an interim final rule, FAQs and a fact sheet for a portion of the $362 billion Coronavirus State and Local Fiscal Recovery Fund, established under the American Rescue Plan Act (ARP) signed into law on March 11 by President Biden. 

    This specific interim rule and related guidance covers the $61.5 billion in direct federal aid to America’s counties.  Later this year, Treasury will release separate guidance for the $1.5 billion in additional federal aid for public lands counties under Sec. 605 of ARP.

    NACo will continue to monitor any developments on additional guidance from the U.S. Treasury.

    REPORTING REQUIRMEMNTS

    1. What are the reporting requirements for the Fiscal Recovery Fund?

    Interim reports:  Counties will be required to submit one interim report, which will include the county’s expenditures by category at the summary level. The interim report will cover spending from the date the county receives Recovery Funds to July 31, 2021. Interim reports are due by August 31, 2021.

    Quarterly project and expenditure reports: Counties will be required to submit quarterly project and expenditure reports, which will include financial data, information on contracts and subawards over $50,000 and other information regarding utilization of funds. These reports will be similar to CARES Act Coronavirus Relief Fund. The first report will cover spending from the date the county receives Recovery Funds to September 30, 2021. First report is due by October 31, 2021.

    Recovery plan performance reports: Counties will be required to submit an annual recovery plan performance report, which will include descriptions of projects funded and information on performance indicators and objectives of each award. Initial recovery plan will cover activity from the date the county receives Recovery Funds to July 31, 2021. Local governments with less than 250,000 residents are not required to develop Recovery Plan Performance Report.  Recovery plan is due by August 31, 2021.

    2. Are counties required to remit interest earned on Recovery Fund payments made by Treasury?

    No. Recovery Fund payments made by Treasury to local governments and Tribes are not subject to the requirement of maintaining balances in an interest-bearing account and remit payments to Treasury. 

    3. What provisions of the Uniform Guidance for grants apply to these funds? Will the Single Audit requirements apply?

    Most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to this program, including the Cost Principles and Single Audit Act requirements. Recipients should refer to the Assistance Listing for detail on the specific provisions of the Uniform Guidance that do not apply to this program. The Assistance Listing will be available on beta.SAM.gov.

    4. How will Treasury recoup Recovery Funds?

    Failure to comply with restriction on use of funds will be identified based on reporting provided by the county. The county will receive a written notice of violation, and within 60-days of the notice, a county can seek reconsideration of the violation based on supplemental information.

    5. May counties use funds to cover the costs of consultants to assist with managing and administering the funds?

    Yes. Counties may use funds for administering the CSFRF/CLFRF program, including costs of consultants to support effective management and oversight, including consultation for ensuring compliance with legal, regulatory, and other requirements.

    6. What is the Assistance Listing and Catalog of Federal Domestic Assistance (CFDA) number for the program?​
    The Assistance Listing for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) was published May 28, 2021 on SAM.gov. This includes the final CFDA Number for the program, 21.027.

    The assistance listing includes helpful information including program purpose, statutory authority, eligibility requirements, and compliance requirements for recipients. The CFDA number is the unique 5-digit code for each type of federal assistance, and can be used to search for program information, including funding opportunities, spending on usaspending.gov, or audit results through the Federal Audit Clearinghouse.

    To expedite payments and meet statutory timelines, Treasury issued initial payments under an existing CFDA number. If you have already received funds or captured the initial CFDA number in your records, please update your systems and reporting to reflect the final CFDA number 21.027. Recipients must use the final CFDA number for all financial accounting, audits, subawards, and associated program reporting requirements.

    To ensure public trust, Treasury expects all recipients to serve as strong stewards of these funds. This includes ensuring funds are used for intended purposes and recipients have in place effective financial management, internal controls, and reporting for transparency and accountability.
    7. If a recipient has received funding as of July 15, 2021 but has not incurred obligations or expenditures as of the end of the reporting period, what are the reporting requirements?
    Interim Report: Recipients should submit a report showing no ($0) obligations or expenditures have yet been incurred. Recovery Plan: Recipients should submit a Recovery Plan describing the planned approach to the use of funds and planned projects.
     
    8. If a recipient has received funding as of July 15, 2021 but has not established projects as of the end of the reporting period, what are the reporting requirements? 
    No project level reporting is required in the Interim Report. Recipients should submit a Recovery Plan describing the planned approach to the use of funds and planned projects. 
     
    9. If a recipient has not received funding as of July 15, 2021, what are the reporting requirements?

    Treasury recognizes that recipients will need sufficient time to gather the information and determine how allocate funds in accordance with the Interim Final Rule. As such, recipients that have not received funding as of July 15, 2021 must submit an Interim Report and Recovery Plan (if applicable) within 60 days of receiving funding.

    10. Does the $5 million threshold apply to funds received or the total allocation?

    The reporting threshold is based on the total allocation expected under the SLFRF program, not the funds received by the recipient as of the time of reporting. Recipient reporting tiers will be displayed in the reporting portal. If you believe there is an error with the reporting tier or application of the $5 million threshold, please email SLFRP@treasury.gov.

    11. Should recipients submit a Recovery Plan if they are awaiting approval by legislative or other governance entities on the proposed projects, and such approval is not received as of the end of the reporting period?

    Recipients should submit a Recovery Plan that includes information about any projects that are approved or authorized for release by August 31, 2021. A recipient should then submit an updated Recovery Plan within 60 days after approval by the legislature or other governance entities.

    12. How should a recipient report funds if funds were received as multiple entity types (e.g., a county and an NEU, or county and a city)? 

    When receiving funds as multiple entity types, a recipient’s reporting tier is determined by their total allocation across both recipient types and the highest tier for which they qualify. For example, if a recipient receives funding as an NEU and a county with population under $250,000 and their total allocation across both entity types is over $5M, the recipient should report as a county with population under 250,000 and over $5M in total SLFRF funding. A recipient’s reporting tier will be available for review in the Treasury’s Portal. If you believe there is an error in consolidating or not consolidating your governmental entities for the purposes of reporting, please email SLFRP@treasury.gov.

    13. What reporting is required if no SLFRF funding was used for the activities covered by the Required Performance Indicators noted in Part 2 C.2. of the Reporting Guidance related to the Recovery Plan? 

    A recipient only needs to report on mandatory performance indicators if funds were used for that purpose / Expenditure Category. 

    14. Do jurisdictions need to have committed or dedicated funding received by the August 31, 2021 deadline for the initial Recovery Plan? 

    No. Funding does not need to be committed or dedicated by the time the initial Recovery Plan is submitted. The Recovery Plan should include planned uses of funds and projects to the extent known at the time the Recovery Plan is submitted. Updates can be provided in subsequent project and expenditure reports.

    15. The guidance covering submission of the Recovery Plan indicates that in addition to submitting a PDF version of the Recovery Plan recipients must also upload a project inventory file and input other programmatic data. Is this no longer required?

    Treasury has delayed the collection of this information in Treasury’s Portal in order to streamline reporting and lessen the reporting burden for recipients. Recipients are still required to upload a PDF version of their Recovery Plan by August 31. Recipients are encouraged to use the suggested template posted in the www.treasury.gov/SLFRPReporting website when preparing the Recovery Plan template. Some data from the Recovery Plan will be required to be submitted with the first Project and Expenditure report by October 31, 2021. The User Guide for the Project and Expenditure Report will include additional information. 

    The population threshold is determined by Treasury at award date and will not change during the four-year reporting period. A recipient’s reporting tier will be available for review in the reporting portal.

    16. Can records be edited or updated after submission? How do I report changes?

    Interim Report: No changes will be allowed after the initial submission. Any updates will be captured when the first Project and Expenditure Report is submitted.

    Quarterly Project and Expenditure Reports: Updates should be provided in the next quarterly Project and Expenditure Report.

    Annual Project and Expenditure Report: Recipients will have an opportunity to provide updates with next quarterly submission date, when the portal opens for quarterly submitters. Additional information will be included in the forthcoming User Guide for the Project and Expenditure Report.

    Recovery Plan: Recipients will be allowed to submit updates of their Recovery Plan reflecting any significant changes. They should also provide concurrent updates to the publicly posted version.

    17. How do recipients correct or edit pre-populated information or project information in Treasury’s Portal?

    In the event that information presented in Treasury’s Portal requires correction, recipients should email SLFRP@treasury.gov and provide the necessary edits.

    18. Is there any possibility of extension for the reporting deadlines for individual recipients?

    Generally, No. The data submitted by recipients will be used internally for oversight purposes and to fulfill Treasury’s transparency and legal obligations. Late submissions undermine the efficiency and timeliness of these processes. Recipient submissions after the reporting deadline will be considered as late, and recipients will be asked to provide a date by which the delayed reporting will be submitted so that Treasury can plan for incorporating the data. Treasury’s own reporting will highlight those recipients whose reports were not received by the deadline. If there are any changes to the overall reporting deadlines, they will be communicated to the relevant impacted recipients. 

    19. Is there a penalty for not submitting timely reports?

    A record of late reporting could lead to a finding of non-compliance, which could result in development of a corrective action plan, or other consequences.

    20. Will the data recipients submit be made publicly available?

    Yes, Treasury will make the data submitted by recipients publicly available. The content and timing of release is still under development. Treasury encourages recipients to make their data directly available through their own websites. States and territories are reminded that they need to post the Recovery Plan in their public website by the date the report is transmitted to Treasury.

    21. What is meant by Date of Award?

    The Date of Award is the day the recipient certifies the funding.

    22. When are recipients subject to the quarterly reporting?

    Recipients are required to provide quarterly reporting starting in the period funds were received and certified. Quarterly reporting is required for all quarters thereafter.

    23. In the event that something is funded/purchased using the Recovery Funds and reported, and then subsequently it is realized that the funding/purchase does not qualify for use of the Recovery Funds, can that report be amended and a correction be made?

    Yes. Recipients can make corrections to reporting to adjust for ineligible uses, and must pay for that expense using non-SLFRF funding.

    24. How should recipients report use of funds when the expense is not listed or does not fit one of the Expenditure Categories designations?

    Recipients should align the project to the best fit of Expenditure Category and use the project description to further describe the project as needed. 

    25. Should expenditures be reported on an accrual or cash basis? 

    Expenditures may be reported on a cash or accrual basis, as long as the methodology is disclosed and consistently applied. Reporting must be consistent with the definition of expenditures pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting records for compiling and reporting accurate, compliant financial data, in accordance with appropriate accounting standards and principles.

    26. Are there targets for the amount of funds that must be spent on evidence based interventions?

    Treasury’s Reporting Guidance requires recipients to report in their Recovery Plan on “the dollar amount of the total project spending that is allocated towards evidence-based interventions for each project” in certain Expenditure Categories (see list of Expenditure Categories in the Reporting Guidance appendix for details). While Treasury encourages all SLFRF recipients to invest funds in evidence-based interventions whenever possible and to increase these amounts over time, there are no targets or requirement to spend a specific amount of money on evidence-based interventions. Recipients are exempt from this requirement in cases where a program evaluation is being conducted. 

    27. What expenses should be counted as evidence-based for the purposes of reporting?

    As outlined in the Reporting Guidance, evidence-based refers to interventions with strong or moderate evidence for the purposes of SLFRF reporting. Appendix 2 of the Reporting Guidance contains additional information on the definition of strong and moderate evidence. In addition to spending funds on evidence-based interventions, Treasury also encourages all recipients to conduct evaluations to build evidence about new or innovative programs or services they are providing with SLFRF. As a reminder, SLFRF may be used by recipients to perform evaluations, build their internal evaluation capacity, or to contract with external organizations for evaluation related activities.

    28. How should evidence be considered when disbursing funds through contracts or grants?

    When sub-granting SLFR funds to third parties, recipients are encouraged to include provisions related to evidence in relevant project areas. Specifically, recipients may include provisions that ask third party recipients (or prospective recipients) of SLFR funds about the level of evidence for the programs or services that they are providing. This could consist of a requirement or preference in grant or contract solicitations that ask third party sub-grantees about whether their programs or services are evidence-based according to the definition in Appendix 2 of the Reporting Guidance. Requiring third party recipients to report on whether their programs or services are evidence-based will facilitate reporting for the Recovery Plan. 

    Please see Treasury’s Interim Final Rule for more information. Further guidance on recipient compliance and reporting responsibilities is forthcoming.

    SPENDING FOCUS

    29. What are the areas that counties can spend Recovery Funds?

    There are five primary ways that Recovery Funds can be spent:

    1. Support public health response: Fund COVID-19 mitigation efforts, medical expenses, behavioral healthcare and certain public health and safety staff
    2. Address negative economic impacts: Respond to economic harms to workers, families, small businesses, and nonprofits, or impacted industries and re-hiring of public sector workers
    3. Replace public sector revenue loss: Use funds to provide government services to the extend of the reduction in revenue experienced due to the pandemic
    4. Premium pay for essential workers: Offer additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure. Funds can be used retroactively back to January 27, 2020.
    5. Water, sewer and broadband infrastructure: Make necessary investments to improve access to clean drinking water, invest in wastewater and stormwater infrastructure and provide unserved or underserved locations with new or expanded broadband access

    The U.S. Treasury has not yet released submission instructions. NACo suggest that your county’s executive or authorized officer have this information on hand and is prepared to certify the submission once additional guidance is released.

    TIMING AND DISTRIBUTION OF FUNDS

    30. How and when will the Recovery Funds be distributed?

    The ARP directs the Treasury to distribute funds no later than 60-days after a county certifies it needs funds. On May 10, the U.S. Treasury opened the portal for requesting funds. Treasury will distribute funds directly to counties of all sizes – regardless of population.

    31. Is there a deadline to apply for funds?

    No. The Interim Final Rule requires that costs be incurred by December 31, 2024. Counties are encouraged to apply as soon as possible.

    ELIGIBLE USES

    32. How do I know if a specific use is eligible? 

    Fiscal Recovery Funds must be used in one of the four eligible use categories specified in the American Rescue Plan Act:

    1. To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; 
    2. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers; 
    3. For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
    4. To make necessary investments in water, sewer, or broadband infrastructure
    33. Are expenses that were allowed under the CARES Act Coronavirus Relief Fund also allowable under the Recovery Fund?

    Yes. However, there are three exceptions – certain restrictions on payroll costs for public health and safety employees, expenses related to issuing tax-anticipation notes are not eligible and non-federal matching requirements.

    34. What is the difference in payroll expense coverage in the CARES Act Coronavirus Relief Fund and the American Rescue Plan State and Local Fiscal Recovery Fund?

    The difference in payroll expense coverage is that the American Rescue Plan recognizes that the response to the COVID-19 public health emergency has changed and will continue to change over time. In particular, funds may be used for payroll and covered benefits expenses for public safety, public health, health care, human services, and similar employees, including first responders, to the extent that the employee’s time that is dedicated to responding to the COVID-19 public health emergency. 

    The recipient may consider a public health and safety employee to be entirely devoted to mitigating or responding to the COVID-19 public health emergency if the employee, or their operating unit or division, is primarily dedicated (e.g., more than half of the employee’s time is dedicated) to responding to the COVID-19 public health emergency.

    35. What staff are included in “public safety, public health, health care, human services and similar employees”?

    Public safety employees would include police officers (including state police officers), sheriffs and deputy sheriffs, firefighters, emergency medical responders, correctional and detention officers, and those who directly support such employees such as dispatchers and supervisory personnel.

    Public health employees would include employees involved in providing medical and other health services to patients and supervisory personnel, including medical staff assigned to schools, prisons, and other such institutions, and other support services essential for patient care (e.g., laboratory technicians, medical examiner or morgue staff) as well as employees of public health departments directly engaged in matters related to public health and related supervisory personnel.

    Human services staff include employees providing or administering social services; public benefits; child welfare services; and child, elder, or family care as well as others.

    36. Can counties use Recovery Funds to pay "back to work incentives"?

    Yes. This assistance can include job training or other efforts to accelerate rehiring and thus reduce unemployment, such as childcare assistance, assistance with transportation to and from a jobsite or interview, and incentives for newly employed workers.

    37. Can counties use Recovery Funds to cover administrative costs?

    Yes. Counties can use Recovery Funds to cover the portion of employee payroll and benefit costs corresponding to time spent on administrative work due to COVID-19 and its economic impacts. Eligible uses include, but are not limited to, costs related to distributing Recovery Funds and managing new grant programs established with the funds.

    38. May a county retain a purchased asset if bought with Recovery Funds?

    Yes, if the purchase was an eligible use of funds.

    39. Can Recovery Funds be used for non-federal matching requirements such as FEMA disaster assistance or Medicaid?

    No. Recovery Funds are subject to pre-existing limitations in other federal statutes and regulations and may not be used as non-federal match for other federal programs whose statute or regulations bar the use of federal funds to meet matching requirements.

    Specifically, Recovery Funds cannot be used to match funds for FEMA programs, unless specifically made so. Under a February 3, 2021 presidential directive, FEMA is authorized to provide 100 percent federal funding for the cost of COVID-related activities previously determined as eligible, from the beginning of the pandemic (January 27, 2020) to September 30, 2021.  In addition, the directive allows FEMA to expand activities eligible for reimbursement from January 21, 2021 until September 30, 2021.  Specifically, costs to support the safe opening and operation of eligible schools, child care facilities, health care facilities, non-congregate shelters, domestic violence shelters, and transit systems are now eligible.

    Additionally, counties may not use funds as a state match for the Clean Water Revolving Fund (CWSRF) and Drinking Water State Revolving Fund (DWSRF) due to prohibitions in utilizing federal funds as a state match in the authorizing statutes and regulations of the CWSRF and DWSRF.

    40. Can funds be used towards general infrastructure projects, such as roads and bridges?

    Counties are not allowed to use funds for general infrastructure spending outside of water, sewer and broadband investments or above the amount allocated under the revenue loss provision.

    41. How flexible are Categories 1 and 2 – public health response and negative economic impacts – when it comes to eligible uses?

    Counties have broad flexibility so long as they can demonstrate that these activities support the public health response or that recipients of the Recovery Funds have experienced economic harm from the pandemic.

    42. May counties use funds to establish a public jobs program?

    Yes. The Interim Final Rule permits a broad range of services to unemployed or underemployed workers and other individuals that suffered negative economic impacts from the pandemic. That can include public jobs programs, subsidized employment, combined education and on-the-job training programs, or job training to accelerate rehiring or address negative economic or public health impacts experienced due to a worker’s occupation or level of training. The broad range of permitted services can also include other employment supports, such as childcare assistance or assistance with transportation to and from a jobsite or interview. The Interim Final Rule includes as an eligible use re-hiring public sector staff up to the government’s level of pre-pandemic employment. “Public sector staff” would not include individuals participating in a job training or subsidized employment program administered by the recipient.

    43. How can I use CSFRF/CLFRF funds to prevent and respond to crime, and support public safety in my community?

    Below are some examples of how Fiscal Recovery Funds can be used to address public safety:

    • In all communities, recipients may use resources to rehire police officers and other public servants to restore law enforcement and courts to their pre-pandemic levels. Additionally, Funds can be used for expenses to address COVID-related court backlogs, including hiring above pre-pandemic levels, as a response to the public health emergency. See FAQ 2.19.
    • In communities where an increase in violence or increased difficulty in accessing or providing services to respond to or mitigate the effects of violence, is a result of the pandemic they may use funds to address that harm. See FAQ 4.8 for a full list of spending examples.
    • Recognizing that the pandemic exacerbated mental health and substance use disorder needs in many communities, eligible public health services include mental health and other behavioral health services, which are a critical component of a holistic public safety approach
    • Recognizing the disproportionate impact of the pandemic on certain communities, a broader range of services are eligible in those communities than would otherwise be available in communities not experiencing a pandemic-related increase in crime or gun violence. These eligible uses aim to address the pandemic’s exacerbation of public health and economic disparities and include services to address health and educational disparities, support neighborhoods and affordable housing, and promote healthy childhood environments. The Interim Final Rule provides a non-exhaustive list of eligible services in these categories.

    Please refer to FAQ 4.8 and Treasury’s Interim Final Rule for additional information.

    44. In order to receive and use Fiscal Recovery Funds, must a recipient government maintain a declaration of emergency relating to COVID-19?

    No. Neither the statute establishing the CSFRF/CLFRF nor the Interim Final Rule requires recipients to maintain a local declaration of emergency relating to COVID-19

    45. The Interim Final Rule states that “assistance or aid to individuals or businesses that did not experience a negative economic impact from the public health emergency would not be an eligible use under this category.” Are recipients required to demonstrate that each individual or business experienced a negative economic impact for that individual or business to receive assistance?

    Not necessarily. The Interim Final Rule allows recipients to demonstrate a negative economic impact on a population or group and to provide assistance to households or businesses that fall within that population or group. In such cases, the recipient need only demonstrate that the household or business is within the population or group that experienced a negative economic impact. This includes assistance to households and small businesses as well as all individuals living within a Qualified Census Tract (QCT). For more information, please see FAQ 2.17.

    46. Would investments in improving outdoor spaces (e.g. parks) be an eligible use of funds as a response to the public health emergency and/or its negative economic impacts?

    There are multiple ways that investments in improving outdoor spaces could qualify as eligible uses:

    1. Services provided to Qualified Census Tracts (QCTs) such as invstments in parks, public plazas, and other public outdoor recreation spaces that may be responsive to the needs of disproportionately impacted communities by promoting healthier living environments and outdoor recreation and socialization to mitigate the spread of COVID-19.
    2. Recipients may provide assistance to small businesses in all communities. Assistance to small businesses could include support to enhance outdoor spaces for COVID-19 mitigation (e.g., restaurant patios) or to improve the built environment of the neighborhood (e.g., façade improvements).
    3. Many governments saw significantly increased use of parks during the pandemic that resulted in damage or increased maintenance needs. The Interim Final Rule recognizes that “decrease[s to] a state or local government’s ability to effectively administer services” can constitute a negative economic impact of the pandemic

    For more information, see FAQ 2.18.

    47. Would expenses to address a COVID-related backlog in court cases be an eligible use of funds as a response to the public health emergency?

    The Interim Final Rule recognizes that “decrease[s to] a state or local government’s ability to effectively administer services,” such as cuts to public sector staffing levels, can constitute a negative economic impact of the pandemic. During the COVID-19 public health emergency, many courts were unable to operate safely during the pandemic and, as a result, now face significant backlogs. Court backlogs resulting from inability of courts to safely operate during the COVID-19 pandemic decreased the government’s ability to administer services. Therefore, steps to reduce these backlogs, such as implementing COVID-19 safety measures to facilitate court operations, hiring additional court staff or attorneys to increase speed of case resolution, and other expenses to expedite case resolution are eligible uses.

    48. Can funds be used to assist small business startups as a response to the negative economic impact of COVID-19?

    As discussed in the Interim Final Rule, recipients may provide assistance to small businesses that responds to the negative economic impacts of COVID-19. Treasury acknowledges a range of potential circumstances in which assisting small business startups could be responsive to the negative economic impacts of COVID-19, including for small businesses and individuals seeking to start small businesses after the start of the COVID-19 public health emergency. For example:

    • A recipient could assist small business startups with additional costs associated with COVID-19 mitigation tactics (e.g., barriers or partitions; enhanced cleaning; or physical plant changes to enable greater use of outdoor space).
    • A recipient could identify and respond to a negative economic impact of COVID19 on new small business startups; for example, if it could be shown that small business startups in a locality were facing greater difficult accessing credit than prior to the pandemic, faced increased costs to starting the business due to the pandemic, or that the small business had lost expected startup capital due to the pandemic.
    • The Interim Final Rule also discusses eligible uses that provide support for individuals who have experienced a negative economic impact from the COVID19 public health emergency, including uses that provide job training for unemployed individuals. These initiatives also may support small business startups and individuals seeking to start small businesses. 

    REVENUE LOSS

    49. How is revenue loss defined?

    Recovery Funds may be used to replace revenue loss relative to the revenue collected in the full fiscal year prior to the COVID-19 public health emergency (January 27, 2020).

    50. How do I know if a certain type of revenue should be counted for the purpose of computing revenue loss?

    Recipients should refer to the definition of “General Revenue” included in the Interim Final Rule. If a recipient is unsure whether a particular revenue source is included in the Interim Final Rule’s definition of “General Revenue,” the recipient may consider the classification and instructions used to complete the Census Bureau’s Annual Survey.

    For example, parking fees would be classified as a Current Charge for the purpose of the Census Bureau’s Annual Survey, and the Interim Final Rule’s concept of “General Revenue” includes all Current Charges. Therefore, parking fees would be included in the Interim Final Rule’s concept of “General Revenue.” 

    51. How do counties calculate revenue loss?
    1. Identify revenues collected in the most recent full fiscal year prior to the public health emergency (i.e. January 27, 2020), called the base year revenue.  In calculating revenue, recipients should sum across all revenue streams covered as general revenue
    2. Estimated counterfactual revenue, which is equal to base year revenue:

    [(1 + growth adjustment)^(n/12)], where n is the number of months elapsed since the end of the base year to the calculation date, and growth adjustment is the greater of 4.1 percent and the recipient’s average annual revenue growth in the three full fiscal years prior to the COVID-19 public health emergency

    1. Identify actual revenue, which equals revenues collected over the past 12 months of the calculation date
    2. The extent of the reduction in revenue is equal to counterfactual revenue less than actual revenue.  If actual revenue exceeds counterfactual revenue, the extent of the reduction in revenue is set to zero for that calculation date
    52. What can a county do with its funding from revenue loss (I.e. what does “government services” mean)?

    Counties can spend revenue loss funding on a variety of government services. Government services can include, but are not limited to, maintenance or pay-go funded building of infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services.

    However, expenses associated with obligations under instruments evidencing financial indebtedness for borrowed money would not be considered the provision of government services, as these financing expenses do not directly provide services or aid to citizens. Specifically, government services would not include interest or principal on any outstanding debt instrument, including, for example, short-term revenue or tax anticipation notes, or fees or issuance costs associated with the issuance of new debt.

    Government services would not include satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt restructuring in a judicial, administrative, or regulatory proceeding, except if the judgment or settlement required the provision of government services. That is, satisfaction of a settlement or judgment itself is not a government service, unless the settlement required the provision of government services. In addition, replenishing financial reserves (e.g., rainy day or other reserve funds) would not be considered provision of a government service, since such expenses do not directly relate to the provision of government services.

    53. In calculating revenue loss, are counties required to use audited financials?

    Where audited data is not available, recipients are not required to obtain audited data. Treasury expects all information submitted to be complete and accurate. See 31 CFR 35.4(c).

    54. In calculating revenue loss, should counties use their own data, or Census data?

    Recipients should use their own data sources to calculate general revenue, and do not need to rely on published revenue data from the Census Bureau. Treasury acknowledges that due to differences in timing, data sources, and definitions, recipients’ self-reported general revenue figures may differ somewhat from those published by the Census Bureau.

    55. Should counties calculate revenue loss on a cash basis or an accrual basis?

    Counties may provide data on a cash, accrual, or modified accrual basis, provided that recipients are consistent in their choice of methodology throughout the covered period and until reporting is no longer required.

    56. Once a county has identified a reduction in revenue, how will Treasury track use of funds for the provision of government services?
    The ARPA establishes four categories of eligible uses and further restrictions on the use of funds to ensure that Fiscal Recovery Funds are used within the four eligible use categories. The Interim Final Rule implements these restrictions, including the scope of the eligible use categories and further restrictions on tax cuts and deposits into pensions. Reporting requirements will align with this structure.
     
    Consistent with the broad latitude provided to recipients to use funds for government services to the extent of the reduction in revenue, recipients will be required to submit a description of services provided. As discussed in IFR, these services can include a broad range of services but may not be used directly for pension deposits, contributions to reserve funds, or debt service. Recipients may use sources of funding other than Fiscal Recovery Funds to make deposits to pension funds, contribute to reserve funds, and pay debt service, including during the period of performance for the Fiscal Recovery Fund award.
     
    For recipients using Fiscal Recovery Funds to provide government services to the extent of reduction in revenue, the description of government services reported to Treasury may be narrative or in another form, and recipients are encouraged to report based on their existing budget processes and to minimize administrative burden. For example, a recipient with $100 in revenue replacement funds available could indicate that $50 were used for personnel costs and $50 were used for pay-go building of sidewalk infrastructure.
     
    In addition to describing the government services provided to the extent of reduction in revenue, all recipients will also be required to indicate that Fiscal Recovery Funds are not used directly to make a deposit in a pension fund. Further, recipients subject to the tax offset provision will be required to provide information necessary to implement the Interim Final Rule, as described in the Interim Final Rule. Treasury does not anticipate requiring other types of reporting or recordkeeping on spending in pensions, debt service, or contributions to reserve funds.
     
    These requirements will be further detailed in forthcoming guidance on reporting requirements for the Fiscal Recovery Funds.
    57. In identifying intergovernmental revenue for the purpose of calculating General Revenue, should recipients exclude all federal funding, or just federal funding related to the COVID-19 response? How should local governments treat federal funds that are passed through states or other entities, or federal funds that are intermingled with other funds? 

    In calculating General Revenue, recipients should exclude all intergovernmental transfers from the federal government. This includes, but is not limited to, federal transfers made via a state to a locality pursuant to the Coronavirus Relief Fund or Fiscal Recovery Funds. To the extent federal funds are passed through states or other entities or intermingled with other funds, recipients should attempt to identify and exclude the federal portion of those funds from the calculation of General Revenue on a best-efforts basis.

    PREMIUM PAY

    58. Who is eligible for premium pay?

    Workers that are eligible for premium pay include:

    • Any work performed by an employee of the state, local or tribal government
    • Staff at nursing homes, hospitals, and home care settings
    • Workers at farms, food production facilities, grocery stores, and restaurants
    • Janitors and sanitation workers
    • Truck drivers, transit staff and warehouse workers
    • Public health and safety staff
    • Childcare workers, educators and other school staff
    • Social service and human services staff
    59. How is essential work defined?

    Essential work is work involving regular in-person interactions or regular physical handling of items that are also handled by others. An individual who teleworked from a residence may not receive premium pay.

    60. Can counties provide grants to third-party employers?

    Yes. Third-party employers of essential workers are eligible. Third-party contractors who employ essential workers are also eligible for grants to provide premium pay. These decisions are at the discretion of the county. If a county does provide a grant to a third-party employer, additional reporting requirements are required.

    61. Can premium pay be made retroactively?

    Yes. Premium pay may be provided retroactively for work performed at any time since the start of the covid-19 public health emergency (January 27, 2020), where those workers have yet to be compensated adequately for work previously performed.

    WATER, SEWER AND BROADBAND INFRASTRUCTURE

    62. What are eligible water and sewer projects?

    The Interim Rule aligns eligible water and sewer projects with those that are eligible to receive financial assistance from the Environmental Protection Agency’s (EPA) Clean Water State Revolving Fund and Drinking Water State Revolving Fund.

    The types of projects eligible for CWSRF include:

    • Projects to construct, improve, and repair wastewater treatment plants
    • Control non-point sources of pollution
    • Improve resilience of infrastructure to severe weather events
    • Create green infrastructure, and
    • Protect waterbodies from pollution.

    The types of DWSRF projects that are eligible:

    • Assist communities in making water infrastructure capital improvements, including the installation and replacement of failing treatment and distribution systems.In administering these programs, States must give priority to projects that:
      • Ensure compliance with applicable health and environmental safety requirements
      • Address the most serious risks to human health, and
      • Assist systems most in need on a per household basis according to State affordability criteria.
    63. What type of broadband projects are eligible?

    Eligible projects are expected to meet or exceed symmetrical upload and download speeds of 100 Mbps. However, in instances where required speeds cannot be achieved (due of the geography, topography, or excessive costs), the affected project would be expected to meet or exceed 100 Mbps download with a minimum of 20 Mbps upload with scalability to a symmetrical minimum of 100 Mbps.

    64. For broadband infrastructure investments, what does the requirement that infrastructure “be designed to” provide service to unserved or underserved households and businesses mean?

    Designing infrastructure investments to provide service to unserved or underserved households or businesses means prioritizing deployment of infrastructure that will bring service to households or businesses that are not currently serviced by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed. To meet this requirement, counties should use funds to deploy broadband infrastructure projects whose objective is to provide service to unserved or underserved households or businesses. These unserved or underserved households or businesses do not need to be the only ones in the service area funded by the project.

    65. For broadband infrastructure to provide service to “unserved or underserved households or businesses,” must every house or business in the service area be unserved or underserved?

    No. It suffices that an objective of the project is to provide service to unserved or underserved households or businesses. Doing so may involve a holistic approach that provides service to a wider area in order, for example, to make the ongoing service of unserved or underserved households or businesses within the service area economical. Unserved or underserved households or businesses need not be the only households or businesses in the service area receiving funds.

    66. May counties use payments from the Funds for “middle mile” broadband projects?

    Yes. Under the Interim Final Rule, counties may use payments from the Funds for “middle-mile projects,” but Treasury encourages counties to focus on projects that will achieve last-mile connections—whether by focusing on funding last-mile projects or by ensuring that funded middle-mile projects have potential or partnered last-mile networks that could or would leverage the middle-mile network.

    67. For broadband infrastructure investments, what does the requirement to “reliably” meet or exceed a broadband speed threshold mean?

    In the Interim Final Rule (IRF), the term “reliably” is used in two places: to identify areas that are eligible to be the subject of broadband infrastructure investments and to identify expectations for acceptable service levels for broadband investments funded by the Coronavirus State and Local Fiscal Recovery Funds.  In particular: 

    • The IFR defines “unserved or underserved households or businesses” to mean one or more households or businesses that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speeds and 3 Mbps of upload speeds.
    • The IFR provides that a recipient may use Coronavirus State and Local Fiscal Recovery Funds to make investments in broadband infrastructure that are designed to provide service to unserved or underserved households or businesses and that are designed to, upon completion:  
      • reliably meet or exceed symmetrical 100 Mbps download speed and upload speeds; 
      • or in limited cases, reliably meet or exceed 100 Mbps download speed and between 20 Mbps and 100 Mbps upload speed and be scalable to a minimum of 100 Mbps download and upload speeds.  

    The use of “reliably” in the IFR provides counties with significant discretion to assess whether the households and businesses in the area to be served by a project have access to wireline broadband service that can actually and consistently meet the specified thresholds of at least 25Mbps/3Mbps—i.e., to consider the actual experience of current wireline broadband customers that subscribe to services at or above the 25 Mbps/3 Mbps threshold.  Whether there is a provider serving the area that advertises or otherwise claims to offer speeds that meet the 25 Mbps download and 3 Mbps upload speed thresholds is not dispositive.   

    When making these assessments, counties may choose to consider any available data, including but not limited to documentation of existing service performance, federal and/or state-collected broadband data, user speed test results, interviews with residents and business owners, and any other information they deem relevant. In evaluating such data, recipients may take into account a variety of factors, including whether users actually receive service at or above the speed thresholds at all hours of the day, whether factors other than speed such as latency or jitter, or deterioration of the existing connections make the user experience unreliable, and whether the existing service is being delivered by legacy technologies, such as copper telephone lines (typically using Digital Subscriber Line technology) or early versions of cable system technology (DOCSIS 2.0 or earlier).  

    The IFR also provides counties with significant discretion as to how they will assess whether the project itself has been designed to provide households and businesses with broadband services that meet, or even exceed, the speed thresholds provided in the rule.   

    68. How do I know if a water, sewer, or broadband project is an eligibile use of funds? Do I need pre-approval?

    Counties do not need approval from Treasury to determine whether an investment in a water, sewer, or broadband project is eligible under CSFRF/CLFRF. Each county should review the Interim Final Rule (IFR), along with the preamble to the Interim Final Rule, in order to make its own assessment of whether its intended project meets the eligibility criteria in the IFR. A recipient that makes its own determination that a project meets the eligibility criteria as outlined in the IFR may pursue the project as a CSFRF/CLFRF project without pre-approval from Treasury. Counties do not need state approval to determine that a project is eligible under CSFRF/CLFRF. However, counties should be cognizant of other federal or state laws or regulations that may apply to construction projects independent of CSFRF/CLFRF funding conditions and that may require pre-approval.

    For water and sewer projects, the IFR refers to the EPA Drinking Water and Clean Water State Revolving Funds (SRFs) for the categories of projects and activities that are eligible for funding. Recipients should look at the relevant federal statutes, regulations, and guidance issued by the EPA to determine whether a water or sewer project is eligible. Of note, the IFR does not incorporate any other requirements contained in the federal statutes governing the SRFs or any conditions or requirements that individual states may place on their use of SRFs.

    69. May recipients use Funds for pre-project development for eligible water, sewer, and broadband projects?

    Yes. To determine whether Funds can be used on pre-project development for an eligible water or sewer project, recipients should consult whether the pre-project development use or cost is eligible under the Drinking Water and Clean Water State Revolving Funds (CWSRF and DWSRF, respectively). Generally, the CWSRF and DWSRF often allow for pre-project development costs that are tied to an eligible project, as well as those that are reasonably expected to lead to a project. For example, the DWSRF allows for planning and evaluations uses, as well as numerous pre-project development costs, including costs associated with obtaining project authorization, planning and design, and project start-up like training and warranty for equipment. Likewise, the CWSRF allows for broad pre-project development, including planning and assessment activities, such as cost and effectiveness analyses, water/energy audits and conservation plans, and capital improvement plans.

    Similarly, pre-project development uses and costs for broadband projects should be tied to an eligible broadband project or reasonably expected to lead to such a project. For example, pre-project costs associated with planning and engineering for an eligible broadband infrastructure build-out is considered an eligible use of funds, as well as technical assistance and evaluations that would reasonably be expected to lead to commencement of an eligible project (e.g., broadband mapping for the purposes of finding an eligible area for investment).

    All funds must be obligated within the statutory period between March 3, 2021 and December 31, 2024, and expended to cover such obligations by December 31, 2026.

    INELIGIBLE USES

    70. Are there any specific ways that counties cannot use the funds?

    Yes. There are two specific restrictions outlined in the Interim Rule:

    • Pension funds: Recipients are not allowed to make an extraordinary deposit to a pension fund. However, recipients may use funds for routine payroll contributions to pensions of employees whose wages and salaries are an eligible use.
    • Reduce net tax revenue (states and territories): States and territories are not allowed to use funding to reduce net tax revenue due to a change in law from March 3, 2021, through the last day of the fiscal year in which the funds provided have been spent.

    Other restrictions include:

    • Deposits into rainy day funds and reserves
    • General infrastructure spending outside of water, sewer and broadband investments or above the amount allocated under the revenue loss provision
    • Legal settlements or judgements
    • Funding debt services
    • Using funds for non-federal match including CWSRF, DWSRF and Medicaid
    71. Do restrictions on using Coronavirus State and Local Fiscal Recovery Funds to cover costs incurred beginning on March 3, 2021 apply to costs incurred by the recipient (e.g., a State, local, territorial, or Tribal government) or to costs incurred by households, businesses, and individuals benefiting from assistance provided using Coronavirus State and Local Fiscal Recovery Funds?

    The Interim Final Rule permits funds to be used to cover costs incurred beginning on March 3, 2021. This limitation applies to costs incurred by the recipient (i.e., the state, local, territorial, or Tribal government receiving funds). However, recipients may use Coronavirus State and Local Fiscal Recovery Funds to provide assistance to households, businesses, and individuals within the eligible use categories described in the Interim Final Rule for economic harms experienced by those households, businesses, and individuals prior to March 3, 2021. For example,

    • Public Health/Negative Economic Impacts – Recipients may use Coronavirus State and Local Fiscal Recovery Funds to provide assistance to households – such as rent, mortgage, or utility assistance – for economic harms experienced or costs incurred by the household prior to March 3, 2021 (e.g., rental arrears from preceding months), provided that the cost of providing assistance to the household was not incurred by the recipient prior to March 3, 2021.
    • Premium Pay – Recipients may provide premium pay retrospectively for work performed at any time since the start of the COVID-19 public health emergency. Such premium pay must be “in addition to” wages and remuneration already received and the obligation to provide such pay must not have been incurred by the recipient prior to March 3, 2021.
    • Revenue Loss – The Interim Final Rule gives recipients broad latitude to use funds for the provision of government services to the extent of reduction in revenue. The calculation of lost revenue begins with the recipient’s revenue in the last full fiscal year prior to the COVID-19 public health emergency and includes the 12-month period ending December 31, 2020. However, use of funds for government services must be forward looking for costs incurred by the recipient after March 3, 2021.
    • Investments in Water, Sewer, and Broadband – Recipients may use Coronavirus State and Local Fiscal Recovery Funds to make necessary investments in water, sewer, and broadband. See FAQ Section 6. Recipients may use Coronavirus State and Local Fiscal Recovery Funds to cover costs incurred for eligible projects planned or started prior to March 3, 2021, provided that the project costs covered by the Coronavirus State and Local Fiscal Recovery Funds were incurred after March 3, 2021.
    72. May counties use Fiscal Recovery Funds to fund Other Post-Employment Benefits (OPEB)?

    OPEB refers to benefits other than pensions (see, e.g., Governmental Accounting Standards Board, “Other Post-Employment Benefits”). Treasury has determined that Sections 602(c)(2)(B) and 603(c)(2), which refer only to pensions, do not prohibit CSFRF/CLFRF recipients from funding OPEB. Recipients of either the CSFRF/CLFRF may use funds for eligible uses, and a recipient seeking to use CSFRF/CLFRF funds for OPEB contributions would need to justify those contributions under one of the four eligible use categories.

     

    QUESTIONS?

    Have a question not answered here? NACo staff are here to assist. Click the link below to ask a question.

    ASK A QUESTION
    NACo has created FAQs to help answer some common questions about the Recovery Fund
    2021-08-16
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