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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 January 6, the U.S. Department of Treasury (Treasury) released the Final Rule and an Overview of the Final Rule document for the Coronavirus State and Local Fiscal Recovery Fund (Recovery Fund), 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. 

    Key changes between the Final Rule and the Interim Final Rule included new flexibility to use Recovery Funds to invest in broadband infrastructure, services and programs to contain and mitigate the spread of COVID-19, including capital investments in public facilities, and investments in housing and neighborhoods, all of which counties advocated for. This specific interim rule and related guidance covers the $65.1 billion in direct federal aid to America’s counties. 

    Since the Recovery Fund was established, NACo has worked closely with Treasury to ensure county recommendations and priorities are included in the Final Rule.

    Please note that the Treasury's Office of Recovery Programs has suspended support activities as of October, 2022. Treasury has created a self-service portal for assisting Recovery Fund recipients that can be found here. 

    REVENUE LOSS

    1. What is revenue loss?

    One eligible use of Recovery Funds is replacing lost public sector revenue. Counties can use Recovery Funds to pay for government services in an amount equal to the revenue loss experienced by the recipient due to COVID-19. The revenue loss category is the most flexible expenditure category, allowing counties to spend Recovery Funds on a broad set of government services.

    2. How can counties determine their revenue loss?

    There are two methods counties can use for determining their revenue loss. First, counties may elect to take a “standard allowance” of $10 million to spend on government services. Treasury presumes that all counties lost up to $10 million in revenue due to COVID-19 based on analysis of average revenue loss across localities. Counties may choose this $10 million standard allowance instead of calculating revenue loss using Treasury’s formula.

    Second, counties may calculate their actual revenue loss according to Treasury’s formula. This formula involves counties calculating their revenue collected in the most recent full fiscal year prior to the COVID-19 pandemic and then comparing actual revenue over the period of performance to a counterfactual amount of revenue if the COVID-19 pandemic had not occurred. You can read more about calculating revenue loss here.

    3. Can counties claim the standard allowance even if they have an allocation of under $10 million?

    Yes. The standard allowance is available to all counties, including ones with allocations under $10 million. Counties with allocations under $10 million may spend their entire allocation on government services, but they may not spend more than their allocation.

    4. Can counties claim the standard allowance even if they do not have any revenue loss based on Treasury’s formula?

    Yes. The standard allowance is available to all counties, irrespective of actual revenue loss. Counties can choose the $10 million standard allowance even if the revenue loss calculated through the Treasury formula is less than $10 million.

    5. What are the benefits of claiming the standard allowance instead of using the Treasury formula?

    Claiming the standard allowance minimizes counties’ administrative burden by allowing them to avoid calculating their revenue loss. For many small counties whose actual revenue loss is less than $10 million based on the Treasury formula, the standard allowance provides additional flexibility to spend on government services. Larger counties may wish to forego the standard allowance because their revenue loss based on the formula may exceed $10 million.

    6. Does a recipient need to calculate or provide proof of its revenue loss to use Recovery Funds for government services?

    Counties that take the $10 million standard allowance do not need to provide proof of revenue loss to use Recovery Funds for government services. Counties that calculate their revenue loss using the Treasury formula will need to report more detailed information about their actual and projected revenue.

    7. Do counties need to demonstrate that reduction in revenue is due to the COVID-19 public health emergency?

    No. The Final Rule presumes that any revenue loss a county experiences is a result of the COVID-19 pandemic. Neither counties that choose the standard allowance nor counties that calculate their revenue loss using the Treasury formula need to provide special data demonstrating that revenue loss was specifically caused by COVID-19.

    8. What are “government services”?

    Counties can use funds spent in the revenue loss category on any traditional government service. This is the most flexible spending category, and Treasury takes a broad view of what constitutes a government service. The Final Rule defines “government services” as any service provided by a government.

    Examples of eligible government services include the construction of schools and hospitals; road building and maintenance, and other infrastructure; health services; general government administration, staff, and administrative facilities; environmental remediation; and the provisioning of police, fire, and other public safety services (including the purchase of fire trucks and police vehicles).

    Generally, the only ineligible uses under the revenue loss category are ones that the Final Rule explicitly notes are ineligible. These restrictions apply to all uses of Recovery Funds, not just the revenue loss category.

    9. 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 Final Rule, which is derived from the components reported under “General Revenue from Own Sources” in the Census Bureau’s Annual Survey of State and Local Government Finances. General revenue includes money that is derived from tax revenue, current charges, and miscellaneous general revenue. It excludes correcting transactions such as refunds and proceeds from issuance of debt, as well as the sale of investments, agency or private trust transactions, and intergovernmental transfers from the federal government.

    The Final Rule made two additional changes to the definition of general revenue. First, Treasury has adjusted the definition to allow recipients that operate utilities as part of their own government to include revenue from these utilities in their revenue loss calculation. Second, Treasury has also added liquor store revenue to the definition of general revenue.

    10. 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) for more information.

    11. Should counties calculate revenue loss on a calendar year basis or fiscal year basis?

    Counties have the flexibility to choose whether to calculate revenue loss on a fiscal year or calendar year basis, though they must choose a consistent basis for revenue loss calculations throughout the period of performance.

    12. 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.

    13. 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.

    14. In identifying intergovernmental revenue for the purpose of calculating general revenue, should counties exclude all federal funding, or just federal funding related to the COVID-19 response?

    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 Fiscal Recovery Fund.

    15. Do counties need to exclude federal funds that are passed through states or other entities, or federal funds that are intermingled with other funds?

    Yes. Counties should attempt to identify and exclude the federal portion of those funds from the calculation of general revenue on a best-efforts basis.

    16. Should counties calculate revenue loss on an entity-wide basis or on a source-by-source basis (e.g., property tax, income tax, sales tax, etc.)?

    Counties should calculate revenue on an entity-wide basis. Treasury presumes that this approach minimizes counties’ administrative burden and provides greater consistency between recipients, who may vary in methodology used to calculate source-by-source revenue.

    17. How should recipients that receive multiple allocations (e.g., a city and a county consolidated government) calculate their revenue loss?

    Recipients should determine revenue loss only once as a combined entity. If the entity wants to elect the standard allowance, it can only claim up to a total of $10 million against all its awards. If the entity elects to calculate its revenue using Treasury’s formula, it must do so on a combined basis.

    18. If a project is eligible under another expenditure category, can counties list the project under revenue loss?

    All projects that would be eligible under another expenditure category are also eligible under the revenue loss category because those uses are also government services. The revenue loss category allows greater flexibility and more streamlined reporting requirements than other eligible use categories, so counties have broad leeway to determine how to spend funds under this category.

    ELIGIBLE USES (GENERAL)

    1. What types of uses are eligible?

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

    A. 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;

    B. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;

    C. 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 OR up to a standard allowance of $10 million; and

    D. To make necessary investments in water, sewer, or broadband infrastructure

    2. What types of uses are responsive to the public health impacts of COVID-19?

    There are four general types of responses to the pandemic’s public health impacts:

    A. COVID-19 mitigation and prevention: Recovery Funds may be used to provide services to mitigate or prevent the spread of COVID-19, such as vaccination or testing programs.

    B. Medical expenses: counties may cover the medical costs that individuals or medical providers incurred due to the pandemic.

    C. Behavioral health care programs: counties can use Recovery Funds to provide mental health, substance abuse, or other behavioral health services.

    D. Preventing and responding to violence: these uses include community violence intervention programs and programs to enforce law enforcement response to gun violence.

    3. What types of uses are responsive to the negative economic impacts of the pandemic?

    Counties can provide assistance to individuals, households, communities, small businesses, nonprofits, and industries that were negatively impacted by the pandemic. Eligible uses to individuals, households, and communities include cash and food assistance, paid sick leave programs, and programs to support long-term housing security. Eligible uses to small businesses, nonprofits, and industries include grants to mitigate financial hardship and technical assistance.

    4. What is the difference between someone who was “impacted” and someone who was “disproportionately impacted” by the pandemic?

    Impacted individuals, households, communities, small businesses, and nonprofits experienced the general, broad-based impacts of the pandemic. Disproportionately impacted individuals, households, communities, small businesses, and nonprofits experienced meaningfully more significant impacts, often due to underlying disparities. Treasury permits counties to provide additional assistance to those that were disproportionately impacted by the pandemic’s impacts. Eligible uses for disproportionately impacted groups include uses that are designed to reduce the effects of underlying disparities, such as rehabilitation of vacant properties in disproportionately impacted communities or grants for startups for disproportionately impacted small businesses.

    5. Can counties identify additional groups having been impacted or disproportionately impacted by the pandemic?

    Yes. Treasury presumes that specific groups were impacted by the pandemic, but counties can designate additional groups as being impacted or disproportionately impacted. Counties should ensure that the groups they identify are specific enough for a proposed response to appropriately respond to the identified harm. Larger, less-specific groups are less likely to have experienced similar harms that counties can address through Recovery Fund investments.

    When designating groups as disproportionately impacted, counties need additional research to prove that the group experienced more severe impacts from the pandemic. Counties can use academic research, government publications, or analysis of their own data sources. When quantitative data is unavailable, counties can use qualitative research such as resident interviews or statements from relevant state and local agencies.

    6. Can counties use Recovery Funds to provide direct cash transfers to impacted households?

    Yes. Cash transfers are an enumerated eligible use in the Final Rule. Such transfers must be proportional to the scale of the economic harm they are meant to address.

    7. Can counties use Recovery Funds to replenish their unemployment trust funds?

    Counties may only replenish the difference between the balance in their unemployment insurance trust fund as of January 27, 2020 and the balance as of May 17, 2021, plus the principal amount outstanding as of May 17, 2021 on any advances received under Title XII of the Social Security Act between January 27, 2020 and May 17, 2021. Counties can also use Recovery Funds to pay interest due on Title XII advances.

    If counties use Recovery Funds for either purpose, they may not change the computation method governing unemployment compensation in a way that reduces the benefits available to unemployed workers.

    8. Can counties use Recovery Funds to reimburse costs they incurred in responding to the impacts of COVID-19 prior to the passage of the ARPA?

    No. The Final Rule takes a forward-looking approach to expenditure of Fiscal Recovery Funds. Counties may only use Recovery Funds to cover costs incurred since March 3, 2021.

    9. Can counties use Recovery Funds for general economic development when responding to the economic impacts of COVID-19?

    Generally, no. County responses to the economic impacts of COVID-19 must be related and proportional to a specific harm. While economic development may improve a jurisdiction’s economy, responses to the economic impacts of COVID-19 must be tailored to specific harms that the jurisdiction experienced.

    10. Can counties use funds to invest in affordable housing?

    Yes. Development, repair, and operation of affordable housing services is an enumerated eligible use to respond to the pandemic’s negative economic impacts.

    Like all uses of funds designed to respond to the pandemic’s economic impacts, affordable housing projects must be related and reasonably proportional to a specific harm caused by the pandemic. Treasury presumes that affordable housing projects meet these criteria if they increase the supply of long-term affordable housing units for households that experienced the impacts of the pandemic.

    To simplify the administration of Recovery Funds for affordable housing, Treasury has created two presumptively eligible use categories. If a project fits within either of these presumptions, Treasury will presume that the project is eligible.

    Presumption One: Treasury will presume that an affordable housing project is an eligible use of Fiscal Recovery Funds if it is eligible under any of the following federal housing programs:

    • The National Housing Trust Fund (HTF, administered by HUD);
    • The Home Investment Partnerships Program (HOME, administered by HUD);
    • The Low-Income Housing Tax Credit (administered by Treasury);
    • The Public Housing Capital Fund (administered by HUD);
    • Section 202 Supportive Housing for the Elderly Program and Section 811 Supportive Housing for Persons with Disabilities Program (administered by HUD);
    • Project-Based Rental Assistance (PBRA) (administered by HUD); and
    • Multifamily Preservation & Revitalization program (administered by USDA).

    If counties use Recovery Funds to invest in affordable housing under one of these federal programs, counties must ensure that the project complies with the program’s resident income restrictions, period of affordability and related covenant requirements for assisted units, tenant protections, and housing quality standards.

    Presumption Two: Treasury will presume that an affordable housing project is an eligible use of Recovery Funds if the unit has a maximum income of 65 percent of area median income imposed through an enforceable legal mechanism for at least 20 years. Counties can use Recovery Funds for mixed-income housing projects, but the share of Recovery Funds cannot exceed the costs attributable to units limited for households at or below 65 percent of area median income. In other words, if 15 percent of a project’s total development costs are attributable to units for families at or below 65 percent of area median income, a county could use Recovery Funds for up to 15 percent of the project’s development costs.

    Additional Eligible Uses: Other affordable housing projects may be eligible uses of Recovery Funds if they are related and reasonably proportional responses to the negative economic impacts of COVID-19. For instance, elevated housing prices in local rental markets may expose households above 65 percent of area median income to the impacts of the pandemic. Counties may be able to fund units for these populations as a response to the economic impacts of the pandemic.

    11. 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 as well as assistance to unemployed workers seeking to start small businesses.

    12. How can counties use Recovery Funds for the installation of ventilation systems in public facilities?

    Ventilation improvements are an eligible use of Recovery Funds because they reduce the concentration and risk of exposure to aerosols, thus reducing the likelihood of infection with COVID-19. Eligible projects include assessing current HVAC systems, updating HVAC systems, updating air filters, installing functional windows for improved ventilation, repairing windows and doors, installing in-room air cleaning devices, and more.

    13. When are capital expenditures eligible uses of Recovery Funds?

    Capital expenditures must be a related and reasonably proportional response to economic or public health impacts of COVID-19. Treasury presumes that capital expenditures projects that cost less than $1 million qualify are eligible uses if they respond to a specific public health or economic impact. If the project costs at least $1 million, the county will need to create a written justification explaining why the scale of the project is necessary. If the project costs at least $10 million or is not an enumerated eligible use, the county will need to submit the written justification to Treasury as part of regular reporting.

    Treasury also presumes that certain types of capital expenditures projects are generally ineligible. Construction of new correctional facilities to respond to increased crime, construction of new congregate facilities to decrease the spread of COVID-19, and construction of capital projects for general economic development purposes are all presumably ineligible capital projects.

    14. What type of information is necessary in a written justification?

    Written justifications have three major components. First, they require a description of the harm being addressed and why the harm is attributable to or exacerbated by the pandemic. Second, they require an explanation of why a capital expenditure is appropriate (i.e., why existing equipment and facilities are insufficient). Third, they require a comparison of the proposed project to other alternative expenditures and a demonstration that the proposed option is superior.

    15. How can a county use Recovery Funds to improve public sector capacity?

    There are three main categories of bolstering public sector capacity:

    A. Counties can use Recovery Funds to pay for the salaries and covered benefits of public safety, public health, health care, human services, and similar employees for the portion of their time spent responding to COVID-19.

    B. Counties can provide a broader set of services to support public sector employment, including increasing its number of budgeted full-time employees to 7.5 percent above its pre-pandemic baseline; maintaining current compensation levels to avoid layoffs; and providing reasonable worker retention incentives.

    C. Counties can use Recovery Funds to improve the efficacy of public health and economic programs, such as investing in technology infrastructure to improve government IT systems, funding data analysis resources, and engaging in community outreach and engagement.

    16. 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.

    17. What types of retention incentives can counties provide?

    Retention incentives should be narrowly tailored to counties’ need to persuade workers to remain with their current employer. Counties must be able to support their conclusion that employees were likely to leave their current positions in the absence of retention incentives.

    Retention incentives must also be entirely additive to an employee’s salary. They cannot exceed incentives traditionally offered by the county or compensation that alternative employers may offer. Treasury will presume that retention incentives that are less than 25 percent of an individual’s base pay rate, or less than 10 percent for a group of employees, are reasonably proportional to the need to maintain employees.

    18. How can counties use Recovery Funds to invest in their public sector workforce when the county government is not the direct employer?

    When the direct employer of a public sector worker is not the county government, counties can transfer funds to the direct employer to cover payroll, benefits, and other forms of public sector support. In these instances, the direct employer would be a subrecipient of Recovery Funds. Counties can count these employees as part of the total number of employees for the purpose of calculating their pre-pandemic baseline of full-time employees.

    19. If a use of Recovery Funds is not explicitly enumerated as an eligible use in the Final Rule, is it prohibited?

    No. The Final Rule’s list of enumerated uses is not exhaustive. The Final Rule gives counties broader flexibility to identify eligible uses of Recovery Funds as long as they comply with all requirements listed in the Final Rule.

    20. Are expenses that were allowed under the CARES Act Coronavirus Relief Fund also allowable under the Recovery Fund?

    Yes, with three exceptions – under the Fiscal Recovery Funds program, there are certain restrictions on payroll costs for public health and safety employees. Expenses related to issuing tax-anticipation notes are also not eligible. Finally, Fiscal Recovery Fund recipients must comply with non-federal matching requirements unless explicitly stated otherwise in the Treasury’s guidance.

    21. 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.

    22. Can counties use Recovery Funds for non-federal matching requirements such as FEMA disaster assistance or Medicaid?

    Non-federal match requirements have different rules depending on the eligible use category of Recovery Funds.

    Specifically, Recovery Funds under the revenue loss eligible use category may generally be used to meet non-federal cost share or matching requirements. This includes non-federal match requirements of the DWSRF and CWSRF programs. However, note that Recovery Funds may not be used as the non-federal share for purposes of a state's Medicaid and CHIP programs, as the OMB has approved a waiver as requested by the Centers for Medicare & Medicaid Services. Recipients will need to ensure that the relevant agency for which they are using Recovery Funds to provide their non-federal match does not have a waiver in place which would bar federal funds from being used as a non-federal match.

    Outside of the revenue loss category, Recovery Funds generally cannot be used to meet the non-federal match or cost-share requirements of other federal programs, other than as specifically provided for in the statute. For example, 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.

    Notably, the Infrastructure Investment and Jobs Act (IIJA) specifies that an entity using funding under Section 60102 for broadband deployment, "may include funds provided to an eligible entity or subgrantee under ARPA for the purpose of deployment of broadband service, which includes funds provided under the Fiscal Recovery Funds when dealing with the non-federal match requirement. The Final Rule also permits that Recovery Funds may be used for purposes of satisfying non-federal matching requirements required for an authorized Bureau of Reclamation project.

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

    Counties are typically 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, unless the infrastructure project can specifically be tied back to a specific public health need or negative economic impact.

    24. Can counties use Recovery Funds to establish a public jobs program?

    Yes. The 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.

    25. How can I use Recovery Funds to prevent and respond to crime and support public safety in my community?

    The enumerated eligible uses in this area should respond to an identified impact of the COVID-19 public health emergency in a reasonably proportional manner to the extent and type of harm experienced.

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

    • Many enumerated eligible uses – such as behavioral health services, services to improve employment opportunities, and services to address educational disparities in disproportionately impacted communities – that respond to the public health and negative economic impacts of the pandemic may also have benefits for reducing crime or aiding victims of crime.
    • The Final Rule includes an enumerated eligible use for community violence intervention programs in all communities, not just the disproportionately impacted communities eligible under the interim final rule. Specific types of service include:
      • Evidence-based practices like focused deterrence, street outreach, violence interrupters, and hospital-based violence intervention models, complete with wraparound services such as behavioral therapy, trauma recovery, job training, education, housing and relocation services, and financial assistance; and
      • Capacity-building efforts at community violence intervention programs like funding more intervention workers, increasing their pay, providing training and professional development for intervention workers, and hiring and training workers to administer the programs.
    • Enumerated eligible uses that respond to an increase in gun violence may be pursued in communities experiencing an increase in gun violence associated with the pandemic, specifically: 1) hiring law enforcement officials – even above pre-pandemic levels – or paying overtime where the funds are directly focused on advancing community policing strategies for gun violence, 2) additional law enforcement efforts to reduce gun violence exacerbated by the pandemic, including prosecuting gun traffickers, dealers, and other parties contributing to the supply of crime guns, as well as collaborative federal, state, and local efforts to identify and address gun trafficking channels, and 3) investing in technology and equipment to allow law enforcement to more efficiently and effectively respond to the rise in gun violence resulting from the pandemic, for example technology to assist in the identification of guns whose serial numbers have been damaged.
    • 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.
    26. 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 State and Local Fiscal Recovery Fund program nor the Treasury Department’s Final Rule requires recipients to maintain a local declaration of emergency relating to COVID-19

    27. Do recipients need to demonstrate that each individual, business, or nonprofit experienced a negative economic impact for that individual, business, or nonprofit to receive assistance?

    Not necessarily. The Final Rule provides an expanded set of households and communities that are presumed to be “impacted” and “disproportionately impacted” by the pandemic, thereby allowing recipients to provide responses to a broad set of households and entities without requiring additional analysis. “Impacted” classes experienced the general, broad-based impacts of the pandemic, while “disproportionately impacted” classes faced meaningfully more severe impacts, often due to preexisting disparities.

    The Final Rule further provides a broader set of uses available for these communities as part of COVID-19 public health and economic response, including making affordable housing, childcare, early learning, and services to address learning loss during the pandemic eligible in all impacted communities and making certain community development and neighborhood revitalization activities eligible for disproportionately impacted communities.

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

    The Final Rule indicates that investments in parks and other public outdoor recreation spaces are enumerated eligible uses for disproportionately impacted communities in order to promote healthier living environments. Spending on outdoor and recreational purposes may also be eligible under the assistance to small businesses eligible use category.

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

    1. Development of neighborhood features that promote improved health and safety outcomes, such as parks, green spaces, recreational facilities, sidewalks, pedestrian safety like crosswalks, projects that increase access to health foods, streetlights, neighborhood cleanup, and other projects to revitalize public spaces.
    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

    Recipients may also utilize lost revenue as a means to provide any traditional government service, which may include maintaining and upgrading public parks.

    29. 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 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 the 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.

    30. What uses of Recovery Funds are enumerated as ineligible?

    Counties may not use Recovery Funds to make extraordinary contributions to pension funds, but may use Recovery Funds to pay for routine payroll contributions to pensions of employees whose wages and salaries are an eligible use. Counties also may not use Recovery Funds for debt servicing, replenishing financial reserves, or satisfying settlements and judgments.

    The Final Rule also notes that counties may not use Recovery Funds in a manner that conflicts with the overall statutory purpose of the ARPA to reduce the spread of COVID-19. Counties must follow all other federal laws and policies, such as environmental and civil rights laws, when spending Recovery Funds.

    31. Do restrictions on using Recovery Funds to cover costs incurred beginning on March 3, 2021 apply to costs incurred by the county or to costs incurred by beneficiaries?

    Under the revenue loss category, Recovery Fund expenditures must be responsive to costs incurred by the county. Under the premium pay category, expenditures must respond to obligations to provide wages and remuneration that incurred beginning on March 3, 2021; employers cannot use Recovery Funds to reimburse themselves for pay already received by the employee. Under the public health/economic impacts categories, expenditures must respond to harms that were incurred by beneficiaries. Under the water/sewer/broadband infrastructure categories, counties can use Recovery Funds to cover costs for projects that were started or planned prior to March 3, 2021 as long as the project costs covered by Recovery Funds were incurred after that date.

    32. Can counties pool funds with other recipients for regional projects?

    Yes, as long as the project is itself an eligible use of Recovery Funds for each recipient that is contributing to the pool of Recovery Funds. All recipients must also be able to track the use of Recovery Funds in line with Treasury’s compliance and reporting requirements.

    33. Can counties fund a project with both ARPA funds and other sources of funding?

    Yes, as long as the costs are eligible costs under each source program and area compliant with all other related statutory and regulatory requirements. For any project that is funded with Recovery Funds, counties must be able to report to Treasury the amount of Recovery Funds that were obligated and expended as well as when such funds were obligated and expended.

    Counties cannot use Recovery Funds to fund the entirety of a project that is only partially eligible under the Final Rule. Counties should instead allocate Recovery Funds towards a separate component project that does constitute an eligible use.

    34. Can counties use Recovery Funds to make loans or other extensions of credit to support an eligible use?

    Counties can use Recovery Funds to make loans as long as the loan supports an eligible use of Recovery Funds. The Recovery Funds used to make the loan must be obligated by December 31, 2024 and expended by December 31, 2026. Counties must also track and report the costs of the loan.

    If the loan matures or is forgiven by December 31, 2026, the recipient must account for the use of Recovery Funds on a cash flow basis. If counties fund the principal of the loan using Recovery Funds, they must track repayment of the principal and interest as program income. Repayment of the principal may only be re-used for eligible uses and is subject to restrictions on the timing of use of Recovery Funds. Interest payments received prior to the end of the period of performance will be considered an addition to the total award and may be used for any eligible use of Recovery Funds.

    If the loan does not mature by December 31, 2026, counties may only use Recovery Funds for the projected cost of the loan. Recipients can calculate the projected cost of the loan using either the expected credit losses over the life of the loan based on the Current Expected Credit Loss standard or the subsidy cost. The subsidy cost is equal to the estimated present value of the cash flows to the recipient resulting from a loan, discounted at the recipient’s cost of funding and discounted to the time when the loan is disbursed.

    Counties may also finance the full cost of long-term affordable housing loans, even if those loans mature beyond the period of performance. As long as the loan has a term of at least 20 years, and the funded affordable housing project will finance affordable units for at least 20 years after the units first receive Recovery Funds investments, counties may finance the full cost of the loan.

    35. Can counties use Recovery Funds to contribute to revolving loan funds?

    Yes. A county can contribute Recovery Funds to a revolving loan fund if the loaned funds only finance eligible uses. If the loans have maturities longer than December 31, 2026, the Recovery Funds the county contributes to the revolving fund are limited to the projected cost of the loans over the life of the revolving funds.

    36. Can counties use 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 Fiscal Recovery Fund recipients from funding OPEB. Recipients of Fiscal Recovery Funds may use them for eligible uses, and a recipient seeking to use Fiscal Recovery Funds for OPEB contributions would need to justify those contributions under one of the four eligible use categories.

    PREMIUM PAY

    1. Who is eligible to receive premium pay?

    Eligible workers are workers who are “needed to maintain continuity of operations of essential critical infrastructure sectors.” The following sectors and occupations are presumed eligible:

    • 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
    2. Can counties designate additional workers as eligible?

    A county’s chief executive (or equivalent) may designate additional non-public sectors as critical as long as doing so is necessary to protecting the health and well-being of the county residents.

    3. What is essential work?

    Essential work is work that involves either regular, in-person interactions with other people or regular physical handling of items that were handled by – or are to be handled by – other people. An individual who teleworked from a residence may not receive premium pay.

    4. When does premium pay “respond to” workers performing essential work during the COVID-19 pandemic?

    If workers are in an eligible sector and perform essential work, they are eligible to receive premium pay if they meet one of two requirements. First, a worker is eligible if the worker earns at or below 150 percent of the county’s average annual wage for all occupations, including the premium. Second, a worker is also eligible if the worker is not exempt from the Fair Labor Standards Act overtime provisions.

    Even if a worker does not meet either of the above requirements, the worker can still be eligible to receive premium pay if the county submits a written justification to Treasury. This written justification must explain why providing premium pay to a given worker would be responsive to workers performing essential work during the public health emergency. The explanation may include a description of the worker’s duties, health, or financial risks faced due to COVID-19 and why the recipient determined that the premium pay was responsive.

    5. What are restrictions on the amount of premium pay that an eligible worker can receive?

    Premium pay can be provided to eligible workers at a maximum rate of $13 per hour. Premium pay cannot exceed $25,000 for any single worker throughout the period of performance.

    6. Can counties provide grants for third-party employers to give their employees premium pay?

    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.

    7. Does non-base compensation, such as overtime, count toward the 150 percent pay threshold?

    Yes, non-base compensation, including overtime and bonuses, counts toward the 150% pay threshold.

    8. Does the 150 percent threshold include income from only the awarding employer or from an employee’s total yearly compensation?

    The 150 percent pay threshold does not take into account other sources of income that an employee may have, such as income from a second job. If the employee does not yet have a year’s worth of earnings from a given employer, the employer should extrapolate the hourly wage at an annual rate by multiplying the hourly rate by forty hours per week and then by fifty-two weeks per year.

    9. Can Recovery Funds pay for benefits and taxes associated with premium wages?

    Premium pay is taxable as wage income, and therefore, employers are encouraged to treat the premium pay earned by the employee just as they would other wage income and withhold from the additional pay any required taxes. For further guidance, please see the FAQ published by the IRS on the Recovery Fund Program.

    10. Can counties award premium pay 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.

    INFRASTRUCTURE INVESTMENTS

    1. What are eligible water and sewer projects?

    The Final 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 (CWSRF) and Drinking Water State Revolving Fund (DWSRF), as well as expands the criteria for project eligibility. Outlined projects under CWSRF and DWSRF are included below, as well as the expanded criteria that projects can cover in order to be eligible.

    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 water bodies 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.

    In addition to the CWSRF and DWSRF offering criteria for project eligibility, the Final Rule clarifies that necessary investments in water and sewer infrastructure are included if they are 1) responsive to an identified need to achieve or maintain an adequate minimum level of service, which for some eligible project categories may include a reasonable projection of increased need, whether due to population growth or otherwise and 2) a cost-effective means for meeting that need, taking into account available alternatives.

    2. Can counties use Recovery Funds as a non-federal match for the CWSRF or DWSRF?

    Recovery Funds available under the revenue loss category can be used to meet the non-federal cost-share or matching requirements of other federal programs, including the EPA’s CWSRF or DWSRF programs. Counties cannot use Recovery Funds under any other category as a non-federal match for CWSRF or DWSRF. For this reason, counties cannot use funds under the water and sewer infrastructure category as a non-federal match for these programs.

    3. Does the National Environmental Policy Act (NEPA) apply to projects funded with Recovery Funds?

    NEPA does not apply to Treasury’s administration of Recovery Funds, including Recovery Funds expended under any eligible use category. Projects supported with Recovery Fund payments may still be subject to NEPA review if they have other sources of federal funding or have certain federal licensing or registration requirements.

    4. Can counties use Recovery Funds to support energy or electrification infrastructure that would be used to power new water treatment plants and wastewater systems?

    The EPA’s Overview of CWSRF Eligibilities notes that one eligible energy-related project is a “[p]ro rata share of capital costs of offsite clean energy facilities that provide power to a treatment works.” Counties can therefore use Recovery Funds to finance the generation and delivery of clean power to a wastewater system or a water treatment plant on a pro-rata basis. If the wastewater or treatment system is the sole user of the clean energy, the full cost is considered an eligible use of Recovery Funds. If other entities receive the clean energy, only the proportionate share used to fund the wastewater or treatment system would be an eligible use.

    5. Can counties use Recovery Funds for road repairs and upgrades that occur in connection with an eligible water or sewer project?

    Yes, but only when the repairs or upgrades are directly related to an eligible water or sewer project. The use of Recovery Funds for general infrastructure projects is subject to the limitations of any other capital expenditures project. When the water and sewer infrastructure project is only a single component of a broader transportation infrastructure project, the components of the project that interact directly with the water/sewer infrastructure project may be funded using Recovery Funds.

    6. What types of broadband projects are eligible?

    The Final Rule expands eligible areas for investment in broadband infrastructure by requiring recipients to invest in projects designed to provide service to households and businesses with an identified need for additional broadband infrastructure investment, which would include but not be limited to a lack of broadband service reliably delivering certain speeds, a lack of affordable broadband service, and a lack of reliable service.

    Treasury now encourages recipients to prioritize projects that are designed to provide service to locations not currently served by a wireline connection that reliably delivers at least 100 Mbps of download speed and 20 Mbps of upload speed. Treasury continues to require eligible projects be designed to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds.

    In addition, the Final Rule further supports the expansion of affordable access to broadband service for households by requiring that recipients use a provider that participates in a qualifying affordability plan.

    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.

    7. What does the requirement that broadband infrastructure be designed to provide service to unserved or underserved households and businesses mean?

    Recipients have flexibility to identify a need for additional broadband infrastructure investment: examples of need include lack of access to a connection that reliably meets or exceeds symmetrical 100 Mbps download and upload speeds, lack of affordable access to broadband service, or lack of reliable broadband service. Recipients are encouraged to prioritize projects that are designed to provide service to locations not currently served by a wireline connection that reliably delivers at least 100 Mbps of download speed and 20 Mbps of upload speed.

    8. 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?

    Households and businesses with an identified need for additional broadband infrastructure investment do not have to be the only ones in the service area served by an eligible broadband infrastructure project. Indeed, serving these households and businesses may require a holistic approach that provides service to a wider area, for example, in order to make ongoing service of certain households or businesses within the service area economical.

    Consistent with further guidance issued by Treasury, in determining areas for investment, recipients may choose to consider any available data, including but not limited to documentation of existing broadband internet service performance, federal and/or state collected broadband data, user speed test results, interviews with community members and business owners, reports from community organizations, and any other information they deem relevant.

    9. Can counties use Recovery Funds under the broadband infrastructure category to invest in cybersecurity or digital literacy training?

    Counties can use Recovery Funds under the broadband infrastructure category to modernize cybersecurity for existing and new broadband projects, regardless of their speed delivery standards. This includes modernization of hardware and software. Under the revenue loss category, counties may also invest in general cybersecurity upgrades, unrelated to broadband infrastructure.

    Digital literacy training is also an eligible use, but only under the revenue loss category or as a response to the pandemic’s economic impacts. The Final Rule states that one eligible way to provide assistance to households is to facilitate digital literacy programs.

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

    Yes. Under the 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 directly on funding last-mile projects or by ensuring that funded middle-mile projects have commitments in place to support new and/or improved last-mile service.

    11. Can counties use Recovery Funds to build or upgrade broadband connections to schools or libraries?

    Counties can use Recovery Funds to invest in broadband infrastructure that is designed to deliver service that reliably meets or exceeds symmetrical upload and download speeds of 100 Mbps to households or businesses with an identified need for additional broadband investment. Treasury defines “businesses” broadly to include non-residential uses of broadband, including private businesses, schools, libraries, healthcare facilities, and public safety organizations.

    12. Do counties need preapproval for water, sewer, or broadband projects?

    Generally, counties do not need to submit planned expenditures for prior approval by Treasury, though recipients must ensure that infrastructure projects are eligible under the Final Rule. However, counties should be aware of any other federal or state laws or regulations that may apply to construction or infrastructure projects, independent of Recovery Fund conditions, and that may require preapproval from another federal or state agency.

    13. Do the general program requirements of the CWSRF or DWSRF apply to Recovery Fund projects?

    The only requirements of the CWSRF and DWSRF that attach to Recovery Fund projects are the project eligibility categories. References to the CWSRF and DWSRF are included in the Final Rule only to assist recipients in understanding the types of water and sewer infrastructure projects that are eligible under the Final Rule. Counties do not need to follow other requirements of these programs, such as applications for funding.

    14. Can counties use Recovery Funds for pre-project development for eligible water, sewer, and broadband projects?

    Yes. For water and sewer infrastructure projects, counties should consult whether pre-project development use or cost is eligible under the CWSRF or DWSRF. These programs 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 broadband infrastructure, pre-project development uses and costs 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.

    15. Are projects funded with Recovery Funds subject to the Davis-Bacon Act?

    The Davis-Bacon Act requirements do not apply to projects funded solely with Recovery Funds, except when undertaken by the District of Columbia. Counties may subject to the Davis-Bacon Act if Recovery Funds are used for a project in conjunction with funds from another federal program that requires enforcement of the Davis-Bacon Act. Corollary state prevailing-wage-in-construction laws may also apply.

    While the Davis-Bacon Act does not apply to Recovery Fund projects, Treasury encourages counties to ensure that projects use strong labor standards. These standards include project labor agreements, community benefits agreements, wages at or above the prevailing rate, and local hire provisions.

    When counties undertake capital expenditures projects that cost more than $10 million, they will need to provide documentation of wages and labor standards for the project. These requirements can be met with certification that the project is in compliance with the Davis-Bacon Act or related state laws, but this compliance is only one way for counties to meet the requirements.

    16. Can counties use Recovery Funds to pay for the replacement or placement of utility poles under the water, sewer, and broadband infrastructure expenditure categories?

    Yes, such replacement/placement of utility poles is eligible when it is directly related to or part of an eligible Recovery Fund infrastructure project. Counties cannot use Recovery Funds for the replacement/placement of utility poles disconnected from an eligible infrastructure project.

    17. Do the Buy America Preference requirements for infrastructure projects apply to awards made under the SLFRF program?

    No, awards made under the Recovery Fund program are not subject to the Buy America Preference requirements set forth in the Infrastructure Investment and Jobs Act.

    18. Do the Buy America Preference requirements for infrastructure projects apply to SLFRF-funded projects if they are supplemented with funding from other federal financial assistance programs?

    Projects may be subject to the Buy America Preference requirements when an infrastructure project is funded in conjunction with funds from other federal programs that require compliance with the Buy America Preference requirements. Projects funded solely with Recovery Funds are not subject to these requirements. Counties should consult with the federal agencies administering the forms of federal funding that are being used alongside Fiscal Recovery Funds.

    19. Does Section 106 of the National Historic Preservation Act (NHPA) apply to projects funded with SLFRF funds?

    No, Section 106 of the NHPA does not apply to any projects funded solely with Recovery Funds. Projects that receive other forms of funding in addition to Recovery Funds may be subject to Section 106.

    REPORTING REQUIREMENTS

    1. What reporting requirements are counties subject to under the Recovery Fund program?

    The Recovery Fund program includes three types of reporting requirements. The first is the Interim Report, a one-time report that provides an initial overview of status and uses of funding. Counties have already submitted their Interim Report and will not need to submit an additional one.

    The second is the Project and Expenditure (P&E) Report. These reports include information on projects funded, expenditures, obligations, contracts, and subawards equal to or greater than $50,000. Depending on county size, counties will either need to submit the report quarterly or annually.

    The third is the Recovery Plan Performance Report (“Recovery Plan”). Recovery Plans are submitted annually by large counties and provide information on how counties plan to ensure that they achieve program outcomes.

    2. Does my county need to submit a quarterly P&E report or an annual one? What about a Recovery Plan?

    Counties with populations of over 250,000 residents and/or that received at least $10 million in Recovery Funds will need to submit a quarterly P&E report. All other counties will only need to submit an annual P&E report.

    Counties with populations of over 250,000 residents will need to submit a Recovery Plan on an annual basis.

    3. What are the P&E Report / Recovery Plan due dates?

    Quarterly P&E reports are due each January 31, April 30, July 31, and October 31 until 2026. In 2027, the only quarterly report that counties must submit is due April 30, 2027.

    Annual P&E reports are due April 30 each year until 2027, with the final report due April 30, 2027.

    Recovery Plans are due each July 31 until 2026. In 2027, the final Recovery Plan is due April 30.

    4. What information is required for the P&E report?

    The following information is required on each P&E report:

    A. Projects: counties must provide information on all projects funded using Fiscal Recovery Funds. Required information includes the project name, identification number, project expenditure category, description, and status of completion.

    B. Obligations and expenditures: counties should report the current period obligation, cumulative obligation, current period expenditure, and cumulative expenditure.

    C. Project status: counties should list whether a project has not been started, has been completed less than 50 percent, has been completed 50 percent or more, or has been completed.

    D. Program income: counties should report any program income earned and expended to cover eligible project costs, where applicable.

    E. Adopted budget: counties with a population of over 250,000 residents need to submit the budget adopted for each Recovery Fund project.

    F. Project demographic distribution: for projects in the public health and negative economic impact categories, counties will need to describe what impacted and/or disproportionately impacted population a project primarily serves.

    G. Subawards, contracts, grants, loans, transfers, and direct payments: counties need to provide detailed obligation and expenditure information for any payments made to other entities that are worth at least $50,000.

    H. Civil rights compliance: Treasury will request information on counties’ compliance with Title VI of the Civil Rights Act of 1964, as applicable, on an annual basis. This information may include a narrative describing the county’s compliance with Title VI, along with other questions and assurances.

    I. Required programmatic data: for many expenditure categories, Treasury requires counties to submit project-specific information, such as the number of households served by a household assistance program. Counties with at least 250,000 residents have some additional programmatic data requirements.

    5. What is a project for the purpose of the P&E Report?

    A project is any grouping of closely related activities that together are intended to achieve a specific goal or are direct toward a common purpose.

    6. What kind of description is sufficient for each project in the P&E report?

    The project description should be between 50 and 250 words. It should describe the project in sufficient detail to provide an understanding of the major activities that will occur.

    7. What is the difference between an obligation and an expenditure?

    The Final Rule defines an “obligation” as an “obligation” as “an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment.” In other words, an obligation is any commitment to pay an entity for something related to the project. In contrast, expenditures are funds that have actually been spent.

    8. Do counties need to separately report contracts, grants, transfers, loans, or direct payments that are below $50,000?

    These payments do not need to be separately reported. These payments will be accounted for by expenditure category at the project level. All obligations and expenditures, regardless of the dollar amount, should be included in aggregate reporting.

    9. Do counties need to submit a written justification for capital expenditures projects?

    Beginning with the P&E report due July 31, 2022, counties will need to submit a written justification for capital projects of any category that cost at least $10 million and for projects in the “other” (i.e., project not explicitly enumerated by Treasury) category that cost at least $1 million. Previously, counties needed to create a written justification for these projects but were not required to submit them as part of regular reporting.

    10. What information is required for the annual Recovery Plan?

    The Recovery Plan must contain, at minimum, the following information:

    A. Executive summary: counties should provide a high-level overview of their intended and actual uses of Recovery Funds, including their strategy, goals, and plan for using Recovery Funds to respond to the pandemic and promote economic recovery.

    B. Uses of funds: where applicable, counties should describe how funds in each category are being used to support their overall strategy and goals.

    C. Promoting equitable outcomes: counties should describe how they are designing and implementing their programs and projects with equity in mind. For instance, counties should note if there are particular underserved groups that their programs are intended to serve or if their uses of funds prioritize racial and economic equity.

    D. Community engagement: counties should describe how their uses of Recovery Funds incorporate community engagement strategies, including written feedback through surveys, oral feedback through community meetings, and other forms of input.

    E. Labor practices: counties should describe the workforce practices for any infrastructure or capital expenditures projects and how the project supports strong labor standards. For instance, counties should report whether a project utilizes a project labor agreement, community benefits agreement, prevailing wage requirements, and local hiring.

    F. Use of evidence: counties should describe whether and how evidence-based interventions and/or program evaluations are incorporated into their Recovery Fund programs.

    G. Performance report: counties should describe how they are implementing performance management in their use of Recovery Funds, including how there are tracking their overarching goals for using Recovery Funds as well as measuring results for individual projects. This section should also include key performance indicators for each project.

    H. Project inventory: counties should list and describe each project funded using Recovery Funds. For each project, the inventory should include the project name, funding amount, identification number (this number will match the one used in the P&E report), expenditure category, a description of the project, dollar amount of total spending that is allocated towards evidence-based interventions, information about the performance indicators for each project, and a link to the project website if available.

    11. Is there a template available for Recovery Plans?

    Yes. Treasury has made a template for the Recovery Plan available here. Counties can use this template as a reference, but they can modify it as long as their report meets the minimum information requirements listed above.

    12. Do counties need to make their Recovery Plan public?

    Yes. Counties should post their Recovery Plans on an easily discoverable webpage on their public-facing website. Treasury recommends that Recovery Plans are accessible within three clicks or fewer from the homepage of the county’s website. Counties must upload a link to the publicly available Recovery Plan during submission.

    13. What kinds of performance indicators should I provide on the Recovery Plan?

    Performance indicators should include both output and outcome measures. Output measures provide information about the early implementation stages of a project, such as the number of students enrolled in an early learning program. Outcome measures provide information about how a project is achieving its overall goals, such as the percent of students reading on grade level.

    Counties have discretion in determining which performance indicators to include, but some categories have mandatory performance indicators. For instance, long-term housing security programs require counties to provide the number of households receiving eviction prevention services and the number of affordable housing units preserved or developed.

    14. What kind of project description should I provide for the Recovery Plan?

    The description should include an overview of the project’s main activities, the approximate timeline, primary delivery mechanisms and partners, and intended outcomes.

    15. What are evidence-based interventions?

    Evidence-based interventions are supported by strong or medium evidence. Strong evidence means that there is sufficient evidence to support causal conclusions for a specific program with the highest level of confidence. This evidence base consists of at least one well-designed and well-implemented experimental studies conducted on the proposed program.

    Moderate evidence means that there is a reasonably developed evidence base to support causal conclusions for a specific program. This evidence base consists of at least one quasi-experimental studies OR two or more non-experimental studies.

    16. Where can I find the P&E Report User Guide?

    The User Guide is available here.

    17. Do counties need to submit proposed expenditures to Treasury for approval?

    No. Recipients do not need to submit planned expenditures to Treasury for approval. Recipients must follow Treasury’s compliance and reporting guidance for reporting their expenditures to Treasury.

    18. What are the reporting requirements if my county has not yet obligated or expended Recovery Funds?

    For the P&E Report, counties have the option to note that they have not yet made any obligations or expenditures. For the Recovery Plan, counties should still describe their planned approach to the use of Recovery Funds even if they have not made any obligations or expenditures.

    19. How should a county report Recovery Funds if they were received as multiple entity types (e.g., a county and an NEU)?

    A recipient’s reporting tier is determined by their total allocation across both recipient types and the highest tier for which they qualify. For instance, if a recipient receives funding as both an NEU and a county with a population of under 250,000 residents, and their total allocation across both entity types is over $10 million, the recipient should report as a county with a population of under 250,000 residents and over $10 million in Fiscal Recovery Funds.

    20. How should counties report if the population threshold changes during the four-year reporting period?

    The population threshold is determined by Treasury at award date and will note change during the four-year reporting period. A recipient’s reporting tier will be available for review in the reporting portal.

    21. How can counties identify their reporting tier if they are not sure?

    Each county’s reporting tier will be available for review in the Treasury reporting portal.

    22. Can counties edit their records after submission? How can counties report changes?

    For the P&E Report, counties can reopen and edit their submitted report any time before the reporting deadline. Counties will need to recertify and resubmit the report again to properly reflect any edits made.

    For the Recovery Plan, counties can reopen and update their plan any time before the reporting deadline. The publicly posted Recovery Plan should reflect any edits made to the P&E Report.

    23. How do counties correct or edit pre-populated information in the Treasury portal?

    If the information presented in the portal requires correction, counties should email slfrp@treasury.gov and provide the necessary edit.

    24. Can Treasury extend the reporting deadline 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. 

    25. Is there a penalty for submitting the report late?

    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.

    26. If counties report a purchase using Recovery Funds and later realize that the purchase does not qualify as an eligible use, can counties fix the mistake?

    Yes. Counties can make corrections to reporting to adjust for ineligible uses. Counties must pay for that expense using a funding source other than Recovery Funds.

    27. Will the data that counties 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.

    28. Where do I go if I’m having difficulty logging into or navigating the Treasury portal?

    Counties that are having technical difficulties should email their question to slfrp@treasury.gov and to covidreliefitsupport@treasury.gov. Counties may also CC question@naco.org if they wish.

    29. If I have not received a payment yet, is it too late? How do I receive one?

    It is not too late for counties to receive a Recovery Fund payment if they have not already. To receive a payment, your county must have a Unique Entity ID (UEI) and an active registration in the System for Award Management. Counties must also have a bank account enabled for Automated Clearing House direct deposit. More information on program pre-submission requirements is available here.

    30. What is an authorized representative?

    An authorized representative is an individual with legal authority to bind the county. An authorized representative must sign the Acceptance of Award terms for it to be valid.

    31. What is ID.me and why is Treasury using it?

    ID.me provides secure digital identity verification to those government agencies and healthcare providers to validate the individual entity – and block fraudulent attempts to access online services. All personally identifiable information provided to ID.me is encrypted and disclosed only with the express consent of the user. Please refer to ID.me Contact Support for assistance with your ID.me account. Their support website is https://help.id.me.

    ID.me is only required for submitting applications for funding in the Treasury Portal. ID.me is not required for users accessing the Treasury portal to complete reporting.

    UNIFORM GUIDANCE

    1. What is the Uniform Guidance?

    The Uniform Guidance is a framework for federal grants management that is developed by the Office of Management and Budget (OMB). It is designed to set standards for managing federal funds to reduce waste, fraud, and abuse.

    2. Are uses of Recovery Funds subject to the Uniform Guidance?

    Yes. Recovery Fund awards are generally subject to the requirements set forth in the Uniform Guidance, except where otherwise stated. A full list of the Uniform Guidance provisions that are applicable to the Recovery Fund program is available at the program’s Assistance Listing on SAM.gov.

    3. Do counties need to follow federal procurement standards when using Recovery Funds?

    Yes. Federal procurement standards are part of the Uniform Guidance, outlined from 2 CFR 200.317 to 2 CFR 200.327. All procurement transactions for property or services must be conducted in a manner providing full and open competition, except in limited circumstances. Counties must develop and use documented procurement procedures that are consistent with the Uniform Guidance. This requirement includes consistency with 2 CFR 180, under which counties must develop an infrastructure for competitive bidding and contractor oversight.

    4. When are Recovery Fund purchases not subject to federal procurement standards?

    When a purchase falls below the simplified acquisition threshold, currently set at $250,000, counties may follow informal procurement methods known as small purchase procedures, outlined at 2 CFR 200.320(a)(2)(i). Following these procedures, price quotations must be obtained from an adequate number of qualified sources as determined appropriate by the county.

    When a purchase falls below the micro-purchase threshold, currently set at $10,000, counties do not need to solicit goods or services competitively. Counties may raise the micro-purchase threshold up to $50,000 in accordance with the procedures outlined at 2 CRR 200.320(a)(iv).

    5. What is a subrecipient and how is it different from a beneficiary?

    A subrecipient receives Recovery Funds from a recipient government, like a county, to carry out eligible uses on the recipient’s behalf. For instance, a county may determine that a nonprofit organization would be better suited to administering a housing support program. If the county gives that nonprofit Recovery Funds for the purpose of carrying out the program, the nonprofit would be a subrecipient.

    In contrast, beneficiaries receive Recovery Funds for their own benefit. That same nonprofit organization would be a beneficiary if it receives Recovery Funds as a response to negative economic impacts the household experienced due to the COVID-19 pandemic.

    The Final Rule states that whether an entity is a subrecipient or a beneficiary is therefore contingent upon the reason why an entity receives Recovery Funds. If the entity is the “end user” of the funds, then that entity is a beneficiary. If the entity is instead responsible for monitoring or administering the funds, it is a subrecipient.

    6. What responsibilities do counties have in subrecipient monitoring?

    Counties are required to monitor their subrecipients pursuant to 2 CFR 200.1 and 200.332. Counties should clearly explain that the subrecipient is receiving a subaward of federal Recovery Funds as well as all compliance and reporting requirements for using the Recovery Funds. Additionally, the county should develop written policies and procedures for monitoring the subrecipient’s use of Recovery Funds and assessing the subrecipient’s risk of noncompliance.

    7. What compliance and reporting requirements apply to subrecipients and beneficiaries?

    Subrecipients must comply with all restrictions applicable to direct recipients. Recipients must report detailed information in their Project and Expenditure Report regarding subrecipients that receive subawards of $50,000 or more and certain beneficiaries that receive direct payments of $50,000 or more in Recovery Funds.

    8. Do recipients need to report subrecipient information for the revenue loss eligible use category?

    No. Treasury is not collecting subaward data for projects categorized under the Revenue Replacement expenditure category. Treasury has determined that recipients’ use of Recovery Funds under the revenue loss category does not create a subrecipient relationship because these uses do not involve a federal program or purpose that subrecipients could carry out on a county’s behalf.

    9. Which requirements of the Uniform Guidance apply to revenue loss funds?

    Requirements of the Uniform Guidance, 2 CFR Part 200 apply to Recovery Fund awards except where Treasury states otherwise. Counties must follow Subparts A, B, C, and F of the Uniform  Guidance for revenue loss expenditures, but Treasury has clarified that only some of the requirements in Subparts D and E apply to revenue loss expenditures. In general, recipients should not deviate from established practices and policies regarding the incurrence of costs, and they should expend and account for the funds in accordance with laws and procedures for expending and accounting for the recipient’s own funds.

    The following parts of the Uniform Guidance Subparts D and E are applicable to counties’ use of Recovery Funds for revenue loss:

    Subpart D – Post Federal Award Requirements

    • 200.300 Statutory and national policy requirements.
    • 200.302 Financial management.
    • 200.303 Internal controls.
    • 200.328 Financial reporting.
    • 200.329 Monitoring and reporting program performance.
    • Record Retention and Access (2 C.F.R. 200.334 – 200.338)
      • 200.334 Retention requirements for records.
      • 200.335 Requests for transfer of records.
      • 200.336 Methods for collection, transmission, and storage of information.
      • 200.337 Access to records.
      • 200.338 Restrictions on public access to records.
    • Remedies for Noncompliance (2 C.F.R. 200.339 – 200.343)
      • Note: These sections will apply to Treasury’s administration of the funds. Because the revenue loss eligible use category does not give rise to subawards, as discussed in FAQ 13.14, recipients will not be in a position to apply these provisions with respect to subrecipient relationships.
      • 200.339 Remedies for noncompliance.
      • 200.340 Termination.
      • 200.341 Notification of termination requirement.
      • 200.342 Opportunities to object, hearings, and appeals.
      • 200.343 Effects of suspension and termination.
    • 200.344 Closeout.
      • Note: This section will apply to Treasury’s administration of the funds. Because the revenue loss eligible use category does not give rise to subawards, as discussed in FAQ 13.14, recipients will not be in a position to apply this provision with respect to subrecipient relationships.
    • 200.345 Post-closeout adjustments and continuing responsibilities.
      • Note: This section will apply to Treasury’s administration of the funds. Because the revenue loss eligible use category does not give rise to subawards, as discussed in FAQ 13.14, recipients will not be in a position to apply this provision with respect to subrecipient relationships.
    • 200.346 Collection of amounts due.

    The program income requirements of 2 CFR 200.307 do not apply under revenue loss eligible use category. As such, recipients may maintain program income, which will not be considered an addition to the federal award.

    Subpart E – Cost Principles

    Under the Uniform Guidance, if Recovery Funds are used to cover a cost incurred by the county, the cost must be allowable. In determining whether a cost is allowable for funds under the revenue loss category, the following requirements apply:

    • 200.400(a) - (c), and (e) Policy guide.
    • 200.403(a), (c), (d), (g), and (h) Factors affecting allowability of costs.
    • 200.404(e) Reasonable costs.
    10. What are the use and disposition requirements for assets purchased with Recovery Funds?

    Counties may use Recovery Funds to acquire real and personal property, supplies, and equipment consistent with the eligible uses outlined in the Final Rule. Except for assets acquired using revenue loss funds, counties must follow the applicable provisions of the Uniform Guidance regarding property standards (2 CFR 200.310-316).

    During the period of performance, a county may use assets purchased or improved with Recovery Funds for a purpose other than the one for which it was purchased or improved, but the new purpose must be consistent with the Final Rule’s eligible use requirements. If a county changes the use of an asset to an ineligible use or sells the asset prior to the end of the period of performance, the county must follow the disposition procedures outlined in the Uniform Guidance at 2 CFR 200.311, 200.313, 200.314, and 200.315.

    After the period of performance, counties must use assets consistent with the purpose for which they were purchased or improved, or for any other eligible purpose in the same category as the purpose reported to Treasury as of the final reporting period. See table below for more details:

    Category

    Use Requirements

    Public Health and Assistance to Households and Individuals

    Property, supplies, or equipment last reported as being used to respond to the public health impacts of the public health emergency, as outlined in 31 CFR 35.6(b)(3)(i), or being used for the provision of services to households provided in 31 CFR 35.6(b)(3)(ii)(A), are authorized to fulfill any eligible use of funds provided in these subparagraphs of the Final Rule.

    Assistance to Small Businesses, Nonprofits, and Impacted Industries

    Property, supplies, or equipment last reported as being used for the provision of services to small businesses, nonprofits, and impacted industries outlined in 31 CFR 35.6(b)(3)(ii)(B)-(D) are authorized to fulfill any eligible use of funds outlined in the public health and negative economic impacts eligible use category.

    Water, Sewer, or Broadband Infrastructure

    Property, supplies, or equipment last reported as being used to make investments in water, sewer, or broadband infrastructure pursuant to 31 CFR 35.6(e) are authorized to fulfill any eligible use of funds outlined in the water, sewer, and broadband infrastructure eligible use category.

    Government Services/Revenue Loss

    Property, supplies, or equipment acquired with revenue loss funds are exempt from the use and disposition requirements of the Uniform Guidance, regardless of award size.

    Premium Pay

    N/A

    If an asset’s use shifts after the period of performance within the parameters outlined in this table, no repayment is required. If, however, an asset’s use shifts after the period of performance outside of the eligible purposes outlined in this table, the recipient or subrecipient must follow the Uniform Guidance’s disposition procedures.

    Counties do not need to seek Treasury’s approval prior to changing an asset’s use, but they should be able to substantiate their determination on whether the use of an asset is authorized. Counties should maintain a record of their determinations.

    11. In the definition of “obligation” in the final rule, what does Treasury mean by “similar transactions that require payment?”

    As stated in the Final Rule, obligation means “an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment.” See 31 CFR 35.3.

    As contemplated by this definition, Treasury recognizes that recipients may obligate funds through means other than contracts or subawards, for example in the case of payroll costs. In these circumstances, recipients must follow state or local law and their own established practices and policies regarding when they are considered to have incurred an obligation and how those obligations are documented. For example, a recipient may have incurred an obligation even though the recipient and its employee may not have entered into an employment contract.

    12. Can counties use prequalified lists to solicit goods and services?

    The Uniform Guidance allows counties to use prequalified lists of persons, firms, or products so long as the list is current and includes enough sources to ensure maximum open and free competition. The Uniform Guidance does not define “current,” so it is up to counties to determine when a list is current enough for the purposes of this provision.

    13. Does certain language need to be included in a bidding package?

    Treasury does not require that there be specific language included in bidding packages, but counties should ensure that all contracts made with Recovery Funds contain the applicable contract provisions listed in 2 CFR Part 200, Appendix II.

    14. Can counties leverage existing contracts to receive goods and services for Recovery Fund projects?

    Counties can leverage existing contracts for Recovery Fund activities if the existing contracts conform to the procurement standards in the Uniform Guidance.

    15. What is the period of performance for Recovery Funds?

    The period of performance is the timeline during which counties may expend Recovery Funds. Funds must be obligated by December 31, 2024 and expended by December 31, 2026.

    16. What is program income?

    Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federal awards, the sale of commodities or items fabricated under a federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with federal award funds. Interest earned on advances of federal funds is not program income. For more information on what constitutes “Program Income” please see 2 CFR 200.1.

    17. How does the Final Rule treat program income?

    Treasury has specified that counties may add program income to their federal award. Any program income generated from Recovery Funds must be used under the conditions of Recovery Funds.

    18. How is a contract different from a subaward?

    The Uniform Guidance defines a “contract” as a legal instrument by which a county or subrecipient purchases property or services needed to carry out a project under a federal award. A “subaward” is distinct because it is an award provided by a county to a subrecipient to carry out part of a federal award on behalf of a county government.

    19. Do counties need to remit interest to Treasury?

    No. Recovery Fund payments are not subject by the provisions of the Uniform Guidance that counties maintain Recovery Funds in an interest-bearing account and remit interest payments to Treasury.

    20. What entities are subject to audit under the Single Audit Act?

    Recent OMB guidance exempts certain counties from being subject to audit based on Recovery Fund expenditures. Previous guidance subjected all recipients and subrecipients of federal funds to audit under the Single Audit Act If they expended more than $750,000 in federal awards during a single fiscal year. OMB’s new guidance creates an alternative financial evaluation procedure for counties that received less than $10 million in Recovery Funds and that spent less than $750,000 of non-ARPA federal funds in a single fiscal year.

    Contractors and beneficiaries are never subjected to audit under the Single Audit Act, but counties and subrecipients might be if they do not qualify for the new OMB exemption.

    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
    2022-03-03
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    2022-11-08

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