CSLFRF Eligible Use FAQs

Although the eligible uses of payments from the Fiscal Recovery Funds are all prospective in nature, Treasury considers the beginning of the covered period for purposes of determining compliance with section 602(c)(2)(A) to be the relevant reference point for this purpose. The Interim Final Rule thus permits funds to be used to cover costs incurred beginning on March 3, 2021.

However, with respect to premium pay the definition clarifies that premium pay may be provided retrospectively for work performed at any time since the start of the COVID-19 public health emergency, where those workers have yet to be compensated adequately for work previously performed. Treasury encourages recipients to prioritize providing retrospective premium pay where possible, recognizing that many essential workers have not yet received additional compensation for work conducted over the course of many months.

(See p. 4433 of the Final Rule)

In General - A recipient may only use funds to cover costs incurred during the period beginning March 3, 2021, and ending December 31, 2024, for one or more of the purposes enumerated in sections 602(c)(1) and 603(c)(1) of the Social Security Act, as applicable, including those enumerated in section § 35.6 of this subpart, subject to the restrictions set forth in sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable.

Costs incurred - A cost shall be considered to have been incurred for purposes of paragraph (a) of this section if the recipient has incurred an obligation with respect to such cost by December 31, 2024.

Return of funds - A recipient must return any funds not obligated by December 31, 2024, and any funds not expended to cover such obligations by December 31, 2026.

(See p. 4448 of the Final Rule)

A cost shall be considered to have been incurred for purposes of paragraph (a) of this section if the recipient has incurred an obligation with respect to such cost by December 31, 2024.

(See p. 4448 of the Final Rule)

The Treasury has not addressed this in the guidance.

Generally, the understanding is that the eligible uses will be the same and apply to all funding.

(Questions to Treasury should be directed to SLFRP@treasury.gov)

Obligation means an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment.

(See p. 4447 of the Final Rule)

An Authorized Representative is an individual with legal authority to bind the government entity (e.g., the Chief Executive Officer of the government entity).  An Authorized Representative must sign the Acceptance of Award terms for it to be valid.

(See Question 11.7 in Treasury's FAQ)

In the context of using funds for administrative purposes, FAQ 10.2 states, “Recipients may use funds to cover the portion of payroll and benefits of employees corresponding to time spent on administrative work necessary due to the COVID–19 public health emergency and its negative economic impacts. This includes, but is not limited to, costs related to disbursing payments of Fiscal Recovery Funds and managing new grant programs established using Fiscal Recovery Funds”.

(See Question 10.2 in Treasury's FAQ)

The majority of GFOA members who have gone through the process noted most often SSN, driver’s license and facial scan.

Treasury has not provided guidance on the investment of these proceeds and how investment earnings may be spent. GFOA will be commenting on this in response to the IFR to the US Treasury.

Treasury has noted that CRF rules apply in ARPA circumstances (except for covered payroll). Treasury is not specific on where and how to place funds. However, GFOA recommends refraining from spending investment earnings until we hear definitive guidance on whether it is subject to the ARPA regulations or not.

The two can be different. The administrator of the accounts is simply the person who is administrative responsible for receiving communications from the treasury and dispatching as necessary.

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Use of Fiscal Recovery Funds is generally forward looking. The Interim Final Rule permits funds to be used to cover costs incurred beginning on March 3, 2021.

(See Question 2.7 in Treasury's FAQ)

Generally, funding uses eligible under CRF as a response to the direct public health impacts of COVID-19 will continue to be eligible under CSFRF/CLFRF, with the following two exceptions: (1) the standard for eligibility of public health and safety payrolls has been updated; and (2) expenses related to the issuance of tax-anticipation notes are not an eligible funding use.

(See Question 2.2 in Treasury's FAQ)

Services and programs to contain and mitigate the spread of COVID-19 including:

-Vaccination program

-Medical expenses

-Testing

-Contact tracing

-Isolation or quarantine

-PPE purchases

-Support for vulnerable populations to access medical or public health services

-Public health surveillance (e.g., monitoring for variants)

-Enforcement of public health orders

-Public communication efforts

-Enhancement of healthcare capacity, including alternative care facilities

-Support for prevention, mitigation, or other services in congregate living facilities and schools

-Enhancement of public health data systems

-Capital investments in public facilities to meet pandemic operational needs

-Ventilation improvements in key settings like healthcare facilities

(See page 3 of Treasury Fact Sheet)

Yes. Payroll and covered benefits expenses for public health, healthcare, human services, public safety and similar employees, to the extent that they work on the COVID-19 response. For public health and safety workers, recipients can use these funds to cover the full payroll and covered benefits costs for employees or operating units or divisions primarily dedicated to the COVID-19 response.

(See page 4 of Treasury Fact Sheet)

Yes. Services to address behavioral healthcare needs exacerbated by the pandemic include:

-Mental health treatment

-Substance misuse treatment

-Other behavioral health services

-Hotlines or warmlines

-Crisis intervention

-Services or outreach to promote access to health and social services

(See page 4 of Treasury Fact Sheet)

Assistance to households or populations facing negative economic impacts due to COVID-19 is also an eligible use. This includes: food assistance; rent, mortgage, or utility assistance; counseling and legal aid to prevent eviction or homelessness; cash assistance; emergency assistance for burials, home repairs, weatherization, or other needs; internet access or digital literacy assistance; or job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training.

(See p. 4359 of the Final Rule)

Ventilation improvements in congregate settings is an eligible use under Section A.

(See Question 2.1 in Treasury's FAQ)

Emergency medical response expenses, including emergency medical transportation related to COVID-19” is an eligible expense under Section A.

(See p. 4449 of the Final Rule)

The Final Rule addresses investing in Housing and Neighborhoods to build stronger communities as an eligible use of the funds under Section A. This is in the context of addressing those disproportionately impacted by the pandemic. It is not clear if storing funds in a housing fund is eligible, however, funds may be used on services to address homelessness, affordable housing development, housing vouchers, residential counseling, or housing navigation assistance.

(See p. 4372 of the Final Rule)

In the context of responding to the public health emergency, an emergency operations center would be an eligible use under Section A.

(See p. 4385 of the Final Rule)

State, local, and Tribal governments may use payments from the Fiscal Recovery Funds to engage in planning and analysis in order to improve programs addressing the COVID-19 pandemic, including through use of targeted consumer outreach, improvements to data or technology infrastructure, impact evaluations, and data analysis.

(See p. 4396 of the Final Rule)

Staffing is an eligible expense under the condition it is related to COVID-19. Therefore, hiring additional staff to assist with the administration of the funds would be an eligible use. Please note staff can only be hired up to the government’s pre-pandemic level of staffing (number of employees employed on January 27, 2020).

(See p. 4385 of the Final Rule)

“For administrative convenience, the recipient may consider public health and safety employees to be entirely devoted to mitigating or responding to the COVID-19 public health emergency, and therefore fully covered, if the employee, or his or her operating unit or division, is primarily dedicated to responding to the COVID-19 public health emergency,”.

(See p. 4384 of the Final Rule)

That is correct.

(See Question 2.7 in Treasury's FAQ)

PREMIUM PAY —The term ‘premium pay’ means an amount of up to $13 per hour that is paid to an eligible worker, in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker during the COVID–19 public health emergency. Such amount may not exceed $25,000 with respect to any single eligible worker.

(See p. 4447 of the Final Rule)

Yes. Treasury encourages recipients to consider providing premium pay retroactively for work performed during the pandemic, recognizing that many essential workers have not yet received additional compensation for their service during the pandemic. January 27, 2020 is the date referenced as the start of the COVID-19 public health emergency.

(See Question 5.3 in Treasury's FAQ)

Treasury has clarified in the final rule that the chief executive’s discretion to designate additional sectors as critical relates only to ‘‘non-public’’ sectors, since all public employees of recipient governments are already included in the definition of ‘‘eligible worker.’’ While all such public employees are ‘‘eligible workers’’ and the chief executive (or equivalent) of a recipient government may designate additional non-public sectors as critical, in order to receive premium pay, these workers must still meet the other premium pay requirements (e.g.,performing essential work).

(See p. 4398 of the Final Rule)

The final rule requires that “eligible workers have regular in-person interactions or regular physical handling of items that were also handled by others. This requirement will also help encourage use of financial resources for those who have endured the heightened risk of performing essential work.”

(See p. 4443 of the Final Rule)

The Final Rule gives some latitude to define essential workers, but generally are those considered critical to protect the health and well-being of residents throughout the pandemic. Keep in mind the final rule also notes that essential workers would be those who performed in-person work, i.e. not for telework performed from a residence.

(See p. 4450 of the Final Rule)

The cap is for the whole covered period.

Premium pay is stated to mean “an amount of up to $13 per hour that is paid to an eligible worker.” Therefore, $13 would be the cap.

(See p. 4447 of the Final Rule)

The bill text states Premium Pay would be "in addition to wages or remuneration the eligible worker otherwise receives, for all work performed by the eligible worker during the COVID–19 public health emergency,"

(American Rescue Plan, p. 225 of 243 Section (g)(3))

Base Year Revenue is the recipient’s general revenue for the most recent full fiscal year prior to the COVID-19 public health emergency.

(See p. 4451 of the Final Rule)

In calculating revenue loss, recipients will look at general revenue in the aggregate, rather than on a source-by-source basis. Given that recipients may have experienced offsetting changes in revenues across sources, Treasury’s approach provides a more accurate representation of the effect of the pandemic on overall revenues.

(See p. 4442 of the Final Rule)

Recipients should calculate the extent of the reduction in revenue as of four points in time: December 31, 2020; December 31, 2021; December 31, 2022; and December 31, 2023. To calculate the extent of the reduction in revenue at each of these dates, recipients should follow a four-step process:

Step 1: Identify revenues collected in the most recent full fiscal year prior to the public health emergency (i.e., last full fiscal year before January 27, 2020), called the base year revenue.

Step 2: Estimate counterfactual revenue, which is equal to base year revenue * [(1 + growth adjustment) ^( n/12)], where n is the number of months elapsed since the end of the base year to the calculation date, and growth adjustment is the greater of 4.1 percent and the recipient’s average annual revenue growth in the three full fiscal years prior to the COVID-19 public health emergency.

Step 3: Identify actual revenue, which equals revenues collected over the past twelve months as of the calculation date.

Step 4: The extent of the reduction in revenue is equal to counterfactual revenue less actual revenue. If actual revenue exceeds counterfactual revenue, the extent of the reduction in revenue is set to zero for that calculation date.

(See p. 4401 of the Final Rule)

GFOA has created an Excel template for members to use.

Please Note: Inputs are consistent with the 2006 Census of Governments Classification Manual and all governments’ calculations may be subject to US Treasury audit.

(GFOA Members Only ARPA Revenue Replacement Calculator)

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

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

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

(See p. 4408 and 4429 (Footnote 365) of the Final Rule)

No. Expenses related to financing, including servicing or redeeming notes, would not address the needs of pandemic response or its negative economic impacts. Such expenses would also not be considered provision of government services, as these financing expenses do not directly provide services or aid to citizens. This applies to paying interest or principal on any outstanding debt instrument, including, for example, short-term revenue or tax anticipation notes, or paying fees or issuance costs associated with the issuance of new debt.

(See question 4.3 in Treasury's FAQ)

-For replacement of lost revenues: Government services can include, but are not limited to, maintenance or pay-go funded building of infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services.

-Statutory allowances for infrastructure include assisting in meeting the critical need for investments and improvements to existing infrastructure in water, sewer, and broadband, the Fiscal Recovery Funds provide funds to State, local, and Tribal governments to make necessary investments in these sectors.

(See p. 4408 and 4410 of the Final Rule)

Modernization of cybersecurity, including hardware, software, and protection of critical infrastructure, is listed as an eligible use of funds for government services.

(See p. 4408 of the Final Rule)

Recipients may use funds for maintenance of infrastructure or pay-go spending for building of new infrastructure as part of the general provision of government services, to the extent of the estimated reduction in revenue due to the public health emergency. A general infrastructure project typically would not be considered a response to the public health emergency and its negative economic impacts unless the project responds to a specific pandemic-related public health need (e.g., investments in facilities for the delivery of vaccines) or a specific negative economic impact of the pandemic (e.g., affordable housing in a Qualified Census Tract).

(See question 4.2 in Treasury's FAQ)

With respect to wastewater infrastructure, recipients may use Fiscal Recovery Funds to construct publicly owned treatment infrastructure, manage and treat stormwater or subsurface drainage water, facilitate water reuse, among other uses.

(See p. 4411 of the Final Rule)

If a reduction of revenue has been identified as outlined in the guidance, maintenance of infrastructure is an eligible use of funds under Section C, (FAQ 3.8). Because the interim final rule aligned the definition of necessary water and sewer infrastructure with the eligible uses included in the DWSRF and CWSRF, Treasury is reflecting in the final rule a revised standard for determining a necessary water and sewer infrastructure investment for eligible water and sewer uses beyond those uses that are eligible under the DWSRF and CWSRF. Improving resilience of infrastructure to severe weather events is identified as an eligible project for CWSRF assistance. (FR 4409

(See Question 3.8 in Treasury's FAQ and p. 4410 of the Final Rule)

Water, sewer, and broadband infrastructure are not examples but the only eligible areas under Section D’s use of funds. However, the "investments in" definition is very broad and allows for flexibility in a community's approach as it relates back to these three areas.

Yes, if the cell towers are constructed for the purpose of delivering faster Mbps speeds to households and businesses.

Yes, Section D use of funds include eligible expenditures made towards improvement of water, sewer, and broadband infrastructure.

In the context of broadband infrastructure under Section D, the IFR states that recipients are encouraged to “prioritize investments in fiber optic infrastructure where feasible, as such advanced technology enables the next generation of application solutions for all communities,”

(See p. 4420 of the Final Rule)