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The American Rescue Plan includes $350 billion to create the Coronavirus Fiscal Recovery Funds (FRF) for state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and bring back jobs through 2024.

The Coronavirus State and Local Fiscal Recovery Funds provide a substantial infusion of resources to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery.

Funding Objectives

  • Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
  • Replace lost public sector revenue to strengthen support for vital public services and help retain jobs
  • Support immediate economic stabilization for households and businesses
  • Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic

Eligible Jurisdictions & Allocations

Direct Recipients

  • States and District of Columbia ($195.3 billion) - details
  • Counties ($65.1 billion) - details
  • Metropolitan cities ($45.6 billion) - details
  • Tribal governments ($20.0 billion) - details
  • Territories ($4.5 billion) - details

Indirect Recipients

  • Non-entitlement units ($19.5 billion) - details

Support Public Health Response

Fund COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff

Replace Public Sector Revenue Loss

Use funds to provide government services to the extent of the reduction in revenue experienced due to the pandemic

Water and Sewer Infrastructure

Make necessary investments to improve access to clean drinking water and invest in wastewater and stormwater infrastructure

Address Negative Economic Impacts

Respond to economic harms to workers, families, small businesses, impacted industries, and the public sector

Premium Pay for Essential Workers

Offer additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors

Broadband Infrastructure

Make necessary investments to provide unserved or underserved locations with new or expanded broadband access

Example Uses of Funds
  Support Public Health Response
  • Services to contain and mitigate the spread of COVID-19, including vaccination, medical expenses, testing, contact tracing, quarantine costs, capacity enhancements, and many related activities
  • Behavioral healthcare services, including mental health or substance misuse treatment, crisis intervention, and related services
  • Payroll and covered benefits for public health, healthcare, human services, and public safety staff to the extent that they work on the COVID-19 response
  Address Negative Economic Impacts
  • Deliver assistance to workers and families, including support for unemployed workers, aid to households, and survivor's benefits for families of COVID-19 victims
  • Support small businesses with loans, grants, in-kind assistance, and counseling programs
  • Speed the recovery of impacted industries, including the tourism, travel, and hospitality sectors
  • Rebuild public sector capacity by rehiring staff, replenishing state unemployment insurance funds, and implementing economic relief programs
  Replace Public Sector Revenue Loss
  • Ensure continuity of vital government services by filling budget shortfalls
  • Revenue loss is calculated relative to the expected trend, beginning with the last full fiscal year pre-pandemic and adjusted annually for growth
  • Recipients may re-calculate revenue loss at multiple points during the program, supporting those entities that experience revenue loss with a lag
  Premium Pay for Essential Workers
  • Provide premium pay to essential workers, both directly and through grants to third-party employers
  • Prioritize low- and moderate-income workers, who face the greatest mismatch between employment-related health risks and compensation
  • Key sectors include healthcare, grocery and food services, education, childcare, sanitation, and transit
  • Must be fully additive to a worker's wages
  Water & Sewer Infrastructure
  • Includes improvements to infrastructure, such as building or upgrading facilities and transmission, distribution, and storage systems
  • Eligible uses aligned to Environmental Protection Agency project categories for the Clean Water State Revolving Fund and Drinking Water State Revolving Fund
  Broadband Infrastructure
  • Focus on households and businesses without access to broadband and those with connections that do not provide minimally acceptable speeds
  • Fund projects that deliver reliable service with minimum 100 M bps download 100 Mbps upload speeds unless impracticable
  • Complement broadband investments made through the Capital Projects Fund
  Equity-Focused Services
  • Additional flexibility for the hardest-hit communities and families to address health disparities, invest in housing, address educational disparities, and promote healthy childhood environments
  • Broadly applicable to Qualified Census Tracts, other disproportionately impacted areas, and when provided by Tribal governments
  Ineligible Uses
  • Changes that reduce net tax revenue must not be offset with American Rescue Plan funds
  • Extraordinary payments into a pension fund are a prohibited use of this funding. However, recipients may use funds for routine payroll contributions to pensions of employees whose wages and salaries are otherwise an eligible use
  • Other restrictions include using funds as a nonfederal match for other federal programs whose statute or regulations bar the use of federal funds to meet matching requirements, pay interest or principal on outstanding debts, pay for legal settlement or judgments, replenish a budget stabilization fund, rainy day fund, or similar reserve account, etc.
Fund Allocation
State & District of Columbia (DC)
The $195.3 billion is to be allocated as follows:

  • $25.5 billion equally to each of 50 states and DC.
  • $0.8 billion to DC as an additional direct allocation.
  • $169 billion is designated for each of the 50 states and DC based on the unemployment rate
Territories
The $4.5 billion is to be allocated as follows:

  • $2.25 billion equally to each of the 5 territories.
  • $2.25 billion to each of 5 territories based on population.
Counties
The $65.1 billion is to be distributed based on the county population. Counties that are Community Development Block Grant (CDBG) recipients (urban entitlement counties) will receive the larger of the population-based share or the share under a modified CDBG allocation formula.

Metropolitan Cities
The $45.6 billion is to be distributed using the Housing and Community Development Act of 1974 (HCDA) Formula.

Tribes
The $20 billion is to be allocated as follows:

  • $1 billion equally to all eligible tribal governments.
  • $12.35 billion based on tribe enrolment data from the April 2021 submission to the BIA.
  • $6.65 billion based on tribal employment data using data submitted to Treasury in May 2020 in connection with CARES act funding. The tribe will require to confirm these numbers.
Non-entitlement units (NEU)
The $19.5 billion is to be allocated for NEU’s as follows:

  • NEU will receive funds through their state government.
  • Each state will receive a specific amount based on a calculation proportionate to the total population of all NEUs within a state to the total population of all NEUs in all states
  • The state allocation to each NEU will be based on the NEU’s population.
  • The amount distributed to an NEU may not exceed 75 percent of the unit’s most recent budget as of January 27, 2020
Local governments will receive funds in two tranches, with 50% provided beginning in May 2021 and the balance delivered approximately 12 months later.
Payments to Tribes
The award to the tribe will be made in two payments. The first payment will include the equally divided shares of $1 billion and each tribal government’s pro rata share of enrolment allocation. The initial request deadline is June 7, 2021.

The Second payment will include the pro rata share of the employment allocation for each tribe that confirms their 2019 employment number. The deadline to confirm or amend a Tribal government’s 2019 employment numbers is June 21, 2021. If a Tribal government does not confirm or amend employment numbers by the deadline, the Tribal government will not be eligible to receive a share of the Employment Allocation.
Application Submission Process
State, territorial, metropolitan city, county, or Tribal government eligible to receive funding directly from Treasury should submit a request for funding through the Treasury Submission Portal. NEU will receive funds through their state governments.

To apply, a government must have an active registration with the System for Award Management (SAM) database at SAM.gov. Governments will be asked to provide the following information:

  •  Jurisdiction name, taxpayer ID number, DUNS Number, and address
  •  Authorized representative name, title, and email
  •  Contact person name, title, phone, and email
  •  Funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number
  •  Completed award terms and conditions (to be signed by the authorized representative)

Jurisdictions must submit a request to receive funding even if they have previously applied for other programs through the Treasury Submission Portal. Eligible jurisdictions will receive further communications regarding the status of their submission via the email address provided in the Treasury Submission Portal
Subrecipients
The interim final rule permits states, territories, and tribal governments to transfer FRF awards to other constituent units of government or private entities—subrecipients—as long as the transferee abides by the transferor’s eligible use and other requirements. Similarly, local governments can transfer FRF awards to other constituent units of government, e.g., a county is able to transfer FRF awards to a city, town, or school district within it.

In these cases, the government FRF recipient remains responsible for monitoring and overseeing the subrecipient’s FRF usage and other activities related to the award to ensure that the subrecipient complies with the statutory and regulatory requirements and the award’s terms and conditions. Recipients also remain responsible for reporting to the Treasury on their subrecipients’ use of FRF payments for the award’s duration
Reporting Requirement
Financial records and supporting documents related to the FRF awards must be retained for five years. This includes those that demonstrate the award funds were used for eligible purposes under the program’s guidelines. Recipients must submit to the Treasury an interim report, quarterly project and expenditure reports, and an annual recovery plan performance report.
Interim Report
States, territories, metropolitan cities, counties, and Tribal governments will be required to submit one interim report, which will include the recipient’s expenditures by category at the summary level$195.3 billion is to be allocated as follows:

  • The Interim report will cover spending from the date of award to July 31, 2021
  • The interim report is due by August 31, 2021
  • This report will be similar to that of the CARES Act Coronavirus Relief Fund
  • Treasury will release additional guidance on this report in the coming weeks
Quarterly Project and Expenditure Report
States, territories, metropolitan cities, counties, and Tribal governments will be required to submit quarterly project and expenditure reports, including financial data, information on contract and subawards over $50,000 and other information regarding utilization of funds.

  • First report will cover spending from the date of award to September 30, 2021
  • First report is due by October 31, 2021
  • This report will be similar to that of the CARES Act Coronavirus Relief Fund
Recovery Plan Performance Report
States, territories, metropolitan cities, and counties above 250,000 populations will be required to submit an Annual Recovery Performance Report, including a description of a project funded and information on performance indicators and objectives of each fund.

  • Initial recovery plan will cover activity from the date of award to July 31, 2021
  • Local governments (including counties) with less than 250,000 residents, Tribal governments are not required to develop a Recovery Plan Performance Report
  • The initial Recovery performance plan is due by August 31, 2021, and thereafter it is due by 30 days after the end of the 12-month period
Most of the provisions of the Uniform Guidance apply to this program, including the Cost Principles and Single Audit Act requirements.
Harshwal & Company will continue to follow this developing situation. If you have questions about these changes, contact us at: info@harshwal.com

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