HomeMy WebLinkAbout257-21 RESOLUTION113 West Mountain Street
Fayetteville. AR 72701
(479) 575-8323
Resolution: 257-21
File Number: 2021-0786
NORTHWEST ARKANSAS COUNCIL FOUNDATION COVID COMMUNICATIONS
CAMPAIGN AND VACCINATION CAMPAIGN:
A RESOLUTION TO APPROVE A SUBRECIPIENT AGREEMENT WITH THE NORTHWEST
ARKANSAS COUNCIL FOUNDATION TO PROVIDE FUNDING FROM AMERICAN
RESCUE PLAN LOCAL RECOVERY FUNDS TO PROVIDE A REGION -WIDE COVID-19
COMMUNICATION AND VACCINATION CAMPAIGN IN BENTON AND WASHINGTON
COUNTIES, AND TO APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City was contacted by the Northwest Arkansas Council to request funds needed to
perform a region -wide communication and vaccination campaign in Benton and Washington Counties;
and
WHEREAS, funding for this campaign is being solicited from private philanthropy and businesses,
large Northwest Arkansas Cities and Counties based upon their population (one dollar per resident),
and the State of Arkansas. The amounts requested from the Cities of Fayetteville, Springdale, Rodgers
and Bentonville is one dollar per resident based on the latest census.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan
to execute the Subrecipient Agreement with Northwest Arkansas Council Foundation, a copy of which
is attached to this Resolution, in order to provide funding from American Rescue Plan Local Recover
Funds for a region -wide Covid-19 communication and vaccination campaign in Washington and
Benton counties.
page 1 Printed on 10/20/21
Resolution:: 257-21
File Number 2021-0786
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves a budget
adjustment, a copy of which is attached to this Resolution.
PASSED and APPROVED on 10/19/2021
Attest:
nn1r1
ERK/
GITf
Kara Paxton, City Clerk Treasure[, AY'7- Vek f
Page 2 PrintW on 10120/21
City of Fayetteville, Arkansas 113 West Mountain Street
Fayetteville, AR 72701 (479) 575-8323
Text File
File Number: 2021-0786
Agenda Date: 10/19/2021 Version: 1 Status: Passed
In Control: City Council Meetinq File Type: Resolution
Agenda Number: A.11
NORTHWEST ARKANSAS COUNCIL FOUNDATION COVID COMMUNICATIONS
CAMPAIGN AND VACCINATION CAMPAIGN:
A RESOLUTION TO APPROVE A SUBRECIPIENT AGREEMENT WITH THE NORTHWEST
ARKANSAS COUNCIL FOUNDATION TO PROVIDE FUNDING FROM AMERICAN RESCUE
PLAN LOCAL RECOVERY FUNDS TO PROVIDE A REGION -WIDE COVID-19
COMMUNICATION AND VACCINATION CAMPAIGN IN BENTON AND WASHINGTON
COUNTIES, AND TO APPROVE A BUDGET ADJUSTMENT
WHEREAS, the City was contacted by the Northwest Arkansas Council to request funds needed to perform
a region -wide communication and vaccination campaign in Benton and Washington Counties; and
WHEREAS, funding for this campaign is being solicited from private philanthropy and businesses, large
Northwest Arkansas Cities and Counties based upon their population (one dollar per resident), and the State of
Arkansas. The amounts requested from the Cities of Fayetteville, Springdale, Rodgers and Bentonville is one
dollar per resident based on the latest census.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FAYETTEVILLE, ARKANSAS:
Section 1: That the City Council of the City of Fayetteville, Arkansas hereby authorizes Mayor Jordan to
execute the Subrecipient Agreement with Northwest Arkansas Council Foundation, a copy of which is attached
to this Resolution, in order to provide funding from American Rescue Plan Local Recover Funds for a
region -wide Covid- 19 communication and vaccination campaign in Washington and Benton counties.
Section 2: That the City Council of the City of Fayetteville, Arkansas hereby approves a budget adjustment, a
copy of which is attached to this Resolution.
City of Fayetteville, Arkansas Page 1 Printed on 10/20/2021
City of Fayetteville Staff Review Form
2021-0786
Legistar File ID
10/19/2021
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
Paul Becker 10/1/2021 CHIEF OF STAFF (070)
Submitted By Submitted Date Division / Department
Action Recommendation:
Staff recommends approving a subrecipient agreement with the Northwest Arkansas Council Foundation to provide
a COVID communications campaign and vaccination campaign on a region -wide basis in Washington and Benton
counties and approval of a budget adjustment.
Budget Impact:
2246.800.9711-5729.00
2246 - American Rescue Plan Act
Account Number
Fund
20023.2021
American Rescue Plan Grant
Project Number
Project Title
Budgeted Item? Yes
Current Budget
$ 400,000.00
Funds Obligated
$ 400,000.00
Current Balance
$
Does item have a cost? Yes
Item Cost
$ 93,969.00
Budget Adjustment Attached? Yes
Budget Adjustment
$ 93,969.00
Remaining Budget
V20210527
Purchase Order Number: Previous Ordinance or Resolution #
Change Order Number: Approval Date:
Original Contract Number:
Comments:
CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF OCTOBER 19, 2021
TO: Mayor and City Council
THRU: Paul Becker, Chief Financial Officer
FROM: Paul Becker and Andrea Foren
DATE: October 1, 2021
CITY COUNCIL MEMO
SUBJECT: Staff recommends approving a Subrecipient Agreement with the Northwest
Arkansas Council Foundation to provide a COVID Communications Campaign
and Vaccination Campaign on a region- wide basis in Washington and Benton
Counties and approval of a Budget Adjustment.
RECOMMENDATION:
To approve the attached Subrecipient Agreement with the Northwest Arkansas Council
Foundation and provide funding from American Rescue Plan Local Recovery Funds for the
scope of work identified in Appendix A of this resolution.
DISCUSSION:
The City was contacted by the Northwest Arkansas Council to request funds needed to perform
a region -wide communication and vaccination campaign in Benton and Washington Counties
Total funding for this campaign is being solicited from private philanthropy businesses as well as
large Northwest Arkansas Cities and Counties and the State of Arkansas. The amounts
requested from the Cities of Fayetteville, Springdale, Rodgers and Bentonville is one dollar per
resident based on the latest census.
As structured, the Northwest Arkansas Council Foundation would function as a subrecipient of
the Fayetteville grant award and must, therefore, agree to meet the terms and reporting
requirements of the grant as specified in the attached Subrecipient Agreement.
BUDGET/STAFF IMPACT:
This request will be funded by approval of the attach budget adjustment for $93,969 which will
be appropriated from the American Rescue Plan Local Recovery Grant received by the City.
Attachments:
ARPA Subrecipient Contract with Northwest Arkansas Council
Mailing Address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
10/12/21 REVISED CONTRACT
CITY OF
r
FAYETTEVILLE
ARKANSA
S
SUBRECIPIENT AGREEMENT for AMERICAN RESCUE PLAN
City of Fayetteville, AR
and
Northwest Arkansas Council Foundation
City of Fayetteville Subrecipient# ARPA-001
This Subrecipient Agreement (Agreement) is made entered into on this ig day of O l -u'., 2021
between the City of Fayetteville, hereafter referred to as ("the City) and the Northwest Arkansas Council Foundation,
hereafter referred to as ("the NACF" or "subrecipient").
WHEREAS, The NAC requested funding to contribute to a region wide COVID communication and vaccination campaign
with the City of Fayetteville contributing a proportional amount of funding based on current population. Other
contributing City's include Bentonville, Rogers, and Springdale;
WHEREAS, The City of Fayetteville has received funding through the American Rescue Plan Act (ARPA), 31 CFR Part 35
from the United States Department of the Treasury;
WHEREAS, it shall be hereby disclosed this Agreement shall make NACF a subrecipient / pass -through entity under 2 CFR
200.1 receiving a subaward under sections 602(c)(3) and 603(c)(3) and be considered for this subaward to carry out a
program or project on behalf of the City with the City's Federal award funding;
WHEREAS, the City notifies the subrecipient: (1) that this funding shall be considered a subaward of ARPA funds; (2)
subrecipient shall adhere to any and all compliance requirements for use of ARPA funds; and (3) any and all reporting
requirements for expenditures of ARPA funds.
WHEREAS, NACF shall also be identified with EIN 46-0807914 and SAM.gov Unique Entity ID UXTWG5AF9945;
WHEREAS, this Agreement is reflective of requirements issued and identified with the Interim Final Rule of the
Department of the Treasury and this agreement is subject to change with the final Rule of the Department of the
Treasury, which has not been yet issued as of the date of this Agreement;
In consideration of the covenants and conditions hereinafter set forth, the City and subrecipient agree as follows:
1. INFORMATION REQUIRED BY THE UNIFORM GRANT GUIDANCE (UGG) §200.332:
a) Subrecipient Name (must match the name associated with its Unique Entity Identifier):
Northwest Arkansas Council Foundation
4100 Corporate Center Dr., Suite 205
Springdale, AR 72762-5768
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreernent# ARPA-0001
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b) Subrecipient's Unique Entity Identifier (formerly known as DUNS number):
DUNS Unique Entity ID: 933792038
SAM Unique Entity ID: UXTWG5AF9945
c) Subaward Budget Period: Subaward budget period shall begin on the Start date as defined above and shall
ends on the end date.
d) Total Amount of Federal Funds obligated to the subrecipient by the City: $93,969.00
e) Name of Federal Awarding Agency and Contact Information:
United States Department of Treasury (US Treasury)
Attn: State and Local Fiscal Recovery Funds
1500 Pennsylvania Avenue NW,
Washington, DC 20220
SLFRP@treasury.gov
Telephone: 202-622-6415
Website: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local- and-tribal-
governments/state-and-local-fiscal-recovery-fund
Contact Information for the City:
Paul A. Becker
Chief Financial Officer
113 W. Mountain
Fayetteville, AR 72701
pbecker@fayetteville-ar.gov
Telephone: 479-575-8330
Contact Information for the Subrecipient:
Northwest Arkansas Council Foundation
Attn: Mike Harvey
4100 Corporate Center Drive, Suite 205
Springdale, AR 72762
f) Assistance Listings Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) (AKA
the American Rescue Plan Local Recovery Funds, hereinafter ARPA) See
https://sam.gov/fal/7cecfdef62dc42729a3fdcd449bd62b8/view
This subaward is a program grant and not for Research and Development.
g) Indirect Cost Rate: (de minimis cost rate) maximum of 10% of direct costs if indicated in the budget.
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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FAYETTEVILLE
ARKANSAS
AGREEMENT: This Agreement, contains the entire agreement and understanding between the parties hereto and
supersedes any prior or contemporaneous written or oral agreements, representations and warranties between them
respecting the subject matter hereof. This Agreement is also composed of the following appendices:
a. Appendix A — Scope of Work & Project Allocation
b. Appendix B — Department of the Treasury, 31 CFR Part 35, RIN 1505-AC77, Coronavirus State and Local Fiscal
Recovery Finds, Action: Interim Final Rule
c. Appendix C — Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds
i. This appendix document shall be replaced in its entirety immediately upon issuance of the Final Rule.
3. SUBCONTRACTING: Subrecipient is permitted to sub -contract with third parties to complete the scope of work
identified in this contract. Any sub -contract or sub -sub recipient shall follow all federal, local and state regulations.
Subrecipient shall not be allowed to disperse funds in a subrecipient manner to another third party without prior
written City approval.
4. PERIOD OF PERFORMANCE: This Agreement shall commence on the date stated above and shall expire one year from
commencement. The Agreement may be extended or shortened upon mutual written agreement of the parties.
5. STANDARDS OF WORK: Subrecipient agrees that the performance of the work and services of this Agreement shall
conform to the highest professional standards.
6. TAXES: Subrecipient shall pay all current and applicable local, city, county, state and federal taxes, licenses and
assessments related to the Scope of Work to be performed by Subrecipient including but not limited to those
payments required by all federal, state and local laws, and any other laws and Acts under which Subrecipient may be
liable.
7. COMPLIANCE WITH APPLICABLE LAWS: Subrecipient shall perform all activities funded by this Agreement in
accordance with all applicable federal, state and local laws, including without limitation laws which regulate the use of
funds allocated under ARPA. The term "federal, state and local laws" as used in this Agreement shall mean all
applicable statutes, rules, regulations, executive orders, directives or other laws, including all laws as presently in
effect and as may be amended or otherwise altered during the Agreement Term, as well as all such laws which may
be enacted or otherwise become effective during the Agreement Term. The term "federal, state and local laws" shall
include, without limitation:
a. Federal Reauirements:
Subrecipient agrees to comply with the requirements of section 603 of the Rescue Act, regulations
adopted by Treasury pursuant to section 603(f) of the Act, and guidance issued by Treasury regarding
the foregoing. The Subrecipient also agrees to comply with all other applicable federal statutes,
regulations, and executive orders, and the Subrecipient shall provide for such compliance by other
parties in any agreements it enters into with other parties relating to this award.
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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ii. Federal regulations applicable to this award include, without limitation, the following:
a. Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards, 2 C.F.R. Part 200, other than such provisions as Treasury may
determine are inapplicable to this Award and subject to such exceptions as may be
otherwise provided by Treasury. Subpart F — Audit Requirements of the Uniform
Guidance, implementing the Single Audit Act, shall apply to this award. The following
2 CFR Part 200 Policy requirements are excluded from coverage under this assistance
listing: For 2 CFR Part 200, Subpart C, the following provisions do not apply to the
CSLFRF program: 2 C.F.R. § 200.204 (Notices of Funding Opportunities); 2 C.F.R. §
200.205 (Federal awarding agency review of merit of proposal); 2 C.F.R. § 200.210
(Pre -award costs);and 2 C.F.R. § 200.213(Reporting a determination that a non -
Federal entity is not qualified for a Federal award). For 2 CFR Part 200, Subpart D, the
following provisions do not apply to the SLFRF program: 2 C.F.R. § 200.308 (revision
of budget or program plan); 2 C.F.R. § 200.309 (modifications to period of
performance); C.F.R. § 200.305 (b)(8) and (9) (Federal Payment).
b. Universal Identifier and System for Award Management (SAM), 2 C.F.R. Part 25,
pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part 25 is
hereby incorporated by reference. As SAM is scheduled to be phased out,
compliance with a successor government -wide system officially designated by the
Office of Management and Budget (OMB).
c. Reporting Subaward and Executive Compensation Information, 2 C.F.R. Part 170,
pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part 170 is
hereby incorporated by reference.
d. OMB Guidelines to Agencies on Governmentwide Debarment and Suspension
(Nonprocurement), 2 C.F.R. Part 180, including the requirement to include a term or
condition in all lower tier covered transactions (contracts and subcontracts described
in 2 C.F.R. Part 180, subpart B) that the award is subject to 2 C.F.R. Part 180 and
Treasury's implementing regulation at 31 C.F.R. Part 19.
e. Subrecipient Integrity and Performance Matters, pursuant to which the award term
set forth in 2 C.F.R. Part 200, Appendix XII to Part 200 is hereby incorporated by
reference.
f. Governmentwide Requirements for Drug -Free Workplace, 31 C.F.R. Part 20.
g. New Restrictions on Lobbying, 31 C.F.R. Part 21.
h. Uniform Relocation Assistance and Real Property Acquisitions Act of 1970 (42 U.S.C.
§§ 4601-4655) and implementing regulations.
i. Generally applicable federal environmental laws and regulations.
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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._ FAYETTEVI
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iii. Statutes and regulations prohibiting discrimination applicable to this award include without
limitation, the following:
a. Title VI of the Civil Rights Act of 1964 (42 U.S.C. §§ 2000d et seq.) and Treasury's
implementing regulations at 31 C.F.R. Part 22, which prohibit discrimination on the
basis of race, color, or national origin under programs or activities receiving federal
financial assistance; Subrecipient and its sub -contractors, sub -recipients, sub -
grantees, successors, transferees, or assignees, shall comply with: Title VI of the Civil
Rights Act of 1964 (42 U.S.C. § 2000d et seq., 78 stat. 252) and its applicable federal
statutory, regulatory authorities, other pertinent directives, circulars, policy,
memoranda, and guidance prohibiting discrimination on the basis of race, color,
national origin, age, sex, and disability and give assurance that it will promptly take
any measures necessary to ensure such compliance.
b. The Fair Housing Act, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §§ 3601 et
seq.), which prohibits discrimination in housing on the basis of race, color, religion,
national origin, sex, familial status, or disability;
c. Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. § 794), which
prohibits discrimination on the basis of disability under any program or activity
receiving federal financial assistance;
d. The Age Discrimination Act of 1975, as amended (42 U.S.C. §§ 6101 et seq.), and
Treasury's implementing regulations at 31 C.F.R. Part 23, which prohibit
discrimination on the basis of age in programs or activities receiving federal financial
assistance; and
e. Title II of the Americans with Disabilities Act of 1990, as amended (42 U.S.C. §§
12101 et seq.), which prohibits discrimination on the basis of disability under
programs, activities, and services provided or made available by state and local
governments or instrumentalities or agencies thereto.
iv. Remedial Actions. In the event of the Subecipient's noncompliance with section 603 of the Act, other
applicable laws, Treasury's implementing regulations, guidance, or any reporting or other program
requirements, the City may impose additional conditions on the receipt of a subsequent payments, if
any, or take other available remedies as set forth in 2 C.F.R. § 200.339. In the case of a violation of
section 603(c) of the Act regarding the use of funds, previous payments shall be subject to
recoupment as provided in section 603(e) of the Act.
v. Hatch Act The Subrecipient agrees to comply, as applicable, with requirements of the Hatch Act (5
U.S.C. §§ 1501-1508 and 7324-7328), which limit certain political activities of State or local
government employees whose principal employment is in connection with an activity financed in
whole or in part by this federal assistance.
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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._ FAYETTEVILLE
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vi. False Statements. The Subrecipient understands that making false statements or claims in connection
with this award is a violation of federal law and may result in criminal, civil, or administrative
sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating
in federal awards or contracts, and/or any other remedy available by law.
vii. Monitoring: The Subrecipient agrees to allow the City and the US Treasury to monitor the subaward
in accordance with all applicable statutes, regulations, OMB circulars, and guidelines. The
Subrecipient shall allow the City to have oversight of any Subrecipient's spending and monitoring of
specific outcomes and benefits attributable to use of subaward funds by Subrecipient.
viii. Audits In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements, nonfederal
entities that expend financial assistance of $750,000 or more in Federal awards will have a single
audit conducted for that year. Non-federal entities that expend less than $750,000 a year in Federal
awards are exempt from Federal audit requirements for that year, except as noted in 2 CFR 200.503.
The City is responsible for resolving audit findings specifically related to the subaward and not
responsible for resolving cross -cutting findings (§200.332(d)(4)).
ix. Disclosure of Information. Any confidential or personally identifiable information (PII) acquired during
the course of the subaward shall not be disclosed by the Subrecipient to any person, firm,
corporation, association, or other entity for any reason or purpose whatsoever without the prior
written consent of the City, either during the term of the Agreement or after termination of the
Agreement for any reasons whatsoever. The Subrecipient agrees to abide by applicable federal
regulations regarding confidential information and research standards, as appropriate, for federally
supported projects.
x. Conflicts of Interest. The Subrecipient understands and agrees it must maintain a conflict of interest
policy consistent with 2 C.F.R. § 200.318(c) and that such conflict of interest policy is applicable to
each activity funded under this award. Subrecipients must disclose in writing to the City, as
appropriate, any potential conflict of interest affecting the awarded funds in accordance with 2 C.F.R.
§ 200.112.
b. City and Other City Requirements (see §200.332(a)(3)):
•Reporting: Subrecipient agrees to comply with any reporting obligations established by the City as it
relates to this award. Subrecipient shall submit a Monthly Grant Report by the 6th of the month to
the Contact for the City.
ii. Maintenance of and Access to Records:
a. The Subrecipient shall maintain records and financial documents sufficient to
evidence compliance with section 603(c) of the Act, Treasury's regulations
implementing that section, and guidance issued by Treasury regarding the foregoing.
=The US Treasury Office of Inspector General and the Government Accountability
Office, the City, or their authorized representatives, shall have the right of access to
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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fCITY OF
_ FAYETTEVILLE
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records (electronic and otherwise) of the Subrecipient in order to conduct audits or
other investigations.
Records shall be maintained by Subrecipient for a period of five (5) years after all
funds have been audited, the audit resolved, and all funds expended or returned to
Treasury, whichever is later.
iii. Administrative Considerations. Where policies of the Subrecipient differ from those of, such as travel
reimbursement, fringe benefits, indirect costs, etc., the policies of the subrecipient shall be applicable
to cost incurrences under the Agreement provided such policies comply with awarding agency
regulations.
.Responsibilities. The Subrecipient agrees to furnish the necessary resources, materials, services, and
otherwise to do all things necessary for the performance of the work described in Scope of Work,
which is incorporated into the Agreement as Attachment , along with the Budget required for that
performance, which is incorporated into the Agreement as Attachment B and C respectively. (see
Attachment B: Scope of Work and Attachment C Budget). Subrecipient shall provide Monthly Reports
as provided above.
Relationship of Parties. The parties are independent, and neither party is the agent, joint venturer,
partner, or employer of the other.
-Rebudgeting and Prior Approvals. Subrecipient is permitted to rebudget direct costs, if necessary, as
described in the uniform guidance (§200.308) to better reflect spending requirements, subject to the
City's written approval, and subject to the federal awarding agency's policy and UGG's that would
define requirements for prior written approval (§200.407) before implementation.
-Monitoring Plan and Reporting. The City will monitor the Subrecipient to ensure that the subaward is
used for authorized purposes, in compliance with federal statutes, regulations, and the terms and
conditions of the subaward; and that subaward performance goals are achieved, as required by
§200.332(d). The City will monitor the Subrecipient and identify any failures in the administration
and performance of the award. The monitoring plan will also serve to identify whether the
Subrecipient needs technical assistance.
In addition to program performance, The City will monitor financial performance as required by
§200.332(d)(1)). Monitoring will be used to document allowable and unallowable costs, time and
effort reporting and travel. Monitoring also will be used to follow up on findings identified in an
earlier monitoring visit, from document reviews or after an audit to ensure the Subrecipient took
corrective action (§200.332(d)(2)).
As appropriate, the cooperative audit resolution process may be applied. The monitoring plan may
include on -site visits, follow-up, document and/or desk reviews, third -party evaluations, virtual
monitoring, technical assistance and informal monitoring such as email and telephone interviews.
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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The City will also issue management decisions for applicable audit findings as required by §200.521
(§200.332(d)(3)). For reporting, UGG requires that the City and the Subrecipient use OMB approved
government -wide standard information collections when providing performance information and
data in reports.
The books and records of the Subrecipient shall be made available, if needed and upon request, at
subrecipient's regular place of business, for audit by personnel authorized by the City or federal
government. The Subrecipient books and records must be retained for a period of five (5) years
following receipt of final report, understanding no other actions require an extension of the record
retention period, such as open audit findings, committed program income, or other reasons, as
applicable.
viii. Risk Assessments, Specific Conditions and Remedies. The City has conducted a risk assessment as
required by §200.332(b) and determined the subrecipient's level of risk as low. Risk assessments may
be repeated throughout the project period after scheduled reports, audits, unanticipated issues or
other adverse circumstances that may arise. In the event of noncompliance or failure to perform, the
City has the authority to apply remedies, as defined in the uniform guidance (§200.339), including but
not limited to: temporarily withholding payments, disallowances, suspension or termination of the
federal award, suspension of other federal awards received by the subrecipient, debarment or other
remedies including civil and/or criminal penalties, as appropriate (§200.332(h). The City will also
consider whether the monitoring results of the Subrecipient necessitate adjustments to the its own
record (see §200.332(9)).
.Copyright/Intellectual Property. The federal government will possess the entire copyright, title, and
interest in all materials, inventions or deliverables produced as a result of this subaward, including
use of logos, as appropriate. As a general principle, subject to the rights of the federal government
and with respect to any subject, invention, material, or deliverable in which the City [and
subrecipient] retain title resulting from this subaward, the federal government shall ha.ve a
nonexclusive, nontransferable, irrevocable paid -up license to practice or have practiced for or on
behalf of the United States the subject invention, material or deliverable throughout the world. The
City and Subrecipient will credit the federal award agency on any materials, inventions or deliverables
produced under the federal award and subaward.
c. Suspension and Debarment. Subrecipient represents that neither it nor any of its principals has been
debarred, suspended or determined ineligible to participate in federal assistance awards or contracts as
defined in regulations implementing Office of Management and Budget Guidelines on Governmentwide
Debarment and Suspension (Non -procurement) in Executive Order 12549. Subrecipient further agrees that
it will notify the City immediately if it or any of its principals is placed on the list of parties excluded from
federal procurement or non -procurement programs available at www.sam.gov.;
d. DUNS Number. Subrecipient agrees and acknowledges the City may not grant the Subaward and Subrecipient
may not receive the Subaward unless Subrecipient has provided its Data Universal Numbering System
("DUNS") number to the City. The DUNS number is the nine -digit number established and assigned by Dun
and Bradstreet, Inc. to uniquely identify business entities;
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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e. Federal Funding Accountability and Transparency Act of 2006. Subrecipient agrees to provide the City with all
information requested by the City to enable the City to comply with the reporting requirements of the
Federal Funding Accountability and Transparency Act of 2006;
f. Licenses, Certifications, Permits, Accreditation. Subrecipient shall procure and keep current any license,
certification, permit or accreditation required by federal, state or local law and shall submit to the City proof
of any licensure, certification, permit or accreditation upon request; and
g. Other City Agreements. Subrecipient shall fulfill all other agreements with the City and shall comply with all
federal, state and local laws applicable to programs funded by such agreements.
8. LIMITATION OF FUNDING AND COMPENSATION: It is expressly agreed and understood that upon execution of the
Agreement, the City agrees to allocate no more than the amount of $93,969.00 US DOLLARS for the City's
proportionate allocation based on population for full and complete satisfactory performance of this Agreement.
Drawdowns for the payment of eligible expenses shall be made against the line item budgets specified in Appendix A
and in accordance with performance.
a. Compensation. This is a subaward agreement, using the working advance method of payment. The amount of
the subaward is $93,969.00 US DOLLARS. The subrecipient may invoice the City monthly. Invoices shall state
the period for which reimbursement is being requested and will itemize the cost by budget category per
Appendix A. Copies of invoices and other supporting documentation shall be attached. All deliverables and
reports defined in Appendix A are to be submitted to the City for the compensation defined herein.
Subrecipient shall not be entitled to receive any additional or separate compensation from the City in
connection with the project without prior written approval of the City.
9. SCOPE OF WORK: The Subrecipient shall perform all services according to the Scope of Work as indicated in Appendix
A. Any deviation from the provisions detailed in the Scope of Work shall be prohibited unless prior approval is
granted by formal change order to this Agreement.
10. PUBLICITY AND USE OF NAME:
a. Any and all news releases, advertising, promotion, sales literature containing the City of Fayetteville logo or
name shall be subject to prior written approval of the other party, and subject to the prior written approval of
the City, as appropriate. Any such publicity shall credit the contributions of each party.
b. Neither party shall use the name, insignia, or trademark of the other party, nor any adaptation thereof, nor
the names of any of its employees in any advertising, promotion or sales literature without the written
consent of the other party.
11. FISCAL AND ADMINISTRATIVE RESPONSIBILITIES: The Subrecipient agrees to comply with the provisions of the
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR part 200)
(the Uniform Guidance), including the cost principles and restrictions on general provisions for selected items of cost.
as applicable, and all requirements and standards which shall include but are not limited to the following:
a. Compliance with Federal Procurement Laws: The City hereby designates and the Subrecipient hereby agrees
to receive funding through the City's ARPA funding and to administer such funding in accordance the United
States Treasury Interim Final Rule, currently, and Final Rule, upon issuance from the US Treasury, 31 CFR Part
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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fCITY OF
_ FAYETTEVILLE
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35, RIN 1505-AC77, Coronavirus State and Local Fiscal Recovery Funds with this agreement. Compliance with
procurement laws shall be inclusive of all appendices within this Agreement.
All contracts for services and procurement for materials shall be carried out in compliance with 2 CFR Part
200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
b. Compliance with Other Federal, State and Local Procurement: All contracts for services and procurement for
materials shall be carried out in compliance with and all other applicable federal, state, and local rules and
regulations, including regulations and policies from the City's Purchasing Division.
City of Fayetteville Procurement Thresholds:
a. $0 - $999: No quotes required
b. $1,000 - $2,499: minimum of 3 verbal quotes required
c. $2,500 - $19,999: minimum of 3 written quotes required
d. $20,000 and up: Formal sealed bid / solicitation process
i. Refer to State of Arkansas Procurement laws, City of Fayetteville Purchasing Policies and Ordinances for
requirements for formal solicitation processes.
c. Records and Reports: The Subrecipient shall, at a minimum, submit the following reports to the City and
report as required in Appendix D:
i. Monthly reports shall be submitted to the City fifteen (15) calendar days after month end. Monthly
reports shall be submitted on the City provided form and will provide and outline funded activities
undertaken during each month for the duration of the project as it relates to Appendix A — Scope of
Work & Project Allocation. Failure to provide the required documentation and information will affect
the funding in this agreement and future requests for funding.
ii. A Final Summary Report due no later than thirty (30) calendar days after the end of the Agreement
period shall include a summary of all compiled information and activities related to this Agreement
iii. The Subrecipient agrees to maintain records and reports related to the project for a period of no less
than five years following the term of this Agreement.
iv. Access to Records (See §200.332(a)(5))
a. The City, its auditors, and if necessary, the federal agency, will be provided access to
the subrecipient's programmatic and financial records (§200.337(a)).
b. The Subrecipient will maintain all programmatic and financial records, including but
not limited to:
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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CITY OF
_ FAYETTEVILLE
q
ARKANSAS
i. records providing a full description of each activity undertaken;
ii. records demonstrating that each activity undertaken meets the national
objectives of the federally- connected program;
iii. records required to determine the eligibility of activities;
iv. records required to document the acquisition, improvement, use or
disposition of real property acquired or improved with the subaward
assistance;
v. records documenting compliance with federal and local laws; and
vi. financial records required by program regulations and the Office of
Management and Budget.
c. The Subrecipient shall retain all records pertinent to program activities and financial
expenditures incurred under this Agreement for a period of three years after the
date of submission of the final expenditure report under this award (§200.334).
Notwithstanding the above, if there are litigation, claims, audits, negotiations,
written notification from the federal program or cognizant agencies or the City, or
other actions that involve any of the records cited and that have started before the
expiration of the three year period, then such records must be retained until
completion of the actions and resolutions of all issues (§200.334(a)), or the
expiration of the three-year period, whichever occurs later.
d. Documentation of Costs: The Subrecipient shall maintain records on materials purchased, services
performed, individuals and families served. All costs shall be supported by evidencing in proper detail the
nature and propriety of charges. All checks, payrolls, invoices, contracts, vouchers, orders or other
accounting documents pertaining in whole or in part to this Agreement shall be clearly identified and readily
accessible.
e. Limitations on Expenditures. Subrecipient shall not be reimbursed or otherwise compensated for any
expenditures incurred or services provided prior to the Effective Date or following the earlier of the expiration
or termination of this Agreement. The City shall only reimburse Subrecipient for documented expenditures
incurred during the Agreement Term that are: (i) reasonable and necessary to carry out the Scope of Work;
(ii) documented by contracts or other evidence of liability consistent with established federal, state and local
procurement guidelines; and (iii) incurred in accordance with all applicable requirements for the expenditure
of funds payable under this Agreement.
f. Improper Payments. Any item of expenditure by Subrecipient under the terms of this Agreement which is
found by auditors, investigators, and other authorized representatives of the City, the U.S. Government
Accountability Office or the Comptroller General of the United States to be improper, unallowable, in
violation of federal or state law or the terms of the Notice of Prime Award or this Agreement, or involving any
fraudulent, deceptive, or misleading representations or activities of Subrecipient, shall become Subrecipient's
City of Fayetteville, AR and Northwest Arkansas Council
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CITY OF
P_ FAYETTEVILLE
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liability, to be paid by Subrecipient from funds other than those provided by City under this Agreement or any
other agreements between City and Subrecipient. This provision shall survive the expiration or termination of
this Agreement.
g. Audited Financial Statements. In any fiscal year in which Subrecipient expends $750,000 or more in federal
awards during such fiscal year, including awards received as a subrecipient, Subrecipient must comply with
the federal audit requirements contained in 2 CFR § 200, including the preparation of an audit by an
independent Certified Public Accountant in accordance with the Single Audit Act Amendments of 1996, 31
U.S.C. 7501-7507, and with Generally Accepted Accounting Principles.1 If Subrecipient expends less than
$750,000 in federal awards in any fiscal year, it is exempt from federal audit requirements, but its records
must be available for review by the City and appropriate officials of the U.S. Government Accountability Office
and the Comptroller General of the United States, and it must still have a financial audit performed for that
year by an independent Certified Public Accountant. Subrecipient shall provide the City with a copy of
Subrecipient's most recent audited financial statements, federal Single Audit report, if applicable (including
financial statements, schedule of expenditures of federal awards, schedule of findings and questioned costs,
summary of prior audit findings, and corrective action plan, if applicable), and management letter within
thirty (30) days after execution of this Agreement and thereafter within nine (9) months following the end of
Subrecipient's most recently ended fiscal year.
h. Closeout (see 200.332(a)(6)): The City will determine whether all applicable administrative actions and all
required work have been completed by the Subrecipient at the end of the period of performance. If the
Subrecipient fails to complete the requirements, the federal awarding agency or pass -through will proceed to
closeout the award with the information available (§200.344). The pass -through will note if closeout relates
to the end of a 12 -month period and termination of subaward, or if the closeout relates to the end of a 12 -
month period and preparation for an upcoming continuation period.
i. The City must provide timelines for completion of tasks (see §200.344).
ii. The City must identify submission dates of all performance and financial reports (no later than 90
calendar days after the period of performance) (§200.344(a}).
iii. The City must describe requirements for liquidation of financial obligations if the award is ending, or
identification of carry-over of funds, if needed, to the next award period (§200.344(b))
iv. The City must include completion of any other required closeout activities, such as submission of
deliverables, payments, if any, due to the Subrecipient from the City, attribution to the federal agency
and/or copyright or patent rights, and any accounting of real or personal property (§200.344(c) and
(f)).
v. The Subrecipient must permit the City and auditors to have access to the subrecipient's records and
financial statements as necessary for audits and monitoring during the record retention period of
three years, or more as appropriate (§200.337(a)).
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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CITY OF
Z40 FAYETTEVILLE
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vi. The federal agency and/or City has the right to return to audit the program after close-out at any
time during the record retention period and as long as the records are retained, to conduct recovery
audits including the recovery of funds, as appropriate (§200.337(c)}.
12. COOPERATION IN MONITORING AND EVALUATION:
a. City Responsibilities. The City shall monitor, evaluate and provide guidance and direction to Subrecipient in
the conduct of Approved Services performed under this Agreement. The City has the responsibility to
determine whether Subrecipient has spent funds in accordance with applicable laws, regulations, including
the federal audit requirements and agreements and shall monitor the activities of Subrecipient to ensure that
Subrecipient has met such requirements. The City may require Subrecipient to take corrective action if
deficiencies are found.
b. Subrecipient Responsibilities:
i. Subrecipient shall permit the City to carry out monitoring and evaluation activities, including any
performance measurement system required by applicable law, regulation, funding sources guidelines
or by the terms and conditions of the applicable Notice of Prime Award, and Subrecipient agrees to
ensure, to the greatest extent possible, the cooperation of its agents, employees and board members
in such monitoring and evaluation efforts. This provision shall survive the expiration or termination of
this Agreement.
ii. Subrecipient shall cooperate fully with any reviews or audits of the activities under this Agreement by
authorized representatives of the City, the U.S. Government Accountability Office or the Comptroller
General of the United States and Subrecipient agrees to ensure to the extent possible the
cooperation of its agents, employees and board members in any such reviews and audits. This
provision shall survive the expiration or termination of this Agreement.
13. PROGRAM INCOME: It is not the intent of this Agreement to produce income relating from the Scope of Work;
however, income directly generated from the use funds associated with this Agreement by the Subrecipient shall be
returned to the City of Fayetteville.
14. MONITORING AND AUDITS: The City is required to ensure that federal funding requirements are met, that the funds
are used for the purpose of the program, and the Subrecipient complies with reporting and auditing requirements.
The City will monitor and audit the Subrecipient to assure the compliance of project.
15. REMEDIES FOR NONCOMPLIANCE: If the Subrecipient fails to comply with any term in this Agreement, the City may
take one or more of the actions indicated in 2 CFR Part 200.338 Remedies for noncompliance.
16. PERFORMANCE TERM EXTENSION: The City may consider an extension of the term of performance based on
justifiable circumstances beyond the control of the Subrecipient. The Subrecipient shall make application and submit
documentation to the City regarding such circumstances, and acceptance of a proposal for the new time frame
constitutes an amendment to this Agreement. Any such request for extensions shall be subject to the written
approval of the City. The decision of the City shall be final and conclusive.
17. TERMINATION OF AGREEMENT:
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
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fCITY OF
_ FAYETTEVILLE
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a. This Agreement may be terminated at any time by either party, upon giving 30 calendar days written notice
to the non -terminating party. This Agreement shall be automatically terminated in the event that funds under
federal award, number are discontinued by the awarding agency for any reason. Such termination shall take
effect upon receipt of written notice to Subrecipient from the City. If there is a need to settle on an early
termination, partial payment up to the termination date would be determined by incurrence of allowable
cost, by completion of task, by percent of time completed up to the settlement, or some other method as
defined by the City upon review of the subrecipient's records.
18. CLAIMS AGAINST THE CITY: The Subrecipient agrees to defend, indemnify and save harmless the City from any and all
claims of any nature whatsoever which may arise from the Subrecipient's performance of this Agreement; provided,
however, that nothing contained in this Agreement shall be construed as rendering the Subrecipient liable for acts of
the City, its officers, agents or employees.
19. CONFLICTS OF INTEREST: The Subrecipient represents that none of its employees, officers, or directors presently
have any interest, either directly or indirectly, which would conflict in any manner with the Subrecipient's
performance or procurement under this Agreement, and that no person having such interest will be appointed or
employed by the Subrecipient.
20. BINDING EFFECT: This Agreement shall be binding upon and shall ensure to the benefit of the parties hereto and their
respective heirs and assigns; provided, however, that no assignment shall be effective to relieve a party of any liability
under this Agreement unless the other party has consented in writing to the assignment and agreed to the release of
such liability. The City and the Subrecipient hereby acknowledge receipt of a duly executed copy of this Agreement
complete with all Appendices attached hereto.
21. PAYMENTS: Specific project completion dates may be negotiated during the contract term. Payment may be reduced,
delayed, or denied until acceptable work products are produced.
a. Costs shall be necessary, reasonable and directly related to the scope of the project in this agreement. All
costs shall be legal and proper. The budget included in Appendix A shall control amounts of allowable
expenditures within budget categories.
b. The total amount invoiced to the City over the course of the contract period shall not exceed $93,969.00 US
Dollars, the agreed upon contribution of the City to a regional COVID Vaccination and Communication plan
pursuant to Appendix A.
c. On or before the fifteenth (15th) day of each month and in any event no later than thirty (30) calendar days
after the earlier of the expiration or termination of this Agreement, Subrecipient shall submit invoices for the
most recent month ended, to the City, setting forth actual expenditures of Subrecipient in accordance with
this Agreement The Subrecipient shall provide backup documentation with all invoices to show compliance
with all federal, state and local laws.
d. The City may disapprove the requested compensation. If the compensation is so disapproved, the City shall
notify Subrecipient as to the disapproval. If payment is approved, no notice will be given.
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
Page 14 of 17
CITY OF
V_ FAYETTEVILLE
4ff ARKANSAS
22. INSURANCE: Subrecipient shall, at all times throughout the Agreement Term, carry insurance in such form and in such
amounts as City may from time to time reasonably require against other insurable hazards and casualties that are
commonly insured against in the performance of similar services as are to be provided under this Agreement. At a
minimum, Subrecipient shall maintain during the Agreement Term at least the following types and limits of insurance
coverage:
a. Workers' compensation in amounts no less than required by law and statutory amount;
b. Employer's Liability Insurance with a limit of no less than $1,000,000;
c. Commercial general liability insurance, including personal injury, contractual liability and property
damage, with limits of $1,000,000 per occurrence and $2,000,000 aggregate;
d. Umbrella liability insurance with a limit of $1,000,000 per occurrence and in the aggregate.
All policies (other than workers' compensation and employer's liability insurance) providing such coverage shall
name the City as an additional insured with respect to Subrecipient's performance of services under this
Agreement. Subrecipient shall provide the City with certificates of insurance evidencing such coverage within
thirty (30) calendar days after execution of this Agreement, which certificates shall provide that the City shall
receive thirty (30) days' advance written notice of any pending cancellation or non -renewal of any of the
coverages required by the City pursuant to this Agreement. Insurance coverages that expire before the expiration
of the Agreement Term shall be promptly renewed by Subrecipient so that there is no gap in coverage and
certificates of insurance evidencing such renewal coverage shall be provided to the City, by a copy provided to the
City immediately upon renewal. Subrecipient's failure to maintain insurance in the form and/or amounts required
by the Citypursuant to this Agreement shall be deemed a material breach of this Agreement and the City shall
have the right thereupon to terminate this Agreement immediately in addition to any other remedy provided
herein
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
Page 15 of 17
q OF
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23. Changes in Scope or Price: Changes, modifications or amendments in scope, price or fees to this agreement shall not
be allowed without a prior formal contract amendment approved by the City in advance of the change in scope, price
or fees.
24. Freedom of Information Act: This Agreement is subject to the Arkansas Freedom of Information Act. If a Freedom of
Information Act request is presented to the City of Fayetteville, the subrecipient shall do everything possible to
provide the documents in a prompt and timely manner as prescribed in the Arkansas Freedom of Information Act
(A.C.A. §25-19-101 et. seq.). Only legally authorized photocopying costs pursuant to the FOIA may be assessed for this
compliance.
25. Jurisdiction: Venue to resolve any disputes shall be Washington County, Arkansas with Arkansas law applying to the
case. This Agreement shall be governed by and construed in accordance with the laws of the State of Arkansas
without regard to conflict of law principles.
26. Miscellaneous
a. Notices: Any notice, request, consent or approval required or permitted to be given under this Agreement or
pursuant to law shall be sufficient if in writing, and if and when sent by certified or registered mail, with
postage prepaid, to City's address or to the NAC's address as listed below.
CITY OF FAYETTEVILLE, AR
City of Fayetteville, AR
Lioneld Jordan
113 W. Mountain
Fayetteville, AR 72701
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
Page 16 of 17
SUBRECIPIE NT
Northwest Arkansas Council Foundation ATTN: Mayor
ATTN: Mike Harvey
4100 Corporate Center Drive, Suite 205
Springdale, AR. 72762
CITY OF
r FAYETTEVILLE
ARKANSAS
b. Severability. If any term, provision, covenant or condition of this Agreement, or the application thereof to
any person, place or circumstance, shall be held to be invalid, unenforceable or void, the remainder of this
Agreement and such term, provision, covenant or condition as applied to other persons, places and
circumstances shall remain in full force and effect.
c. Construction. The headings and captions of this Agreement are provided for convenience only and are
intended to have no effect in construing or interpreting this Agreement. The language in all parts of this
Agreement shall be in all cases construed according to its fair meaning and not strictly for or against either
party.
d. Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the exercise of
any right or remedy by either party hereto (or by its successor), whether pursuant to this Agreement, to any
other agreement, or to law, shall not preclude or waive its right to exercise any or all other rights and
remedies.
e. Assistance. The NAC shall, during and after termination of services rendered, upon reasonable notice, furnish
such information and proper assistance to the City as may reasonably be required by the City in connection
with work performed by NAC.
f. Compliance with Law. The Parties mutually represent that throughout the term of this Agreement their
respective performance under this Agreement shall be, and shall remain, in compliance with all applicable
federal, state and local laws and regulations.
CITY OF FAY EM NORTHWEST ARKANSAS COUNCIL
By: By:
Lior4t6 Jordan, yor `sss��ERK//!j, Mike Harvey, Chief Operating Officer
Attest: -BUJ. G\T Y pF 9PG 5
By. FAYEJTEViLLE ?? Date Signed: October t2, 2021
Kara Paxton, City Clerk %Y�Z,, ?
�ANSN5 �•�
Date Signed: /0 /g -z/ '`
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
Page 17 of 17
SUBRECIPIENT AGREEMENT
AMERICAN RESCUE PLAN
Subrecipient # ARPA-001
APPENDIX A
Scope of Work & Project Allocation
1. SCOPE OF WORK:
a. The Northwest Arkansas Council Foundation (NACF) shall be responsible for managing all aspects of a
COVID Communications Campaign and Vaccination Campaign not to exceed 12 months.
b. The vaccination campaign is needed both to provide relief to hospital staff that has been overburdened
due to the pandemic and to achieve the maximum number of vaccinations possible.
c. NACF shall continue to focus significant efforts on communications and education on the virus to care for
the northwest Arkansas community.
d. NACF shall maintain an online resource for COVID-19, currently located athttps://nwacouncil.org/covidl9
and information on the vaccine, currently located at,https://nwacouncil.org/covidvaccine.
e. NACF shall manage and promote vaccine safety and resources with the support of local community
leaders, as available.
f. NACF shall manage and promote vaccine safety and resources campaign in the the northwest Arkansas
community to develop awareness of health and safety measures as the community continues to be
impacted by COVID-19.
2. COMMUNICATIONS PLAN:
a. The communications plan is based on research on vaccine hesitancy and will focus at least initially on
encouraging people to get vaccinated. The length of each campaign will depend on the amount of funds
raised. The communications plan is structured in three month intervals to allow for it to be adapted to
accommodate changes in the virus and medical guidance.
b. Manage and maintain the "Safe and Strong PSA Campaign":
Safe & Strong is a public service announcement campaign developed by the Northwest Arkansas
Council in partnership with the Northwest Arkansas Healthcare Community. The campaign was
launched in the Spring of 2020 and is intended to continue for the foreseeable future.
NACF current mandate is to develop a fully integrated communications strategy for the next 3
months. The immediate goal is to provide general education to the public about the safety and
importance of vaccinations. Messaging objectives will pivot as needed throughout the campaign
to address concerns as they arise.
iii. The plan shall include but not be limited to the following:
1. Creative development of communication assets (i.e. Commercial PSA's, social video
content, media for news outlets, print materials, ads, and digital assets for web
platforms).
2. Public Relations including a robust community integration component
3. Digital campaign management including all Safe & Strong media properties
4. Media Buy including TV, radio, outdoor, and other placements as needed
5. Trilingual communication in Spanish, Marshallese, and English.
i. Creative Development: NACF will heavily on research, focus groups, community partners, and
nonprofits, develop a new series of creative messaging to drive the next phase of
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 1 of 4
communications. The messaging wil be tailored specifically to reach the NWA community by
partnering with trusted experts, and utilizing members of the community in the materials
developed.
a. Campaign Refresh
b. PSA's on COVID Vaccinations
c. Radio
d. Artwork Refresh
e. Promotional Products
f. Other resources as needed
i. Digital: In conjunction with creative messaging, media buys and the community integration
strategy NACF will support the overall campaign online, maximizing overall reach.
a. Google Ad Campaign
b. Spcial Media Ad Campaign
c. Geo Targeted Event Campaigs
d. Reporting
ii. Public Relations: Full PR campaign with a strong community integration strategy. Plan to
include:
a. Develop a Communications & PR strategy
b. Develop an editorial calendar / communications plan
c. Outline and plan key editorial elements for the communications plan
d. Tri-lingual communications
e. Media releases and community updates
f. Community leadership and provider messaging
g. Government relations
h. Leveraging community partnerships
i. Speaking engagements and forums
j. Identification of key audiences and message delivery
k. Employer engagement and outreach
I. Event development
m. Nontraditional "media buys" and planning
n. Staffing Support
o. Reporting
ii. Media Mix Plan
a. Television
b. Radio
c. Outdoor/Billboard
d. Reporting
3. TOTAL CAMPAIGN BUDGET:
a. The breakdown of expenses is as follows. NACF intends to enforce a reduction in the media campaign in
the event funds are not fully raised. NACF shall report report monthly to the City, no later than the 5th day
after the last day of each month and provide the status of fundraising and campaign income, expenses
and progress.
Needs
Cost per item
Total Cost
Quantities
Cost
Actual Spend
Factors
PR CAMPAIGN
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 2 of 4
Verge Media x 6 months
$500,000
$500,000
Verge Media x 12 months
$1,000,000
$1,000,000
$1,000,000
Human Capital
Vaccinators x 30
$30 per hour
$72,000
40 hrs x 4
weeks
Infusion of covid + patients x 15
$75 per hour
$45,000
40hrs x 4
weeks
COVID Testing Swabbers x 20
$30 per hour
$96,000
40hrs x 4
weeks
$213,000
Supplies
N95 (per case)
$150.00
$3,750
25
Gloves (per case)
$360.00
$9,000
25
OR mask (per box)
$25.00
$625
25
Gowns (per case)
$315.00
$7,875
25
Face Shields (each)
$17.00
$8,500
500
BioHazard Bag (red bag) x box
$8.00
$200
25
$29,950
Testing Kits
Antigen Test Kits (each)
$25.00
$12,500
500
$12,500
Total cost
$1,255,450
4. CAMPAIGN INCOME AND FEES TO BE PAID BY THE CITY
a. In total, NACF is requesting $305,217 from cities of Fayetteville, Bentonville, Springdale and Rogers. The
Council arrived at this figure by assessing $1.00 per resident based on the population of each city as
determined by the 2020 Census.
Community asks
Walmart Foundation (confirmed)
$125,000
Walton Family Foundation (under
consideration/not yet approved)
$250,000
Visit Bentonville (confirmed)
$10,000
Bentonville Chamber of
Commerce (confirmed)
$10,000
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 3 of 4
Northwest Arkansas Chamber of
Commerce (confirmed)
$5,000
Amazeum (confirmed)
$5,000
Total need if all philanthropic
goals are met.
$850,450
Total Protentional funds raised
from cities, counties, and state
$682,813
• Bentonville
$54,164
• Fayetteville
$93,969
• Rogers
$69,908
• Springdale
$87,176
• Washington County
$125,023
• Benton County
$112,877.50
• State Ask (may
change/increase)
$139,695.00
Deficit/amount still needed if all
funds listed above are raised
$167,637
b. Payments from the City resulting from this scope of work shall not exceed $93,969.00 US Dollars for the
contract period.
The City of Fayetteville shall be responsible only for the portion of the total expense committed,
which is $93,969. If the full amount needed is not raised, the NACF will shorten the length of the
campaign to adjust for reduced funds and notify the City accordingly.
c. NACF shall be responsible for submitting an invoice for actual expenses incurred. The services rendered
and the period being invoiced shall be clearly stated on the invoice. Each invoice payment, once accepted
by the NACF will be considered final for the period being invoiced and any future charges for the same
period will be disallowed.
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 4 of 4
26786 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
DEPARTMENT OF THE TREASURY
31 CFR Part 35
RIN 1505-AC77
Coronavirus State and Local Fiscal
Recovery Funds
AGENCY: Department of the Treasury
ACTION: Interim final rule.
SUMMARY: The Secretary of the Treasury
(Treasury) is issuing this interim final
rule to implement the Coronavirus State
Fiscal Recovery Fund and the
Coronavirus Local Fiscal Recovery Fund
established under the American Rescue
Plan Act.
DATES: Effective date: The provisions in
this interim final rule are effective May
17, 2021.
Comment date: Comments must be
received on or before July 16, 2021.
ADDRESSES: Please submit comments
electronically through the Federal
eRulemaking Portal: http://
www.regulations.gov. Comments can be
mailed to the Office of the
Undersecretary for Domestic Finance,
Department of the Treasury, 1500
Pennsylvania Avenue NW, Washington,
DC 20220. Because postal mail may be
subject to processing delay, it is
recommended that comments be
submitted electronically. All comments
should be captions with "Coronavirus
State and Local Fiscal Recovery Funds
Interim Final Rule Comments." Please
include your name, organization
affiliation, address, email address and
telephone number in your comment.
Where appropriate, a comment should
include a short executive summary.
In general, comments received will be
posted on http://www.regulations.gov
without change, including any business
or personal information provided.
Comments received, including
attachments and other supporting
materials, will be part of the public
record and subject to public disclosure.
Do not enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
FOR FURTHER INFORMATION CONTACT:
Katharine Richards, Senior Advisor,
Office of Recovery Programs,
Department of the Treasury, (844) 529-
9527.
SUPPLEMENTARY INFORMATION:
I. Background Information
A. Overview
Since the first case of coronavirus
disease 2019 (COVID-19) was
discovered in the United States in
January 2020, the disease has infected
over 32 million and killed over 575,000
Americans.1 The disease has impacted
every part of life: As social distancing
became a necessity, businesses closed,
schools transitioned to remote
education, travel was sharply reduced,
and millions of Americans lost their
jobs. In April 2020, the national
unemployment rate reached its highest
level in over seventy years following the
most severe month -over -month decline
in employment on record.2 As of April
2021, there were still 8.2 million fewer
jobs than before the pandemic.3 During
this time, a significant share of
households have faced food and
housing insecurity.4 Economic
disruptions impaired the flow of credit
to households, State and local
governments, and businesses of all
sizes.5 As businesses weathered
closures and sharp declines in revenue,
many were forced to shut down,
especially small businesses.6
Amid this once -in -a -century crisis,
State, territorial, Tribal, and local
governments (State, local, and Tribal
governments) have been called on to
respond at an immense scale.
Governments have faced myriad needs
to prevent and address the spread of
1 Centers for Disease Control and Prevention,
COVID Data Tracker, http://www.covid.cdc.gov/
covid-data-tracker/#datatracker-home (last visited
May 8, 2021).
2 U.S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/UNRATE, May 3, 2021.
U.S. Bureau of Labor Statistics, Employment Level
[LNU02000000], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNU02000000, May 3,
2021.
3 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS], retrieved from FRED,
Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/PAYEMS, May 7, 2021.
4 Nirmita Panchal et al., The Implications of
COVID-19 for Mental Health and Substance Abuse
(Feb. 10, 2021), https://www.kff.org/coronavirus-
covid-19/issue-brief/the-implications-of-covid-19-
for-mental-health-and-substance-use/#: LI text=
Older % 2 0 adults % 2 0 ar a% 2 0 al s o% 2 0
more,prior%20to%20the%20current%20crisis; U.S.
Census Bureau, Household Pulse Survey:
Measuring Social and Economic Impacts during the
Coronavirus Pandemic, https://www.census.gov/
programs-surveys/household-pulse-survey.html
(last visited Apr. 26, 2021); Rebecca T. Leeb et al.,
Mental Health -Related Emergency Department
Visits Among Children Aged <18 Years During the
COVID Pandemic —United States, January 1 —
October 17, 2020, Morb. Mortal. Wkly. Rep.
69(45):1675-80 (Nov. 13, 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6945a3.htm.
5 Board of Governors of the Federal Reserve
System, Monetary Policy Report (June 12, 2020),
https://www.federalreserve.gov/monetazypolicy/
2020-06-m pr-summary.htm.
6 Joseph R. Biden, Remarks by President Biden on
Helping Small Businesses (Feb. 22, 2021), https://
www. whitehouse.gov/briefing-room/speeches-
remarks/202l /02/22/remarks-by-president-biden-
on-helping-small-businesses/.
COVID-19, including testing, contact
tracing, isolation and quarantine, public
communications, issuance and
enforcement of health orders,
expansions to health system capacity
like alternative care facilities, and in
recent months, a massive nationwide
mobilization around vaccinations.
Governments also have supported major
efforts to prevent COVID-19 spread
through safety measures in settings like
nursing homes, schools, congregate
living settings, dense worksites,
incarceration settings, and public
facilities. The pandemic's impacts on
behavioral health, including the toll of
pandemic -related stress, have increased
the need for behavioral health resources.
At the same time, State, local and
Tribal governments launched major
efforts to address the economic impacts
of the pandemic. These efforts have
been tailored to the needs of their
communities and have included
expanded assistance to unemployed
workers; food assistance; rent, mortgage,
and utility support; cash assistance;
internet access programs; expanded
services to support individuals
experiencing homelessness; support for
individuals with disabilities and older
adults; and assistance to small
businesses facing closures or revenue
loss or implementing new safety
measures.
In responding to the public health
emergency and its negative economic
impacts, State, local, and Tribal
governments have seen substantial
increases in costs to provide these
services, often amid substantial declines
in revenue due to the economic
downturn and changing economic
patterns during the pandemic.? Facing
these budget challenges, many State,
local, and Tribal governments have been
forced to make cuts to services or their
workforces, or delay critical
investments. From February to May of
2020, State, local, and Tribal
governments reduced their workforces
by more than 1.5 million jobs and, in
April of 2021, State, local, and Tribal
government employment remained
nearly 1.3 million jobs below pre -
pandemic levels.$ These cuts to State,
local, and Tribal government workforces
7 Michael Leachman, House Budget Bill Provides
Needed Fiscal Aid for States, Localities, Tribal
Nations, and Territories (Feb. 10, 2021), https://
www.cbpp. org/research/state-budget-and-tax/
house-budget-bill-provides-neededfiscal-aid for -
states -localities.
5U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
CES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited May 8, 2021).
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26787
come at a time when demand for
government services is high, with State,
local, and Tribal governments on the
frontlines of fighting the pandemic.
Furthermore, State, local, and Tribal
government austerity measures can
hamper overall economic growth, as
occurred in the recovery from the Great
Recession.9
Finally, although the pandemic's
impacts have been widespread, both the
public health and economic impacts of
the pandemic have fallen most severely
on communities and populations
disadvantaged before it began. Low-
income communities, people of color,
and Tribal communities have faced
higher rates of infection, hospitalization,
and death,10 as well as higher rates of
unemployment and lack of basic
necessities like food and housing.11 Pre-
existing social vulnerabilities magnified
the pandemic in these communities,
where a reduced ability to work from
home and, frequently, denser housing
amplified the risk of infection. Higher
rates of pre-existing health conditions
also may have contributed to more
severe COVID-19 health outcomes.12
Similarly, communities or households
facing economic insecurity before the
pandemic were less able to weather
business closures, job losses, or declines
in earnings and were less able to
participate in remote work or education
due to the inequities in access to
reliable and affordable broadband
infrastructure.13 Finally, though schools
in all areas faced challenges, those in
high poverty areas had fewer resources
to adapt to remote and hybrid learning
models.14 Unfortunately, the pandemic
9 Tracy Gordon, State and Local Budgets and the
Great Recession, Brookings Institution (Dec. 31,
2012), http://www.brookings.edu/articles/state-and-
local-budgets-an d -the -great -recession.
10 Sebastian D. Romano et al., Trends in Racial
and Ethnic Disparities in COVID-19
Hospitalizations, by Region —United States, March —
December 2020, MMWR Morb Mortal Wkly Rep
2021, 70:560-565 (Apr. 16, 2021), https://
www.cdc.gov/mmwr/volumes/70/wr/
mm7015e2.htm?s cid=mm7015e2w.
11 Center on Budget and Policy Priorities,
Tracking the COVID-19 Recession's Effects on
Food, Housing, and Employment Hardships,
https://www.cbpp. org/research/poverty-and-
in equali ty/tracking-th e-covi d -19 -recessions -e ffects-
on-housing-and (last visited May 4, 2021).
12 Lisa R. Fortuna et al., Inequity and the
Disproportionate Impact of COVID-19 on
Communities of Color in the United States: The
Need for Trauma -Informed Social Justice Response,
Psychological Trauma Vol. 12(5):443-45 (2020),
available at https:I/psycnet.apa.orglfulltext/2020-
37320-001.pdf.
13 Emily Vogles et al., 53% of Americans Say the
internet Has Been Essential During the COVID-19
Outbreak (Apr. 30, 2020), https:I/
www.pewresearch.org/intern et/2020/04/30/53-of-
americans-say-the-internet-has-been-essential-
during-the-covid-19-outbreak/.
14 Emma Dorn et al., COVID-19 and student
learning in the United States: The hurt could last
also has reversed many gains made by
communities of color in the prior
economic expansion.15
B. The Statute and Interim Final Rule
On March 11, 2021, the American
Rescue Plan Act (ARPA) was signed into
law by the President.16 Section 9901 of
ARPA amended Title VI of the Social
Security Act 17 (the Act) to add section
602, which establishes the Coronavirus
State Fiscal Recovery Fund, and section
603, which establishes the Coronavirus
Local Fiscal Recovery Fund (together,
the Fiscal Recovery Funds).18 The Fiscal
Recovery Funds are intended to provide
support to State, local, and Tribal
governments (together, recipients) in
responding to the impact of COVID-19
and in their efforts to contain COVID-
19 on their communities, residents, and
businesses. The Fiscal Recovery Funds
build on and expand the support
provided to these governments over the
last year, including through the
Coronavirus Relief Fund (CRF).19
a lifetime (June 2020), https://
webtest.childrensinstitute.net/sites/default/files/
documents/CO VID-1 9 -and -student-1 earning -in -th e -
United -States FINAL.pdf,• Andrew Bacher-Hicks et
al., Inequality in Household Adaptation to
Schooling Shocks: Covid-Induced Online
Engagement in Real Time, J. of Public Econ. Vol.
193(C) (July 2020), available at https://
www.nber.org/papers/w27555.
15 See, e.g., Tyler Atkinson & Alex Richter,
Pandemic Disproportionately Affects Women,
Minority Labor Force Participation, https://
www.dollasfed.org/research/economics/2020/1110
(last visited May 9, 2021); Jared Bernstein & Janelle
Jones, The Impact of the COVID19 Recession on the
Jobs and Incomes of Persons of Color, https://
www.cbpp.org/sites/default/files/atoms/files/6-2-
20bud0 .pdf (last visited May 9, 2021).
16 American Rescue Plan Act of 2021 (ARPA), sec.
9901, Public Law 117-2, codified at 42 U.S.C. 802
et seq. The term "state" as used in this
SUPPLEMENTARY INFORMATION and defined in section
602 of the Act means each of the 50 States and the
District of Columbia. The term "territory" as used
in this SUPPLEMENTARY INFORMATION and defined in
section 602 of the Act means the Commonwealth
of Puerto Rico, the United States Virgin Islands,
Guam, the Commonwealth of Northern Mariana
Islands, and American Samoa. Tribal government is
defined in the Act and the interim final rule to
mean "the recognized governing body of any Indian
or Alaska Native tribe, band, nation, pueblo, village,
community, component band, or component
reservation, individually identified (including
parenthetically) in the list published most recently
as of the date of enactment of the [American Rescue
Plan Act] pursuant to section 104 of the Federally
Recognized Indian Tribe List Act of 1994 (25 U.S.C.
5131)." See section 602(g)(7) of the Social Security
Act, as added by the American Rescue Plan Act. On
January 29, 2021, the Bureau of Indian Affairs
published a current list of 574 Tribal entities. See
86 FR 7554, January 29, 2021. The term "local
governments" as used in this SUPPLEMENTARY
INFORMATION includes metropolitan cities, counties,
and nonentitlement units of local government.
1742 U.S.C. 801 et seq.
18 Sections 602, 603 of the Act.
19 The CRF was established by the section 601 of
the Act as added by the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act), Public
Law 116-136, 134 Stat. 281 (2020).
Through the Fiscal Recovery Funds,
Congress provided State, local, and
Tribal governments with significant
resources to respond to the COVID-19
public health emergency and its
economic impacts through four
categories of eligible uses. Section 602
and section 603 contain the same
eligible uses; the primary difference
between the two sections is that section
602 establishes a fund for States,
territories, and Tribal governments and
section 603 establishes a fund for
metropolitan cities, nonentitlement
units of local government, and counties.
Sections 602(c)(1) and 603(c)(1) provide
that funds may be used:
(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; and
(d) To make necessary investments in
water, sewer, or broadband
infrastructure.
In addition, Congress clarified two
types of uses which do not fall within
these four categories. Sections
602(c)(2)(B) and 603(c)(2) provide that
these eligible uses do not include, and
thus funds may not be used for,
depositing funds into any pension fund.
Section 602(c)(2)(A) also provides, for
States and territories, that the eligible
uses do not include "directly or
indirectly offset[ting] a reduction in the
net tax revenue of [the] State or territory
resulting from a change in law,
regulation, or administrative
interpretation."
The ARPA provides a substantial
infusion of resources to meet pandemic
response needs and rebuild a stronger,
more equitable economy as the country
recovers. First, payments from the Fiscal
Recovery Funds help to ensure that
State, local, and Tribal governments
have the resources needed to continue
to take actions to decrease the spread of
COVID-19 and bring the pandemic
under control. Payments from the Fiscal
Recovery Funds may also be used by
recipients to provide support for costs
incurred in addressing public health
and economic challenges resulting from
the pandemic, including resources to
offer premium pay to essential workers,
in recognition of their sacrifices over the
26788 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
last year. Recipients may also use
payments from the Fiscal Recovery
Funds to replace State, local, and Tribal
government revenue lost due to COVID-
19, helping to ensure that governments
can continue to provide needed services
and avoid cuts or layoffs. Finally, these
resources lay the foundation for a
strong, equitable economic recovery, not
only by providing immediate economic
stabilization for households and
businesses, but also by addressing the
systemic public health and economic
challenges that may have contributed to
more severe impacts of the pandemic
among low-income communities and
people of color.
Within the eligible use categories
outlined in the Fiscal Recovery Funds
provisions of ARPA, State, local, and
Tribal governments have flexibility to
determine how best to use payments
from the Fiscal Recovery Funds to meet
the needs of their communities and
populations. The interim final rule
facilitates swift and effective
implementation by establishing a
framework for determining the types of
programs and services that are eligible
under the ARPA along with examples of
uses that State, local, and Tribal
governments may consider. These uses
build on eligible expenditures under the
CRF, including some expansions in
eligible uses to respond to the public
health emergency, such as vaccination
campaigns. They also reflect changes in
the needs of communities, as evidenced
by, for example, nationwide data
demonstrating disproportionate impacts
of the COVID-19 public health
emergency on certain populations,
geographies, and economic sectors. The
interim final rule takes into
consideration these disproportionate
impacts by recognizing a broad range of
eligible uses to help States, local, and
Tribal governments support the
families, businesses, and communities
hardest hit by the COVID-19 public
health emergency.
Implementation of the Fiscal
Recovery Funds also reflect the
importance of public input,
transparency, and accountability.
Treasury seeks comment on all aspects
of the interim final rule and, to better
facilitate public comment, has included
specific questions throughout this
SUPPLEMENTARY INFORMATION. Treasury
encourages State, local, and Tribal
governments in particular to provide
feedback and to engage with Treasury
regarding issues that may arise
regarding all aspects of this interim final
rule and Treasury's work in
administering the Fiscal Recovery
Funds. In addition, the interim final
rule establishes certain regular reporting
requirements, including by requiring
State, local, and Tribal governments to
publish information regarding uses of
Fiscal Recovery Funds payments in
their local jurisdiction. These reporting
requirements reflect the need for
transparency and accountability, while
recognizing and minimizing the burden,
particularly for smaller local
governments. Treasury urges State,
territorial, Tribal, and local governments
to engage their constituents and
communities in developing plans to use
these payments, given the scale of
funding and its potential to catalyze
broader economic recovery and
rebuilding.
II. Eligible Uses
A. Public Health and Economic Impacts
Sections 602(c)(1)(A) and 603(c)(1)(A)
provide significant resources for State,
territorial, Tribal governments, and
counties, metropolitan cities, and
nonentitlement units of local
governments (each referred to as a
recipient) to meet the wide range of
public health and economic impacts of
the COVID-19 public health emergency.
These provisions authorize the use of
payments from the Fiscal Recovery
Funds to respond to the public health
emergency with respect to COVID-19 or
its negative economic impacts. Section
602 and section 603 also describe
several types of uses that would be
responsive to the impacts of the COVID-
19 public health emergency, including
assistance to households, small
businesses, and nonprofits and aid to
impacted industries, such as tourism,
travel, and hospitality.20
Accordingly, to assess whether a
program or service is included in this
category of eligible uses, a recipient
should consider whether and how the
use would respond to the COVID-19
public health emergency. Assessing
whether a program or service "responds
to" the COVID-19 public health
emergency requires the recipient to,
first, identify a need or negative impact
of the COVID-19 public health
emergency and, second, identify how
the program, service, or other
intervention addresses the identified
need or impact. While the COVID-19
public health emergency affected many
aspects of American life, eligible uses
under this category must be in response
to the disease itself or the harmful
consequences of the economic
disruptions resulting from or
exacerbated by the COVID-19 public
health emergency.
20 Sections 602(c)(1)(A), 603(c)(1)(A) of the Act.
The interim final rule implements
these provisions by identifying a non-
exclusive list of programs or services
that may be funded as responding to
COVID-19 or the negative economic
impacts of the COVID-19 public health
emergency, along with considerations
for evaluating other potential uses of the
Fiscal Recovery Funds not explicitly
listed. The interim final rule also
provides flexibility for recipients to use
payments from the Fiscal Recovery
Funds for programs or services that are
not identified on these non-exclusive
lists but that fall under the terms of
section 602(c)(1)(A) or 603(c)(1)(A) by
responding to the COVID-19 public
health emergency or its negative
economic impacts. As an example, in
determining whether a program or
service responds to the negative
economic impacts of the COVID-19
public health emergency, the interim
final rule provides that payments from
the Fiscal Recovery Funds should be
designed to address an economic harm
resulting from or exacerbated by the
public health emergency. Recipients
should assess the connection between
the negative economic harm and the
COVID-19 public health emergency, the
nature and extent of that harm, and how
the use of this funding would address
such harm.
As discussed, the pandemic and the
necessary actions taken to control the
spread had a severe impact on
households and small businesses,
including in particular low-income
workers and communities and people of
color. While eligible uses under sections
602(c)(1)(A) and 603(c)(1)(A) provide
flexibility to recipients to identify the
most pressing local needs, Treasury
encourages recipients to provide
assistance to those households,
businesses, and non -profits in
communities most disproportionately
impacted by the pandemic.
1. Responding to COVID-19
On January 21, 2020, the Centers for
Disease Control and Prevention (CDC)
identified the first case of novel
coronavirus in the United States.21 By
late March, the virus had spread to
many States and the first wave was
growing rapidly, centered in the
northeast.22 This wave brought acute
21 Press Release, Centers for Disease Control and
Prevention, First Travel -related Case of 2019 Novel
Coronavirus Detected in United States (Jan. 21,
2020), https://www.cdc.gov/media/releases/2020/
p0121-novel-coronavirus-travel-case.html.
22 Anne Schuchat et al., Public Health Response
to the Initiation and Spread of Pandemic COVID-
19 in the United States, February 24 —April 21, 2021,
MMWR Morb Mortal Wkly Rep 2021, 69(18):551-
56 (May 8, 2021), https://www.cdc.gov/mmwr/
volumes/69/wr/mm 6918e2.h tm.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26789
strain on health care and public health
systems: Hospitals and emergency
medical services struggled to manage a
major influx of patients; response
personnel faced shortages of personal
protective equipment; testing for the
virus was scarce; and congregate living
facilities like nursing homes and prisons
saw rapid spread. State, local, and
Tribal governments mobilized to
support the health care system, issue
public health orders to mitigate virus
spread, and communicate safety
measures to the public. The United
States has since faced at least two
additional COVID-19 waves that
brought many similar challenges: The
second in the summer, centered in the
south and southwest, and a wave
throughout the fall and winter, in which
the virus reached a point of
uncontrolled spread across the country
and over 3,000 people died per day.23
By early May 2021, the United States
has experienced over 32 million
confirmed COVID-19 cases and over
575,000 deaths.24
Mitigating the impact of COVID-19,
including taking actions to control its
spread and support hospitals and health
care workers caring for the sick,
continues to require a major public
health response from State, local and
Tribal governments. New or heightened
public health needs include COVID-19
testing, major expansions in contact
tracing, support for individuals in
isolation or quarantine, enforcement of
public health orders, new public
communication efforts, public health
surveillance (e.g., monitoring case
trends and genomic sequencing for
variants), enhancement to health care
capacity through alternative care
facilities, and enhancement of public
health data systems to meet new
demands or scaling needs. State, local,
and Tribal governments have also
supported major efforts to prevent
COVID-19 spread through safety
measures at key settings like nursing
homes, schools, congregate living
settings, dense worksites, incarceration
settings, and in other public facilities.
This has included implementing
infection prevention measures or
making ventilation improvements in
congregate settings, health care settings,
or other key locations.
Other response and adaptation costs
include capital investments in public
facilities to meet pandemic operational
23 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in Number of
COVID-19 Cases and Deaths in the US Reported to
CDC, by State/Territory, https://covid.cdc.govl
covid-data-tracker/#trends_dailytrendscases (last
visited May 8, 2021).
24 Id.
needs, such as physical plant
improvements to public hospitals and
health clinics or adaptations to public
buildings to implement COVID-19
mitigation tactics. In recent months,
State, local, and Tribal governments
across the country have mobilized to
support the national vaccination
campaign, resulting in over 250 million
doses administered to date.25
The need for public health measures
to respond to COVID-19 will continue
in the months and potentially years to
come. This includes the continuation of
the vaccination campaign for the general
public and, if vaccinations are approved
for children in the future, eventually for
youths. This also includes monitoring
the spread of COVID-19 variants,
understanding the impact of these
variants (especially on vaccination
efforts), developing approaches to
respond to those variants, and
monitoring global COVID-19 trends to
understand continued risks to the
United States. Finally, the long-term
health impacts of COVID-19 will
continue to require a public health
response, including medical services for
individuals with "long COVID," and
research to understand how COVID-19
impacts future health needs and raises
risks for the millions of Americans who
have been infected.
Other areas of public health have also
been negatively impacted by the
COVID-19 pandemic. For example, in
one survey in January 2021, over 40
percent of American adults reported
symptoms of depression or anxiety, up
from 11 percent in the first half of
2019.26, The proportion of children's
emergency department visits related to
mental health has also risen
noticeably.27 Similarly, rates of
substance misuse and overdose deaths
have spiked: Preliminary data from the
CDC show a nearly 30 percent increase
in drug overdose mortality from
September 2019 to September 2020.28
Stay-at-home orders and other
pandemic responses may have also
reduced the ability of individuals
affected by domestic violence to access
25 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID-19 Vaccinations in the
United States, https://covid.cdc.gov/covid-dota-
tracker/#vaccinations (last visited May 8, 2021).
26 Panchal, supra note 4; Mark E. Czeisler et al.,
Mental Health, Substance Abuse, and Suicidal
Ideation During COVID-19 Pandemic— United
States, June 24-30 2020, Morb. Mortal. Wkly. Rep.
69(32):1049-57 (Aug. 14, 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6932a1.htm.
27 Leeb, supra note 4.
28 Centers for Disease Prevention and Control,
National Center for Health Statistics, Provisional
Drug Overdose Death Counts, https://www.cdc.gov/
nchs/nvss/vsrr/drug-overdose-data.htm (last visited
May 8, 2021).
services.29 Finally, some preventative
public health measures like childhood
vaccinations have been deferred and
potentially forgone.3°
While the pandemic affected
communities across the country, it
disproportionately impacted some
demographic groups and exacerbated
health inequities along racial, ethnic,
and socioeconomic lines.31 The CDC
has found that racial and ethnic
minorities are at increased risk for
infection, hospitalization, and death
from COVID-19, with Hispanic or
Latino and Native American or Alaska
Native patients at highest risk.32
Similarly, low-income and socially
vulnerable communities have seen the
most severe health impacts. For
example, counties with high poverty
rates also have the highest rates of
infections and deaths, with 223 deaths
per 100,000 compared to the U.S.
average of 175 deaths per 100,000, as of
May 2021.33 Counties with high social
vulnerability, as measured by factors
such as poverty and educational
attainment, have also fared more poorly
than the national average, with 211
deaths per 100,000 as of May 2021.34
29 Megan L. Evans, et al., A Pandemic within a
Pandemic —Intimate Partner Violence during
Covid-19, N. Engl. J. Med. 383:2302-04 (Dec. 10,
2020), available at https://www.nejm.org/doi/full/
10.1056/NEJMp2024046.
3o Jeanne M. Santoli et al., Effects of the
COVID-19 Pandemic on Routine Pediatric Vaccine
Ordering and Administration —United States, Morb.
Mortal. Wkly. Rep. 69(19):591-93 (May 8, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/
mm6919e2.htm; Marisa Langdon-Embry et al.,
Notes from the Field: Rebound in Routine
Childhood Vaccine Administration Following
Decline During the COVID-19 Pandemic —New
York City, March 1 —June 27, 2020, Morb. Mortal.
Wkly. Rep. 69(30):999-1001 (Jul. 31 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6930a3.htm.
31 Office of the White House, National Strategy for
the COVID-19 Response and Pandemic
Preparedness (Jan. 21, 2021), https://
www.whitehouse.gov/wp-content/uploodsl2o2l/01I
National -Strategy for-the-COVID-19-Response-and-
Pandemic-Preparedness. pd f.
32In a study of 13 states from October to
December 2020, the CDC found that Hispanic or
Latino and Native American or Alaska Native
individuals were 1.7 times more likely to visit an
emergency room for COVID-19 than White
individuals, and Black individuals were 1.4 times
more likely to do so than White individuals. See
Romano, supra note 10.
33 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID-19 Cases
and Deaths in the United States, by County -level
Population Factors, https://covid.cdc.gov/covid-
data-tracker/#pop factors_totaldeaths (last visited
May 8, 2021).
34 The CDC's Social Vulnerability Index includes
fifteen variables measuring social vulnerability,
including unemployment, poverty, education
levels, single -parent households, disability status,
non-English speaking households, crowded
housing, and transportation access.
Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID-19 Cases
Continued
26790 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Over the last year, Native Americans
have experienced more than one and a
half times the rate of COVID-19
infections, more than triple the rate of
hospitalizations, and more than double
the death rate compared to White
Americans.35 Low-income and minority
communities also exhibit higher rates of
pre-existing conditions that may
contribute to an increased risk of
COVID-19 mortality.3°
In addition, individuals living in low-
income communities may have had
more limited ability to socially distance
or to self -isolate when ill, resulting in
faster spread of the virus, and were
over -represented among essential
workers, who faced greater risk of
exposure.37 Social distancing measures
in response to the pandemic may have
also exacerbated pre-existing public
health challenges. For example, for
children living in homes with lead
paint, spending substantially more time
at home raises the risk of developing
elevated blood lead levels, while
screenings for elevated blood lead levels
declined during the pandemic.38 The
combination of these underlying social
and health vulnerabilities may have
contributed to more severe public health
outcomes of the pandemic within these
communities, resulting in an
exacerbation of pre-existing disparities
in health outcomes.39
and Deaths in the United States, by Social
Vulnerability Index, https://covid.cdc.gov/covid-
data-tracker/#pop factors_totaldeaths (last visited
May 8, 2021).
35 Centers for Disease Control and Prevention,
Risk for COVID-19 Infection, Hospitalization, and
Death By Race/Ethnicity, https://www.cdc.gov/
coron avirus/2019-ncov/covi d-data/in vestigati ons-
discovery/hospitalization-death-by-race-
ethnicity.html (last visited Apr. 26, 2021).
36 See, e.g., Centers for Disease Control and
Prevention, Risk of Severe Illness or Death from
COVID-19 (Dec. 10, 2020), https://www.cdc.gov/
coronavirus/2019-ncov/community/health-equity/
racial-ethnic-disparities/disparities-illness.html
(last visited Apr. 26, 2021).
37 Milena Almagro et al., Racial Disparities in
Frontline Workers and Housing Crowding During
COVID-19: Evidence from Geolocation Data (Sept.
22, 2020), NYU Stern School of Business
(forthcoming), available at https://papers.ssrn.com/
so13/papers.cfm?abstract_id=3695249; Grace
McCormack et al., Economic Vulnerability of
Households with Essential Workers, JAMA
324(4):388-90 (2020), available at https://
jamanetwork.com/journals/jama/fullarticle/
2767630.
36 See, e.g., Joseph G. Courtney et al., Decreases
in Young Children Who Received Blood Lead Level
Testing During COVID-19-34 Jurisdictions,
January —May 2020, Morb. Mort. Wkly. Rep.
70(5):155-61 (Feb. 5, 2021), https://www.cdc.gov/
mmwr/volumes/70/wr/mm7005a2.htm; Emily A.
Benfer & Lindsay F. Wiley, Health Justice Strategies
to Combat COVID-19: Protecting Vulnerable
Communities During a Pandemic, Health Affairs
Blog (Mar. 19, 2020), https://www.healthaffairs.org/
do/b. 1377/hbl og20200319.757883/f u ll /.
39 See, e.g., Centers for Disease Control and
Prevention, supra note 34; Benfer & Wiley, supra
Eligible Public Health Uses. The
Fiscal Recovery Funds provide
resources to meet and address these
emergent public health needs, including
through measures to counter the spread
of COVID-19, through the provision of
care for those impacted by the virus,
and through programs or services that
address disparities in public health that
have been exacerbated by the pandemic.
To facilitate implementation and use of
payments from the Fiscal Recovery
Funds, the interim final rule identifies
a non-exclusive list of eligible uses of
funding to respond to the COVID-19
public health emergency. Eligible uses
listed under this section build and
expand upon permissible expenditures
under the CRF, while recognizing the
differences between the ARPA and
CARES Act, and recognizing that the
response to the COVID-19 public health
emergency has changed and will
continue to change over time. To assess
whether additional uses would be
eligible under this category, recipients
should identify an effect of COVID-19
on public health, including either or
both of immediate effects or effects that
may manifest over months or years, and
assess how the use would respond to or
address the identified need.
The interim final rule identifies a
non-exclusive list of uses that address
the effects of the COVID-19 public
health emergency, including:
❑ COVID-19 Mitigation and
Prevention. A broad range of services
and programming are needed to contain
COVID-19. Mitigation and prevention
efforts for COVID-19 include
vaccination programs; medical care;
testing; contact tracing; support for
isolation or quarantine; supports for
vulnerable populations to access
medical or public health services;
public health surveillance (e.g.,
monitoring case trends, genomic
sequencing for variants); enforcement of
public health orders; public
communication efforts; enhancement to
health care capacity, including through
alternative care facilities; purchases of
personal protective equipment; support
for prevention, mitigation, or other
services in congregate living facilities
(e.g., nursing homes, incarceration
settings, homeless shelters, group living
facilities) and other key settings like
schools; 40 ventilation improvements in
note 38; Nathaniel M. Lewis et al., Disparities in
COVID-19 Incidence, Hospitalizations, and Testing,
by Area -Level Deprivation —Utah, March 3 —July 9,
2020, Morb. Mortal. Wkly. Rep. 69(38):1369-73
(Sept. 25, 2020), https://www.cdc.gov/mmwr/
volumes/69/wr/mm6938a4.htm.
40 This includes implementing mitigation
strategies consistent with the Centers for Disease
Control and Prevention's (CDC) Operational
congregate settings, health care settings,
or other key locations; enhancement of
public health data systems; and other
public health responses.41 They also
include capital investments in public
facilities to meet pandemic operational
needs, such as physical plant
improvements to public hospitals and
health clinics or adaptations to public
buildings to implement COVID-19
mitigation tactics. These COVID-19
prevention and mitigation programs and
services, among others, were eligible
expenditures under the CRF and are
eligible uses under this category of
eligible uses for the Fiscal Recovery
Funds.42
❑ Medical Expenses. The COVID-19
public health emergency continues to
have devastating effects on public
health; the United States continues to
average hundreds of deaths per day and
the spread of new COVID-19 variants
has raised new risks and genomic
surveillance needs.43 Moreover, our
understanding of the potentially serious
and long-term effects of the virus is
growing, including the potential for
symptoms like shortness of breath to
continue for weeks or months, for multi -
organ impacts from COVID-19, or for
post -intensive care syndrome. ## State
and local governments may need to
continue to provide care and services to
address these near- and longer -term
needs.45
Strategy for K-12 Schools through Phased
Prevention, available at https://www.cdc.gov/
coron avirus/2019-ncov/community/school s-
chil dcareloperation-strategy.html.
41 Many of these expenses were also eligible in
the CRF. Generally, funding uses eligible under CRF
as a response to the direct public health impacts of
COVID-19 will continue to be eligible under the
ARPA, including those not explicitly listed here
(e.g., telemedicine costs, costs to facilitate
compliance with public health orders, disinfection
of public areas, facilitating distance learning,
increased solid waste disposal needs related to PPE,
paid sick and paid family and medical leave to
public employees to enable compliance with
COVID-19 public health precautions), with the
following two exceptions: (1) The standard for
eligibility of public health and safety payrolls has
been updated (see section II.A of this
SUPPLEMENTARY INFORMATION) and (2) expenses
related to the issuance of tax -anticipation notes are
no longer an eligible funding use (see discussion of
debt service in section II.B of this SUPPLEMENTARY
INFORMATION).
42 Coronavirus Relief Fund for States, Tribal
Governments, and Certain Eligible Local
Governments, 86 FR 4182 (Jan. 15, 2021), available
at https://home.treasury.gov/system/files/136/CRF-
Guidance-Federal-Register 2021-00827.pdf.
43 Centers for Disease Control and Prevention,
supra note 24.
44 Centers for Disease Control and Prevention,
Long -Term Effects (Apr. 8, 2021), https://
www.cdc.gov/coronavirus/2019-ncov/long-term-
effects.html (last visited Apr. 26, 2021).
45 Pursuant to 42 CFR 433.51 and 45 CFR 75.306,
Fiscal Recovery Funds may not serve as a State or
locality's contribution of certain Federal funds.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26791
❑ Behavioral Health Care. In addition,
new or enhanced State, local, and Tribal
government services may be needed to
meet behavioral health needs
exacerbated by the pandemic and
respond to other public health impacts.
These services include mental health
treatment, substance misuse treatment,
other behavioral health services,
hotlines or warmlines, crisis
intervention, overdose prevention,
infectious disease prevention, and
services or outreach to promote access
to physical or behavioral health primary
care and preventative medicine.
❑ Public Health and Safety Staff.
Treasury recognizes that responding to
the public health and negative economic
impacts of the pandemic, including
administering the services described
above, requires a substantial
commitment of State, local, and Tribal
government human resources. As a
result, the Fiscal Recovery Funds may
be used for payroll and covered benefits
expenses for public safety, public
health, health care, human services, and
similar employees, to the extent that
their services are devoted to mitigating
or responding to the COVID-19 public
health emergency.46 Accordingly, the
Fiscal Recovery Funds may be used to
support the payroll and covered benefits
for the portion of the employee's time
that is dedicated to responding to the
COVID-19 public health emergency. 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. Recipients may
consider other presumptions for
assessing the extent to which an
employee, division, or operating unit is
engaged in activities that respond to the
COVID-19 public health emergency,
provided that the recipient reassesses
periodically and maintains records to
support its assessment, such as payroll
records, attestations from supervisors or
staff, or regular work product or
correspondence demonstrating work on
46 In general, if an employee's wages and salaries
are an eligible use of Fiscal Recovery Funds,
recipients may treat the employee's covered
benefits as an eligible use of Fiscal Recovery Funds.
For purposes of the Fiscal Recovery Funds, covered
benefits include costs of all types of leave (vacation,
family -related, sick, military, bereavement,
sabbatical, jury duty), employee insurance (health,
life, dental, vision), retirement (pensions, 401(k)),
unemployment benefit plans (Federal and state),
workers compensation insurance, and Federal
Insurance Contributions Act (FICA) taxes (which
includes Social Security and Medicare taxes).
the COVID-19 response. Recipients
need not routinely track staff hours.
❑ Expenses to Improve the Design and
Execution of Health and Public Health
Programs. 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.
Eligible Uses to Address Disparities in
Public Health Outcomes. In addition, in
recognition of the disproportionate
impacts of the COVID-19 pandemic on
health outcomes in low-income and
Native American communities and the
importance of mitigating these effects,
the interim final rule identifies a
broader range of services and programs
that will be presumed to be responding
to the public health emergency when
provided in these communities.
Specifically, Treasury will presume that
certain types of services, outlined
below, are eligible uses when provided
in a Qualified Census Tract (QCT),47 to
families living in QCTs, or when these
services are provided by Tribal
governments.48 Recipients may also
provide these services to other
populations, households, or geographic
areas that are disproportionately
impacted by the pandemic. In
identifying these disproportionately -
impacted communities, recipients
should be able to support their
determination that the pandemic
resulted in disproportionate public
health or economic outcomes to the
47 Qualified Census Tracts are a common, readily -
accessible, and geographically granular method of
identifying communities with a large proportion of
low-income residents. Using an existing measure
may speed implementation and decrease
administrative burden, while identifying areas of
need at a highly -localized level.
While QCTs are an effective tool generally, many
tribal communities have households with a wide
range of income levels due in part to non -tribal
member, high income residents living in the
community. Mixed income communities, with a
significant share of tribal members at the lowest
levels of income, are often not included as eligible
QCTs yet tribal residents are experiencing
disproportionate impacts due to the pandemic.
Therefore, including all services provided by Tribal
governments is a more effective means of ensuring
that disproportionately impacted Tribal members
can receive services.
48 U.S. Department of Housing and Urban
Development (HUD), Qualified Census Tracts and
Difficult Development Areas, https://
www.huduser.gov/portal/datasets/gct.html (last
visited Apr. 26, 2021); U.S. Department of the
Interior, Bureau of Indian Affairs, Indian Lands of
Federally Recognized Tribes of the United States
(June 2016), https://www.bia.gov/siteslbia.gov/files/
assets/bia/ots/webteam/pdf/idcl-028635.pdf (last
visited Apr. 26, 2021).
specific populations, households, or
geographic areas to be served.
Given the exacerbation of health
disparities during the pandemic and the
role of pre-existing social vulnerabilities
in driving these disparate outcomes,
services to address health disparities are
presumed to be responsive to the public
health impacts of the pandemic.
Specifically, recipients may use
payments from the Fiscal Recovery
Funds to facilitate access to resources
that improve health outcomes,
including services that connect
residents with health care resources and
public assistance programs and build
healthier environments, such as:
❑ Funding community health workers
to help community members access
health services and services to address
the social determinants of health; 49
❑ Funding public benefits navigators
to assist community members with
navigating and applying for available
Federal, State, and local public benefits
or services;
❑ Housing services to support healthy
living environments and neighborhoods
conducive to mental and physical
wellness;
❑ Remediation of lead paint or other
lead hazards to reduce risk of elevated
blood lead levels among children; and
❑ Evidence -based community
violence intervention programs to
prevent violence and mitigate the
increase in violence during the
pandemics°
2. Responding to Negative Economic
Impacts
Impacts on Households and
Individuals. The public health
emergency, including the necessary
measures taken to protect public health,
resulted in significant economic and
financial hardship for many Americans.
As businesses closed, consumers stayed
home, schools shifted to remote
49 The social determinants of health are the social
and environmental conditions that affect health
outcomes, specifically economic stability, health
care access, social context, neighborhoods and built
environment, and education access. See, e.g., U.S.
Department of Health and Human Services, Office
of Disease Prevention and Health Promotion,
Healthy People 2030: Social Determinants of
Health, https://health.gov/healthypeople/objectives-
and-data/social-determinants-health (last visited
Apr. 26, 2021).
50 National Commission on COVID-19 and
Criminal Justice, Impact Report: COVID-19 and
Crime (Jan. 31, 2021), https://
covid l9.counciloncj. org/2021 /01 /31 /impact-report-
covid-19-and-crime-3/ (showing a spike in
homicide and assaults); Brad Boesrup et al.,
Alarming Trends in US domestic violence during
the COVID-19 pandemic, Am. J. of Emerg. Med.
38(12): 2753-55 (Dec. 1, 2020), available at https://
www.ajemjournal.com/article/S0735-
6757(20)30307-7/fulltext (showing a spike in
domestic violence).
26792 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
education, and travel declined
precipitously, over 20 million jobs were
lost in March and April 2020.51
Although many have returned to work,
as of April 2021, the economy remains
8.2 million jobs below its pre -pandemic
peak,52 and more than 3 million workers
have dropped out of the labor market
altogether relative to February 2020.53
Rates of unemployment are
particularly severe among workers of
color and workers with lower levels of
educational attainment; for example, the
overall unemployment rate in the
United States was 6.1 percent in April
2021, but certain groups saw much
higher rates: 9.7 percent for Black
workers, 7.9 percent for Hispanic or
Latino workers, and 9.3 percent for
workers without a high school
diploma.54 Job losses have also been
particularly steep among low wage
workers, with these workers remaining
furthest from recovery as of the end of
2020.55 A severe recession —and its
concentrated impact among low-income
workers —has amplified food and
housing insecurity, with an estimated
nearly 17 million adults living in
households where there is sometimes or
often not enough food to eat and an
estimated 10.7 million adults living in
households that were not current on
rent.56 Over the course of the pandemic,
51 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm (PAYEMS), retrieved from FRED,
Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/PAYEMS (last visited May
8, 2021).
52Id.
53 U.S. Bureau of Labor Statistics, Civilian Labor
Force Level [CLF16OV], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://
fred.stlouisfed.org/series/CLF16OV (last visited May
8, 2021).
54 U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian population by sex
and age (May 8 2021), https://www.bls.gov/
news.release/empsit.t0l.htm (last visited May 8,
2021); U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian noninstitutional
population by race, Hispanic or Latino ethnicity,
sex, and age (May 8, 2021), https://www.bls.gov/
web/empsit/cpseea04.htm (last visited May 8,
2021); U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian noninstitutional
population 25 years and over by educational
attainment (May 8, 2021), https://www.bls.gov/web/
empsiticpseea05.htm (last visited May 8, 2021).
55 Elise Gould & Jori Kandra, Wages grew in 2020
because the bottom fell out of the low -wage labor
market, Economic Policy Institute (Feb. 24, 2021),
https://files.epi.org/pdf/219418.pdf. See also,
Michael Dalton et al., The K -Shaped Recovery:
Examining the Diverging Fortunes of Workers in the
Recovery from the COVID-19 Pandemic using
Business and Household Survey Microdata, U.S.
Bureau of Labor Statistics Working Paper Series
(Feb. 2021), https:I/www.bls.gov/osmr/research-
papers/2021/pdf/ec210020.pdf.
p d f.
56 Center on Budget and Policy Priorities,
Tracking the COVID-19 Recession's Effects on
inequities also manifested along gender
lines, as schools closed to in -person
activities, leaving many working
families without child care during the
day.57 Women of color have been hit
especially hard: The labor force
participation rate for Black women has
fallen by 3.2 percentage points 58 during
the pandemic as compared to 1.0
percentage points for Black men 59 and
2.0 percentage points for White
women.6o
As the economy recovers, the effects
of the pandemic -related recession may
continue to impact households,
including a risk of longer -term effects on
earnings and economic potential. For
example, unemployed workers,
especially those who have experienced
longer periods of unemployment, earn
lower wages over the long term once
rehired.61 In addition to the labor
market consequences for unemployed
workers, recessions can also cause
longer -term economic challenges
through, among other factors, damaged
consumer credit scores 62 and reduced
familial and childhood wellbeing.63
Food, Housing, and Employment Hardships,
https://www. cbpp.org/research/poverty-and-
inequality/tracking-the-covid-19-recessions-effects-
onfood-housing-and (last visited May 8, 2021).
57 Women have carried a larger share of childcare
responsibilities than men during the COVID-19
crisis. See, e.g., Gema Zamarro & Maria J. Prados,
Gender differences in couples' division of
childcare, work and mental health during COVID-
19, Rev. Econ. Household 19:11-40 (2021),
available at https://link.springer.com/article/
10.1007/s11150-020-09534-7; Titan Alan et al., The
Impact of COVID-19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
(April 2020), available at https://www.nber.org/
papers/w26947.
58 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate -20 Yrs. & Over, Black or African
American Women [LNS11300032], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300032 (last visited
May 8, 2021).
59 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate -20 Yrs. & Over, Black or African
American Men [LNS11300031], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300031 (last visited
May 8, 2021).
60 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate -20 Yrs. & Over, White Women
[LNS11300029], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300029 (last visited
May 8, 2021).
61 See, e.g., Michael Greenstone & Adam Looney,
Unemployment and Earnings Losses: A Look at
Long -Term Impacts of the Great Recession on
American Workers, Brookings Institution (Nov. 4,
2021), https://www.brookings.edu/blog/jobs/2011/
11 /04/unem ployment-an d-earnings-losses-a-look-
at-long-term-impacts-of-the-great-recession-on-
american-workers/.
62 Chi Chi Wu, Solving the Credit Conundrum:
Helping Consumers' Credit Records Impaired by the
Foreclosure Crisis and Great Recession (Dec. 2013),
https:/!www.ncic.org/images!pdf!credit_reports/
report-credit-conundrum-2013.pdf.
63Irwin Garfinkel, Sara McLanahan, Christopher
Wimer, eds., Children of the Great Recession,
These potential long-term economic
consequences underscore the continued
need for robust policy support.
Impacts on Businesses. The pandemic
has also severely impacted many
businesses, with small businesses hit
especially hard. Small businesses make
up nearly half of U.S. private -sector
employment 64 and play a key role in
supporting the overall economic
recovery as they are responsible for two-
thirds of net new jobs.65 Since the
beginning of the pandemic, however,
400,000 small businesses have closed,
with many more at risk.66 Sectors with
a large share of small business
employment have been among those
with the most drastic drops in
employment.67 The negative outlook for
small businesses has continued: As of
April 2021, approximately 70 percent of
small businesses reported that the
pandemic has had a moderate or large
negative effect on their business, and
over a third expect that it will take over
6 months for their business to return to
their normal level of operations.68
This negative outlook is likely the
result of many small businesses having
faced periods of closure and having seen
declining revenues as customers stayed
home.69 In general, small businesses can
face greater hurdles in accessing
credit,70 and many small businesses
were already financially fragile at the
outset of the pandemic.71 Non -profits,
which provide vital services to
communities, have similarly faced
Russell Sage Foundation (Aug. 2016), available at
https://www.russellsage. org/publications/chil dren-
great-recession.
64 Board of Governors of the Federal Reserve
System, supra note 5.
65 U.S. Small Business Administration, Office of
Advocacy, Small Businesses Generate 44 Percent of
U.S. Economic Activity (Jan. 30, 2019), https://
advocacy.sba.gov/2019/01 /30/small-businesses-
genera to -4 4 -percent -o f- u -s-economic-activity/.
66 Biden, supra note 6.
67Daniel Wilmoth, U.S. Small Business
Administration Office of Advocacy, The Effects of
the COVID-19 Pandemic on Small Businesses, Issue
Brief No. 16 (Mar. 2021), available at https://
cdn.advocacy.sba.gov/wp-content/uploads/2021/
03/02112318/CO VID-19-Impact-On-Small-
Business.pd f.
6s U.S. Census Bureau, Small Business Pulse
Survey, https://portal.census.gov/pulse/data/ (last
visited May 8, 2021).
69 Olivia S. Kim et al., Revenue Collapses and the
Consumption of Small Business Owners in the
Early Stages of the COVID-19 Pandemic (Nov.
2020), https://www.nber.org/papers/w28151.
70 See e.g., Board of Governors of the Federal
Reserve System, Report to Congress on the
Availability of Credit to Small Businesses (Sept.
2017), available at https://www.federalreserve.gov/
publications/2017-september-availability-of-credit-
to-small-businesses.h tm.
71 Alexander W. Bartik et al., The Impact of
COVID-19 on small business outcomes and
expectations, PNAS 117(30): 17656-66 (July 28,
2020), available at https://www.pnas.org/content/
117/30/17656.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26793
economic and financial challenges due
to the pandemic.72
Impacts to State, Local, and Tribal
Governments. State, local, and Tribal
governments have felt substantial fiscal
pressures. As noted above, State, local,
and Tribal governments have faced
significant revenue shortfalls and
remain over 1 million jobs below their
pre -pandemic staffing levels.73 These
reductions in staffing may undermine
the ability to deliver services effectively,
as well as add to the number of
unemployed individuals in their
jurisdictions.
Exacerbation of Pre-existing
Disparities. The COVID-19 public
health emergency may have lasting
negative effects on economic outcomes,
particularly in exacerbating disparities
that existed prior to the pandemic.
The negative economic impacts of the
COVID-19 pandemic are particularly
pronounced in certain communities and
families. Low- and moderate -income
jobs make up a substantial portion of
both total pandemic job losses,74 and
jobs that require in -person frontline
work, which are exposed to greater risk
of contracting COVID-19.75 Both factors
compound pre-existing vulnerabilities
and the likelihood of food, housing, or
other financial insecurity in low- and
moderate -income families and, given
the concentration of low- and moderate -
income families within certain
communities,76 raise a substantial risk
that the effects of the COVID-19 public
health emergency will be amplified
within these communities.
These compounding effect of
recessions on concentrated poverty and
the long-lasting nature of this effect
were observed after the 2007-2009
recession, including a large increase in
concentrated poverty with the number
of people living in extremely poor
72 Federal Reserve Bank of San Francisco, Impacts
of COVID-19 on Nonprofits in the Western United
States (May 2020), https://www.frbsf.org/
community-development/files/impact-o f -co vi d -
nonprofits -serving -western -united -states. pd f.
73 Bureau of Labor Statistics, supra note 8; Elijah
Moreno & Heather Sobrepena, Tribal entities remain
resilient as COVID-19 batters their finances,
Federal Reserve Bank of Minneapolis (Nov. 10,
2021), https://www.minneapolisfed.org/article/
2020/tribal -en ti ti es -rem ain -resilient-a s -c o vi d -19-
batters-their finances.
74 Kim Parker et al., Economic Fallout from
COVID-19 Continues to Hit Lower -Income
Americans the Hardest, Pew Research Center (Sept.
24, 2020), https://www.pewresearch.org/social-
trends/2020/09/24/economic falloutfrom-covid-19-
contin ues-to-hit-lower-income-americans-the-
hardest/; Gould, supra note 55.
75 See infra Section II.B of this Supplementary
Information.
76 Elizabeth Kneebone, The Changing geography
of US poverty, Brookings Institution (Feb. 15, 2017),
https://www.brookings. edu/testimonies/the-
changing-geography-o f -us -poverty/.
neighborhoods more than doubling by
2010-2014 relative to 2000.77
Concentrated poverty has a range of
deleterious impacts, including
additional burdens on families and
reduced economic potential and social
cohesion.78 Given the disproportionate
impact of COVID-19 on low-income
households discussed above, there is a
risk that the current pandemic -induced
recession could further increase
concentrated poverty and cause long-
term damage to economic prospects in
neighborhoods of concentrated poverty.
The negative economic impacts of
COVID-19 also include significant
impacts to children in
disproportionately affected families and
include impacts to education, health,
and welfare, all of which contribute to
long-term economic outcomes.79 Many
low-income and minority students, who
were disproportionately served by
remote or hybrid education during the
pandemic, lacked the resources to
participate fully in remote schooling or
live in households without adults
available throughout the day to assist
with online coursework.80 Given these
trends, the pandemic may widen
educational disparities and worsen
outcomes for low-income students,81 an
77 Elizabeth Kneebone & Natalie Holmes, U.S.
concentrated poverty in the wake of the Great
Recession, Brookings Institution (Mar. 31, 2016),
https://www.brookings.ed u/research/u-s-
concentrated-poverty-in-the-wake-of-the-great-
recession!.
78 David Erickson et al., The Enduring Challenge
of Concentrated Poverty in America: Case Studies
from Communities Across the U.S. (2008), available
at https://www. frbsf.org/community-development/
files/cp fullreport. p d f.
79 Educational quality, as early as Kindergarten,
has a long-term impact on children's public health
and economic outcomes. See, e.g., Tyler W. Watts
et al., The Chicago School Readiness Project:
Examining the long-term impacts of an early
childhood intervention, PLoS ONE 13(7) (2018),
available at https://journals.plos.org/plosone/
article?id=10.1371 /journal. pone.0200144;
Opportunity Insights, How Can We Amplify
Education as an Engine of Mobility? Using big data
to help children get the most from school, https://
opportunityinsights.org/education/ (last visited
Apr. 26, 2021); U.S. Department of Health and
Human Services (HHS), Office of Disease
Prevention and Health Promotion, Early Childhood
Development and Education, https://
www.healthypeople.gov!2020/topics-objectives!
topic/social-determinants-heal th/interventions-
resources/early-childhood-development-and-
education (last visited Apr. 26, 2021).
so See, e.g., Bacher-Hicks, supra note 14.
81 A Department of Education survey found that,
as of February 2021, 42 percent of fourth grade
students nationwide were offered only remote
education, compared to 48 percent of economically
disadvantaged students, 54 percent of Black
students and 57 percent of Hispanic students. Large
districts often disproportionately serve low-income
students. See Institute of Education Sciences,
Monthly School Survey Dashboard, https://
ies.ed.gov/schoolsurvey/ (last visited Apr. 26, 2021).
In summer 2020, a review found that 74 percent of
the largest 100 districts chose remote learning only.
effect that would substantially impact
their long-term economic outcomes.
Increased economic strain or material
hardship due to the pandemic could
also have a long-term impact on health,
educational, and economic outcomes of
young children.82 Evidence suggests
that adverse conditions in early
childhood, including exposure to
poverty, food insecurity, housing
insecurity, or other economic hardships,
are particularly impactful.83
The pandemic's disproportionate
economic impacts are also seen in
Tribal communities across the
country —for Tribal governments as well
as families and businesses on and off
Tribal lands. In the early months of the
pandemic, Native American
unemployment spiked to 26 percent
and, while partially recovered, remains
at nearly 11 percent.S4 Tribal enterprises
are a significant source of revenue for
Tribal governments to support the
provision of government services. These
enterprises, notably concentrated in
gaming, tourism, and hospitality,
frequently closed, significantly reducing
both revenues to Tribal governments
and employment. As a result, Tribal
governments have reduced essential
services to their citizens and
communities.85
Eligible Uses. Sections 602(c)(1)(A)
and 603(c)(1)(A) permit use of payments
from the Fiscal Recovery Funds to
respond to the negative economic
impacts of the COVID-19 public health
emergency. Eligible uses that respond to
the negative economic impacts of the
public health emergency must be
designed to address an economic harm
resulting from or exacerbated by the
public health emergency. In considering
whether a program or service would be
See Education Week, School Districts' Reopening
Plans: A Snapshot (Jul. 15, 2020), https://
www.edweek.org/leadership/school-districts-
reopening-plans-a-snapshot/2020/07 (last visited
May 4, 2021).
82 HHS, supra note 79.
83 Hirokazu Yoshikawa, Effects of the Global
Coronavirus Disease -2019 Pandemic on Early
Childhood Development: Short- and Long -Term
Risks and Mitigating Program and Policy Actions,
J. of Pediatrics Vol. 223:188-93 (Aug. 1, 2020),
available at https://www.jpeds.com/article/S0022-
3476(20)30606-5/abstract.
84 Based on calculations conducted by the
Minneapolis Fed's Center for Indian Country
Development using Flood et al. (2020)5 Current
Population Survey." Sarah Flood, Miriam King,
Renae Rodgers, Steven Ruggles and J. Robert
Warren. Integrated Public Use Microdata Series,
Current Population Survey: Version 8.0 [dataset].
Minneapolis, MN: IPUMS, 2020. https://doi.orgl
10.18128/D030.V8.0; see also Donna Feir & Charles
Golding, Native Employment During COVID-19:
Hard hit in April but Starting to Rebount? (Aug. 5,
2020), https://www.minneapolisfed.org/article/
2020/native-em ployment-during-covid-19-hit-hard-
in-a pril-but-starting-to-rebound.
85 Moreno & Sobrepena, supra note 73.
26794 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
eligible under this category, the
recipient should assess whether, and the
extent to which, there has been an
economic harm, such as loss of earnings
or revenue, that resulted from the
COVID-19 public health emergency and
whether, and the extent to which, the
use would respond or address this
harm.86 A recipient should first
consider whether an economic harm
exists and whether this harm was
caused or made worse by the COVID-19
public health emergency. While
economic impacts may either be
immediate or delayed, assistance or aid
to individuals or businesses that did not
experience a negative economic impact
from the public health emergency
would not be an eligible use under this
category.
In addition, the eligible use must
"respond to" the identified negative
economic impact. Responses must be
related and reasonably proportional to
the extent and type of harm
experienced; uses that bear no relation
or are grossly disproportionate to the
type or extent of harm experienced
would not be eligible uses. Where there
has been a negative economic impact
resulting from the public health
emergency, States, local, and Tribal
governments have broad latitude to
choose whether and how to use the
Fiscal Recovery Funds to respond to
and address the negative economic
impact. Sections 602(c)(1)(A) and
603(c)(1)(A) describe several types of
uses that would be eligible under this
category, including assistance to
households, small businesses, and
nonprofits and aid to impacted
industries such as tourism, travel, and
hospitality.
To facilitate implementation and use
of payments from the Fiscal Recovery
Funds, the interim final rule identifies
a non-exclusive list of eligible uses of
funding that respond to the negative
economic impacts of the public health
emergency. Consistent with the
discussion above, the eligible uses listed
below would respond directly to the
economic or financial harms resulting
from and or exacerbated by the public
health emergency.
❑ Assistance to Unemployed Workers.
This includes assistance to unemployed
workers, including services like job
training to accelerate rehiring of
unemployed workers; these services
may extend to workers unemployed due
to the pandemic or the resulting
recession, or who were already
unemployed when the pandemic began
86 In some cases, a use may be permissible under
another eligible use category even if it falls outside
the scope of section (c)(1)(A) of the Act.
and remain so due to the negative
economic impacts of the pandemic.
❑ State Unemployment Insurance
Trust Funds. Consistent with the
approach taken in the CRF, recipients
may make deposits into the state
account of the Unemployment Trust
Fund established under section 904 of
the Social Security Act (42 U.S.C. 1104)
up to the level needed to restore the pre -
pandemic balances of such account as of
January 27, 2020 or to pay back
advances received under Title XII of the
Social Security Act (42 U.S.C. 1321) for
the payment of benefits between January
27, 2020 and May 17, 2021, given the
close nexus between Unemployment
Trust Fund costs, solvency of
Unemployment Trust Fund systems,
and pandemic economic impacts.
Further, Unemployment Trust Fund
deposits can decrease fiscal strain on
Unemployment Insurance systems
impacted by the pandemic. States facing
a sharp increase in Unemployment
Insurance claims during the pandemic
may have drawn down positive
Unemployment Trust Fund balances
and, after exhausting the balance,
required advances to fund continuing
obligations to claimants. Because both
of these impacts were driven directly by
the need for assistance to unemployed
workers during the pandemic,
replenishing Unemployment Trust
Funds up to the pre -pandemic level
responds to the pandemic's negative
economic impacts on unemployed
workers.
❑ Assistance to Households.
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 (discussed below); 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. As
discussed above, in considering whether
a potential use is eligible under this
category, a recipient must consider
whether, and the extent to which, the
household has experienced a negative
economic impact from the pandemic. In
assessing whether a household or
population experienced economic harm
as a result of the pandemic, a recipient
may presume that a household or
population that experienced
unemployment or increased food or
housing insecurity or is low- or
moderate -income experienced negative
economic impacts resulting from the
pandemic. For example, a cash transfer
program may focus on unemployed
workers or low- and moderate -income
families, which have faced
disproportionate economic harms due to
the pandemic. Cash transfers must be
reasonably proportional to the negative
economic impact they are intended to
address. Cash transfers grossly in excess
of the amount needed to address the
negative economic impact identified by
the recipient would not be considered to
be a response to the COVID-19 public
health emergency or its negative
impacts. In particular, when considering
the appropriate size of permissible cash
transfers made in response to the
COVID-19 public health emergency,
State, local and Tribal governments may
consider and take guidance from the per
person amounts previously provided by
the Federal Government in response to
the COVID-19 crisis. Cash transfers that
are grossly in excess of such amounts
would be outside the scope of eligible
uses under sections 602(c)(1)(A) and
603(c)(1)(A) and could be subject to
recoupment. In addition, a recipient
could provide survivor's benefits to
surviving family members of COVID-19
victims, or cash assistance to widows,
widowers, and dependents of eligible
COVID-19 victims.
❑ Expenses to Improve Efficacy of
Economic Relief Programs. State, local,
and Tribal governments may use
payments from the Fiscal Recovery
Funds to improve efficacy of programs
addressing negative economic impacts,
including through use of data analysis,
targeted consumer outreach,
improvements to data or technology
infrastructure, and impact evaluations.
❑ Small Businesses and Non -profits.
As discussed above, small businesses
and non -profits faced significant
challenges in covering payroll,
mortgages or rent, and other operating
costs as a result of the public health
emergency and measures taken to
contain the spread of the virus. State,
local, and Tribal governments may
provide assistance to small businesses
to adopt safer operating procedures,
weather periods of closure, or mitigate
financial hardship resulting from the
COVID-19 public health emergency,
including:
o Loans or grants to mitigate financial
hardship such as declines in revenues
or impacts of periods of business
closure, for example by supporting
payroll and benefits costs, costs to retain
employees, mortgage, rent, or utilities
costs, and other operating costs;
o Loans, grants, or in -kind assistance
to implement COVID-19 prevention or
mitigation tactics, such as physical
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26795
plant changes to enable social
distancing, enhanced cleaning efforts,
barriers or partitions, or COVID-19
vaccination, testing, or contact tracing
programs; and
O Technical assistance, counseling, or
other services to assist with business
planning needs.
As discussed above, these services
should respond to the negative
economic impacts of COVID-19.
Recipients may consider additional
criteria to target assistance to businesses
in need, including small businesses.
Such criteria may include businesses
facing financial insecurity, substantial
declines in gross receipts (e.g.,
comparable to measures used to assess
eligibility for the Paycheck Protection
Program), or other economic harm due
to the pandemic, as well as businesses
with less capacity to weather financial
hardship, such as the smallest
businesses, those with less access to
credit, or those serving disadvantaged
communities. Recipients should
consider local economic conditions and
business data when establishing such
criteria.87
❑ Rehiring State, Local, and Tribal
Government Staff. State, local, and
Tribal governments continue to see
pandemic impacts in overall staffing
levels: State, local, and Tribal
government employment remains more
than 1 million jobs lower in April 2021
than prior to the pandemic.88
Employment losses decrease a state or
local government's ability to effectively
administer services. Thus, the interim
final rule includes as an eligible use
payroll, covered benefits, and other
costs associated with rehiring public
sector staff, up to the pre -pandemic
staffing level of the government.
❑ Aid to Impacted Industries.
Sections 602(c)(1)(A) and 603(c)(1)(A)
recognize that certain industries, such
as tourism, travel, and hospitality, were
disproportionately and negatively
impacted by the COVID-19 public
health emergency. Aid provided to
tourism, travel, and hospitality
industries should respond to the
negative economic impacts of the
8'] See Federal Reserve Bank of Cleveland, An
Uphill Battle: COVID-19's Outsized Toll on
Minority -Owned Firms (Oct. 8, 2020), https://
www.clevelandfed.org/newsroom-and-events/
publications/comm unity-development-briefs/db-
20201008-misera-report.aspx (discussing the
impact of COVID-19 on minority owned
businesses).
8a U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
CES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited May 8, 2021).
pandemic on those and similarly
impacted industries. For example, aid
may include assistance to implement
COVID-19 mitigation and infection
prevention measures to enable safe
resumption of tourism, travel, and
hospitality services, for example,
improvements to ventilation, physical
barriers or partitions, signage to
facilitate social distancing, provision of
masks or personal protective equipment,
or consultation with infection
prevention professionals to develop safe
reopening plans.
Aid may be considered responsive to
the negative economic impacts of the
pandemic if it supports businesses,
attractions, business districts, and Tribal
development districts operating prior to
the pandemic and affected by required
closures and other efforts to contain the
pandemic. For example, a recipient may
provide aid to support safe reopening of
businesses in the tourism, travel, and
hospitality industries and to business
districts that were closed during the
COVID-19 public health emergency, as
well as aid for a planned expansion or
upgrade of tourism, travel, and
hospitality facilities delayed due to the
pandemic.
When considering providing aid to
industries other than tourism, travel,
and hospitality, recipients should
consider the extent of the economic
impact as compared to tourism, travel,
and hospitality, the industries
enumerated in the statute. For example,
on net, the leisure and hospitality
industry has experienced an
approximately 24 percent decline in
revenue and approximately 17 percent
decline in employment nationwide due
to the COVID-19 public health
emergency.89 Recipients should also
consider whether impacts were due to
the COVID-19 pandemic, as opposed to
longer -term economic or industrial
trends unrelated to the pandemic.
To facilitate transparency and
accountability, the interim final rule
requires that State, local, and Tribal
governments publicly report assistance
provided to private -sector businesses
under this eligible use, including
89 From February 2020 to April 2021,
employment in "Leisure and hospitality" has fallen
by approximately 17 percent. See U.S. Bureau of
Labor Statistics, All Employees, Leisure and
Hospitality, retrieved from FRED, Federal Reserve
Bank of St. Louis, https://fred.stlouisfed.org/series/
USLAH (last visited May 8, 2021). From 2019Q4 to
2020Q4, gross output (e.g. revenue) in arts,
entertainment, recreation, accommodation, and
food services has fallen by approximately 24
percent. See Bureau of Economic Analysis, News
Release: Gross Domestic Product (Third Estimate),
Corporate Profits, and GDP by Industry, Fourth
Quarter and Year 2020 (Mar. 25, 2021), Table 17,
https://www.bea.gov/sites/default/files/2021-03/
gdp4q20_3rd.pdf.
tourism, travel, hospitality, and other
impacted industries, and its connection
to negative economic impacts of the
pandemic. Recipients also should
maintain records to support their
assessment of how businesses or
business districts receiving assistance
were affected by the negative economic
impacts of the pandemic and how the
aid provided responds to these impacts.
As discussed above, economic
disparities that existed prior to the
COVID-19 public health emergency
amplified the impact of the pandemic
among low-income and minority
groups. These families were more likely
to face housing, food, and financial
insecurity; are over -represented among
low -wage workers; and many have seen
their livelihoods deteriorate further
during the pandemic and economic
contraction. In recognition of the
disproportionate negative economic
impacts on certain communities and
populations, the interim final rule
identifies services and programs that
will be presumed to be responding to
the negative economic impacts of the
COVID-19 public health emergency
when provided in these communities.
Specifically, Treasury will presume
that certain types of services, outlined
below, are eligible uses when provided
in a QCT, to families and individuals
living in QCTs, or when these services
are provided by Tribal governments.90
Recipients may also provide these
services to other populations,
households, or geographic areas
disproportionately impacted by the
pandemic. In identifying these
disproportionately impacted
communities, recipients should be able
to support their determination that the
pandemic resulted in disproportionate
public health or economic outcomes to
the specific populations, households, or
geographic areas to be served. The
interim final rule identifies a non-
exclusive list of uses that address the
disproportionate negative economic
effects of the COVID-19 public health
emergency, including:
O Building Stronger Communities
through Investments in Housing and
Neighborhoods. The economic impacts
of COVID-19 have likely been most
acute in lower -income neighborhoods,
including concentrated areas of high
unemployment, limited economic
opportunity, and housing insecurity.91
90 HUD, supra note 48.
91 Stuart M. Butler & Jonathan Grabinsky,
Tackling the legacy of persistent urban inequality
and concentrated poverty, Brookings Institution
(Nov. 16, 2020), https://www.brookings.edu/blog/
upfront/2020/11/16/tackling-the-legacy-of-
Continued
26796 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Services in this category alleviate the
immediate economic impacts of the
COVID-19 pandemic on housing
insecurity, while addressing conditions
that contributed to poor public health
and economic outcomes during the
pandemic, namely concentrated areas
with limited economic opportunity and
inadequate or poor -quality housing.92
Eligible services include:
■ Services to address homelessness
such as supportive housing, and to
improve access to stable, affordable
housing among unhoused individuals;
■ Affordable housing development to
increase supply of affordable and high -
quality living units; and
■ Housing vouchers, residential
counseling, or housing navigation
assistance to facilitate household moves
to neighborhoods with high levels of
economic opportunity and mobility for
low-income residents, to help residents
increase their economic opportunity
and reduce concentrated areas of low
economic opportunity.93
o Addressing Educational Disparities.
As outlined above, school closures and
the transition to remote education raised
particular challenges for lower -income
students, potentially exacerbating
educational disparities, while increases
in economic hardship among families
could have long-lasting impacts on
children's educational and economic
prospects. Services under this prong
would enhance educational supports to
help mitigate impacts of the pandemic.
Eligible services include:
■ New, expanded, or enhanced early
learning services, including pre-
kindergarten, Head Start, or
partnerships between pre -kindergarten
programs and local education
authorities, or administration of those
services;
■ Providing assistance to high -poverty
school districts to advance equitable
funding across districts and
geographies;
■ Evidence -based educational
services and practices to address the
academic needs of students, including
tutoring, summer, afterschool, and other
persistent -urban -inequality -and -concentrated -
poverty!.
92 U.S. Department of Health and Human Services
(HHS), Office of Disease Prevention and Health
Promotion, Quality of Housing, https://
www.healthypeople.gov/2020/topics-objectives/
topic/social-determinants-health /in terven ti ons-
resources/quality-of-housing#11 (last visited Apr.
26, 2021).
93 The Opportunity Atlas, https://
www.opportunityatlas.org/ (last visited Apr. 26,
2021); Raj Chetty & Nathaniel Hendren, The
Impacts of Neighborhoods on Intergenerational
Mobility I: Childhood Exposure Effects, Quarterly J.
of Econ. 133(3):1107-162 (2018), available at
https://opportunityinsights. org/paper/
neighborhoodsi/.
extended learning and enrichment
programs; and
■ Evidence -based practices to address
the social, emotional, and mental health
needs of students;
o Promoting Healthy Childhood
Environments. Children's economic and
family circumstances have a long-term
impact on their future economic
outcomes.94 Increases in economic
hardship, material insecurity, and
parental stress and behavioral health
challenges all raise the risk of long-term
harms to today's children due to the
pandemic. Eligible services to address
this challenge include:
■ New or expanded high -quality
childcare to provide safe and supportive
care for children;
■ Home visiting programs to provide
structured visits from health, parent
educators, and social service
professionals to pregnant women or
families with young children to offer
education and assistance navigating
resources for economic support, health
needs, or child development; and
■ Enhanced services for child welfare -
involved families and foster youth to
provide support and training on child
development, positive parenting, coping
skills, or recovery for mental health and
substance use challenges.
State, local, and Tribal governments
are encouraged to use payments from
the Fiscal Recovery Funds to respond to
the direct and immediate needs of the
pandemic and its negative economic
impacts and, in particular, the needs of
households and businesses that were
disproportionately and negatively
impacted by the public health
emergency. As highlighted above, low-
income communities and workers and
people of color have faced more severe
health and economic outcomes during
the pandemic, with pre-existing social
vulnerabilities like low -wage or
insecure employment, concentrated
neighborhoods with less economic
opportunity, and pre-existing health
disparities likely contributing to the
magnified impact of the pandemic. The
Fiscal Recovery Funds provide
resources to not only respond to the
immediate harms of the pandemic but
also to mitigate its longer -term impact in
compounding the systemic public
health and economic challenges of
disproportionately impacted
populations. Treasury encourages
recipients to consider funding uses that
foster a strong, inclusive, and equitable
recovery, especially uses with long-term
benefits for health and economic
outcomes.
94 See supra notes 52 and 84.
Uses Outside the Scope of this
Category. Certain uses would not be
within the scope of this eligible use
category, although may be eligible under
other eligible use categories. A general
infrastructure project, for example,
typically would not be included unless
the project responded to a specific
pandemic public health need (e.g.,
investments in facilities for the delivery
of vaccines) or a specific negative
economic impact like those described
above (e.g., affordable housing in a
QCT). The ARPA explicitly includes
infrastructure if it is "necessary" and in
water, sewer, or broadband. See Section
II.D of this SUPPLEMENTARY INFORMATION.
State, local, and Tribal governments also
may use the Fiscal Recovery Funds
under sections 602(c)(1)(C) or
603(c)(1)(C) to provide "government
services" broadly to the extent of their
reduction in revenue. See Section II.C of
this SUPPLEMENTARY INFORMATION.
This category of eligible uses also
would not include contributions to
rainy day funds, financial reserves, or
similar funds. Resources made available
under this eligible use category are
intended to help meet pandemic
response needs and provide relief for
households and businesses facing near -
and long-term negative economic
impacts. Contributions to rainy day
funds and similar financial reserves
would not address these needs or
respond to the COVID-19 public health
emergency but would rather constitute
savings for future spending needs.
Similarly, this eligible use category
would not include payment of interest
or principal on outstanding debt
instruments, including, for example,
short-term revenue or tax anticipation
notes, or other debt service costs. As
discussed below, payments from the
Fiscal Recovery Funds are intended to
be used prospectively and the interim
final rule precludes use of these funds
to cover the costs of debt incurred prior
to March 3, 2021. Fees or issuance costs
associated with the issuance of new
debt would also not be covered using
payments from the Fiscal Recovery
Funds because such costs would not
themselves have been incurred to
address the needs of pandemic response
or its negative economic impacts. The
purpose of the Fiscal Recovery Funds is
to provide fiscal relief that will permit
State, local, and Tribal governments to
continue to respond to the COVID-19
public health emergency.
For the same reasons, this category of
eligible uses would not include
satisfaction of any obligation arising
under or pursuant to a settlement
agreement, judgment, consent decree, or
judicially confirmed debt restructuring
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26797
plan in a judicial, administrative, or
regulatory proceeding, except to the
extent the judgment or settlement
requires the provision of services that
would respond to the COVID-19 public
health emergency. That is, satisfaction
of a settlement or judgment would not
itself respond to COVID-19 with respect
to the public health emergency or its
negative economic impacts, unless the
settlement requires the provision of
services or aid that did directly respond
to these needs, as described above.
In addition, as described in Section
VIII of this SUPPLEMENTARY
INFORMATION, Treasury will establish
reporting and record keeping
requirements for uses within this
category, including enhanced reporting
requirements for certain types of uses.
Question 1: Are there other types of
services or costs that Treasury should
consider as eligible uses to respond to
the public health impacts of COVID-19?
Describe how these respond to the
COVID-19 public health emergency.
Question 2: The interim final rule
permits coverage of payroll and benefits
costs of public health and safety staff
primarily dedicated to COVID-19
response, as well as rehiring of public
sector staff up to pre -pandemic levels.
For how long should these measures
remain in place? What other measures
or presumptions might Treasury
consider to assess the extent to which
public sector staff are engaged in
COVID-19 response, and therefore
reimbursable, in an easily -administrable
manner?
Question 3: The interim final rule
permits rehiring of public sector staff up
to the government's pre -pandemic
staffing level, which is measured based
on employment as of January 27, 2020.
Does this approach adequately measure
the pre -pandemic staffing level in a
manner that is both accurate and easily
administrable? Why or why not?
Question 4: The interim final rule
permits deposits to Unemployment
Insurance Trust Funds, or using funds
to pay back advances, up to the pre -
pandemic balance. What, if any,
conditions should be considered to
ensure that funds repair economic
impacts of the pandemic and strengthen
unemployment insurance systems?
Question 5: Are there other types of
services or costs that Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVID-19? Describe how these respond
to the COVID-19 public health
emergency.
Question 6: What other measures,
presumptions, or considerations could
be used to assess "impacted industries"
affected by the COVID-19 public health
emergency?
Question 7: What are the advantages
and disadvantages of using Qualified
Census Tracts and services provided by
Tribal governments to delineate where a
broader range of eligible uses are
presumed to be responsive to the public
health and economic impacts of
COVID-19? What other measures might
Treasury consider? Are there other
populations or geographic areas that
were disproportionately impacted by the
pandemic that should be explicitly
included?
Question 8: Are there other services or
costs that Treasury should consider as
eligible uses to respond to the
disproportionate impacts of COVID-19
on low-income populations and
communities? Describe how these
respond to the COVID-19 public health
emergency or its negative economic
impacts, including its exacerbation of
pre-existing challenges in these areas.
Question 9: The interim final rule
includes eligible uses to support
affordable housing and stronger
neighborhoods in disproportionately -
impacted communities. Discuss the
advantages and disadvantages of
explicitly including other uses to
support affordable housing and stronger
neighborhoods, including rehabilitation
of blighted properties or demolition of
abandoned or vacant properties. In
what ways does, or does not, this
potential use address public health or
economic impacts of the pandemic?
What considerations, if any, could
support use of Fiscal Recovery Funds in
ways that do not result in resident
displacement or loss of affordable
housing units?
B. Premium Pay
Fiscal Recovery Funds payments may
be used by recipients to provide
premium pay to eligible workers
performing essential work during the
COVID-19 public health emergency or
to provide grants to third -party
employers with eligible workers
performing essential work.95 These are
workers who have been and continue to
be relied on to maintain continuity of
operations of essential critical
infrastructure sectors, including those
who are critical to protecting the health
and wellbeing of their communities.
Since the start of the COVID-19
public health emergency in January
2020, essential workers have put their
physical wellbeing at risk to meet the
daily needs of their communities and to
provide care for others. In the course of
this work, many essential workers have
95 Sections 602(c)(1)(B), 603(c)(1)(B) of the Act.
contracted or died of COVID-19.96
Several examples reflect the severity of
the health impacts for essential workers.
Meat processing plants became
"hotspots" for transmission, with 700
new cases reported at a single plant on
a single day in May 2020.97 In New York
City, 120 employees of the Metropolitan
Transit Authority were estimated to
have died due to COVID-19 by mid -May
2020, with nearly 4,000 testing positive
for the virus.98 Furthermore, many
essential workers are people of color or
low -wage workers.99 These workers, in
particular, have borne a
disproportionate share of the health and
economic impacts of the pandemic.
Such workers include:
❑ 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; and
❑ Social service and human services
staff.
During the public health emergency,
employers' policies on COVID-19-
related hazard pay have varied widely,
with many essential workers not yet
compensated for the heightened risks
they have faced and continue to face.100
96 See, e.g., Centers for Disease Control and
Prevention, COVID Data Tracker: Cases & Death
among Healthcare Personnel, https://covid.cdc.gov/
covid-data-tracker/#health-care-personnel (last
visited May 4, 2021); Centers for Disease Control
and Prevention, COVID Data Tracker: Confirmed
COVID-19 Cases and Deaths among Staff and Rate
per 1,000 Resident -Weeks in Nursing Homes, by
Week —United States, https://covid.cdc.gov/covid-
data-tracker/#nursing-home-staff (last visited May
4, 2021).
97 See, e.g., The Lancet, The plight of essential
workers during the COVID-19 pandemic, Vol. 395,
Issue 10237:1587 (May 23, 2020), available at
https://www.thelancet.com/journals/lancet/article/
PIIS0140-6736 %2820 %2931200-9/f ull text.
98 Id.
99 Joanna Gaitens et al., Covid-19 and essential
workers: A narrative review of health outcomes and
moral injury, Int'l J. of Envtl. Research and Pub.
Health 18(4):1446 (Feb. 4, 2021), available at
https://pubmed.ncbi.nlm.nih.gov/335570751; Tiana
N. Rogers et al., Racial Disparities in COVID-19
Mortality Among Essential Workers in the United
States, World Med. & Health policy 12(3):311-27
(Aug. 5, 2020), available at https://
onlinelibrary.wiley.com/doilfull/10. l002lwmh3.358
(finding that vulnerability to coronavirus exposure
was increased among non -Hispanic blacks, who
disproportionately occupied the top nine essential
occupations).
100 Economic Policy Institute, Only 30% of those
working outside their home are receiving hazard
pay (June 16, 2020), https://www.epi.org/press/only-
30-of-those-working-outside-their-home-are-
receiving-hazard-pay-black-an d-hispanic-workers-
are-most-concerned-about-bringing-the-
coronavirus-home/.
26798 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Many of these workers earn lower wages
on average and live in
socioeconomically vulnerable
communities as compared to the general
population.101 A recent study found that
25 percent of essential workers were
estimated to have low household
income, with 13 percent in high -risk
households.102 The low pay of many
essential workers makes them less able
to cope with the financial consequences
of the pandemic or their work -related
health risks, including working hours
lost due to sickness or disruptions to
childcare and other daily routines, or
the likelihood of COVID-19 spread in
their households or communities. Thus,
the threats and costs involved with
maintaining the ongoing operation of
vital facilities and services have been,
and continue to be, borne by those that
are often the most vulnerable to the
pandemic. The added health risk to
essential workers is one prominent way
in which the pandemic has amplified
pre-existing socioeconomic inequities.
The Fiscal Recovery Funds will help
respond to the needs of essential
workers by allowing recipients to
remunerate essential workers for the
elevated health risks they have faced
and continue to face during the public
health emergency. To ensure that
premium pay is targeted to workers that
faced or face heightened risks due to the
character of their work, the interim final
rule defines essential work as work
involving regular in -person interactions
or regular physical handling of items
that were also handled by others. A
worker would not be engaged in
essential work and, accordingly may not
receive premium pay, for telework
performed from a residence.
Sections 602(g)(2) and 603(g)(2)
define eligible worker to mean "those
workers needed to maintain continuity
of operations of essential critical
infrastructure sectors and additional
sectors as each Governor of a State or
territory, or each Tribal government,
may designate as critical to protect the
health and well-being of the residents of
their State, territory, or Tribal
government." 103 The rule incorporates
this definition and provides a list of
industries recognized as essential
critical infrastructure sectors.104 These
sectors include healthcare, public health
and safety, childcare, education,
sanitation, transportation, and food
production and services, among others
101 McCormack, supra note 37.
102 Id.
103 Sections 602(g)(2), 603(g)(2) of the Act.
104 The list of critical infrastructure sectors
provided in the interim final rule is based on the
list of essential workers under The Heroes Act, H.R.
6800, 116th Cong. (2020).
as noted above. As provided under
sections 602(g)(2) and 603(g)(2), the
chief executive of each recipient has
discretion to add additional sectors to
this list, so long as additional sectors are
deemed critical to protect the health and
well-being of residents.
In providing premium pay to essential
workers or grants to eligible employers,
a recipient must consider whether the
pay or grant would "respond to" to the
worker or workers performing essential
work. Premium pay or grants provided
under this section respond to workers
performing essential work if it addresses
the heightened risk to workers who
must be physically present at a jobsite
and, for many of whom, the costs
associated with illness were hardest to
bear financially. Many of the workers
performing critical essential services are
low- or moderate -income workers, such
as those described above. The ARPA
recognizes this by defining premium
pay to mean an amount up to $13 per
hour in addition to wages or
remuneration the worker otherwise
receives and in an aggregate amount not
to exceed $25,000 per eligible worker.
To ensure the provision is implemented
in a manner that compensates these
workers, the interim final rule provides
that any premium pay or grants
provided using the Fiscal Recovery
Funds should prioritize compensation
of those lower income eligible workers
that perform essential work.
As such, providing premium pay to
eligible workers responds to such
workers by helping address the
disparity between the critical services
and risks taken by essential workers and
the relatively low compensation they
tend to receive in exchange. If premium
pay would increase a worker's total pay
above 150 percent of their residing
state's average annual wage for all
occupations, as defined by the Bureau of
Labor Statistics' Occupational
Employment and Wage Statistics, or
their residing county's average annual
wage, as defined by the Bureau of Labor
Statistics' Occupational Employment
and Wage Statistics, whichever is
higher, on an annual basis, the State,
local, or Tribal government must
provide Treasury and make publicly
available, whether for themselves or on
behalf of a grantee, a written
justification of how the premium pay or
grant is responsive to workers
performing essential worker during the
public health emergency.105
105 County median annual wage is taken to be that
of the metropolitan or nonmetropolitan area that
includes the county. See U.S. Bureau of Labor
Statistics, State Occupational Employment and
Wage Estimates, https://www.bls.gov/oes/current/
oessrcst.htm (last visited May 1, 2021); U.S. Bureau
The threshold of 150 percent for
requiring additional written justification
is based on an analysis of the
distribution of labor income for a
sample of 20 occupations that generally
correspond to the essential workers as
defined in the interim final rule.106 For
these occupations, labor income for the
vast majority of workers was under 150
percent of average annual labor income
across all occupations. Treasury
anticipates that the threshold of 150
percent of the annual average wage will
be greater than the annual average wage
of the vast majority of eligible workers
performing essential work. These
enhanced reporting requirements help
to ensure grants are directed to essential
workers in critical infrastructure sectors
and responsive to the impacts of the
pandemic observed among essential
workers, namely the mis-alignment
between health risks and compensation.
Enhanced reporting also provides
transparency to the public. Finally,
using a localized measure reflects
differences in wages and cost of living
across the country, making this standard
administrable and reflective of essential
worker incomes across a diverse range
of geographic areas.
Furthermore, because premium pay is
intended to compensate essential
workers for heightened risk due to
COVID-19, it must be entirely additive
to a worker's regular rate of wages and
other remuneration and may not be used
to reduce or substitute for a worker's
normal earnings. The definition of
premium pay also 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.107 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
of Labor Statistics, May 2020 Metropolitan and
Nonmetropolitan Area Estimates listed by county or
town, https://www.bls.gov/oes/current/county_
links.htm (last visited May 1, 2021).
106 Treasury performed this analysis with data
from the U.S. Census Bureau's 2019 Annual Social
and Economic Supplement. In determining which
occupations to include in this analysis, Treasury
excluded management and supervisory positions, as
such positions may not necessarily involve regular
in -person interactions or physical handling of items
to the same extent as non -managerial positions.
107 However, such compensation must be "in
addition to" remuneration or wages already
received. That is, employers may not reduce such
workers' current pay and use Fiscal Recovery Funds
to compensate themselves for premium pay
previously provided to the worker.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26799
months. Essential workers who have
already earned premium pay for
essential work performed during the
COVID-19 public health emergency
remain eligible for additional payments,
and an essential worker may receive
both retrospective premium pay for
prior work as well as prospective
premium pay for current or ongoing
work.
To ensure any grants respond to the
needs of essential workers and are made
in a fair and transparent manner, the
rule imposes some additional reporting
requirements for grants to third -party
employers, including the public
disclosure of grants provided. See
Section VIII of this SUPPLEMENTARY
INFORMATION, discussing reporting
requirements. In responding to the
needs of essential workers, a grant to an
employer may provide premium pay to
eligible workers performing essential
work, as these terms are defined in the
interim final rule and discussed above.
A grant provided to an employer may
also be for essential work performed by
eligible workers pursuant to a contract.
For example, if a municipality contracts
with a third party to perform sanitation
work, the third -party contractor could
be eligible to receive a grant to provide
premium pay for these eligible workers.
Question 10: Are there additional
sectors beyond those listed in the
interim final rule that should be
considered essential critical
infrastructure sectors?
Question 11: What, if any, additional
criteria should Treasury consider to
ensure that premium pay responds to
essential workers?
Question 12: What consideration, if
any, should be given to the criteria on
salary threshold, including measure and
level, for requiring written justification?
C. Revenue Loss
Recipients may use payments from
the Fiscal Recovery Funds for the
provision of government services to the
extent of the reduction in revenue
experienced due to the COVID-19
public health emergency.108 Pursuant to
sections 602(c)(1)(C) and 603(c)(1)(C) of
the Act, a recipient's reduction in
revenue is measured relative to the
revenue collected in the most recent full
fiscal year prior to the emergency.
Many State, local, and Tribal
governments are experiencing
significant budget shortfalls, which can
have a devastating impact on
communities. State government tax
revenue from major sources were down
4.3 percent in the six months ended
September 2020, relative to the same
108ARPA, supra note 16.
period 2019.109 At the local level, nearly
90 percent of cities have reported being
less able to meet the fiscal needs of their
communities and, on average, cities
expect a double-digit decline in general
fund revenues in their fiscal year
2021.110 Similarly, surveys of Tribal
governments and Tribal enterprises
found majorities of respondents
reporting substantial cost increases and
revenue decreases, with Tribal
governments reporting reductions in
healthcare, housing, social services, and
economic development activities as a
result of reduced revenues.111 These
budget shortfalls are particularly
problematic in the current environment,
as State, local, and Tribal governments
work to mitigate and contain the
COVID-19 pandemic and help citizens
weather the economic downturn.
Further, State, local, and Tribal
government budgets affect the broader
economic recovery. During the period
following the 2007-2009 recession,
State and local government budget
pressures led to fiscal austerity that was
a significant drag on the overall
economic recovery.112 Inflation -
adjusted State and local government
revenue did not return to the previous
peak until 2013,113 while State, local,
and Tribal government employment did
not recover to its prior peak for over a
decade, until August 2019 —just a few
months before the COVID-19 public
health emergency began.114
109 Major sources include personal income tax,
corporate income tax, sales tax, and property tax.
See Lucy Dadayan., States Reported Revenue
Growth in July —September Quarter, Reflecting
Revenue Shifts from the Prior Quarter, State Tax
and Econ. Rev. (Q. 3, 2020), available at https://
www. urban.org/sites/default/files/publication/
103938/state-tax-and-economic-review-2020-q3_
0.pdf.
110 National League of Cities, City Fiscal
Conditions (2020), available at https://www.nlc.org/
wp-content/uploads/2020/08lCity_Fiscal_
Conditions_ 2020_FINAL. pd f.
111 Surveys conducted by the Center for Indian
Country Development at the Federal Reserve Bank
of Minneapolis in March, April, and September
2020. See Moreno & Sobrepena, supra note 73.
112 See, e.g., Fitzpatrick, Haughwout & Setren,
Fiscal Drag from the State and Local Sector?,
Liberty Street Economics Blog, Federal Reserve
Bank of New York (June 27, 2012), https://
www.libertystreeteconomics.newyorkfed.org/2012/
06/fiscal-drag-from-the-state-and-local-sector.html;
Jiri Jonas, Great Recession and Fiscal Squeeze at
U.S. Subnational Government Level, IMF Working
Paper 12/184, (July 2012), available at https://
www.imf.org/external/pubs/ft/wp/2012/
org/external/pubs/ft/wp/2012/
wp12184.pdf, Gordon, supra note 9.
113 State and local government general revenue
from own sources, adjusted for inflation using the
GDP price index. U.S. Census Bureau, Annual
Survey of State Government Finances and U.S.
Bureau of Economic Analysis, National Income and
Product Accounts.
114 U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
Sections 602(c)(1)(C) and 603(c)(1)(C)
of the Act allow recipients facing budget
shortfalls to use payments from the
Fiscal Recovery Funds to avoid cuts to
government services and, thus, enable
State, local, and Tribal governments to
continue to provide valuable services
and ensure that fiscal austerity measures
do not hamper the broader economic
recovery. The interim final rule
implements these provisions by
establishing a definition of "general
revenue" for purposes of calculating a
loss in revenue and by providing a
methodology for calculating revenue
lost due to the COVID-19 public health
emergency.
General Revenue. The interim final
rule adopts a definition of "general
revenue" based largely on the
components reported under "General
Revenue from Own Sources" in the
Census Bureau's Annual Survey of State
and Local Government Finances, and for
purposes of this interim final rule, helps
to ensure that the components of general
revenue would be calculated in a
consistent manner.115 By relying on a
methodology that is both familiar and
comprehensive, this approach
minimizes burden to recipients and
provides consistency in the
measurement of general revenue across
a diverse set of recipients.
The interim final rule defines the term
"general revenue" to include revenues
collected by a recipient and generated
from its underlying economy and would
capture a range of different types of tax
revenues, as well as other types of
revenue that are available to support
government services.116 In calculating
revenue, recipients should sum across
all revenue streams covered as general
revenue. This approach minimizes the
administrative burden for recipients,
provides for greater consistency across
recipients, and presents a more accurate
representation of the overall impact of
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
GES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited Apr. 27, 2021).
11s U.S. Census Bureau, Annual Survey of State
and Local Government Finances, https://
www.census.gov/programs-surveys/go
finances.html (last visited Apr. 30, 2021).
116 The interim final rule would define tax
revenue in a manner consistent with the Census
Bureau's definition of tax revenue, with certain
changes (i.e., inclusion of revenue from liquor
stores and certain intergovernmental transfers).
Current charges are defined as "charges imposed for
providing current services or for the sale of
products in connection with general government
activities." It includes revenues such as public
education institution, public hospital, and toll
revenues. Miscellaneous general revenue comprises
of all other general revenue of governments from
their own sources (i.e., other than liquor store,
utility, and insurance trust revenue), including
rents, royalties, lottery proceeds, and fines.
26800 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
the COVID-19 public health emergency
on a recipient's revenue, rather than
relying on financial reporting prepared
by each recipient, which vary in
methodology used and which generally
aggregates revenue by purpose rather
than by source.117
Consistent with the Census Bureau's
definition of "general revenue from own
sources," the definition of general
revenue in the interim final rule would
exclude refunds and other correcting
transactions, proceeds from issuance of
debt or the sale of investments, and
agency or private trust transactions. The
definition of general revenue also would
exclude revenue generated by utilities
and insurance trusts. In this way, the
definition of general revenue focuses on
sources that are generated from
economic activity and are available to
fund government services, rather than a
fund or administrative unit established
to account for and control a particular
activity.118 For example, public utilities
typically require financial support from
the State, local, or Tribal government,
rather than providing revenue to such
government, and any revenue that is
generated by public utilities typically is
used to support the public utility's
continued operation, rather than being
used as a source of revenue to support
government services generally.
The definition of general revenue
would include all revenue from Tribal
enterprises, as this revenue is generated
from economic activity and is available
to fund government services. Tribes are
not able to generate revenue through
taxes in the same manner as State and
local governments and, as a result,
Tribal enterprises are critical sources of
revenue for Tribal governments that
enable Tribal governments to provide a
range of services, including elder care,
health clinics, wastewater management,
and forestry.
Finally, the term "general revenue"
includes intergovernmental transfers
between State and local governments,
but excludes intergovernmental
transfers from the Federal Government,
including Federal transfers made via a
State to a local government pursuant to
the CRF or as part of the Fiscal Recovery
Funds. States and local governments
often share or collect revenue on behalf
of one another, which results in
117 Fund -oriented reporting, such as what is used
under the Governmental Accounting Standards
Board (GASB), focuses on the types of uses and
activities funded by the revenue, as opposed to the
economic activity from which the revenue is
sourced. See Governmental Accounting Standards
Series, Statement No. 54 of the Governmental
Accounting Standards Board: Fund Balance
Reporting and Governmental Fund Type
Definitions, No. 287—B (Feb. 2009).
115 Supra note 116.
intergovernmental transfers. When
attributing revenue to a unit of
government, the Census Bureau's
methodology considers which unit of
government imposes, collects, and
retains the revenue and assigns the
revenue to the unit of government that
meets at least two of those three
factors.119 For purposes of measuring
loss in general revenue due to the
COVID-19 public health emergency and
to better allow continued provision of
government services, the retention and
ability to use the revenue is a more
critical factor. Accordingly, and to better
measure the funds available for the
provision of government services, the
definition of general revenue would
include intergovernmental transfers
from States or local governments other
than funds transferred pursuant to
ARPA, CRF, or another Federal
program. This formulation recognizes
the importance of State transfers for
local government revenue.120
Calculation of Loss. In general,
recipients will compute the extent of the
reduction in revenue by comparing
actual revenue to a counterfactual trend
representing what could have been
expected to occur in the absence of the
pandemic. This approach measures
losses in revenue relative to the most
recent fiscal year prior to the COVID-19
public health emergency by using the
most recent pre -pandemic fiscal year as
the starting point for estimates of
revenue growth absent the pandemic. In
other words, the counterfactual trend
starts with the last full fiscal year prior
to the COVID-19 public health
emergency and then assumes growth at
a constant rate in the subsequent years.
Because recipients can estimate the
revenue shortfall at multiple points in
time throughout the covered period as
revenue is collected, this approach
accounts for variation across recipients
in the timing of pandemic impacts.121
Although revenue may decline for
119 U.S. Census Bureau, Government Finance and
Employment Classification Manual (Dec. 2000),
https://www2.census.gov/govs/class/classfuil.pdf.
120 For example, in 2018, state transfers to
localities accounted for approximately 27 percent of
local revenues. U.S. Census Bureau, Annual Survey
of State and Local Government Finances, Table 1
(2018), https://www.census.gov/data/datasets/2018/
econ/1oca1/public-use-datasets.html.
121 For example, following the 2007-09 recession,
local government property tax collections did not
begin to decline until 2011, suggesting that property
tax collection declines can lag downturns. See U.S.
Bureau of Economic Analysis, Personal current
taxes: State and local: Property taxes
[S210401A027NBEA], retrieved from Federal
Reserve Economic Data, Federal Reserve Bank of St.
Louis, https:I/fred.stlouisfed.org/graph/?g=r3YI (last
visited Apr. 22, 2021). Estimating the reduction in
revenue at points throughout the covered period
will allow for this type of lagged effect to be taken
into account during the covered period.
reasons unrelated to the COVID-19
public health emergency, to minimize
the administrative burden on recipients
and taking into consideration the
devastating effects of the COVID-19
public health emergency, any
diminution in actual revenues relative
to the counterfactual pre -pandemic
trend would be presumed to have been
due to the COVID-19 public health
emergency.
For purposes of measuring revenue
growth in the counterfactual trend,
recipients may use a growth adjustment
of either 4.1 percent per year or the
recipient's average annual revenue
growth over the three full fiscal years
prior to the COVID-19 public health
emergency, whichever is higher. The
option of 4.1 percent represents the
average annual growth across all State
and local government "General Revenue
from Own Sources" in the most recent
three years of available data.122 This
approach provides recipients with a
standardized growth adjustment when
calculating the counterfactual revenue
trend and thus minimizes
administrative burden, while not
disadvantaging recipients with revenue
growth that exceeded the national
average prior to the COVID-19 public
health emergency by permitting these
recipients to use their own revenue
growth rate over the preceding three
years.
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) 0 (nl
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
122 Together with revenue from liquor stores from
2015 to 2018. This estimate does not include any
intergovernmental transfers. A recipient using the
three-year average to calculate their growth
adjustment must be based on the definition of
general revenue, including treatment of
intergovernmental transfers. 2015-2018 represents
the most recent available data. See U.S. Census
Bureau, State & Local Government Finance
Historical Datasets and Tables (2018), https://
www.census.gov/programs-surveys/go v -finances/
data/datasets.html.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26801
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.
For illustration, consider a
hypothetical recipient with base year
revenue equal to 100. In Step 2, the
hypothetical recipient finds that 4.1
percent is greater than the recipient's
average annual revenue growth in the
three full fiscal years prior to the public
health emergency. Furthermore, this
recipient's base year ends June 30. In
this illustration, n (months elapsed) and
counterfactual revenue would be equal
to:
As of:
12/31/2020
12/31/2021
12/31/2022
12/31/2023
n (months elapsed)..........................................................................................
Counterfactual revenue:..................................................................................
18
106.2
30
110.6
42
115.1
54
119.8
The overall methodology for
calculating the reduction in revenue is
illustrated in the figure below:
140 _____'Base year revenue
Extent of reduction in revenue
130 Actual revenue (last twelve months)
Counterfactual revenue
120
110
100
90
80
I
. G' G G'
<)e
Upon receiving Fiscal Recovery Fund
payments, recipients may immediately
calculate revenue loss for the period
ending December 31, 2020.
Sections 602(c)(1)(C) and 603(c)(1)(C)
of the Act provide recipients with broad
latitude to use the Fiscal Recovery
Funds for the provision of government
services. Government services can
include, but are not limited to,
maintenance or pay -go funded
building 123 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
123 Pay -go infrastructure funding refers to the
practice of funding capital projects with cash -on -
hand from taxes, fees, grants, and other sources,
rather than with borrowed sums.
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.
Question 13: Are there sources of
revenue that either should or should not
be included in the interim final rule's
measure of "general revenue" for
recipients? If so, discuss why these
sources either should or should not be
included.
Question 14: In the interim final rule,
recipients are expected to calculate the
reduction in revenue on an aggregate
basis. Discuss the advantages and
disadvantages of, and any potential
concerns with, this approach, including
circumstances in which it could be
necessary or appropriate to calculate
the reduction in revenue by source.
Question 15: Treasury is considering
whether to take into account other
factors, including actions taken by the
recipient as well as the expiration of the
COVID-19 public health emergency, in
determining whether to presume that
revenue losses are "due to" the COVID—
26802 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
19 public health emergency. Discuss the
advantages and disadvantages of this
presumption, including when, if ever,
during the covered period it would be
appropriate to reevaluate the
presumption that all losses are
attributable to the COVID-19 public
health emergency.
Question 16: Do recipients anticipate
lagged revenue effects of the public
health emergency? If so, when would
these lagged effects be expected to
occur, and what can Treasury to do
support these recipients through its
implementation of the program?
Question 17: In the interim final rule,
paying interest or principal on
government debt is not considered
provision of a government service.
Discuss the advantages and
disadvantages of this approach,
including circumstances in which
paying interest or principal on
government debt could be considered
provision of a government service.
D. Investments in Infrastructure
To assist 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. The
interim final rule outlines eligible uses
within each category, allowing for a
broad range of necessary investments in
projects that improve access to clean
drinking water, improve wastewater and
stormwater infrastructure systems, and
provide access to high -quality
broadband service. Necessary
investments are designed to provide an
adequate minimum level of service and
are unlikely to be made using private
sources of funds. Necessary investments
include projects that are required to
maintain a level of service that, at least,
meets applicable health -based
standards, taking into account resilience
to climate change, or establishes or
improves broadband service to unserved
or underserved populations to reach an
adequate level to permit a household to
work or attend school, and that are
unlikely to be met with private sources
of funds.124
It is important that necessary
investments in water, sewer, or
broadband infrastructure be carried out
in ways that produce high -quality
infrastructure, avert disruptive and
costly delays, and promote efficiency.
Treasury encourages recipients to
124 Treasury notes that using funds to support or
oppose collective bargaining would not be included
as part of "necessary investments in water, sewer,
or broadband infrastructure."
ensure that water, sewer, and broadband
projects use strong labor standards,
including project labor agreements and
community benefits agreements that
offer wages at or above the prevailing
rate and include local hire provisions,
not only to promote effective and
efficient delivery of high -quality
infrastructure projects but also to
support the economic recovery through
strong employment opportunities for
workers. Using these practices in
construction projects may help to
ensure a reliable supply of skilled labor
that would minimize disruptions, such
as those associated with labor disputes
or workplace injuries.
To provide public transparency on
whether projects are using practices that
promote on -time and on -budget
delivery, Treasury will seek information
from recipients on their workforce plans
and practices related to water, sewer,
and broadband projects undertaken with
Fiscal Recovery Funds. Treasury will
provide additional guidance and
instructions on the reporting
requirements at a later date.
1. Water and Sewer Infrastructure
The ARPA provides funds to State,
local, and Tribal governments to make
necessary investments in water and
sewer infrastructure. 125 By permitting
funds to be used for water and sewer
infrastructure needs, Congress
recognized the critical role that clean
drinking water and services for the
collection and treatment of wastewater
and stormwater play in protecting
public health. Understanding that State,
local, and Tribal governments have a
broad range of water and sewer
infrastructure needs, the interim final
rule provides these governments with
wide latitude to identify investments in
water and sewer infrastructure that are
of the highest priority for their own
communities, which may include
projects on privately -owned
infrastructure. The interim final rule
does this by aligning eligible uses of the
Fiscal Recovery Funds with the wide
range of types or categories of projects
that would be eligible to receive
financial assistance through the
Environmental Protection Agency's
(EPA) Clean Water State Revolving
Fund (CWSRF) or Drinking Water State
Revolving Fund (DWSRF).126
125 Sections 602(c)(1)(D), 603(c)(1)(D) of the Act.
116 Environmental Protection Agency, Drinking
Water State Revolving fund, https://www.epa.gov/
dwarf (last visited Apr. 30, 2021); Environmental
Protection Agency, Clean Water State Revolving
Fund, https://www.epa.gov/cwsrf (last visited Apr.
30, 2021).
Established by the 1987
amendments 127 to the Clean Water Act
(CWA),128 the CWSRF provides
financial assistance for a wide range of
water infrastructure projects to improve
water quality and address water
pollution in a way that enables each
State to address and prioritize the needs
of their populations. The types of
projects eligible for CWSRF assistance
include projects to construct, improve,
and repair wastewater treatment plants,
control non -point sources of pollution,
improve resilience of infrastructure to
severe weather events, create green
infrastructure, and protect waterbodies
from pollution.129 Each of the 51 State
programs established under the CWSRF
have the flexibility to direct funding to
their particular environmental needs,
and each State may also have its own
statutes, rules, and regulations that
guide project eligibility.130
The DWSRF was modeled on the
CWSRF and created as part of the 1996
amendments to the Safe Drinking Water
Act (SDWA),131 with the principal
objective of helping public water
systems obtain financing for
improvements necessary to protect
public health and comply with drinking
water regulations.132 Like the CWSRF,
127 Water Quality Act of 1987, Public Law 100-
4.
128 Federal Water Pollution Control Act as
amended, codified at 33 U.S.C. 1251 et seq.,
common name (Clean Water Act). In 2009, the
American Recovery and Reinvestment Act created
the Green Project Reserve, which increased the
focus on green infrastructure, water and energy
efficient, and environmentally innovative projects.
Public Law 111-5. The CWA was amended by the
Water Resources Reform and Development Act of
2014 to further expand the CWSRF's eligibilities.
Public Law 113-121. The CWSRF's eligibilities were
further expanded in 2018 by the America's Water
Infrastructure Act of 2018, Public Law 115-270.
129 See Environmental Protection Agency, The
Drinking Water State Revolving Funds: Financing
America's Drinking Water, EPA -816—R—00-023
(Nov. 2000), https://nepis.epa.gov/Exe/ZyPDF.cgil
200024WB.PDF?Docket'=200024WB.PDF; See also
Environmental Protection Agency, Learn About the
Clean Water State Revolving Fund, https://
www. a pa.gov/cwsr f/learn-about-clean-water-sta te-
revolving fund-cwsrf (last visited Apr. 30, 2021).
130 33 U.S.C. 1383(c). See also Environmental
Protection Agency, Overview of Clean Water State
Revolving Fund Eligibilities (May 2016), https://
www.epa.gov/sites/production/files/2016-07/
documents/overview of cwsrf eligibilities_may
_
2016.pdf Claudia Copeland, Clean Water Act: A
Summary of the Law, Congressional Research
Service (Oct. 18, 2016), https://fas.org/sgp/crs/misc/
RL30030.pdf; Jonathan L Ramseur, Wastewater
Infrastructure: Overview, Funding, and Legislative
Developments, Congressional Research Service
(May 22, 2018), https://fas.org/sgp/crs/misc/
R44963.pdf.
13142 U.S.C. 300j-12.
131 Environmental Protection Agency, Drinking
Water State Revolving Fund Eligibility Handbook,
(June 2017), https://www.epa.gov/sites/production/
files/2017-06/documents/dwsrf eligibility_
handbookjune132017_updated _508_version. pd f,•
Environmental Protection Agency, Drinking Water
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26803
the DWSRF provides States with the
flexibility to meet the needs of their
populations.133 The primary use of
DWSRF funds is to assist communities
in making water infrastructure capital
improvements, including the
installation and replacement of failing
treatment and distribution systems.134
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.135
By aligning use of Fiscal Recovery
Funds with the categories or types of
eligible projects under the existing EPA
state revolving fund programs, the
interim final rule provides recipients
with the flexibility to respond to the
needs of their communities while
ensuring that investments in water and
sewer infrastructure made using Fiscal
Recovery Funds are necessary. As
discussed above, the CWSRF and
DWSRF were designed to provide
funding for projects that protect public
health and safety by ensuring
compliance with wastewater and
drinking water health standards.136 The
need to provide funding through the
state revolving funds suggests that these
projects are less likely to be addressed
with private sources of funding; for
example, by remediating failing or
inadequate infrastructure, much of
which is publicly owned, and by
addressing non -point sources of
pollution. This approach of aligning
with the EPA state revolving fund
programs also supports expedited
project identification and investment so
that needed relief for the people and
communities most affected by the
pandemic can deployed expeditiously
and have a positive impact on their
health and wellbeing as soon as
possible. Further, the interim final rule
is intended to preserve flexibility for
award recipients to direct funding to
their own particular needs and priorities
and would not preclude recipients from
applying their own additional project
eligibility criteria.
Infrastructure Needs Survey and Assessment: Sixth
Report to Congress (March 2018), https://
www.epa.govlsites/production/files/2018-1O/
documents/corrected_sixth_drinking_wa ter_
infrastructure_ needs_survey_and_assessment. pd f.
1331d
134 Id.
13542 U.S.C. 300j-12(b)(3)(A).
136 Environmental Protection Agency, Learn
About the Clean Water State Revolving Fund,
https://www.epa.gov/cwsrf/learn-about-clean-water-
state-revolving fund-cwsrf (last visited Apr. 30,
2021); 42 U.S.C. 300j-12.
In addition, responding to the
immediate needs of the COVID-19
public health emergency may have
diverted both personnel and financial
resources from other State, local, and
Tribal priorities, including projects to
ensure compliance with applicable
water health and quality standards and
provide safe drinking and usable
water.137 Through sections 602(c)(1)(D)
and 603(c)(1)(D), the ARPA provides
resources to address these needs.
Moreover, using Fiscal Recovery Funds
in accordance with the priorities of the
CWA and SWDA to "assist systems
most in need on a per household basis
according to state affordability criteria"
would also have the benefit of providing
vulnerable populations with safe
drinking water that is critical to their
health and, thus, their ability to work
and learn.138
Recipients may use Fiscal Recovery
Funds to invest in a broad range of
projects that improve drinking water
infrastructure, such as building or
upgrading facilities and transmission,
distribution, and storage systems,
including replacement of lead service
lines. Given the lifelong impacts of lead
exposure for children, and the
widespread nature of lead service lines,
Treasury encourages recipients to
consider projects to replace lead service
lines.
Fiscal Recovery Funds may also be
used to support the consolidation or
establishment of drinking water
systems. 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,
and secure publicly owned treatment
works, among other uses. Finally,
consistent with the CWSRF and
DWSRF, Fiscal Recovery Funds may be
used for cybersecurity needs to protect
water or sewer infrastructure, such as
developing effective cybersecurity
practices and measures at drinking
water systems and publicly owned
treatment works.
Many of the types of projects eligible
under either the CWSRF or DWSRF also
131 House Committee on the Budget, State and
Local Governments are in Dire Need of Federal
Relief (Aug. 19, 2020), https://budget.house.govI
publication s/report/state -and -local -go vern m en ts-
are-dire-need-federal-relief.
138 Environmental Protection Agency, Drinking
Water State Revolving Fund (Nov. 2019), https://
www.epa.gov/sites/production/files/2019-11/
documents/fact _sheet_ dwsrfoverviewfinal_
O.pdf,• Environmental Protection Agency, National
Benefits Analysis for Drinking Water Regulations,
https://www. epa.gov/sdwa/national-benefits-
analysis-drinking-water-regulations (last visited
Apr. 30, 2020).
support efforts to address climate
change. For example, by taking steps to
manage potential sources of pollution
and preventing these sources from
reaching sources of drinking water,
projects eligible under the DWSRF and
the ARPA may reduce energy required
to treat drinking water. Similarly,
projects eligible under the CWSRF
include measures to conserve and reuse
water or reduce the energy consumption
of public water treatment facilities.
Treasury encourages recipients to
consider green infrastructure
investments and projects to improve
resilience to the effects of climate
change. For example, more frequent and
extreme precipitation events combined
with construction and development
trends have led to increased instances of
stormwater runoff, water pollution, and
flooding. Green infrastructure projects
that support stormwater system
resiliency could include rain gardens
that provide water storage and filtration
benefits, and green streets, where
vegetation, soil, and engineered systems
are combined to direct and filter
rainwater from impervious surfaces. In
cases of a natural disaster, recipients
may also use Fiscal Recovery Funds to
provide relief, such as interconnecting
water systems or rehabilitating existing
wells during an extended drought.
Question 18: What are the advantages
and disadvantages of aligning eligible
uses with the eligible project type
requirements of the DWSRF and
CWSRF? What other water or sewer
project categories, if any, should
Treasury consider in addition to DWSRF
and CWSRF eligible projects? Should
Treasury consider a broader general
category of water and sewer projects?
Question 19: What additional water
and sewer infrastructure categories, if
any, should Treasury consider to
address and respond to the needs of
unserved, undeserved, or rural
communities? How do these projects
differ from DWSFR and CWSRF eligible
projects?
Question 20: What new categories of
water and sewer infrastructure, if any,
should Treasury consider to support
State, local, and Tribal governments in
mitigating the negative impacts of
climate change? Discuss emerging
technologies and processes that support
resiliency of water and sewer
infrastructure. Discuss any challenges
faced by States and local governments
when pursuing or implementing climate
resilient infrastructure projects.
Question 21: Infrastructure projects
related to dams and reservoirs are
generally not eligible under the CWSRF
and DWSRF categories. Should Treasury
consider expanding eligible
26804 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
infrastructure under the interim final
rule to include dam and reservoir
projects? Discuss public health,
environmental, climate, or equity
benefits and costs in expanding the
eligibility to include these types of
projects.
2. Broadband Infrastructure
The COVID-19 public health
emergency has underscored the
importance of universally available,
high-speed, reliable, and affordable
broadband coverage as millions of
Americans rely on the internet to
participate in, among critical activities,
remote school, healthcare, and work.
Recognizing the need for such
connectivity, the ARPA provides funds
to State, territorial, local, and Tribal
governments to make necessary
investments in broadband
infrastructure.
The National Telecommunications
and Information Administration (NTIA)
highlighted the growing necessity of
broadband in daily lives through its
analysis of NTIA Internet Use Survey
data, noting that Americans turn to
broadband internet access service for
every facet of daily life including work,
study, and healthcare.139 With increased
use of technology for daily activities and
the movement by many businesses and
schools to operating remotely during the
pandemic, broadband has become even
more critical for people across the
country to carry out their daily lives.
By at least one measure, however,
tens of millions of Americans live in
areas where there is no broadband
infrastructure that provides download
speeds greater than 25 Mbps and upload
speeds of 3 Mbps.140 By contrast, as
noted below, many households use
upload and download speeds of 100
Mbps to meet their daily needs. Even in
areas where broadband infrastructure
139 See, e.g., https://www.ntia.gov/blog/2020/
more-hal f-american-households-used-internet-
health-related-activities-2019-ntia-data-show;
https://www.ntia.gov/blog/2020/nearly-third-
american-em ployees-worked-remotely-2019-ntia-
data-show; and generally, https://www.ntia.govl
data/digital-nation-data-explorer.
140 As an example, data from the Federal
Communications Commission shows that as of June
2020, 9.07 percent of the U.S. population had no
available cable or fiber broadband providers
providing greater than 25 Mbps download speeds
and 3 Mbps upload speeds. Availability was
significantly less for rural versus urban populations,
with 35.57 percent of the rural population lacking
such access, compared with 2.57 percent of the
urban population. Availability was also
significantly less for tribal versus non -tribal
populations, with 35.93 percent of the tribal
population lacking such access, compared with 8.74
of the non -tribal population. Federal
Communications Commission, Fixed Broadband
Deployment, https://broadbandmap.fcc.gov/#/ (last
visited May 9, 2021).
exists, broadband access may be out of
reach for millions of Americans because
it is unaffordable, as the United States
has some of the highest broadband
prices in the Organisation for Economic
Co-operation and Development
(OECD).141 There are disparities in
availability as well; historically,
Americans living in territories and
Tribal lands as well as rural areas have
disproportionately lacked sufficient
broadband infrastructure.142 Moreover,
rapidly growing demand has, and will
likely continue to, quickly outpace
infrastructure capacity, a phenomenon
acknowledged by various states around
the country that have set scalability
requirements to account for this
anticipated growth in demand.143
The interim final rule provides that
eligible investments in broadband are
those that are designed to provide
services meeting adequate speeds and
are provided to unserved and
underserved households and
businesses. Understanding that States,
territories, localities, and Tribal
governments have a wide range of
varied broadband infrastructure needs,
the interim final rule provides award
recipients with flexibility to identify the
specific locations within their
communities to be served and to
otherwise design the project.
Under the interim final rule, eligible
projects are expected to be designed to
deliver, upon project completion,
service that reliably meets or exceeds
symmetrical upload and download
speeds of 100 Mbps. There may be
instances in which it would not be
practicable for a project to deliver such
service speeds because of the geography,
topography, or excessive costs
associated with such a project. In these
instances, the affected project would be
expected to be designed to deliver, upon
project completion, service that reliably
meets or exceeds 100 Mbps download
and between at least 20 Mbps and 100
Mbps upload speeds and be scalable to
141 How Do U.S. Internet Costs Compare To The
Rest Of The World?, BroadbandSearch Blog Post,
available at https://www.broadbandsearch.net/blog/
internet-costs-compared-worldwide.
142 See, e.g., Federal Communications
Commission, Fourteenth Broadband Deployment
Report, available at https://docs.fcc.gov/public/
attachments/FCC-21-18A1. pd f.
143 See, e.g., Illinois Department of Commerce &
Economic Opportunity, Broadband Grants, h (last
visited May 9, 2021), https://www2.illinois.govl
dceo/Connectlllinois/Pages/BroadbandGrants. aspx;
Kansas Office of Broadband Development,
Broadband Acceleration Grant, https://
www.kansascommerce.gov/wp-content/uploads/
2020/11/Broadband-Acceleration-Grant.pdf (last
visited May 9, 2021); New York State Association
of Counties, Universal Broadband: Deploying High
Speed Internet Access in NYS (Jul. 2017), https://
www.nysoc.org/files/BroodbandUpdate
Report2017(1).pdf.
a minimum of 100 Mbps symmetrical
for download and upload speeds.144 In
setting these standards, Treasury
identified speeds necessary to ensure
that broadband infrastructure is
sufficient to enable users to generally
meet household needs, including the
ability to support the simultaneous use
of work, education, and health
applications, and also sufficiently
robust to meet increasing household
demands for bandwidth. Treasury also
recognizes that different communities
and their members may have a broad
range of internet needs and that those
needs may change over time.
In considering the appropriate speed
requirements for eligible projects,
Treasury considered estimates of typical
households demands during the
pandemic. Using the Federal
Communication Commission's (FCC)
Broadband Speed Guide, for example, a
household with two telecommuters and
two to three remote learners today are
estimated to need 100 Mbps download
to work simultaneously. 145 In
households with more members, the
demands may be greater, and in
households with fewer members, the
demands may be less.
In considering the appropriate speed
requirements for eligible projects,
Treasury also considered data usage
patterns and how bandwidth needs have
changed over time for U.S. households
and businesses as people's use of
technology in their daily lives has
evolved. In the few years preceding the
pandemic, market research data showed
that average upload speeds in the
United States surpassed over 10 Mbps
in 2017146 and continued to increase
significantly, with the average upload
speed as of November, 2019 increasing
to 48.41 Mbps,147 attributable, in part to
a shift to using broadband and the
internet by individuals and businesses
144 This scalability threshold is consistent with
scalability requirements used in other jurisdictions.
Id.
145 Federal Communications Commission,
Broadband Speed Guide, https://www.fcc.govl
consumers/guides/broadband-speed-guide (last
visited Apr. 30, 2021).
146 Letter from Lisa R. Youngers, President and
CEO of Fiber Broadband Association to FCC, WC
Docket No. 19-126 (filed Jan. 3, 2020), including an
Appendix with research from RVA LLC, Data
Review Of The Importance of Upload Speeds (Jan.
2020), and Ookla speed test data, available at
https://ecfsapi. fcc.govlfile/101030085118517/
FCC%20RDOF%20Jan %203 %20
Ex%20Parte.pdf.Additional information on historic
growth in data usage is provided in Schools, Health
& Libraries Broadband Coalition, Common Sense
Solutions for closing the Digital Divide, Apr. 29,
2021.
147 Id. See also United States's Mobile and
Broadband internet Speeds—Speedtest Global
Index, available at https://www.speedtest.net/
gl obal-index/united-states#fixed.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26805
to create and share content using video
sharing, video conferencing, and other
applications.148
The increasing use of data accelerated
markedly during the pandemic as
households across the country became
increasingly reliant on tools and
applications that require greater internet
capacity, both to download data but also
to upload data. Sending information
became as important as receiving it. A
video consultation with a healthcare
provider or participation by a child in
a live classroom with a teacher and
fellow students requires video to be sent
and received simultaneously.149 As an
example, some video conferencing
technology platforms indicate that
download and upload speeds should be
roughly equal to support two-way,
interactive video meetings.150 For both
work and school, client materials or
completed school assignments, which
may be in the form of PDF files, videos,
or graphic files, also need to be shared
with others. This is often done by
uploading materials to a collaboration
site, and the upload speed available to
a user can have a significant impact on
the time it takes for the content to be
shared with others. 151 These activities
require significant capacity from home
internet connections to both download
and upload data, especially when there
are multiple individuals in one
household engaging in these activities
simultaneously.
This need for increased broadband
capacity during the pandemic was
reflected in increased usage patterns
seen over the last year. As OpenVault
noted in recent advisories, the
pandemic significantly increased the
amount of data users consume. Among
data users observed by OpenVault, per -
subscriber average data usage for the
fourth quarter of 2020 was 482.6
gigabytes per month, representing a 40
percent increase over the 344 gigabytes
consumed in the fourth quarter of 2019
and a 26 percent increase over the third
quarter 2020 average of 383.8
148 Id.
149 One high definition Zoom meeting or class
requires approximately 3.8 Mbps/3.0 Mbps (up/
down).
150 See, e.g., Zoom, System Requirements for
Windows, macOS, and Linux, https://
support.zoom. us/hc/en-us/articles/201362023-
System-requirements-for-Win d ows-macOS-an d -
Lin ux#h_d278c327-e03d-4896-b19a-96a8f3c0c69c
(last visited May 8, 2021).
151 By one estimate, to upload a one gigabit video
file to YouTube would take 15 minutes at an upload
speed of 10 Mbps compared with 1 minute, 30
seconds at an upload speed of 100 Mbps, and 30
seconds at an upload speed of 300 Mbps.
Reviews.org: What is Symmetrical internet? (March
2020).
gigabytes.152 OpenVault also noted
significant increases in upstream usage
among the data users it observed, with
upstream data usage growing 63
percent —from 19 gigabytes to 31
gigabytes —between December, 2019 and
December, 2020.153 According to an
OECD Broadband statistic from June
2020, the largest percentage of U.S.
broadband subscribers have services
providing speeds between 100 Mbps
and 1 Gbps.154
Jurisdictions and Federal programs
are increasingly responding to the
growing demands of their communities
for both heightened download and
upload speeds. For example, Illinois
now requires 100 Mbps symmetrical
service as the construction standard for
its state broadband grant programs. This
standard is also consistent with speed
levels, particularly download speed
levels, prioritized by other Federal
programs supporting broadband
projects. Bids submitted as part of the
FCC in its Rural Digital Opportunity
Fund (RDOF), established to support the
construction of broadband networks in
rural communities across the country,
are given priority if they offer faster
service, with the service offerings of 100
Mbps download and 20 Mbps upload
being included in the "above baseline"
performance tier set by the FCC.155 The
Broadband Infrastructure Program
(BBIP) 156 of the Department of
Commerce, which provides Federal
funding to deploy broadband
152 OVBI: Covid-19 Drove 15 percent Increase in
Broadband Traffic in 2020, OpenVault, Quarterly
Advisory, (Feb. 10, 2021), available at https://
openvault. com/ovbi-covid-19-drove-51-increase-in-
broadband-traffic-in-2020; See OpenVault's data set
incorporates information on usage by subscribers
across multiple continents, including North
America and Europe. Additional data and detail on
increases in the amount of data users consume and
the broadband speeds they are using is provided in
Open Vault Broadband Insights Report Q4,
Quarterly Advisory (Feb. 10, 2021), available at
https://openvault.com/compliinentary-report-4q20/.
153OVBI Special Report: 202 Upstream Growth
Nearly 4X of Pre -Pandemic Years, OpenVault,
Quarterly Advisory, (April 1, 20201), available at
https://openvault. com/ovbi-special-report-2020-
u pstream-growth-rate-nearly-4x-of-pre-pandemic-
years/; Additional data is provided in Open Vault
Broadband Insights Pandemic Impact on Upstream
Broadband Usage and Network Capacity, available
at https://openvault.com/upstream-whitepaper/.
154 Organisation for Economic Co-operation and
Development, Fixed broadband subscriptions per
100 inhabitants, per speed tiers (June 2020), https://
www.oecd.org/sti/broadband/5. 1-FixedBB-
SpeedTiers-2020-06.xls www.oecd.org/sti/
broadband/broadband-statistics.
155 Rural Digital Opportunity Fund, Report and
Order, 35 FCC Rcd 686, 690, para. 9 (2020),
available at https://www.fcc.gov/document/fcc-
launches-20-billion-rural-digital-opportunity fund -
0.
156 The BIPP was authorized by the Consolidated
Appropriations Act, 2021, Section 905, Public Law
116-260, 134 Stat. 1182 (Dec. 27, 2020).
infrastructure to eligible service areas of
the country also prioritizes projects
designed to provide broadband service
with a download speed of not less than
100 Mbps and an upload speed of not
less than 20 Mbps.157
The 100 Mbps upload and download
speeds will support the increased and
growing needs of households and
businesses. Recognizing that, in some
instances, 100 Mbps upload speed may
be impracticable due to geographical,
topographical, or financial constraints,
the interim final rule permits upload
speeds of between at least 20 Mbps and
100 Mbps in such instances. To provide
for investments that will accommodate
technologies requiring symmetry in
download and upload speeds, as noted
above, eligible projects that are not
designed to deliver, upon project
completion, service that reliably meets
or exceeds symmetrical speeds of 100
Mbps because it would be impracticable
to do so should be designed so that they
can be scalable to such speeds.
Recipients are also encouraged to
prioritize investments in fiber optic
infrastructure where feasible, as such
advanced technology enables the next
generation of application solutions for
all communities.
Under the interim final rule, eligible
projects are expected to focus on
locations that are unserved or
underserved. The interim final rule
treats users as being unserved or
underserved if they lack access to a
wireline connection capable of reliably
delivering at least minimum speeds of
25 Mbps download and 3 Mbps upload
as households and businesses lacking
this level of access are generally not
viewed as being able to originate and
receive high -quality voice, data,
graphics, and video
telecommunications. This threshold is
consistent with the FCC's benchmark for
an "advanced telecommunications
capability." 158 This threshold is also
consistent with thresholds used in other
Federal programs to identify eligible
areas to be served by programs to
improve broadband services. For
example, in the FCC's RDOF program,
eligible areas include those without
current (or already funded) access to
terrestrial broadband service providing
25 Mbps download and 3 Mbps upload
speeds.159 The Department of
Commerce's BBIP also considers
households to be "unserved" generally
if they lack access to broadband service
157 Section 905(d)(4) of the Consolidated
Appropriations Act, 2021.
1513 Deployment Report, supra note 142.
159 Rural Digital Opportunity Fund, supra note
156.
26806 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
with a download speed of not less than
25 Mbps download and 3 Mbps upload,
among other conditions. In selecting an
area to be served by a project, recipients
are encouraged to avoid investing in
locations that have existing agreements
to build reliable wireline service with
minimum speeds of 100 Mbps
download and 20 Mbps upload by
December 31, 2024, in order to avoid
duplication of efforts and resources.
Recipients are also encouraged to
consider ways to integrate affordability
options into their program design. To
meet the immediate needs of unserved
and underserved households and
businesses, recipients are encouraged to
focus on projects that deliver a physical
broadband connection by prioritizing
projects that achieve last mile -
connections. Treasury also encourages
recipients to prioritize support for
broadband networks owned, operated
by, or affiliated with local governments,
non -profits, and co -operatives —
providers with less pressure to turn
profits and with a commitment to
serving entire communities.
Under sections 602(c)(1)(A) and
603(c)(1)(A), assistance to households
facing negative economic impacts due to
COVID-19 is also an eligible use,
including internet access or digital
literacy assistance. As discussed above,
in considering whether a potential use
is eligible under this category, a
recipient must consider whether, and
the extent to which, the household has
experienced a negative economic impact
from the pandemic.
Question 22: What are the advantages
and disadvantages of setting minimum
symmetrical download and upload
speeds of 100 Mbps? What other
minimum standards would be
appropriate and why?
Question 23: Would setting such a
minimum be impractical for particular
types of projects? If so, where and on
what basis should those projects be
identified? How could such a standard
be set while also taking into account the
practicality of using this standard in
particular types of projects? In addition
to topography, geography, and financial
factors, what other constraints, if any,
are relevant to considering whether an
investment is impracticable?
Question 24: What are the advantages
and disadvantages of setting a
minimum level of service at 100 Mbps
download and 20 Mbps upload in
projects where it is impracticable to set
minimum symmetrical download and
upload speeds of 100 Mbps? What are
the advantages and disadvantages of
setting a scalability requirement in these
cases? What other minimum standards
would be appropriate and why?
Question 25: What are the advantages
and disadvantages of focusing these
investments on those without access to
a wireline connection that reliably
delivers 25 Mbps download by 3 Mbps
upload? Would another threshold be
appropriate and why?
Question 26: What are the advantages
and disadvantages of setting any
particular threshold for identifying
unserved or underserved areas,
minimum speed standards or scalability
minimum? Are there other standards
that should be set (e.g., latency)? If so,
why and how? How can such threshold,
standards, or minimum be set in a way
that balances the public's interest in
making sure that reliable broadband
services meeting the daily needs of all
Americans are available throughout the
country with the providing recipients
flexibility to meet the varied needs of
their communities?
III. Restrictions on Use
As discussed above, recipients have
considerable flexibility to use Fiscal
Recovery Funds to address the diverse
needs of their communities. To ensure
that payments from the Fiscal Recovery
Funds are used for these congressionally
permitted purposes, the ARPA includes
two provisions that further define the
boundaries of the statute's eligible uses.
Section 602(c)(2)(A) of the Act provides
that States and territories may not "use
the funds . . . to either directly or
indirectly offset a reduction in . . . net
tax revenue . . . resulting from a change
in law, regulation, or administrative
interpretation during the covered period
that reduces any tax . . . or delays the
imposition of any tax or tax increase."
In addition, sections 602(c)(2)(B) and
603(c)(2) prohibit any recipient,
including cities, nonentitlement units of
government, and counties, from using
Fiscal Recovery Funds for deposit into
any pension fund. These restrictions
support the use of funds for the
congressionally permitted purposes
described in Section II of this
Supplementary Information by
providing a backstop against the use of
funds for purposes outside of the
eligible use categories.
These provisions give force to
Congress's clear intent that Fiscal
Recovery Funds be spent within the
four eligible uses identified in the
statute —(1) to respond to the public
health emergency and its negative
economic impacts, (2) to provide
premium pay to essential workers, (3) to
provide government services to the
extent of eligible governments' revenue
losses, and (4) to make necessary water,
sewer, and broadband infrastructure
investments —and not otherwise. These
four eligible uses reflect Congress's
judgment that the Fiscal Recovery
Funds should be expended in particular
ways that support recovery from the
COVID-19 public health emergency.
The further restrictions reflect
Congress's judgment that tax cuts and
pension deposits do not fall within
these eligible uses. The interim final
rule describes how Treasury will
identify when such uses have occurred
and how it will recoup funds put
toward these impermissible uses and, as
discussed in Section VIII of this
SUPPLEMENTARY INFORMATION, establishes
a reporting framework for monitoring
the use of Fiscal Recovery Funds for
eligible uses.
A. Deposit Into Pension Funds
The statute provides that recipients
may not use Fiscal Recovery Funds for
"deposit into any pension fund." For
the reasons discussed below, Treasury
interprets "deposit" in this context to
refer to an extraordinary payment into a
pension fund for the purpose of
reducing an accrued, unfunded liability.
More specifically, the interim final rule
does not permit this assistance to be
used to make a payment into a pension
fund if both:
1. The payment reduces a liability
incurred prior to the start of the COVID-
19 public health emergency, and
2. the payment occurs outside the
recipient's regular timing for making
such payments.
Under this interpretation, a "deposit"
is distinct from a "payroll
contribution," which occurs when
employers make payments into pension
funds on regular intervals, with
contribution amounts based on a pre-
determined percentage of employees'
wages and salaries.
As discussed above, eligible uses for
premium pay and responding to the
negative economic impacts of the
COVID-19 public health emergency
include hiring and compensating public
sector employees. Interpreting the scope
of "deposit" to exclude contributions
that are part of payroll contributions is
more consistent with these eligible uses
and would reduce administrative
burden for recipients. Accordingly, if an
employee's wages and salaries are an
eligible use of Fiscal Recovery Funds,
recipients may treat the employee's
covered benefits as an eligible use of
Fiscal Recovery Funds. For purposes of
the Fiscal Recovery Funds, covered
benefits include costs of all types of
leave (vacation, family -related, sick,
military, bereavement, sabbatical, jury
duty), employee insurance (health, life,
dental, vision), retirement (pensions,
401(k)), unemployment benefit plans
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26807
(Federal and State), workers'
compensation insurance, and Federal
Insurance Contributions Act taxes
(which includes Social Security and
Medicare taxes).
Treasury anticipates that this
approach to employees' covered benefits
will be comprehensive and, for
employees whose wage and salary costs
are eligible expenses, will allow all
covered benefits listed in the previous
paragraph to be eligible under the Fiscal
Recovery Funds. Treasury expects that
this will minimize the administrative
burden on recipients by treating all the
specified covered benefit types as
eligible expenses, for employees whose
wage and salary costs are eligible
expenses.
Question 27: Beyond a "deposit" and
a "payroll contribution," are there other
types of payments into a pension fund
that Treasury should consider?
B. Offset a Reduction in Net Tax
Revenue
For States and territories (recipient
governments 160), section 602(c)(2)(A)—
the offset provision —prohibits the use
of Fiscal Recovery Funds to directly or
indirectly offset a reduction in net tax
revenue resulting from a change in law,
regulation, or administrative
interpretation 161 during the covered
period. If a State or territory uses Fiscal
Recovery Funds to offset a reduction in
net tax revenue, the ARPA provides that
the State or territory must repay to the
Treasury an amount equal to the lesser
of (i) the amount of the applicable
reduction attributable to the
impermissible offset and (ii) the amount
received by the State or territory under
the ARPA. See Section IV of this
SUPPLEMENTARY INFORMATION. As
discussed below Section IV of this
SUPPLEMENTARY INFORMATION, a State or
territory that chooses to use Fiscal
Recovery Funds to offset a reduction in
net tax revenue does not forfeit its entire
allocation of Fiscal Recovery Funds
(unless it misused the full allocation to
offset a reduction in net tax revenue) or
any non-ARPA funding received.
The interim final rule implements
these conditions by establishing a
framework for States and territories to
determine the cost of changes in law,
regulation, or interpretation that reduce
tax revenue and to identify and value
the sources of funds that will offset-
160In this sub -section, "recipient governments"
refers only to States and territories. In other
sections, "recipient governments" refers more
broadly to eligible governments receiving funding
from the Fiscal Recovery Funds.
161 For brevity, referred to as "changes in law,
regulation, or interpretation" for the remainder of
this preamble.
i.e., cover the cost of —any reduction in
net tax revenue resulting from such
changes. A recipient government would
only be considered to have used Fiscal
Recovery Funds to offset a reduction in
net tax revenue resulting from changes
in law, regulation, or interpretation if,
and to the extent that, the recipient
government could not identify sufficient
funds from sources other than the Fiscal
Recovery Funds to offset the reduction
in net tax revenue. If sufficient funds
from other sources cannot be identified
to cover the full cost of the reduction in
net tax revenue resulting from changes
in law, regulation, or interpretation, the
remaining amount not covered by these
sources will be considered to have been
offset by Fiscal Recovery Funds, in
contravention of the offset provision.
The interim final rule recognizes three
sources of funds that may offset a
reduction in net tax revenue other than
Fiscal Recovery Funds —organic growth,
increases in revenue (e.g., an increase in
a tax rate), and certain cuts in spending.
In order to reduce burden, the interim
final rule's approach also incorporates
the types of information and modeling
already used by States and territories in
their own fiscal and budgeting
processes. By incorporating existing
budgeting processes and capabilities,
States and territories will be able to
assess and evaluate the relationship of
tax and budget decisions to uses of the
Fiscal Recovery Funds based on
information they likely have or can
obtain. This approach ensures that
recipient governments have the
information they need to understand the
implications of their decisions regarding
the use of the Fiscal Recovery Funds —
and, in particular, whether they are
using the funds to directly or indirectly
offset a reduction in net tax revenue,
making them potentially subject to
recoupment.
Reporting on both the eligible uses
and on a State's or territory's covered
tax changes that would reduce tax
revenue will enable identification of,
and recoupment for, use of Fiscal
Recovery Funds to directly offset
reductions in tax revenue resulting from
tax relief. Moreover, this approach
recognizes that, because money is
fungible, even if Fiscal Recovery Funds
are not explicitly or directly used to
cover the costs of changes that reduce
net tax revenue, those funds may be
used in a manner inconsistent with the
statute by indirectly being used to
substitute for the State's or territory's
funds that would otherwise have been
needed to cover the costs of the
reduction. By focusing on the cost of
changes that reduce net tax revenue —
and how a recipient government is
offsetting those reductions in
constructing its budget over the covered
period —the framework prevents efforts
to use Fiscal Recovery Funds to
indirectly offset reductions in net tax
revenue for which the recipient
government has not identified other
offsetting sources of funding.
As discussed in greater detail below
in this preamble, the framework set
forth in the interim final rule establishes
a step-by-step process for determining
whether, and the extent to which, Fiscal
Recovery Funds have been used to offset
a reduction in net tax revenue. Based on
information reported annually by the
recipient government:
❑ First, each year, each recipient
government will identify and value the
changes in law, regulation, or
interpretation that would result in a
reduction in net tax revenue, as it would
in the ordinary course of its budgeting
process. The sum of these values in the
year for which the government is
reporting is the amount it needs to "pay
for" with sources other than Fiscal
Recovery Funds (total value of revenue
reducing changes).
❑ Second, the interim final rule
recognizes that it may be difficult to
predict how a change would affect net
tax revenue in future years and,
accordingly, provides that if the total
value of the changes in the year for
which the recipient government is
reporting is below a de minimis level,
as discussed below, the recipient
government need not identify any
sources of funding to pay for revenue
reducing changes and will not be
subject to recoupment.
❑ Third, a recipient government will
consider the amount of actual tax
revenue recorded in the year for which
they are reporting. If the recipient
government's actual tax revenue is
greater than the amount of tax revenue
received by the recipient for the fiscal
year ending 2019, adjusted annually for
inflation, the recipient government will
not be considered to have violated the
offset provision because there will not
have been a reduction in net tax
revenue.
❑ Fourth, if the recipient
government's actual tax revenue is less
than the amount of tax revenue received
by the recipient government for the
fiscal year ending 2019, adjusted
annually for inflation, in the reporting
year the recipient government will
identify any sources of funds that have
been used to permissibly offset the total
value of covered tax changes other than
Fiscal Recovery Funds. These are:
o State or territory tax changes that
would increase any source of general
26808 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
fund revenue, such as a change that
would increase a tax rate; and
o Spending cuts in areas not being
replaced by Fiscal Recovery Funds.
The recipient government will
calculate the value of revenue reduction
remaining after applying these sources
of offsetting funding to the total value of
revenue reducing changes —that, is, how
much of the tax change has not been
paid for. The recipient government will
then compare that value to the
difference between the baseline and
actual tax revenue. A recipient
government will not be required to
repay to the Treasury an amount that is
greater than the recipient government's
actual tax revenue shortfall relative to
the baseline (i.e., fiscal year 2019 tax
revenue adjusted for inflation). This
"revenue reduction cap," together with
Step 3, ensures that recipient
governments can use organic revenue
growth to offset the cost of revenue
reductions.
❑ Finally, if there are any amounts
that could be subject to recoupment,
Treasury will provide notice to the
recipient government of such amounts.
This process is discussed in greater
detail in Section IV of this
SUPPLEMENTARY INFORMATION.
Together, these steps allow Treasury
to identify the amount of reduction in
net tax revenue that both is attributable
to covered changes and has been
directly or indirectly offset with Fiscal
Recovery Funds. This process ensures
Fiscal Recovery Funds are used in a
manner consistent with the statute's
defined eligible uses and the offset
provision's limitation on these eligible
uses, while avoiding undue interference
with State and territory decisions
regarding tax and spending policies.
The interim final rule also
implements a process for recouping
Fiscal Recovery Funds that were used to
offset reductions in net tax revenue,
including the calculation of any
amounts that may be subject to
recoupment, a process for a recipient
government to respond to a notice of
recoupment, and clarification regarding
amounts excluded from recoupment.
See Section IV of this SUPPLEMENTARY
INFORMATION.
The interim final rule includes several
definitions that are applicable to the
implementation of the offset provision.
Covered change. The offset provision
is triggered by a reduction in net tax
revenue resulting from "a change in
law, regulation, or administrative
interpretation." A covered change
includes any final legislative or
regulatory action, a new or changed
administrative interpretation, and the
phase -in or taking effect of any statute
or rule where the phase -in or taking
effect was not prescribed prior to the
start of the covered period. Changed
administrative interpretations would
not include corrections to replace prior
inaccurate interpretations; such
corrections would instead be treated as
changes implementing legislation
enacted or regulations issued prior to
the covered period; the operative change
in those circumstances is the underlying
legislation or regulation that occurred
prior to the covered period. Moreover,
only the changes within the control of
the State or territory are considered
covered changes. Covered changes do
not include a change in rate that is
triggered automatically and based on
statutory or regulatory criteria in effect
prior to the covered period. For
example, a state law that sets its earned
income tax credit (EITC) at a fixed
percentage of the Federal EITC will see
its EITC payments automatically
increase —and thus its tax revenue
reduced —because of the Federal
Government's expansion of the EITC in
the ARPA.162 This would not be
considered a covered change. In
addition, the offset provision applies
only to actions for which the change in
policy occurs during the covered period;
it excludes regulations or other actions
that implement a change or law
substantively enacted prior to March 3,
2021. Finally, Treasury has determined
and previously announced that income
tax changes —even those made during
the covered period —that simply
conform with recent changes in Federal
law (including those to conform to
recent changes in Federal taxation of
unemployment insurance benefits and
taxation of loan forgiveness under the
Paycheck Protection Program) are
permissible under the offset provision.
Baseline. For purposes of measuring a
reduction in net tax revenue, the interim
final rule measures actual changes in tax
revenue relative to a revenue baseline
(baseline). The baseline will be
calculated as fiscal year 2019 (FY 2019)
tax revenue indexed for inflation in
each year of the covered period, with
inflation calculated using the Bureau of
Economic Analysis's Implicit Price
Deflator.163
FY 2019 was chosen as the starting
year for the baseline because it is the
last full fiscal year prior to the COVID-
162 See, e.g., Tax Policy Center, How do state
earned income tax credits work?, https://
www. taxpolicycenter. org/briefing-book/how-do-
state-earned-income-tax-credits-work/ (last visited
May 9, 2021).
163 U.S. Department of Commerce, Bureau of
Economic Analysis, GDP Price Deflator, https://
www.bea.gov/data/prices-inflation/gdp-price-
deflator (last visited May 9, 2021).
19 public health emergency.164 This
baseline year is consistent with the
approach directed by the ARPA in
sections 602(c)(1)(C) and 603(c)(1)(C),
which identify the "most recent full
fiscal year of the [State, territory, or
Tribal government] prior to the
emergency" as the comparator for
measuring revenue loss. U.S. gross
domestic product is projected to
rebound to pre -pandemic levels in
2021,165 suggesting that an FY 2019 pre -
pandemic baseline is a reasonable
comparator for future revenue levels.
The FY 2019 baseline revenue will be
adjusted annually for inflation to allow
for direct comparison of actual tax
revenue in each year (reported in
nominal terms) to baseline revenue in
common units of measurement; without
inflation adjustment, each dollar of
reported actual tax revenue would be
worth less than each dollar of baseline
revenue expressed in 2019 terms.
Reporting year. The interim final rule
defines "reporting year" as a single year
within the covered period, aligned to
the current fiscal year of the recipient
government during the covered period,
for which a recipient government
reports the value of covered changes
and any sources of offsetting revenue
increases ("in -year" value), regardless of
when those changes were enacted. For
the fiscal years ending in 2021 or 2025
(partial years), the term "reporting year"
refers to the portion of the year falling
within the covered period. For example,
the reporting year for a fiscal year
beginning July 2020 and ending June
2021 would be from March 3, 2021 to
July 2021.
Tax revenue. The interim final rule's
definition of "tax revenue" is based on
the Census Bureau's definition of taxes,
used for its Annual Survey of State
Government Finances.166 It provides a
consistent, well -established definition
with which States and territories will be
familiar and is consistent with the
approach taken in Section II.C of this
SUPPLEMENTARY INFORMATION describing
the implementation of sections
602(c)(1)(C) and 603(c)(1)(C) of the Act,
regarding revenue loss. Consistent with
the approach described in Section II.C
of this SUPPLEMENTARY INFORMATION, tax
164 Using Fiscal Year 2019 is consistent with
section 602 as Congress provided for using that
baseline for determining the impact of revenue loss
affecting the provision of government services. See
section 602(c)(1)(C).
165 Congressional Budget Office, An Overview of
the Economic Outlook: 2021 to 2031 (February 1,
2021), available at https://www.cbo.gov/
publication/56965.
166 U.S. Census Bureau, Annual Survey of State
and Local Government Finances Glossary, https://
www.census.go v/programs-surveys/state/about/
glossary.html (last visited Apr. 30, 2021).
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26809
revenue does not include revenue taxed
and collected by a different unit of
government (e.g., revenue from taxes
levied by a local government and
transferred to a recipient government).
Framework. The interim final rule
provides a step-by-step framework, to be
used in each reporting year, to calculate
whether the offset provision applies to
a State's or territory's use of Fiscal
Recovery Funds:
(1) Covered changes that reduce tax
revenue. For each reporting year, a
recipient government will identify and
value covered changes that the recipient
government predicts will have the effect
of reducing tax revenue in a given
reporting year, similar to the way it
would in the ordinary course of its
budgeting process. The value of these
covered changes may be reported based
on estimated values produced by a
budget model, incorporating reasonable
assumptions, that aligns with the
recipient government's existing
approach for measuring the effects of
fiscal policies, and that measures
relative to a current law baseline. The
covered changes may also be reported
based on actual values using a statistical
methodology to isolate the change in
year -over -year revenue attributable to
the covered change(s), relative to the
current law baseline prior to the
change(s). Further, estimation
approaches should not use dynamic
methodologies that incorporate the
projected effects of macroeconomic
growth because macroeconomic growth
is accounted for separately in the
framework. Relative to these dynamic
scoring methodologies, scoring
methodologies that do not incorporate
projected effects of macroeconomic
growth rely on fewer assumptions and
thus provide greater consistency among
States and territories. Dynamic scoring
that incorporates macroeconomic
growth may also increase the likelihood
of underestimation of the cost of a
reduction in tax revenue.
In general and where possible,
reporting should be produced by the
agency of the recipient government
responsible for estimating the costs and
effects of fiscal policy changes. This
approach offers recipient governments
the flexibility to determine their
reporting methodology based on their
existing budget scoring practices and
capabilities. In addition, the approach of
using the projected value of changes in
law that enact fiscal policies to estimate
the net effect of such policies is
consistent with the way many States
and territories already consider tax
changes.167
(2) In excess of the de minimis. The
recipient government will next calculate
the total value of all covered changes in
the reporting year resulting in revenue
reductions, identified in Step 1. If the
total value of the revenue reductions
resulting from these changes is below
the de minimis level, the recipient
government will be deemed not to have
any revenue -reducing changes for the
purpose of determining the recognized
net reduction. If the total is above the de
minimis level, the recipient government
must identify sources of in -year revenue
to cover the full costs of changes that
reduce tax revenue.
The de minimis level is calculated as
1 percent of the reporting year's
baseline. Treasury recognizes that,
pursuant to their taxing authority, States
and territories may make many small
changes to alter the composition of their
tax revenues or implement other
policies with marginal effects on tax
revenues. They may also make changes
based on projected revenue effects that
turn out to differ from actual effects,
unintentionally resulting in minor
revenue changes that are not fairly
described as "resulting from" tax law
changes. The de minimis level
recognizes the inherent challenges and
uncertainties that recipient governments
face, and thus allows relatively small
reductions in tax revenue without
consequence. Treasury determined the 1
percent level by assessing the historical
effects of state -level tax policy changes
in state EITCs implemented to effect
policy goals other than reducing net tax
revenues.168 The 1 percent de minimis
level reflects the historical reductions in
revenue due to minor changes in state
fiscal policies.
(3) Safe harbor. The recipient
government will then compare the
reporting year's actual tax revenue to
the baseline. If actual tax revenue is
greater than the baseline, Treasury will
deem the recipient government not to
have any recognized net reduction for
the reporting year, and therefore to be in
a safe harbor and outside the ambit of
the offset provision. This approach is
consistent with the ARPA, which
contemplates recoupment of Fiscal
Recovery Funds only in the event that
167 See, e.g., Megan Randall & Kim Rueben, Tax
Policy Center, Sustainable Budgeting in the States:
Evidence on State Budget Institutions and Practices
(Nov. 2017), available at https://
www.taxpolicycenter.org/sites/default/filesI
publication/149186/sustain able-budgeting-in-th e-
states_1.pdf.
168 Data provided by the Urban -Brookings Tax
Policy Center for state -level EITC changes for 2004-
2017.
such funds are used to offset a reduction
in net tax revenue. If net tax revenue has
not been reduced, this provision does
not apply. In the event that actual tax
revenue is above the baseline, the
organic revenue growth that has
occurred, plus any other revenue -raising
changes, by definition must have been
enough to offset the in -year costs of the
covered changes.
(4) Consideration of other sources of
funding. Next, the recipient government
will identify and calculate the total
value of changes that could pay for
revenue reduction due to covered
changes and sum these items. This
amount can be used to pay for up to the
total value of revenue -reducing changes
in the reporting year. These changes
consist of two categories:
(a) Tax and other increases in
revenue. The recipient government must
identify and consider covered changes
in policy that the recipient government
predicts will have the effect of
increasing general revenue in a given
reporting year. As when identifying and
valuing covered changes that reduce tax
revenue, the value of revenue -raising
changes may be reported based on
estimated values produced by a budget
model, incorporating reasonable
assumptions, aligned with the recipient
government's existing approach for
measuring the effects of fiscal policies,
and measured relative to a current law
baseline, or based on actual values using
a statistical methodology to isolate the
change in year -over -year revenue
attributable to the covered change(s).
Further, and as discussed above,
estimation approaches should not use
dynamic scoring methodologies that
incorporate the effects of
macroeconomic growth because growth
is accounted for separately under the
interim final rule. In general and where
possible, reporting should be produced
by the agency of the recipient
government responsible for estimating
the costs and effects of fiscal policy
changes. This approach offers recipient
governments the flexibility to determine
their reporting methodology based on
their existing budget scoring practices
and capabilities.
(b) Covered spending cuts. A recipient
government also may cut spending in
certain areas to pay for covered changes
that reduce tax revenue, up to the
amount of the recipient government's
net reduction in total spending as
described below. These changes must be
reductions in government outlays not in
an area where the recipient government
has spent Fiscal Recovery Funds. To
better align with existing reporting and
accounting, the interim final rule
considers the department, agency, or
26810 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
authority from which spending has been
cut and whether the recipient
government has spent Fiscal Recovery
Funds on that same department, agency,
or authority. This approach was selected
to allow recipient governments to report
how Fiscal Recovery Funds have been
spent using reporting units already
incorporated into their budgeting
process. If they have not spent Fiscal
Recovery Funds in a department,
agency, or authority, the full amount of
the reduction in spending counts as a
covered spending cut, up to the
recipient government's net reduction in
total spending. If they have, the Fiscal
Recovery Funds generally would be
deemed to have replaced the amount of
spending cut and only reductions in
spending above the amount of Fiscal
Recovery Funds spent on the
department, agency, or authority would
count.
To calculate the amount of spending
cuts that are available to offset a
reduction in tax revenue, the recipient
government must first consider whether
there has been a reduction in total net
spending, excluding Fiscal Recovery
Funds (net reduction in total spending).
This approach ensures that reported
spending cuts actually create fiscal
space, rather than simply offsetting
other spending increases. A net
reduction in total spending is measured
as the difference between total spending
in each reporting year, excluding Fiscal
Recovery Funds spent, relative to total
spending for the recipient's fiscal year
ending in 2019, adjusted for inflation.
Measuring reductions in spending
relative to 2019 reflects the fact that the
fiscal space created by a spending cut
persists so long as spending remains
below its original level, even if it does
not decline further, relative to the same
amount of revenue. Measuring spending
cuts from year to year would, by
contrast, not recognize any available
funds to offset revenue reductions
unless spending continued to decline,
failing to reflect the actual availability of
funds created by a persistent change and
limiting the discretion of States and
territories. In general and where
possible, reporting should be produced
by the agency of the recipient
government responsible for estimating
the costs and effects of fiscal policy
changes. Treasury chose this approach
because while many recipient
governments may score budget
legislation using projections, spending
cuts are readily observable using actual
values.
This approach —allowing only
spending reductions in areas where the
recipient government has not spent
Fiscal Recovery Funds to be used as an
offset for a reduction in net tax
revenue —aims to prevent recipient
governments from using Fiscal Recovery
Funds to supplant State or territory
funding in the eligible use areas, and
then use those State or territory funds to
offset tax cuts. Such an approach helps
ensure that Fiscal Recovery Funds are
not used to "indirectly" offset revenue
reductions due to covered changes.
In order to help ensure recipient
governments use Fiscal Recovery Funds
in a manner consistent with the
prescribed eligible uses and do not use
Fiscal Recovery Funds to indirectly
offset a reduction in net tax revenue
resulting from a covered change,
Treasury will monitor changes in
spending throughout the covered
period. If, over the course of the covered
period, a spending cut is subsequently
replaced with Fiscal Recovery Funds
and used to indirectly offset a reduction
in net tax revenue resulting from a
covered change, Treasury may consider
such change to be an evasion of the
restrictions of the offset provision and
seek recoupment of such amounts.
(5) Identification of amounts subject
to recoupment. If a recipient
government (i) reports covered changes
that reduce tax revenue (Step 1); (ii) to
a degree greater than the de minimis
(Step 2); (iii) has experienced a
reduction in net tax revenue (Step 3);
and (iv) lacks sufficient revenue from
other, permissible sources to pay for the
entirety of the reduction (Step 4), then
the recipient government will be
considered to have used Fiscal Recovery
Funds to offset a reduction in net tax
revenue, up to the amount that revenue
has actually declined. That is, the
maximum value of reduction in revenue
due to covered changes which a
recipient government must cover is
capped at the difference between the
baseline and actual tax revenue.169 In
the event that the baseline is above
actual tax revenue and the difference
between them is less than the sum of
revenue reducing changes that are not
paid for with other, permissible sources,
organic revenue growth has implicitly
offset a portion of the reduction. For
example, if a recipient government
reduces tax revenue by $1 billion,
makes no other changes, and
experiences revenue growth driven by
organic economic growth worth $500
million, it need only pay for the
remaining $500 million with sources
other than Fiscal Recovery Funds. The
revenue reduction cap implements this
169 This cap is applied in § 35.8(c) of the interim
final rule, calculating the amount of funds used in
violation of the tax offset provision.
approach for permitting organic revenue
growth to cover the cost of tax cuts.
Finally, as discussed further in
Section IV of this SUPPLEMENTARY
INFORMATION, a recipient government
may request reconsideration of any
amounts identified as subject to
recoupment under this framework. This
process ensures that all relevant facts
and circumstances, including
information regarding planned spending
cuts and budgeting assumptions, are
considered prior to a determination that
an amount must be repaid. Amounts
subject to recoupment are calculated on
an annual basis; amounts recouped in
one year cannot be returned if the State
or territory subsequently reports an
increase in net tax revenue.
To facilitate the implementation of
the framework above, and in addition to
reporting required on eligible uses, in
each year of the reporting period, each
State and territory will report to
Treasury the following items:
❑ Actual net tax revenue for the
reporting year;
❑ Each revenue -reducing change
made to date during the covered period
and the in -year value of each change;
❑ Each revenue -raising change made
to date during the covered period and
the in -year value of each change;
❑ Each covered spending cut made to
date during the covered period, the in -
year value of each cut, and
documentation demonstrating that each
spending cut is covered as prescribed
under the interim final rule;
Treasury will provide additional
guidance and instructions the reporting
requirements at a later date.
Question 28: Does the interim final
rule's definition of tax revenue accord
with existing State and territorial
practice and, if not, are there other
definitions or elements Treasury should
consider? Discuss why or why not.
Question 29: The interim final rule
permits certain spending cuts to cover
the costs of reductions in tax revenue,
including cuts in a department, agency,
or authority in which the recipient
government is not using Fiscal Recovery
Funds. How should Treasury and
recipient governments consider the
scope of a department, agency, or
authority for the use of funds to ensure
spending cuts are not being substituted
with Fiscal Recovery Funds while also
avoiding an overbroad definition of that
captures spending that is, in fact,
distinct?
Question 30: Discuss the budget
scoring methodologies currently used by
States and territories. How should the
interim final rule take into
consideration differences in
approaches? Please discuss the use of
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26811
practices including but not limited to
macrodynamic scoring, microdynamic
scoring, and length of budget windows.
Question 31: If a recipient government
has a balanced budget requirement, how
will that requirement impact its use of
Fiscal Recovery Funds and ability to
implement this framework?
Question 32: To implement the
framework described above, the interim
final rule establishes certain reporting
requirements. To what extent do
recipient governments already produce
this information and on what timeline?
Discuss ways that Treasury and
recipient governments may better rely
on information already produced, while
ensuring a consistent application of the
framework.
Question 33: Discuss States' and
territories' ability to produce the figures
and numbers required for reporting
under the interim final rule. What
additional reporting tools, such as a
standardized template, would facilitate
States' and territories' ability to
complete the reporting required under
the interim final rule?
C. Other Restrictions on Use
Payments from the Fiscal Recovery
Funds are also subject to pre-existing
limitations provided in other Federal
statutes and regulations and may not be
used as non -Federal match for other
Federal programs whose statute or
regulations bar the use of Federal funds
to meet matching requirements. For
example, payments from the Fiscal
Recovery Funds may not be used to
satisfy the State share of Medicaid.170
As provided for in the award terms,
payments from the Fiscal Recovery
Funds as a general matter will be subject
to the provisions of the Uniform
Administrative Requirements, Cost
Principles, and Audit Requirements for
Federal Awards (2 CFR part 200) (the
Uniform Guidance), including the cost
principles and restrictions on general
provisions for selected items of cost.
D. Timeline for Use of Fiscal Recovery
Funds
Section 602(c)(1) and section 603(c)(1)
require that payments from the Fiscal
Recovery Funds be used only to cover
costs incurred by the State, territory,
Tribal government, or local government
by December 31, 2024. Similarly, the
CARES Act provided that payments
from the CRF be used to cover costs
incurred by December 31, 2021.171 The
170 See 42 CFR 433.51 and 45 CFR 75.306.
171 Section 1001 of Division N of the Consolidated
Appropriations Act, 2021 amended section
601(d)(3) of the Act by extending the end of the
covered period for CRF expenditures from
December 30. 2020 to December 31. 2021.
definition of "incurred" does not have
a clear meaning. With respect to the
CARES Act, on the understanding that
the CRF was intended to be used to
meet relatively short-term needs,
Treasury interpreted this requirement to
mean that, for a cost to be considered to
have been incurred, performance of the
service or delivery of the goods acquired
must occur by December 31, 2021. In
contrast, the ARPA, passed at a different
stage of the COVID-19 public health
emergency, was intended to provide
more general fiscal relief over a broader
timeline. In addition, the ARPA
expressly permits the use of Fiscal
Recovery Funds for improvements to
water, sewer, and broadband
infrastructure, which entail a longer
timeframe. In recognition of this,
Treasury is interpreting the requirement
in section 602 and section 603 that costs
be incurred by December 31, 2024, to
require only that recipients have
obligated the Fiscal Recovery Funds by
such date. The interim final rule adopts
a definition of "obligation" that is based
on the definition used for purposes of
the Uniform Guidance, which will allow
for uniform administration of this
requirement and is a definition with
which most recipients will be familiar.
Payments from the Fiscal Recovery
Funds are grants provided to recipients
to mitigate the fiscal effects of the
COVID-19 public health emergency and
to respond to the public health
emergency, consistent with the eligible
uses enumerated in sections 602(c)(1)
and 603(c)(1).172 As such, these funds
are intended to provide economic
stimulus in areas still recovering from
the economic effects of the pandemic. In
implementing and interpreting these
provisions, including what it means to
"respond to" the COVID-19 public
health emergency, Treasury takes into
consideration pre -pandemic facts and
circumstances (e.g., average revenue
growth prior to the pandemic) as well as
impact of the pandemic that predate the
enactment of the ARPA (e.g.,
replenishing Unemployment Trust
balances drawn during the pandemic).
While assessing the effects of the
COVID-19 public health emergency
necessarily takes into consideration the
facts and circumstances that predate the
ARPA, use of Fiscal Recovery Funds is
forward looking.
As discussed above, recipients are
permitted to use payments from the
Fiscal Recovery Funds to respond to the
public health emergency, to respond to
workers performing essential work by
providing premium pay or providing
172 Sections 602(a), 603(a), 602(c)(1) and 603(c)(1)
of the Act.
grants to eligible employers, and to
make necessary investments in water,
sewer, or broadband infrastructure,
which all relate to prospective uses. In
addition, sections 602(c)(1)(C) and
603(c)(1)(C) permit recipients to use
Fiscal Recovery Funds for the provision
of government services. This clause
provides that the amount of funds that
may be used for this purpose is
measured by reference to the reduction
in revenue due to the public health
emergency relative to revenues collected
in the most recent full fiscal year, but
this reference does not relate to the
period during which recipients may use
the funds, which instead refers to
prospective uses, consistent with the
other eligible uses.
Although as discussed above 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.
This aligns the period for use of Fiscal
Recovery Funds with the period during
which these funds may not be used to
offset reductions in net tax revenue.
Permitting Fiscal Recovery Funds to be
used to cover costs incurred beginning
on this date will also mean that
recipients that began incurring costs in
the anticipation of enactment of the
ARPA and in advance of the issuance of
this rule and receipt of payment from
the Fiscal Recovery Funds would be
able to cover them using these
payments.173
As set forth in the award terms, the
period of performance will run until
December 31, 2026, which will provide
recipients a reasonable amount of time
to complete projects funded with
payments from the Fiscal Recovery
Funds.
IV. Recoupment Process
Under the ARPA, failure to comply
with the restrictions on use contained in
sections 602(c) and 603(c) of the Act
may result in recoupment of funds.174
The interim final rule implements these
provisions by establishing a process for
recoupment.
Identification and Notice of
Violations. Failure to comply with the
restrictions on use will be identified
based on reporting provided by the
173 Given the nature of this program, recipients
will not be permitted to use funds to cover pre -
award costs, i.e., those incurred prior to March 3,
2021.
174 Sections 602(e) and 603(e) of the Act.
26812 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
recipient. As discussed further in
Sections III.B and VIII of this
SUPPLEMENTARY INFORMATION, Treasury
will collect information regarding
eligible uses on a quarterly basis and on
the tax offset provision on an annual
basis. Treasury also may consider other
information in identifying a violation,
such as information provided by
members of the public. If Treasury
identifies a violation, it will provide
written notice to the recipient along
with an explanation of such amounts.
Request for Reconsideration. Under
the interim final rule, a recipient may
submit a request for reconsideration of
any amounts identified in the notice
provided by Treasury. This
reconsideration process provides a
recipient the opportunity to submit
additional information it believes
supports its request in light of the notice
of recoupment, including, for example,
additional information regarding the
recipient's use of Fiscal Recovery Funds
or its tax revenues. The process also
provides the Secretary with an
opportunity to consider all information
relevant to whether a violation has
occurred, and if so, the appropriate
amount for recoupment.
The interim final rule also establishes
requirements for the timing of a request
for reconsideration. Specifically, if a
recipient wishes to request
reconsideration of any amounts
identified in the notice, the recipient
must submit a written request for
reconsideration to the Secretary within
60 calendar days of receipt of such
notice. The request must include an
explanation of why the recipient
believes that the finding of a violation
or recoupable amount identified in the
notice of recoupment should be
reconsidered. To facilitate the
Secretary's review of a recipient's
request for reconsideration, the request
should identify all supporting reasons
for the request. Within 60 calendar days
of receipt of the recipient's request for
reconsideration, the recipient will be
notified of the Secretary's decision to
affirm, withdraw, or modify the notice
of recoupment. Such notification will
include an explanation of the decision,
including responses to the recipient's
supporting reasons and consideration of
additional information provided.
The process and timeline established
by the interim final rule are intended to
provide the recipient with an adequate
opportunity to fully present any issues
or arguments in response to the notice
of recoupment.175 This process will
allow the Secretary to respond to the
17s The interim final rule also provides that
Treasury may extend any deadlines.
issues and considerations raised in the
request for reconsideration taking into
account the information and arguments
presented by the recipient along with
any other relevant information.
Repayment. Finally, the interim final
rule provides that any amounts subject
to recoupment must be repaid within
120 calendar days of receipt of any final
notice of recoupment or, if the recipient
has not requested reconsideration,
within 120 calendar days of the initial
notice provided by the Secretary.
Question 34: Discuss the timeline for
requesting reconsideration under the
interim final rule. What, if any,
challenges does this timeline present?
V. Payments in Tranches to Local
Governments and Certain States
Section 603 of the Act provides that
the Secretary will make payments to
local governments in two tranches, with
the second tranche being paid twelve
months after the first payment. In
addition, section 602(b)(6)(A)(ii)
provides that the Secretary may
withhold payment of up to 50 percent
of the amount allocated to each State
and territory for a period of up to twelve
months from the date on which the
State or territory provides its
certification to the Secretary. Any such
withholding for a State or territory is
required to be based on the
unemployment rate in the State or
territory as of the date of the
certification.
The Secretary has determined to
provide in this interim final rule for
withholding of 50 percent of the amount
of Fiscal Recovery Funds allocated to all
States (and the District of Columbia)
other than those with an unemployment
rate that is 2.0 percentage points or
more above its pre -pandemic (i.e.,
February 2020) level. The Secretary will
refer to the latest available monthly data
from the Bureau of Labor Statistics as of
the date the certification is provided.
Based on data available at the time of
public release of this interim final rule,
this threshold would result in a majority
of States being paid in two tranches.
Splitting payments for the majority of
States is consistent with the
requirement in section 603 of the Act to
make payments from the Coronavirus
Local Fiscal Recovery Fund to local
governments in two tranches.176
176 With respect to Federal financial assistance
more generally, States are subject to the
requirements of the Cash Management
Improvement Act (CMIA), under which Federal
funds are drawn upon only on an as needed basis
and States are required to remit interest on unused
balances to Treasury. Given the statutory
requirement for Treasury to make payments to
States within a certain period, these requirements
Splitting payments to States into two
tranches will help encourage recipients
to adapt, as necessary, to new
developments that could arise over the
coming twelve months, including
potential changes to the nature of the
public health emergency and its
negative economic impacts. While the
U.S. economy has been recovering and
adding jobs in aggregate, there is still
considerable uncertainty in the
economic outlook and the interaction
between the pandemic and the
economy.177 For these reasons, Treasury
believes it will be appropriate for a
majority of recipients to adapt their
plans as the recovery evolves. For
example, a faster -than -expected
economic recovery in 2021 could lead a
recipient to dedicate more Fiscal
Recovery Funds to longer -term
investments starting in 2022. In
contrast, a slower -than -expected
economic recovery in 2021 could lead a
recipient to use additional funds for
near -term stimulus in 2022.
At the same time, the statute
contemplates the possibility that
elevated unemployment in certain
States could justify a single payment.
Elevated unemployment is indicative of
a greater need to assist unemployed
workers and stimulate a faster economic
recovery. For this reason, the interim
final rule provides that States and
territories with an increase in their
unemployment rate over a specified
threshold may receive a single payment,
with the expectation that a single
tranche will better enable these States
and territories to take additional
immediate action to aid the unemployed
and strengthen their economies.
Following the initial pandemic -
related spike in unemployment in 2020,
States' unemployment rates have been
trending back towards pre -pandemic
levels. However, some States' labor
markets are healing more slowly than
others. Moreover, States varied widely
in their pre -pandemic levels of
unemployment, and some States remain
substantially further from their pre -
of the CMIA and Treasury's implementing
regulations at 31 CFR part 205 will not apply to
payments from the Fiscal Recovery Funds.
Providing funding in two tranches to the majority
of States reflects, to the maximum extent permitted
by section 602 of the Act, the general principles of
Federal cash management and stewardship of
Federal funding, yet will be much less restrictive
than the usual requirements to which States are
subject.
177 The potential course of the virus, and its
impact on the economy, has contributed to a
heightened degree of uncertainty relative to prior
periods. See, e.g., Dave Altig et al., Economic
uncertainty before and during the COVID-19
pandemic, J. of Public Econ. (Nov. 2020), available
at https://www.sciencedirect.com/science/article/
abs/pii/S0047272720301389.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26813
pandemic starting point. Consequently,
Treasury is delineating States with
significant remaining elevation in the
unemployment rate, based on the net
difference to pre -pandemic levels.
Treasury has established that
significant remaining elevation in the
unemployment rate is a net change in
the unemployment rate of 2.0
percentage points or more relative to
pre -pandemic levels. In the four
previous recessions going back to the
early 1980s, the national unemployment
rate rose by 3.6, 2.3, 2.0, and 5.0
percentage points, as measured from the
start of the recession to the eventual
peak during or immediately following
the recession.178 Each of these increases
can therefore represent a recession's
impact on unemployment. To identify
States with significant remaining
elevation in unemployment, Treasury
took the lowest of these four increases,
2.0 percentage points, to indicate states
where, despite improvement in the
unemployment rate, current labor
market conditions are consistent still
with a historical benchmark for a
recession.
No U.S. territory will be subject to
withholding of its payment from the
Fiscal Recovery Funds. For Puerto Rico,
the Secretary has determined that the
current level of the unemployment rate
(8.8 percent, as of March 2021179) is
sufficiently high such that Treasury
should not withhold any portion of its
payment from the Fiscal Recovery
Funds regardless of its change in
unemployment rate relative to its pre -
pandemic level. For U.S. territories that
are not included in the Bureau of Labor
Statistics' monthly unemployment rate
data, the Secretary will not exercise the
authority to withhold amounts from the
Fiscal Recovery Funds.
VI. Transfer
The statute authorizes State,
territorial, and Tribal governments;
counties; metropolitan cities; and
nonentitlement units of local
government (counties, metropolitan
178 Includes the period during and immediately
following recessions, as defined by the National
Bureau of Economic Research. National Bureau of
Economic Research, US Business Cycle Expansions
and Contractions, https://www.nber.org/research/
data/us-business-cycle-expansions-and-
contractions (last visited Apr. 27, 2021). Based on
data from U.S. Bureau of Labor Statistics,
Unemployment Rate [UNRATE], retrieved from
FRED, Federal Reserve Bank of St. Louis, https://
fred.stlouisfed.org/series/UNRATE (last visited Apr.
27, 2021).
179 U.S. Bureau of Labor Statistics, Economic
News Release —Table 1. Civilian labor force and
unemployment by state and selected area,
seasonally adjusted, https://www.bls.gov/
news.release/laus.tOl.htm (last visited Apr. 30,
2021).
cities, and nonentitlement units of local
government are collectively referred to
as "local governments") to transfer
amounts paid from the Fiscal Recovery
Funds to a number of specified entities.
By permitting these transfers, Congress
recognized the importance of providing
flexibility to governments seeking to
achieve the greatest impact with their
funds, including by working with other
levels or units of government or private
entities to assist recipient governments
in carrying out their programs. This
includes special-purpose districts that
perform specific functions in the
community, such as fire, water, sewer,
or mosquito abatement districts.
Specifically, under section 602(c)(3), a
State, territory, or Tribal government
may transfer funds to a "private
nonprofit organization . . . a Tribal
organization . . . a public benefit
corporation involved in the
transportation of passengers or cargo, or
a special-purpose unit of State or local
government." 180 Similarly, section
603(c)(3) authorizes a local government
to transfer funds to the same entities
(other than Tribal organizations).
The interim final rule clarifies that the
lists of transferees in sections 602(c)(3)
and 603(c)(3) are not exclusive. The
interim final rule permits State,
territorial, and Tribal governments to
transfer Fiscal Recovery Funds to other
constituent units of government or
private entities beyond those specified
in the statute. Similarly, local
governments are authorized to transfer
Fiscal Recovery Funds to other
constituent units of government (e.g., a
county is able to transfer Fiscal
Recovery Funds to a city, town, or
school district within it) or to private
entities. This approach is intended to
help provide funding to local
governments with needs that may
exceed the allocation provided under
the statutory formula.
State, local, territorial, and Tribal
governments that receive a Federal
award directly from a Federal awarding
agency, such as Treasury, are
"recipients." A transferee receiving a
transfer from a recipient under sections
602(c)(3) and 603(c)(3) will be a
subrecipient. Subrecipients are entities
that receive a subaward from a recipient
to carry out a program or project on
behalf of the recipient with the
recipient's Federal award funding. The
recipient remains responsible for
monitoring and overseeing the
subrecipient's use of Fiscal Recovery
Funds and other activities related to the
award to ensure that the subrecipient
complies with the statutory and
180 Section 602(c)(3) of the Act.
regulatory requirements and the terms
and conditions of the award. Recipients
also remain responsible for reporting to
Treasury on their subrecipients' use of
payments from the Fiscal Recovery
Funds for the duration of the award.
Transfers under sections 602(c)(3) and
603(c)(3) must qualify as an eligible use
of Fiscal Recovery Funds by the
transferor. Once Fiscal Recovery Funds
are received, the transferee must abide
by the restrictions on use applicable to
the transferor under the ARPA and other
applicable law and program guidance.
For example, if a county transferred
Fiscal Recovery Funds to a town within
its borders to respond to the COVID-19
public health emergency, the town
would be bound by the eligible use
requirements applicable to the county in
carrying out the county's goal. This also
means that county A may not transfer
Fiscal Recovery Funds to county B for
use in county B because such a transfer
would not, from the perspective of the
transferor (county A), be an eligible use
in county A.
Section 603(c)(4) separately provides
for transfers by a local government to its
State or territory. A transfer under
section 603(c)(4) will not make the State
a subrecipient of the local government,
and such Fiscal Recovery Funds may be
used by the State for any purpose
permitted under section 602(c). A
transfer under section 603(c)(4) will
result in a cancellation or termination of
the award on the part of the transferor
local government and a modification of
the award to the transferee State or
territory. The transferor must provide
notice of the transfer to Treasury in a
format specified by Treasury. If the local
government does not provide such
notice, it will remain legally obligated to
Treasury under the award and remain
responsible for ensuring that the
awarded Fiscal Recovery Funds are
being used in accordance with the
statute and program guidance and for
reporting on such uses to Treasury. A
State that receives a transfer from a local
government under section 603(c)(4) will
be bound by all of the use restrictions
set forth in section 602(c) with respect
to the use of those Fiscal Recovery
Funds, including the prohibitions on
use of such Fiscal Recovery Funds to
offset certain reductions in taxes or to
make deposits into pension funds.
Question 35: What are the advantages
and disadvantages of treating the list of
transferees in sections 602(c)(3) and
603(c)(3) as nonexclusive, allowing
States and localities to transfer funds to
entities outside of the list?
Question 36: Are there alternative
ways of defining "special-purpose unit
of State or local government" and
26814 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
"public benefit corporation" that would
better further the aims of the Funds?
VII. Nonentitlement Units of
Government
The Fiscal Recovery Funds provides
for $19.53 billion in payments to be
made to States and territories which
will distribute the funds to
nonentitlement units of local
government (NEUs); local governments
which generally have populations below
50,000. These local governments have
not yet received direct fiscal relief from
the Federal Government during the
COVID-19 public health emergency,
making Fiscal Recovery Funds
payments an important source of
support for their public health and
economic responses. Section 603
requires Treasury to allocate and pay
Fiscal Recovery Funds to the States and
territories and requires the States and
territories to distribute Fiscal Recovery
Funds to NEUs based on population
within 30 days of receipt unless an
extension is granted by the Secretary.
The interim final rule clarifies certain
aspects regarding the distribution of
Fiscal Recovery by States and territories
to NEUs, as well as requirements around
timely payments from the Fiscal
Recovery Funds.
The ARPA requires that States and
territories allocate funding to NEUs in
an amount that bears the same
proportion as the population of the NEU
bears to the total population of all NEUs
in the State or territory, subject to a cap
(described below). Because the statute
requires States and territories to make
distributions based on population,
States and territories may not place
additional conditions or requirements
on distributions to NEUs, beyond those
required by the ARPA and Treasury's
implementing regulations and guidance.
For example, a State may not impose
stricter limitations than permitted by
statute or Treasury regulations or
guidance on an NEU's use of Fiscal
Recovery Funds based on the NEU's
proposed spending plan or other
policies. States and territories are also
not permitted to offset any debt owed by
the NEU against the NEU's distribution.
Further, States and territories may not
provide funding on a reimbursement
basis—e.g., requiring NEUs to pay for
project costs up front before being
reimbursed with Fiscal Recovery Funds
payments —because this funding model
would not comport with the statutory
requirement that States and territories
make distributions to NEUs within the
statutory timeframe.
Similarly, States and territories
distributing Fiscal Recovery Funds
payments to NEUs are responsible for
complying with the Fiscal Recovery
Funds statutory requirement that
distributions to NEUs not exceed 75
percent of the NEU's most recent
budget. The most recent budget is
defined as the NEU's most recent annual
total operating budget, including its
general fund and other funds, as of
January 27, 2020. Amounts in excess of
such cap and therefore not distributed
to the NEU must be returned to Treasury
by the State or territory. States and
territories may rely for this
determination on a certified top -line
budget total from the NEU.
Under the interim final rule, the total
allocation and distribution to an NEU,
including the sum of both the first and
second tranches of funding, cannot
exceed the 75 percent cap. States and
territories must permit NEUs without
formal budgets as of January 27, 2020 to
self -certify their most recent annual
expenditures as of January 27, 2020 for
the purpose of calculating the cap. This
approach will provide an administrable
means to implement the cap for small
local governments that do not adopt a
formal budget.
Section 603(b)(3) of the Social
Security Act provides for Treasury to
make payments to counties but provides
that, in the case of an amount to be paid
to a county that is not a unit of general
local government, the amount shall
instead be paid to the State in which
such county is located, and such State
shall distribute such amount to each
unit of general local government within
such county in an amount that bears the
same proportion to the amount to be
paid to such county as the population
of such units of general local
government bears to the total population
of such county. As with NEUs, States
may not place additional conditions or
requirements on distributions to such
units of general local government,
beyond those required by the ARPA and
Treasury's implementing regulations
and guidance.
In the case of consolidated
governments, section 603(b)(4) allows
consolidated governments (e.g., a city -
county consolidated government) to
receive payments under each allocation
based on the respective formulas. In the
case of a consolidated government,
Treasury interprets the budget cap to
apply to the consolidated government's
NEU allocation under section 603(b)(2)
but not to the consolidated
government's county allocation under
section 603(b)(3).
If necessary, States and territories may
use the Fiscal Recovery Funds under
section 602(c)(1)(A) to fund expenses
related to administering payments to
NEUs and units of general local
government, as disbursing these funds
itself is a response to the public health
emergency and its negative economic
impacts. If a State or territory requires
more time to disburse Fiscal Recovery
Funds to NEUs than the allotted 30
days, Treasury will grant extensions of
not more than 30 days for States and
territories that submit a certification in
writing in accordance with section
603(b)(2)(C)(ii)(I). Additional extensions
may be granted at the discretion of the
Secretary.
Question 37: What are alternative
ways for States and territories to enforce
the 75 percent cap while reducing the
administrative burden on them?
Question 38: What criteria should
Treasury consider in assessing requests
for extensions for further time to
distribute NEU payments?
VIII. Reporting
States (defined to include the District
of Columbia), territories, metropolitan
cities, counties, and Tribal governments
will be required to submit one interim
report and thereafter quarterly Project
and Expenditure reports through the
end of the award period on December
31, 2026. The interim report will
include a recipient's expenditures by
category at the summary level from the
date of award to July 31, 2021 and, for
States and territories, information
related to distributions to
nonentitlement units. Recipients must
submit their interim report to Treasury
by August 31, 2021. Nonentitlement
units of local government are not
required to submit an interim report.
The quarterly Project and Expenditure
reports will include financial data,
information on contracts and subawards
over $50,000, types of projects funded,
and other information regarding a
recipient's utilization of the award
funds. The reports will include the same
general data (e.g., on obligations,
expenditures, contracts, grants, and sub -
awards) as those submitted by recipients
of the CRF, with some modifications.
Modifications will include updates to
the expenditure categories and the
addition of data elements related to
specific eligible uses, including some of
the reporting elements described in
sections above. The initial quarterly
Project and Expenditure report will
cover two calendar quarters from the
date of award to September 30, 2021,
and must be submitted to Treasury by
October 31, 2021. The subsequent
quarterly reports will cover one
calendar quarter and must be submitted
to Treasury within 30 days after the end
of each calendar quarter.
Nonentitlement units of local
government will be required to submit
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26815
annual Project and Expenditure reports
until the end of the award period on
December 31, 2026. The initial annual
Project and Expenditure report for
nonentitlement units of local
government will cover activity from the
date of award to September 30, 2021
and must be submitted to Treasury by
October 31, 2021. The subsequent
annual reports must be submitted to
Treasury by October 31 each year.
States, territories, metropolitan cities,
and counties with a population that
exceeds 250,000 residents will also be
required to submit an annual Recovery
Plan Performance report to Treasury.
The Recovery Plan Performance report
will provide the public and Treasury
information on the projects that
recipients are undertaking with program
funding and how they are planning to
ensure project outcomes are achieved in
an effective, efficient, and equitable
manner. Each jurisdiction will have
some flexibility in terms of the form and
content of the Recovery Plan
Performance report, as long as it
includes the minimum information
required by Treasury. The Recovery
Plan Performance report will include
key performance indicators identified
by the recipient and some mandatory
indicators identified by Treasury, as
well as programmatic data in specific
eligible use categories and the specific
reporting requirements described in the
sections above. The initial Recovery
Plan Performance report will cover the
period from the date of award to July 31,
2021 and must be submitted to Treasury
by August 31, 2021. Thereafter,
Recovery Plan Performance reports will
cover a 12 -month period, and recipients
will be required to submit the report to
Treasury within 30 days after the end of
the 12 -month period. The second
Recovery Plan Performance report will
cover the period from July 1, 2021 to
June 30, 2022, and must be submitted to
Treasury by July 31, 2022. Each annual
Recovery Plan Performance report must
be posted on the public -facing website
of the recipient. Local governments with
fewer than 250,000 residents, Tribal
governments, and nonentitlement units
of local government are not required to
develop a Recovery Plan Performance
report.
Treasury will provide additional
guidance and instructions on the
reporting requirements outlined above
for the Fiscal Recovery Funds at a later
date.
IX. Comments and Effective Date
This interim final rule is being issued
without advance notice and public
comment to allow for immediate
implementation of this program. As
discussed below, the requirements of
advance notice and public comment do
not apply "to the extent that there is
involved . . . a matter relating to agency
. . . grants." 181 The interim final rule
implements statutory conditions on the
eligible uses of the Fiscal Recovery
Funds grants, and addresses the
payment of those funds, the reporting
on uses of funds, and potential
consequences of ineligible uses. In
addition and as discussed below, the
Administrative Procedure Act also
provides an exception to ordinary
notice -and -comment procedures "when
the agency for good cause finds (and
incorporates the finding and a brief
statement of reasons therefor in the
rules issued) that notice and public
procedure thereon are impracticable,
unnecessary, or contrary to the public
interest." 182 This good cause
justification also supports waiver of the
60 -day delayed effective date for major
rules under the Congressional Review
Act at 5 U.S.C. 808(2). Although this
interim final rule is effective
immediately, comments are solicited
from interested members of the public
and from recipient governments on all
aspects of the interim final rule.
These comments must be submitted
on or before July 16, 2021.
X. Regulatory Analyses
Executive Orders 12866 and 13563
This interim final rule is
economically significant for the
purposes of Executive Orders 12866 and
13563. Treasury, however, is proceeding
under the emergency provision at
Executive Order 12866 section 6(a)(3)(D)
based on the need to act expeditiously
to mitigate the current economic
conditions arising from the COVID-19
public health emergency. The rule has
been reviewed by the Office of
Management and Budget (OMB) in
accordance with Executive Order 12866.
This rule is necessary to implement the
ARPA in order to provide economic
relief to State, local, and Tribal
governments adversely impacted by the
COVID-19 public health emergency.
Under Executive Order 12866, OMB
must determine whether this regulatory
action is "significant" and, therefore,
subject to the requirements of the
Executive Order and subject to review
by OMB. Section 3(f) of Executive Order
12866 defines a significant regulatory
1815 U.S.C. 553(a)(2).
182 5 U.S.C. 553(b)(3)(B); see also 5 U.S.C.
553(d)(3) (creating an exception to the requirement
of a 30 -day delay before the effective date of a rule
"for good cause found and published with the
rule").
action as an action likely to result in a
rule that may:
(1) Have an annual effect on the
economy of $100 million or more, or
adversely affect a sector of the economy;
productivity; competition; jobs; the
environment; public health or safety; or
State, local, or Tribal governments or
communities in a material way (also
referred to as "economically significant"
regulations);
(2) Create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency;
(3) Materially alter the budgetary
impacts of entitlements, grants, user
fees, or loan programs or the rights and
obligations of recipients thereof; or
(4) Raise novel legal or policy issues
arising out of legal mandates, the
President's priorities, or the principles
stated in the Executive order.
This regulatory action is an
economically significant regulatory
action subject to review by OMB under
section 3(f) of Executive Order 12866.
Treasury has also reviewed these
regulations under Executive Order
13563, which supplements and
explicitly reaffirms the principles,
structures, and definitions governing
regulatory review established in
Executive Order 12866. To the extent
permitted by law, section 1(b) of
Executive Order 13563 requires that an
agency:
(1) Propose or adopt regulations only
upon a reasoned determination that
their benefits justify their costs
(recognizing that some benefits and
costs are difficult to quantify);
(2) Tailor its regulations to impose the
least burden on society, consistent with
obtaining regulatory objectives taking
into account, among other things, and to
the extent practicable, the costs of
cumulative regulations;
(3) Select, in choosing among
alternative regulatory approaches, those
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety,
and other advantages; distributive
impacts; and equity);
(4) To the extent feasible, specify
performance objectives, rather than the
behavior or manner of compliance a
regulated entity must adopt; and
(5) Identify and assess available
alternatives to direct regulation,
including providing economic
incentives —such as user fees or
marketable permits —to encourage the
desired behavior, or providing
information that enables the public to
make choices.
Executive Order 13563 also requires
an agency "to use the best available
26816 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
techniques to quantify anticipated
present and future benefits and costs as
accurately as possible." OMB's Office of
Information and Regulatory Affairs
(OIRA) has emphasized that these
techniques may include "identifying
changing future compliance costs that
might result from technological
innovation or anticipated behavioral
changes."
Treasury has assessed the potential
costs and benefits, both quantitative and
qualitative, of this regulatory action, and
is issuing this interim final rule only on
a reasoned determination that the
benefits exceed the costs. In choosing
among alternative regulatory
approaches, Treasury selected those
approaches that would maximize net
benefits. Based on the analysis that
follows and the reasons stated
elsewhere in this document, Treasury
believes that this interim final rule is
consistent with the principles set forth
in Executive Order 13563.
Treasury also has determined that this
regulatory action does not unduly
interfere with States, territories, Tribal
governments, and localities in the
exercise of their governmental
functions.
This Regulatory Impact Analysis
discusses the need for regulatory action,
the potential benefits, and the potential
costs.
Need for Regulatory Action. This
interim final rule implements the $350
billion Fiscal Recovery Funds of the
ARPA, which Congress passed to help
States, territories, Tribal governments,
and localities respond to the ongoing
COVID-19 public health emergency and
its economic impacts. As the agency
charged with execution of these
programs, Treasury has concluded that
this interim final rule is needed to
ensure that recipients of Fiscal Recovery
Funds fully understand the
requirements and parameters of the
program as set forth in the statute and
deploy funds in a manner that best
reflects Congress' mandate for targeted
fiscal relief.
This interim final rule is primarily a
transfer rule: It transfers $350 billion in
aid from the Federal Government to
states, territories, Tribal governments,
and localities, generating a significant
macroeconomic effect on the U.S.
economy. In making this transfer,
Treasury has sought to implement the
program in ways that maximize its
potential benefits while minimizing its
costs. It has done so by aiming to target
relief in key areas according to the
congressional mandate; offering clarity
to States, territories, Tribal
governments, and localities while
maintaining their flexibility to respond
to local needs; and limiting
administrative burdens.
Analysis of Benefits. Relative to a pre -
statutory baseline, the Fiscal Recovery
Funds provide a combined $350 billion
to State, local, and Tribal governments
for fiscal relief and support for costs
incurred responding to the COVID-19
pandemic. Treasury believes that this
transfer will generate substantial
additional economic activity, although
given the flexibility accorded to
recipients in the use of funds, it is not
possible to precisely estimate the extent
to which this will occur and the timing
with which it will occur. Economic
research has demonstrated that state
fiscal relief is an efficient and effective
way to mitigate declines in jobs and
output during an economic
downturn.183 Absent such fiscal relief,
fiscal austerity among State, local, and
Tribal governments could exert a
prolonged drag on the overall economic
recovery, as occurred following the
2007-09 recession.184
This interim final rule provides
benefits across several areas by
implementing the four eligible funding
uses, as defined in statute:
Strengthening the response to the
COVID-19 public health emergency and
its economic impacts; easing fiscal
pressure on State, local, and Tribal
governments that might otherwise lead
to harmful cutbacks in employment or
government services; providing
premium pay to essential workers; and
making necessary investments in certain
types of infrastructure. In implementing
the ARPA, Treasury also sought to
support disadvantaged communities
that have been disproportionately
impacted by the pandemic. The Fiscal
Recovery Funds as implemented by the
interim final rule can be expected to
channel resources toward these uses in
order to achieve substantial near -term
economic and public health benefits, as
well as longer -term benefits arising from
the allowable investments in water,
sewer, and broadband infrastructure and
aid to families.
1113 Gabriel Chodorow-Reich et al., Does State
Fiscal Relief during Recessions Increase
Employment? Evidence from the American
Recovery and Reinvestment Act, American Econ. J.:
Econ. Policy, 4:3 118-45 (Aug. 2012), available at
https://wsvw.aeaweb.org/articles?id=1O.12571
pol.4.3.118.
184 See, e.g., Fitzpatrick, Haughwout & Setren,
Fiscal Drag from the State and Local Sector?,
Liberty Street Economics Blog, Federal Reserve
Bank of New York (June 27, 2012), https:I/
www.libertystreeteconomics.newyorkfed.orgl2Ol2/
06/fiscal-drag from-the-state-and-local-sector.html;
Jiri Jonas, Great Recession and Fiscal Squeeze at
U.S. Subnational Government Level, IMF Working
Paper 12/184, (July 2012), available at https://
www.imf.org/ext org/external/pubs/ft/wp/2012/
wp12184.pdf; Gordon, supra note 9.
These benefits are achieved in the
interim final rule through a broadly
flexible approach that sets clear
guidelines on eligible uses of Fiscal
Recovery Funds and provides State,
local, and Tribal government officials
discretion within those eligible uses to
direct Fiscal Recovery Funds to areas of
greatest need within their jurisdiction.
While preserving recipients' overall
flexibility, the interim final rule
includes several provisions that
implement statutory requirements and
will help support use of Fiscal Recovery
Funds to achieve the intended benefits.
The remainder of this section clarifies
how Treasury's approach to key
provisions in the interim final rule will
contribute to greater realization of
benefits from the program.
❑ Revenue Loss: Recipients will
compute the extent of reduction in
revenue by comparing actual revenue to
a counterfactual trend representing what
could have plausibly been expected to
occur in the absence of the pandemic.
The counterfactual trend begins with
the last full fiscal year prior to the
public health emergency (as required by
statute) and projects forward with an
annualized growth adjustment.
Treasury's decision to incorporate a
growth adjustment into the calculation
of revenue loss ensures that the formula
more fully captures revenue shortfalls
relative to recipients' pre -pandemic
expectations. Moreover, recipients will
have the opportunity to re -calculate
revenue loss at several points
throughout the program, recognizing
that some recipients may experience
revenue effects with a lag. This option
to re -calculate revenue loss on an
ongoing basis should result in more
support for recipients to avoid harmful
cutbacks in future years. 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.
❑ Premium Pay: Per the statute,
recipients have broad latitude to
designate critical infrastructure sectors
and make grants to third -party
employers for the purpose of providing
premium pay or otherwise respond to
essential workers. While the interim
final rule generally preserves the
flexibility in the statute, it does add a
requirement that recipients give written
justification in the case that premium
pay would increase a worker's annual
pay above a certain threshold. To set
this threshold, Treasury analyzed data
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26817
from the Bureau of Labor Statistics to
determine a level that would not require
further justification for premium pay to
the vast majority of essential workers,
while requiring higher scrutiny for
provision of premium pay to higher -
earners who, even without premium
pay, would likely have greater personal
financial resources to cope with the
effects of the pandemic. Treasury
believes the threshold in the interim
final rule strikes the appropriate balance
between preserving flexibility and
helping encourage use of these
resources to help those in greatest need.
The interim final rule also 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.
❑ Withholding of Payments to
Recipients: Treasury believes that for
the vast majority of recipient entities, it
will be appropriate to receive funds in
two separate payments. As discussed
above, withholding of payments ensures
that recipients can adapt spending plans
to evolving economic conditions and
that at least some of the economic
benefits will be realized in 2022 or later.
However, consistent with authorities
granted to Treasury in the statute,
Treasury recognizes that a subset of
States with significant remaining
elevation in the unemployment rate
could face heightened additional near -
term needs to aid unemployed workers
and stimulate the recovery. Therefore,
for a subset of State governments,
Treasury will not withhold any funds
from the first payment. Treasury
believes that this approach strikes the
appropriate balance between the general
reasons to provide funds in two
payments and the heightened additional
near -term needs in specific States. As
discussed above, Treasury set a
threshold based on historical analysis of
unemployment rates in recessions.
❑ Hiring Public Sector Employees:
The interim final rule states explicitly
that recipients may use funds to restore
their workforces up to pre -pandemic
levels. Treasury believes that this
statement is beneficial because it
eliminates any uncertainty that could
cause delays or otherwise negatively
impact restoring public sector
workforces (which, at time of
publication, remain significantly below
pre -pandemic levels).
Finally, the interim final rule aims to
promote and streamline the provision of
assistance to individuals and
communities in greatest need,
particularly communities that have been
historically disadvantaged and have
experienced disproportionate impacts of
the COVID-19 crisis. Targeting relief is
in line with Executive Order 13985,
"Advancing Racial Equity and Support
for Underserved Communities Through
the Federal Government," which laid
out an Administration -wide priority to
support "equity for all, including people
of color and others who have been
historically underserved, marginalized,
and adversely affected by persistent
poverty and inequality." 185 To this end,
the interim final rule enumerates a list
of services that may be provided using
Fiscal Recovery Funds in low-income
areas to address the disproportionate
impacts of the pandemic in these
communities; establishes the
characteristics of essential workers
eligible for premium pay and
encouragement to serve workers based
on financial need; provides that
recipients may use Fiscal Recovery
Funds to restore (to pre -pandemic
levels) state and local workforces, where
women and people of color are
disproportionately represented; 186 and
targets investments in broadband
infrastructure to unserved and
underserved areas. Collectively, these
provisions will promote use of resources
to facilitate the provision of assistance
to individuals and communities with
the greatest need.
Analysis of Costs. This regulatory
action will generate administrative costs
relative to a pre -statutory baseline. This
includes, chiefly, costs required to
administer Fiscal Recovery Funds,
oversee subrecipients and beneficiaries,
and file periodic reports with Treasury.
It also requires States to allocate Fiscal
Recovery Funds to nonentitlement
units, which are smaller units of local
government that are statutorily required
to receive their funds through States.
Treasury expects that the
administrative burden associated with
this program will be moderate for a
grant program of its size. Treasury
expects that most recipients receive
direct or indirect funding from Federal
Government programs and that many
185 Executive Order on Advancing Racial Equity
and Support for Underserved Communities through
the Federal Government (Jan. 20, 2021) (86 FR 7009,
January 25, 2021), https://www.whitehouse.govl
briefing-room/presidential-actions/2021/01/20!
executive -order -advancing -racial -equity -and -
support -for-underserved-communities-through-the-
federal-government! (last visited May 9, 2021).
186 David Cooper, Mary Gable & Algernon Austin,
Economic Policy Institute Briefing Paper, The
Public -Sector Jobs Crisis: Women and African
Americans hit hardest by job losses in state and
local governments, https://www.epi.org/
publication/bp339-public-sector jobs -crisis (last
visited May 9, 2021).
have familiarity with how to administer
and report on Federal funds or grant
funding provided by other entities. In
particular, States, territories, and large
localities will have received funds from
the CRF and Treasury expects them to
rely heavily on established processes
developed last year or through prior
grant funding, mitigating burden on
these governments.
Treasury expects to provide technical
assistance to defray the costs of
administration of Fiscal Recovery Funds
to further mitigate burden. In making
implementation choices, Treasury has
hosted numerous consultations with a
diverse range of direct recipients —
States, small cities, counties, and Tribal
governments —along with various
communities across the United States,
including those that are underserved.
Treasury lacks data to estimate the
precise extent to which this interim
final rule generates administrative
burden for State, local, and Tribal
governments, but seeks comment to
better estimate and account for these
costs, as well as on ways to lessen
administrative burdens.
Executive Order 13132
Executive Order 13132 (entitled
Federalism) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial, direct compliance costs on
State, local, and Tribal governments,
and is not required by statute, or
preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the
Executive order. This interim final rule
does not have federalism implications
within the meaning of the Executive
order and does not impose substantial,
direct compliance costs on State, local,
and Tribal governments or preempt state
law within the meaning of the Executive
order. The compliance costs are
imposed on State, local, and Tribal
governments by sections 602 and 603 of
the Social Security Act, as enacted by
the ARPA. Notwithstanding the above,
Treasury has engaged in efforts to
consult and work cooperatively with
affected State, local, and Tribal
government officials and associations in
the process of developing the interim
final rule. Pursuant to the requirements
set forth in section 8(a) of Executive
Order 13132, Treasury certifies that it
has complied with the requirements of
Executive Order 13132.
Administrative Procedure Act
The Administrative Procedure Act
(APA), 5 U.S.C. 551 et seq., generally
requires public notice and an
opportunity for comment before a rule
26818 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
becomes effective. However, the APA
provides that the requirements of 5
U.S.C. 553 do not apply "to the extent
that there is involved . . . a matter
relating to agency . . . grants." The
interim final rule implements statutory
conditions on the eligible uses of the
Fiscal Recovery Funds grants, and
addresses the payment of those funds,
the reporting on uses of funds, and
potential consequences of ineligible
uses. The rule is thus "both clearly and
directly related to a federal grant
program." National Wildlife Federation
v. Snow, 561 F.2d 227, 232 (D.C. Cir.
1976). The rule sets forth the "process
necessary to maintain state . . .
eligibility for federal funds," id., as well
as the "method[s] by which states can
qualify for federal aid," and other
"integral part[s] of the grant program,"
Center for Auto Safetyv. Ti emann, 414
F. Supp. 215, 222 (D.D.C. 1976). As a
result, the requirements of 5 U.S.C. 553
do not apply.
The APA also provides an exception
to ordinary notice -and -comment
procedures "when the agency for good
cause finds (and incorporates the
finding and a brief statement of reasons
therefor in the rules issued) that notice
and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest." 5 U.S.C.
553(b)(3)(B); see also 5 U.S.C. 553(d)(3)
(creating an exception to the
requirement of a 30 -day delay before the
effective date of a rule "for good cause
found and published with the rule").
Assuming 5 U.S.C. 553 applied,
Treasury would still have good cause
under sections 553(b)(3)(B) and
553(d)(3) for not undertaking section
553's requirements. The ARPA is a law
responding to a historic economic and
public health emergency; it is
"extraordinary" legislation about which
"both Congress and the President
articulated a profound sense of
`urgency." Petryv. Block, 737 F.2d
1193, 1200 (D.C. Cir. 1984). Indeed,
several provisions implemented by this
interim final rule (sections 602(c)(1)(A)
and 603(c)(1)(A)) explicitly provide
funds to "respond to the public health
emergency," and the urgency is further
exemplified by congress's command (in
sections 602(b)(6)(B) and 603(b)(7)(A))
that, "[t]o the extent practicable," funds
must be provided to Tribes and cities
"not later than 60 days after the date of
enactment." See Philadelphia Citizens
in Action v. Schweiker, 669 F.2d 877,
884 (3d Cir. 1982) (finding good cause
under circumstances, including
statutory time limits, where APA
procedures would have been "virtually
impossible"). Finally, there is an urgent
need for States to undertake the
planning necessary for sound fiscal
policymaking, which requires an
understanding of how funds provided
under the ARPA will augment and
interact with existing budgetary
resources and tax policies. Treasury
understands that many states require
immediate rules on which they can rely,
especially in light of the fact that the
ARPA "covered period" began on
March 3, 2021. The statutory urgency
and practical necessity are good cause to
forego the ordinary requirements of
notice -and -comment rulemaking.
Congressional Review Act
The Administrator of OIRA has
determined that this is a major rule for
purposes of Subtitle E of the Small
Business Regulatory Enforcement and
Fairness Act of 1996 (also known as the
Congressional Review Act or CRA) (5
U.S.C. 804(2) et seq.). Under the CRA,
a major rule takes effect 60 days after
the rule is published in the Federal
Register. 5 U.S.C. 801(a)(3).
Notwithstanding this requirement, the
CRA allows agencies to dispense with
the requirements of section 801 when
the agency for good cause finds that
such procedure would be impracticable,
unnecessary, or contrary to the public
interest and the rule shall take effect at
such time as the agency promulgating
the rule determines. 5 U.S.C. 808(2).
Pursuant to section 808(2), for the
reasons discussed above, Treasury for
good cause finds that a 60 -day delay to
provide public notice is impracticable
and contrary to the public interest.
Paperwork Reduction Act
The information collections
associated with State, territory, local,
and Tribal government applications
materials necessary to receive Fiscal
Recovery Funds (e.g., payment
information collection and acceptance
of award terms) have been reviewed and
approved by OMB pursuant to the
Paperwork Reduction Act (44 U.S.C.
chapter 35) (PRA) emergency processing
procedures and assigned control
number 1505-0271. The information
collections related to ongoing reporting
requirements, as discussed in this
interim final rule, will be submitted to
OMB for emergency processing in the
near future. Under the PRA, an agency
may not conduct or sponsor and a
respondent is not required to respond
to, an information collection unless it
displays a valid OMB control number.
Estimates of hourly burden under this
program are set forth in the table below.
Burden estimates below are preliminary.
Reporting
Number of
respondents
(estimated)
Number of
responses per
respondent
Total responses
Hours per
response
Total burden
in hours
Cost to respondent
($48.80 per hour*)
Recipient Payment Form .....................
5,050
1 .....................
5,050
.25 (15 minutes) ...
1,262.5
$61,610
Acceptance of Award Terms ...............
5,050
1 .....................
5,050
.25 (15 minutes) ...
1,262.5
61,610
Title VI Assurances .............................
5,050
1 .....................
5,050
.50 (30 minutes) ...
2,525
123,220
Quarterly Project and Expenditure Re-
5,050
4*** .................
20,200
25 .........................
505,000
24,644,000
port.
Annual Project and Expenditure Re-
TBD
1 per year .......
t 20,000-40,000
15 .........................
300,000-600,000
14,640,000-29,280,000
port from NEUs.
Annual Recovery Plan Performance
418
1 per year .......
418
100 .......................
41,800
2,039,840
report.
(**)
N/A .................
55,768-75,768
141 .......................
851,850-1,151,850
41,570,280-56,210,280
Total ..............................................
*Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants and Auditors, on the internet at https://www.bls.gov/ooh/busi-
ness-and-financial/accountants-and-auditors.htm (visited March 28, 2020). Base wage of $33.89/hour increased by 44 percent to account for fully loaded employer
cost of employee compensation (benefits, etc.) for a fully loaded wage rate of $48.80.
**5,050—TBD.
***Per year after first year.
t (Estimate only).
Periodic reporting is required by As discussed in Section VIII of this and thereafter quarterly Project and
section 602(c) of Section VI of the Social SUPPLEMENTARY INFORMATION, recipients Expenditure reports until the end of the
Security Act and under the interim final of Fiscal Recovery Funds will be award period. Recipients must submit
rule. required to submit one interim report interim reports to Treasury by August
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26819
31, 2021. The quarterly Project and
Expenditure reports will include
financial data, information on contracts
and subawards over $50,000, types of
projects funded, and other information
regarding a recipient's utilization of the
award funds.
Nonentitlement unit recipients will be
required to submit annual Project and
Expenditure reports until the end of the
award period. The initial annual Project
and Expenditure report for
Nonentitlement unit recipients must be
submitted to Treasury by October 31,
2021. The subsequent annual reports
must be submitted to Treasury by
October 31 each year. States, territories,
metropolitan cities, and counties with a
population that exceeds 250,000
residents will also be required to submit
an annual Recovery Plan Performance
report to Treasury. The Recovery Plan
Performance report will include
descriptions of the projects funded and
information on the performance
indicators and objectives of the award.
Each annual Recovery Plan Performance
report must be posted on the public -
facing website of the recipient. Treasury
will provide additional guidance and
instructions on the all the reporting
requirements outlined above for the
Fiscal Recovery Funds program at a
later date.
These and related periodic reporting
requirements are under consideration
and will be submitted to OMB for
approval under the PRA emergency
provisions in the near future.
Treasury invites comments on all
aspects of the reporting and
recordkeeping requirements including:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information has practical utility; (b) the
accuracy of the estimate of the burden
of the collection of information; (c) ways
to enhance the quality, utility, and
clarity of the information to be
collected; (d) ways to minimize the
burden of the collection of information;
and (e) estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information. Comments
should be sent by the comment deadline
to the www.regulations.gov docket with
a copy to the Office of Information and
Regulatory Affairs, U.S. Office of
Management and Budget, 725 17th
Street NW, Washington, DC 20503; or
email to oira_submission@omb.eop.gov.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed rule, or a final rule
pursuant to section 553(b) of the
Administrative Procedure Act or
another law, the agency must prepare a
regulatory flexibility analysis that meets
the requirements of the RFA and
publish such analysis in the Federal
Register. 5 U.S.C. 603, 604.
Rules that are exempt from notice and
comment under the APA are also
exempt from the RFA requirements,
including the requirement to conduct a
regulatory flexibility analysis, when
among other things the agency for good
cause finds that notice and public
procedure are impracticable,
unnecessary, or contrary to the public
interest. Since this rule is exempt from
the notice and comment requirements of
the APA, Treasury is not required to
conduct a regulatory flexibility analysis.
List of Subjects in 31 CFR Part 35
Executive compensation, Public
health emergency, State and local
governments, Tribal governments.
For the reasons stated in the
preamble, the Department of the
Treasury amends 31 CFR part 35 as
follows:
PART 35 —PANDEMIC RELIEF
PROGRAMS
1. The authority citation for part 35 is
revised to read as follows:
Authority: 42 U.S.C. 802(f); 42 U.S.C.
803(f); 31 U.S.C. 321; Division N, Title V,
Subtitle B, Pub. L. 116-260, 134 Stat. 1182;
Section 104A, Pub. L. 103-325, 108 Stat.
2160, as amended (12 U.S.C. 4701 et seq.);
Pub. L. 117-2, 135 Stat. 4 (42 U.S.C. 802 et
seq.).
2. Revise the part heading to read as
set forth above.
3. Add subpart A to read as follows:
Subpart A—Coronavirus State and
Local Fiscal Recovery Funds
Sec.
35.1 Purpose.
35.2 Applicability.
35.3 Definitions.
35.4 Reservation of authority, reporting.
35.5 Use of funds.
35.6 Eligible uses.
35.7 Pensions.
35.8 Tax.
35.9 Compliance with applicable laws.
35.10 Recoupment.
35.11 Payments to States.
35.12 Distributions to nonentitlement units
of local government and units of general
local government.
§35.1 Purpose.
This subpart implements section 9901
of the American Rescue Plan Act
(Subtitle M of Title IX of Pub. L.
117-2), which amends Title VI of the
Social Security Act (42 U.S.C. 801 et
seq.) by adding sections 602 and 603 to
establish the Coronavirus State Fiscal
Recovery Fund and Coronavirus Local
Fiscal Recovery Fund.
§35.2 Applicability.
This subpart applies to States,
territories, Tribal governments,
metropolitan cities, nonentitlement
units of local government, counties, and
units of general local government that
accept a payment or transfer of funds
made under section 602 or 603 of the
Social Security Act.
§35.3 Definitions.
As used in this subpart:
Baseline means tax revenue of the
recipient for its fiscal year ending in
2019, adjusted for inflation in each
reporting year using the Bureau of
Economic Analysis's Implicit Price
Deflator for the gross domestic product
of the United States.
County means a county, parish, or
other equivalent county division (as
defined by the Census Bureau).
Covered benefits include, but are not
limited to, the costs of all types of leave
(vacation, family -related, sick, military,
bereavement, sabbatical, jury duty),
employee insurance (health, life, dental,
vision), retirement (pensions, 401(k)),
unemployment benefit plans (Federal
and State), workers' compensation
insurance, and Federal Insurance
Contributions Act taxes (which includes
Social Security and Medicare taxes).
Covered change means a change in
law, regulation, or administrative
interpretation. A change in law includes
any final legislative or regulatory action,
a new or changed administrative
interpretation, and the phase -in or
taking effect of any statute or rule if the
phase -in or taking effect was not
prescribed prior to the start of the
covered period.
Covered period means, with respect to
a State, Territory, or Tribal government,
the period that:
(1) Begins on March 3, 2021; and
(2) Ends on the last day of the fiscal
year of such State, Territory, or Tribal
government in which all funds received
by the State, Territory, or Tribal
government from a payment made
under section 602 or 603 of the Social
Security Act have been expended or
returned to, or recovered by, the
Secretary.
COVID-19 means the Coronavirus
Disease 2019.
COVID-19 public health emergency
means the period beginning on January
27, 2020 and until the termination of the
national emergency concerning the
COVID-19 outbreak declared pursuant
to the National Emergencies Act (50
U.S.C. 1601 et seq.).
26820 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Deposit means an extraordinary
payment of an accrued, unfunded
liability. The term deposit does not refer
to routine contributions made by an
employer to pension funds as part of the
employer's obligations related to
payroll, such as either a pension
contribution consisting of a normal cost
component related to current employees
or a component addressing the
amortization of unfunded liabilities
calculated by reference to the
employer's payroll costs.
Eligible employer means an employer
of an eligible worker who performs
essential work.
Eligible workers means workers
needed to maintain continuity of
operations of essential critical
infrastructure sectors, including health
care; emergency response; sanitation,
disinfection, and cleaning work;
maintenance work; grocery stores,
restaurants, food production, and food
delivery; pharmacy; biomedical
research; behavioral health work;
medical testing and diagnostics; home -
and community -based health care or
assistance with activities of daily living;
family or child care; social services
work; public health work; vital services
to Tribes; any work performed by an
employee of a State, local, or Tribal
government; educational work, school
nutrition work, and other work required
to operate a school facility; laundry
work; elections work; solid waste or
hazardous materials management,
response, and cleanup work; work
requiring physical interaction with
patients; dental care work;
transportation and warehousing; work at
hotel and commercial lodging facilities
that are used for COVID-19 mitigation
and containment; work in a mortuary;
work in critical clinical research,
development, and testing necessary for
COVID-19 response.
(1) With respect to a recipient that is
a metropolitan city, nonentitlement unit
of local government, or county, workers
in any additional sectors as each chief
executive officer of such recipient may
designate as critical to protect the health
and well-being of the residents of their
metropolitan city, nonentitlement unit
of local government, or county; or
(2) With respect to a State, Territory,
or Tribal government, workers in any
additional sectors as each Governor of a
State or Territory, or each Tribal
government, may designate as critical to
protect the health and well-being of the
residents of their State, Territory, or
Tribal government.
Essential work means work that:
(1) Is not performed while
teleworking from a residence; and
(2) Involves:
(i) Regular in -person interactions with
patients, the public, or coworkers of the
individual that is performing the work;
or
(ii) Regular physical handling of items
that were handled by, or are to be
handled by patients, the public, or
coworkers of the individual that is
performing the work.
Funds means, with respect to a
recipient, amounts provided to the
recipient pursuant to a payment made
under section 602(b) or 603(b) of the
Social Security Act or transferred to the
recipient pursuant to section 603(c)(4)
of the Social Security Act.
General revenue means money that is
received from tax revenue, current
charges, and miscellaneous general
revenue, excluding refunds and other
correcting transactions, proceeds from
issuance of debt or the sale of
investments, agency or private trust
transactions, and intergovernmental
transfers from the Federal Government,
including transfers made pursuant to
section 9901 of the American Rescue
Plan Act. General revenue does not
include revenues from utilities. Revenue
from Tribal business enterprises must be
included in general revenue.
Intergovernmental transfers means
money received from other
governments, including grants and
shared taxes.
Metropolitan city has the meaning
given that term in section 102(a)(4) of
the Housing and Community
Development Act of 1974 (42 U.S.C.
5302(a)(4)) and includes cities that
relinquish or defer their status as a
metropolitan city for purposes of
receiving allocations under section 106
of such Act (42 U.S.C. 5306) for fiscal
year2021.
Net reduction in total spending is
measured as the State or Territory's total
spending for a given reporting year
excluding its spending of funds,
subtracted from its total spending for its
fiscal year ending in 2019, adjusted for
inflation using the Bureau of Economic
Analysis's Implicit Price Deflator for the
gross domestic product of the United
States.
Nonentitlement unit of local
government means a "city," as that term
is defined in section 102(a)(5) of the
Housing and Community Development
Act of 1974 (42 U.S.C. 5302(a)(5)), that
is not a metropolitan city.
Nonprofit means a nonprofit
organization that is exempt from Federal
income taxation and that is described in
section 501(c)(3) of the Internal Revenue
Code.
Obligation means an order placed for
property and services and entering into
contracts, subawards, and similar
transactions that require payment.
Pension fund means a defined benefit
plan and does not include a defined
contribution plan.
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. Premium pay will be
considered to be in addition to wages or
remuneration the eligible worker
otherwise receives if, as measured on an
hourly rate, the premium pay is:
(1) With regard to work that the
eligible worker previously performed,
pay and remuneration equal to the sum
of all wages and remuneration
previously received plus up to $13 per
hour with no reduction, substitution,
offset, or other diminishment of the
eligible worker's previous, current, or
prospective wages or remuneration; or
(2) With regard to work that the
eligible worker continues to perform,
pay of up to $13 that is in addition to
the eligible worker's regular rate of
wages or remuneration, with no
reduction, substitution, offset, or other
diminishment of the workers' current
and prospective wages or remuneration.
Qualified census tract has the same
meaning given in 26 U.S.C.
42(d)(5)(B)(ii)(I).
Recipient means a State, Territory,
Tribal government, metropolitan city,
nonentitlement unit of local
government, county, or unit of general
local government that receives a
payment made under section 602(b) or
603(b) of the Social Security Act or
transfer pursuant to section 603(c)(4) of
the Social Security Act.
Reporting year means a single year or
partial year within the covered period,
aligned to the current fiscal year of the
State or Territory during the covered
period.
Secretary means the Secretary of the
Treasury.
State means each of the 50 States and
the District of Columbia.
Small business means a business
concern or other organization that:
(1) Has no more than 500 employees,
or if applicable, the size standard in
number of employees established by the
Administrator of the Small Business
Administration for the industry in
which the business concern or
organization operates; and
(2) Is a small business concern as
defined in section 3 of the Small
Business Act (15 U.S.C. 632).
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26821
Tax revenue means revenue received
from a compulsory contribution that is
exacted by a government for public
purposes excluding refunds and
corrections and, for purposes of § 35.8,
intergovernmental transfers. Tax
revenue does not include payments for
a special privilege granted or service
rendered, employee or employer
assessments and contributions to
finance retirement and social insurance
trust systems, or special assessments to
pay for capital improvements.
Territory means the Commonwealth
of Puerto Rico, the United States Virgin
Islands, Guam, the Commonwealth of
the Northern Mariana Islands, or
American Samoa.
Tribal enterprise means a business
concern:
(1) That is wholly owned by one or
more Tribal governments, or by a
corporation that is wholly owned by one
or more Tribal governments; or
(2) That is owned in part by one or
more Tribal governments, or by a
corporation that is wholly owned by one
or more Tribal governments, if all other
owners are either United States citizens
or small business concerns, as these
terms are used and consistent with the
definitions in 15 U.S.C. 657a(b)(2)(D).
Tribal government means the
recognized governing body of any
Indian or Alaska Native tribe, band,
nation, pueblo, village, community,
component band, or component
reservation, individually identified
(including parenthetically) in the list
published by the Bureau of Indian
Affairs on January 29, 2021, pursuant to
section 104 of the Federally Recognized
Indian Tribe List Act of 1994 (25 U.S.C.
5131).
Unemployment rate means the U-3
unemployment rate provided by the
Bureau of Labor Statistics as part of the
Local Area Unemployment Statistics
program, measured as total
unemployment as a percentage of the
civilian labor force.
Unemployment trust fund means an
unemployment trust fund established
under section 904 of the Social Security
Act (42 U.S.C. 1104).
Unit of general local government has
the meaning given to that term in
section 102(a)(1) of the Housing and
Community Development Act of 1974
(42 U.S.C. 5302(a)(1)).
Unserved and underserved
households or businesses means one or
more households or businesses that are
not currently served by a wireline
connection that reliably delivers at least
25 Mbps download speed and 3 Mbps
of upload speed.
§35.4 Reservation of authority, reporting.
(a) Reservation of authority. Nothing
in this subpart shall limit the authority
of the Secretary to take action to enforce
conditions or violations of law,
including actions necessary to prevent
evasions of this subpart.
(b) Extensions or accelerations of
timing. The Secretary may extend or
accelerate any deadline or compliance
date of this subpart, including reporting
requirements that implement this
subpart, if the Secretary determines that
such extension or acceleration is
appropriate. In determining whether an
extension or acceleration is appropriate,
the Secretary will consider the period of
time that would be extended or
accelerated and how the modified
timeline would facilitate compliance
with this subpart.
(c) Reporting and requests for other
information. During the covered period,
recipients shall provide to the Secretary
periodic reports providing detailed
accounting of the uses of funds, all
modifications to a State or Territory's
tax revenue sources, and such other
information as the Secretary may
require for the administration of this
section. In addition to regular reporting
requirements, the Secretary may request
other additional information as may be
necessary or appropriate, including as
may be necessary to prevent evasions of
the requirements of this subpart. False
statements or claims made to the
Secretary may result in criminal, civil,
or administrative sanctions, including
fines, imprisonment, civil damages and
penalties, debarment from participating
in Federal awards or contracts, and/or
any other remedy available by law.
§35.5 Use of funds.
(a) 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, subject to the restrictions set
forth in sections 602(c)(2) and 603(c)(2)
of the Social Security Act, as applicable.
(b) 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.
(c) 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.
§35.6 Eligible uses.
(a) In general. Subject to §§ 35.7 and
35.8, a recipient may use funds for one
or more of the purposes described in
paragraphs (b) through (e) of this section
(b) Responding to the public health
emergency or its negative economic
impacts. A recipient may use funds to
respond to the public health emergency
or its negative economic impacts,
including for one or more of the
following purposes:
(1) COVID-19 response and
prevention. Expenditures for the
mitigation and prevention of COVID-19,
including:
(i) Expenses related to COVID-19
vaccination programs and sites,
including staffing, acquisition of
equipment or supplies, facilities costs,
and information technology or other
administrative expenses;
(ii) COVID-19-related expenses of
public hospitals, clinics, and similar
facilities;
(iii) COVID-19 related expenses in
congregate living facilities, including
skilled nursing facilities, long-term care
facilities, incarceration settings,
homeless shelters, residential foster care
facilities, residential behavioral health
treatment, and other group living
facilities;
(iv) Expenses of establishing
temporary public medical facilities and
other measures to increase COVID-19
treatment capacity, including related
construction costs and other capital
investments in public facilities to meet
COVID-19-related operational needs;
(v) Expenses of establishing
temporary public medical facilities and
other measures to increase COVID-19
treatment capacity, including related
construction costs and other capital
investments in public facilities to meet
COVID-19-related operational needs;
(vi) Costs of providing COVID-19
testing and monitoring, contact tracing,
and monitoring of case trends and
genomic sequencing for variants;
(vii) Emergency medical response
expenses, including emergency medical
transportation, related to COVID-19;
(viii) Expenses for establishing and
operating public telemedicine
capabilities for COVID-19-related
treatment;
(ix) Expenses for communication
related to COVID-19 vaccination
programs and communication or
enforcement by recipients of public
health orders related to COVID-19;
(x) Expenses for acquisition and
distribution of medical and protective
supplies, including sanitizing products
and personal protective equipment;
(xi) Expenses for disinfection of
public areas and other facilities in
26822 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
response to the COVID-19 public health
emergency;
(xii) Expenses for technical assistance
to local authorities or other entities on
mitigation of COVID-19-related threats
to public health and safety;
(xiii) Expenses for quarantining or
isolation of individuals;
(xiv) Expenses of providing paid sick
and paid family and medical leave to
public employees to enable compliance
with COVID-19 public health
precautions;
(xv) Expenses for treatment of the
long-term symptoms or effects of
COVID-19, including post -intensive
care syndrome;
(xvi) Expenses for the improvement of
ventilation systems in congregate
settings, public health facilities, or other
public facilities;
(xvii) Expenses related to establishing
or enhancing public health data
systems; and
(xviii) Mental health treatment,
substance misuse treatment, and other
behavioral health services.
(2) Public health and safety staff.
Payroll and covered benefit expenses for
public safety, public health, health care,
human services, and similar employees
to the extent that the employee's time is
spent mitigating or responding to the
COVID-19 public health emergency.
(3) Hiring State and local government
staff. Payroll, covered benefit, and other
costs associated with the recipient
increasing the number of its employees
up to the number of employees that it
employed on January 27, 2020.
(4) Assistance to unemployed
workers. Assistance, including job
training, for individuals who want and
are available for work, including those
who have looked for work sometime in
the past 12 months or who are
employed part time but who want and
are available for full-time work.
(5) Contributions to State
unemployment insurance trust funds.
Contributions to an unemployment trust
fund up to the level required to restore
the unemployment trust fund to its
balance on January 27, 2020 or to pay
back advances received under Title XII
of the Social Security Act (42 U.S.C.
1321) for the payment of benefits
between January 27, 2020 and May 17,
2021.
(6) Small businesses. Assistance to
small businesses, including loans,
grants, in -kind assistance, technical
assistance or other services, that
responds to the negative economic
impacts of the COVID-19 public health
emergency.
(7) Nonprofits. Assistance to nonprofit
organizations, including loans, grants,
in -kind assistance, technical assistance
or other services, that responds to the
negative economic impacts of the
COVID-19 public health emergency.
(8) Assistance to households.
Assistance programs, including cash
assistance programs, that respond to the
COVID-19 public health emergency.
(9) Aid to impacted industries. Aid to
tourism, travel, hospitality, and other
impacted industries that responds to the
negative economic impacts of the
COVID-19 public health emergency.
(10) Expenses to improve efficacy of
public health or economic relief
programs. Administrative costs
associated with the recipient's COVID-
19 public health emergency assistance
programs, including services responding
to the COVID-19 public health
emergency or its negative economic
impacts, that are not federally funded.
(11) Survivor's benefits. Benefits for
the surviving family members of
individuals who have died from
COVID-19, including cash assistance to
widows, widowers, or dependents of
individuals who died of COVID-19.
(12) Disproportionately impacted
populations and communities. A
program, service, or other assistance
that is provided in a qualified census
tract, that is provided to households and
populations living in a qualified census
tract, that is provided by a Tribal
government, or that is provided to other
households, businesses, or populations
disproportionately impacted by the
COVID-19 public health emergency,
such as:
(i) Programs or services that facilitate
access to health and social services,
including:
(A) Assistance accessing or applying
for public benefits or services;
(B) Remediation of lead paint or other
lead hazards; and
(C) Community violence intervention
programs;
(ii) Programs or services that address
housing insecurity, lack of affordable
housing, or homelessness, including:
(A) Supportive housing or other
programs or services to improve access
to stable, affordable housing among
individuals who are homeless;
(B) Development of affordable
housing to increase supply of affordable
and high -quality living units; and
(C) Housing vouchers and assistance
relocating to neighborhoods with higher
levels of economic opportunity and to
reduce concentrated areas of low
economic opportunity;
(iii) Programs or services that address
or mitigate the impacts of the COVID-
19 public health emergency on
education, including:
(A) New or expanded early learning
services;
(B) Assistance to high -poverty school
districts to advance equitable funding
across districts and geographies; and
(C) Educational and evidence -based
services to address the academic, social,
emotional, and mental health needs of
students; and
(iv) Programs or services that address
or mitigate the impacts of the COVID-
19 public health emergency on
childhood health or welfare, including:
(A) New or expanded childcare;
(B) Programs to provide home visits
by health professionals, parent
educators, and social service
professionals to individuals with young
children to provide education and
assistance for economic support, health
needs, or child development; and
(C) Services for child welfare -
involved families and foster youth to
provide support and education on child
development, positive parenting, coping
skills, or recovery for mental health and
substance use.
(c) Providing premium pay to eligible
workers. A recipient may use funds to
provide premium pay to eligible
workers of the recipient who perform
essential work or to provide grants to
eligible employers, provided that any
premium pay or grants provided under
this paragraph (c) must respond to
eligible workers performing essential
work during the COVID-19 public
health emergency. A recipient uses
premium pay or grants provided under
this paragraph (c) to respond to eligible
workers performing essential work
during the COVID-19 public health
emergency if it prioritizes low- and
moderate -income persons. The recipient
must provide, whether for themselves or
on behalf of a grantee, a written
justification to the Secretary of how the
premium pay or grant provided under
this paragraph (c) responds to eligible
workers performing essential work if the
premium pay or grant would increase an
eligible worker's total wages and
remuneration above 150 percent of such
eligible worker's residing State's average
annual wage for all occupations or their
residing county's average annual wage,
whichever is higher.
(d) Providing government services. For
the provision of government services to
the extent of a reduction in the
recipient's general revenue, calculated
according to paragraphs (d)(1) and (2) of
this section.
(1) Frequency. A recipient must
calculate the reduction in its general
revenue using information as -of
December 31, 2020, December 31, 2021,
December 31, 2022, and December 31,
2023 (each, a calculation date) and
following each calculation date.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26823
(2) Calculation. A reduction in a
recipient's general revenue equals:
Max {[Base Year Revenue * (1 + Growth Adjustment)(12)] — Actual General Revenuer; 0}
Where:
Base Year Revenue is the recipient's general
revenue for the most recent full fiscal
year prior to the COVD-19 public health
emergency;
Growth Adjustment is equal to the greater of
4.1 percent (or 0.041) and the recipient's
average annual revenue growth over the
three full fiscal years prior to the
COVID-19 public health emergency.
n equals the number of months elapsed from
the end of the base year to the
calculation date.
Actual General Revenue is a recipient's
actual general revenue collected during
12 -month period ending on each
calculation date;
Subscript t denotes the specific calculation
date.
(e) To make necessary investments in
infrastructure. A recipient may use
funds to make investments in:
(1) Clean Water State Revolving Fund
and Drinking Water State Revolving
Fund investments. Projects or activities
of the type that would be eligible under
section 603(c) of the Federal Water
Pollution Control Act (33 U.S.C.
1383(c)) or section 1452 of the Safe
Drinking Water Act (42 U.S.C. 300j-12);
or,
(2) Broadband. Broadband
infrastructure that is designed to
provide service to unserved or
underserved households and businesses
and that is designed to, upon
completion:
(i) Reliably meet or exceed
symmetrical 100 Mbps download speed
and upload speeds; or
(ii) In cases where it is not
practicable, because of the excessive
cost of the project or geography or
topography of the area to be served by
the project, to provide service meeting
the standards set forth in paragraph
(e)(2)(i) of this section:
(A) Reliably meet or exceed 100 Mbps
download speed and between at least 20
Mbps and 100 Mbps upload speed; and
(B) Be scalable to a minimum of 100
Mbps download speed and 100 Mbps
upload speed.
§ 35.7 Pensions.
A recipient may not use funds for
deposit into any pension fund.
§ 35.8 Tax.
(a) Restriction. A State or Territory
shall not use funds to either directly or
indirectly offset a reduction in the net
tax revenue of the State or Territory
resulting from a covered change during
the covered period.
(b) Violation. Treasury will consider a
State or Territory to have used funds to
offset a reduction in net tax revenue if,
during a reporting year:
(1) Covered change. The State or
Territory has made a covered change
that, either based on a reasonable
statistical methodology to isolate the
impact of the covered change in actual
revenue or based on projections that use
reasonable assumptions and do not
incorporate the effects of
macroeconomic growth to reduce or
increase the projected impact of the
covered change, the State or Territory
assesses has had or predicts to have the
effect of reducing tax revenue relative to
current law;
(2) Exceeds the de minimis threshold.
The aggregate amount of the measured
or predicted reductions in tax revenue
caused by covered changes identified
under paragraph (b)(1) of this section, in
the aggregate, exceeds 1 percent of the
State's or Territory's baseline;
(3) Reduction in net tax revenue. The
State or Territory reports a reduction in
net tax revenue, measured as the
difference between actual tax revenue
and the State's or Territory's baseline,
each measured as of the end of the
reporting year; and
(4) Consideration of other changes.
The aggregate amount of measured or
predicted reductions in tax revenue
caused by covered changes is greater
than the sum of the following, in each
case, as calculated for the reporting
year:
(i) The aggregate amount of the
expected increases in tax revenue
caused by one or more covered changes
that, either based on a reasonable
statistical methodology to isolate the
impact of the covered change in actual
revenue or based on projections that use
reasonable assumptions and do not
incorporate the effects of
macroeconomic growth to reduce or
increase the projected impact of the
covered change, the State or Territory
assesses has had or predicts to have the
effect of increasing tax revenue; and
(ii) Reductions in spending, up to the
amount of the State's or Territory's net
reduction in total spending, that are in:
(A) Departments, agencies, or
authorities in which the State or
Territory is not using funds; and
(B) Departments, agencies, or
authorities in which the State or
Territory is using funds, in an amount
equal to the value of the spending cuts
in those departments, agencies, or
authorities, minus funds used.
(c) Amount and revenue reduction
cap. If a State or Territory is considered
to be in violation pursuant to paragraph
(b) of this section, the amount used in
violation of paragraph (a) of this section
is equal to the lesser of:
(1) The reduction in net tax revenue
of the State or Territory for the reporting
year, measured as the difference
between the State's or Territory's
baseline and its actual tax revenue, each
measured as of the end of the reporting
year; and,
(2) The aggregate amount of the
reductions in tax revenues caused by
covered changes identified in paragraph
(b)(1) of this section, minus the sum of
the amounts in identified in paragraphs
(b)(4)(i) and (ii).
§ 35.9 Compliance with applicable laws.
A recipient must comply with all
other applicable Federal statutes,
regulations, and Executive orders, and a
recipient shall provide for compliance
with the American Rescue Plan Act, this
subpart, and any interpretive guidance
by other parties in any agreements it
enters into with other parties relating to
these funds.
§ 35.10 Recoupment.
(a) Identification of violations —(1) In
general. Any amount used in violation
of § 35.5, § 35.6, or § 35.7 may be
identified at any time prior to December
31, 2026.
(2) Annual reporting of amounts of
violations. On an annual basis, a
recipient that is a State or Territory
must calculate and report any amounts
used in violation of § 35.8.
(b) Calculation of amounts subject to
recoupment—(1) In general. Except as
provided in paragraph (b)(2) of this
section, Treasury will calculate any
amounts subject to recoupment
resulting from a violation of § 35.5,
§ 35.6, or § 35.7 as the amounts used in
violation of such restrictions.
(2) Violations of § 35.8. Treasury will
calculate any amounts subject to
recoupment resulting from a violation of
§ 35.8, equal to the lesser of:
(i) The amount set forth in § 35.8(c);
and,
26824 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
(ii) The amount of funds received by
such recipient.
(c) Notice. If Treasury calculates an
amount subject to recoupment under
paragraph (b) of this section, Treasury
will provide the recipient a written
notice of the amount subject to
recoupment along with an explanation
of such amounts.
(d) Request for reconsideration.
Unless Treasury extends the time
period, within 60 calendar days of
receipt of a notice of recoupment
provided under paragraph (c) of this
section, a recipient may submit a
written request to Treasury requesting
reconsideration of any amounts subject
to recoupment under paragraph (b) of
this section. To request reconsideration
of any amounts subject to recoupment,
a recipient must submit to Treasury a
written request that includes:
(1) An explanation of why the
recipient believes all or some of the
amount should not be subject to
recoupment; and
(2) A discussion of supporting
reasons, along with any additional
information.
(e) Final amount subject to
recoupment. Unless Treasury extends
the time period, within 60 calendar days
of receipt of the recipient's request for
reconsideration provided pursuant to
paragraph (d) of this section, the
recipient will be notified of the
Secretary's decision to affirm, withdraw,
or modify the notice of recoupment.
Such notification will include an
explanation of the decision, including
responses to the recipient's supporting
reasons and consideration of additional
information provided.
(f) Repayment of funds. Unless
Treasury extends the time period, a
recipient shall repay to the Secretary
any amounts subject to recoupment in
accordance with instructions provided
by Treasury:
(1) Within 120 calendar days of
receipt of the notice of recoupment
provided under paragraph (c) of this
section, in the case of a recipient that
does not submit a request for
reconsideration in accordance with the
requirements of paragraph (d) of this
section; or
(2) Within 120 calendar days of
receipt of the Secretary's decision under
paragraph (e) of this section, in the case
of a recipient that submits a request for
reconsideration in accordance with the
requirements of paragraph (d) of this
section.
§ 35.11 Payments to States.
(a) In general. With respect to any
State or Territory that has an
unemployment rate as of the date that
it submits an initial certification for
payment of funds pursuant to section
602(d)(1) of the Social Security Act that
is less than two percentage points above
its unemployment rate in February
2020, the Secretary will withhold 50
percent of the amount of funds allocated
under section 602(b) of the Social
Security Act to such State or territory
until the date that is twelve months
from the date such initial certification is
provided to the Secretary.
(b) Payment of withheld amount. In
order to receive the amount withheld
under paragraph (a) of this section, the
State or Territory must submit to the
Secretary at least 30 days prior to the
date referenced in paragraph (a) the
following information:
(1) A certification, in the form
provided by the Secretary, that such
State or Territory requires the payment
to carry out the activities specified in
section 602(c) of the Social Security Act
and will use the payment in compliance
with section 602(c) of the Social
Security Act; and,
(2) Any reports required to be filed by
that date pursuant to this subpart that
have not yet been filed.
§ 35.12 Distributions to nonentitlement
units of local government and units of
general local government.
(a) Nonentitlement units of local
government. Each State or Territory that
receives a payment from Treasury
pursuant to section 603(b)(2)(B) of the
Social Security Act shall distribute the
amount of the payment to
nonentitlement units of government in
such State or Territory in accordance
with the requirements set forth in
section 603(b)(2)(C) of the Social
Security Act and without offsetting any
debt owed by such nonentitlement units
of local governments against such
payments.
(b) Budget cap. A State or Territory
may not make a payment to a
nonentitlement unit of local government
pursuant to section 603(b)(2)(C) of the
Social Security Act and paragraph (a) of
this section in excess of the amount
equal to 75 percent of the most recent
budget for the nonentitlement unit of
local government as of January 27, 2020.
A State or Territory shall permit a
nonentitlement unit of local government
without a formal budget as of January
27, 2020, to provide a certification from
an authorized officer of the
nonentitlement unit of local government
of its most recent annual expenditures
as of January 27, 2020, and a State or
Territory may rely on such certification
for purposes of complying with this
paragraph (b).
(c) Units of general local government.
Each State or Territory that receives a
payment from Treasury pursuant to
section 603(b)(3)(B)(ii) of the Social
Security Act, in the case of an amount
to be paid to a county that is not a unit
of general local government, shall
distribute the amount of the payment to
units of general local government within
such county in accordance with the
requirements set forth in section
603(b)(3)(B)(ii) of the Social Security
Act and without offsetting any debt
owed by such units of general local
government against such payments.
(d) Additional conditions. A State or
Territory may not place additional
conditions or requirements on
distributions to nonentitlement units of
local government or units of general
local government beyond those required
by section 603 of the Social Security Act
or this subpart.
Laurie Schaffer,
Acting General Counsel.
[FR Doc. 2021-10283 Filed 5-13-21; 11:15 am]
BILLING CODE 4810 -AK -P
Compliance and
Reporting Guidance
June 24, 2021
Version: 1.1
U.S. DEPARTMENT OF THE TREASURY
Coronavirus State and Local Fiscal Recovery Funds
Guidance on Recipient Compliance and Reporting
Responsibilities
On March 11, 2021, the American Rescue Plan Act was signed into law, and established the
Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Funds,
which together make up the Coronavirus State and Local Fiscal Recovery Funds ("SLFRF")
program. This program is intended to provide support to State, territorial, local, and Tribal
governments in responding to the economic and public health impacts of COVID-19 and in
their efforts to contain impacts on their communities, residents, and businesses.
This guidance provides additional detail and clarification for each recipient's compliance and
reporting responsibilities under the SLFRF program, and should be read in concert with the
Award Terms and Conditions, the authorizing statute, the SLFRF implementing regulation,
and other regulatory and statutory requirements, including regulatory requirements under the
Uniform Guidance (2 CRF Part 200). Please see the Assistance Listing in SAM.gov under
assistance listing number (formerly known as CFDA number), 21.027 for more information.
Please Note: This guidance document applies to the SLFRF program only and does not
change nor impact reporting and compliance requirements for the Coronavirus Relief Fund
("CRF") established by the CARES Act.
This guidance includes two parts:
Part 1: General Guidance
This section provides an orientation to recipients' compliance responsibilities and the U.S.
Department of the Treasury's ("Treasury") expectations and recommends best practices
where appropriate under the SLFRF Program.
A. Key Principles....................................................................................... P. 3
B. Statutory Eligible Uses............................................................................ P. 3
C. Treasury's Rulemaking............................................................................ P. 4
D. Uniform Guidance (2 CFR Part 200)........................................................... P. 6
E. Award Terms and Conditions..................................................................... P. 10
Part 2: Reporting Requirements
This section provides information on the reporting requirements for the SLFRF program.
A. Interim Report........................................................................................ P. 13
B. Project and Expenditure Report................................................................. P. 15
C. Recovery Plan Performance Report............................................................ P. 23
Appendix 1: Expenditure Categories................................................................... P. 31
Appendix 2: Evidenced -Based Intervention Additional Information ............................. P. 33
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
ON
U.S. DEPARTMENT OF THE TREASURY
Part 1: General Guidance
This section provides an orientation on recipients' compliance responsibilities and Treasury's
expectations and recommended best practices where appropriate under the SLFRF program.
Recipients under the SLFRF program are the eligible entities identified in sections 602 and
603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of
2021 (the "SLFRF statute") that receive a SLFRF award. Subrecipients under the SLFRF
program are entities that receive a subaward from a recipient to carry out the purposes
(program or project) of the SLFRF award on behalf of the recipient.
Recipients are accountable to Treasury for oversight of their subrecipients, including ensuring
their subrecipients comply with the SLFRF statute, SLFRF Award Terms and Conditions,
Treasury's Interim Final Rule, and reporting requirements, as applicable.
A. Key Principles
There are several guiding principles for developing your own effective compliance regimes
• Recipients and subrecipients are the first line of defense, and responsible for ensuring the
SLFRF award funds are not used for ineligible purposes, and there is no fraud, waste, and
abuse associated with their SLFRF award;
• Many SLFRF-funded projects respond to the COVID-19 public health emergency and
meet urgent community needs. Swift and effective implementation is vital, and recipients
must balance facilitating simple and rapid program access widely across the community
and maintaining a robust documentation and compliance regime;
• SLFRF-funded projects should advance shared interests and promote equitable delivery
of government benefits and opportunities to underserved communities, as outlined in
Executive Order 13985, On Advancing Racial Equity and Support for Underserved
Communities Through the Federal Government; and
• Transparency and public accountability for SLFRF award funds and use of such funds are
critical to upholding program integrity and trust in all levels of government, and SLFRF
award funds should be managed consistent with Administration guidance per
Memorandum M-21-20 and Memorandum M-20-21.
B. Statutory Eligible Uses
As a recipient of an SLFRF award, your organization has substantial discretion to use the
award funds in the ways that best suit the needs of your constituents — as long as such use
fits into one of the following four statutory categories:
1. To respond to the COVID-19 public health emergency or its negative economic impacts;
2. To respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to such eligible workers of the recipient, or by
providing grants to eligible employers that have eligible workers who performed essential
work;
3. For the provision of government services, to the extent of the reduction in revenue of such
recipient due to the COVID-19 public health emergency, relative to revenues collected in
the most recent full fiscal year of the recipient prior to the emergency; and
4. To make necessary investments in water, sewer, or broadband infrastructure.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
-� U.S. DEPARTMENT OF THE TREASURY
Treasury adopted an Interim Final Rule to implement these eligible use categories and other
restrictions on the use of funds under the SLFRF program.' It is the recipient's responsibility
to ensure all SLFRF award funds are used in compliance with these requirements. In addition,
recipients should be mindful of any additional compliance obligations that may apply — for
example, additional restrictions imposed upon other sources of funds used in conjunction with
SLFRF award funds, or statutes and regulations that may independently apply to water,
broadband, and sewer infrastructure projects. Recipients should ensure they maintain proper
documentation supporting determinations of costs and applicable compliance requirements,
and how they have been satisfied as part of their award management, internal controls, and
subrecipient oversight and management.
C. Treasury's Rule
Treasury's Interim Final Rule details recipients' compliance responsibilities and provides
additional information on eligible and restricted uses of SLFRF award funds and reporting
requirements. Your organization should review and comply with the information contained in
Treasury's Interim Final Rule, and any subsequent final rule when building appropriate
controls for SLFRF award funds.
1. Eligible and Restricted Uses of SLFRF Funds. As described in the SLFRF statute and
summarized above, there are four enumerated eligible uses of SLFRF award funds. As a
recipient of an award under the SLFRF program, your organization is responsible for
complying with requirements for the use of funds. In addition to determining a given
project's eligibility, recipients are also responsible for determining subrecipient's or
beneficiaries' eligibility and must monitor use of SLFRF award funds.
To help recipients build a greater understanding of eligible uses, Treasury's Interim Final
Rule establishes a framework for determining whether a specific project would be eligible
under the SLFRF program, including some helpful definitions. For example, Treasury's
Interim Final Rule establishes:
• A framework for determining whether a project "responds to" a "negative economic
impact" caused by the COVID-19 public health emergency;
• Definitions of "eligible employers", "essential work," "eligible workers", and "premium
pay" for cases where premium pay is an eligible use;
• A definition of "general revenue" and a formula for calculating revenue lost due to the
COVID-19 public health emergency;
• A framework for eligible water and sewer infrastructure projects that aligns eligible uses
with projects that are eligible under the Environmental Protection Agency's Drinking
Water and Clean Water State Revolving Funds; and
• A framework for eligible broadband projects designed to provide service to unserved
or underserved households, or businesses at speeds sufficient to enable users to
generally meet household needs, including the ability to support the simultaneous use
of work, education, and health applications, and also sufficiently robust to meet
increasing household demands for bandwidth.
Treasury's Interim Final Rule also provides more information on four important restrictions
on use of SLFRF award funds: recipients may not deposit SLFRF funds into a pension
fund; recipients that are States or territories may not use SLFRF funds to offset a reduction
in net tax revenue caused by the recipient's change in law, regulation, or administrative
1 Treasury's Interim Final Rule is effective as of May 17, 2021, and public comments are due July 16,
2021. This guidance may be clarified consistent with the final rule.
httis://www.govinfo.gov/content/pkg/FR-202 1-05-1 7/pdf/202 1-1 0283.pdf
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
4
-� U.S. DEPARTMENT OF THE TREASURY
interpretation; and, recipients may not use SLFRF funds as non -Federal match where
prohibited. In addition, the Interim Final Rule clarifies certain uses of SLFRF funds outside
the scope of eligible uses, including that recipients generally may not use SLFRF funds
directly to service debt, satisfy a judgment or settlement, or contribute to a "rainy day" fund.
Recipients should refer to Treasury's Interim Final Rule for more information on these
restrictions.
2. Eligible Costs Timeframe. Your organization, as a recipient of an SLFRF award, may
use SLFRF funds to cover eligible costs that your organization incurred during the period
that begins on March 3, 2021 and ends on December 31, 2024, as long as the award funds
for the obligations incurred by December 31, 2024 are expended by December 31, 2026.
Costs for projects incurred by the recipient State, territorial, local, or Tribal government
prior to March 3, 2021 are not eligible, as provided for in Treasury's Interim Final Rule.
Recipients may use SLFRF award funds to provide assistance to households,
businesses, and individuals within the eligible use categories described in Treasury's
Interim Final Rule for costs that those households, businesses and individuals incurred
prior to March 3, 2021. For example,
a. Public Health/Negative Economic Impacts: Recipients may use SLFRF award funds
to provide assistance to households — such as rent, mortgage, or utility assistance —
for costs incurred by the household prior to March 3, 2021, provided that the recipient
State, territorial, local or Tribal government did not incur the cost of providing such
assistance prior to March 3, 2021.
b. Premium Pay: Recipients may provide premium pay retrospectively for work
performed at any time since the start of the COVID-19 public health emergency.
Such premium pay must be "in addition to" wages and remuneration already received
and the obligation to provide such pay must not have been incurred by the recipient
prior to March 3, 2021.
c. Revenue Loss: Treasury's Interim Final Rule gives recipients broad latitude to use
funds for the provision of government services to the extent of reduction in revenue.
While calculation of lost revenue begins with the recipient's revenue in the last full
fiscal year prior to the COVID-19 public health emergency and includes the 12 -month
period ending December 31, 2020, use of funds for government services must be
forward looking for costs incurred by the recipient after March 3, 2021.
d. Investments in Water, Sewer, and Broadband: Recipients may use SLFRF award
funds to make necessary investments in water, sewer, and broadband. Recipients
may use SLFRF award funds to cover costs incurred for eligible projects planned or
started prior to March 3, 2021, provided that the project costs covered by the SLFRF
award funds were incurred after March 3, 2021.
Any funds not obligated or expended for eligible uses by the timelines above must be
returned to Treasury, including any unobligated or unexpended funds that have been
provided to subrecipients and contractors. For the purposes of determining expenditure
eligibility, Treasury's Interim Final Rule provides that "incurred" has the same meaning
given to "financial obligation" in 2 CFR § 200.1.
3. Reporting. Generally, recipients must submit one initial interim report, quarterly or annual
Project and Expenditure reports which include subaward reporting, and in some cases
annual Recovery Plan reports. Treasury's Interim Final Rule and Part 2 of this guidance
provide more detail around SLFRF reporting requirements.
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Assistance Listing
The Assistance Listing for the Coronavirus State and Local Fiscal Recovery Funds
(CSLFRF) was published May 28, 2021 on SAM.gov under Assistance Listing Number
("ALN"), formerly known as CFDA Number, 21.027.
The assistance listing includes helpful information including program purpose, statutory
authority, eligibility requirements, and compliance requirements for recipients. The ALN
is the unique 5 -digit number assigned to identify a federal assistance listing, and can be
used to search for federal assistance program information, including funding
opportunities, spending on USASpending.gov, or audit results through the Federal Audit
Clearinghouse.
To expedite payments and meet statutory timelines Treasury issued initial payments
under an existing ALN, 21.019, assigned to the CRF. If you have already received funds
or captured the initial number in your records, please update your systems and reporting
to reflect the new ALN 21.027 for the SLFRF program. Recipients must use ALN
21.027 for all financial accounting, subawards, and associated program reporting
requirements for the SLFRF awards.
D. Uniform Administrative Requirements
The SLFRF awards are generally subject to the requirements set forth in the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2
CFR Part 200 (the "Uniform Guidance"). In all instances, your organization should review the
Uniform Guidance requirements applicable to your organization's use of SLFRF funds, and
SLFRF-funded projects. Recipients should consider how and whether certain aspects of the
Uniform Guidance apply.
The following sections provide a general summary of your organization's compliance
responsibilities under applicable statutes and regulations, including the Uniform Guidance, as
described in the 2020 OMB Compliance Supplement Part 3. Compliance Requirements
(issued August 18, 2020). Note that the descriptions below are only general summaries and
all recipients and subrecipients are advised to carefully review the Uniform Guidance
requirements and any additional regulatory and statutory requirements applicable to the
program.
1. Allowable Activities. Each recipient should review program requirements, including
Treasury's Interim Final Rule and the recipient's Award Terms and Conditions, to
determine and record eligible uses of SLFRF funds. Per 2 CFR 200.303, your organization
must develop and implement effective internal controls to ensure that funding decisions
under the SLFRF award constitute eligible uses of funds, and document determinations.
2. Allowable Costs/Cost Principles. As outlined in the Uniform Guidance at 2 CFR Part
200, Subpart E regarding Cost Principles, allowable costs are based on the premise that
a recipient is responsible for the effective administration of Federal awards, application of
sound management practices, and administration of Federal funds in a manner consistent
with the program objectives and terms and conditions of the award. Recipients must
implement robust internal controls and effective monitoring to ensure compliance with the
Cost Principles, which are important for building trust and accountability.
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SLFRF Funds may be, but are not required to be, used along with other funding sources
for a given project. Note that SLFRF Funds may not be used for a non -Federal cost share
or match where prohibited by other Federal programs, e.g., funds may not be used for the
State share for Medicaid.2
Treasury's Interim Final Rule and guidance and the Uniform Guidance outline the types of
costs that are allowable, including certain audit costs. For example, per 2 CFR 200.425,
a reasonably proportionate share of the costs of audits required by the Single Audit Act
Amendments of 1996 are allowable; however, costs for audits that were not performed, or
not in accordance with 2 CFR Part 200, Subpart F are not allowable. Please see 2 CFR
Part 200, Subpart E regarding the Cost Principles for more information.
a. Administrative costs: Recipients may use funds for administering the SLFRF
program, including costs of consultants to support effective management and
oversight, including consultation for ensuring compliance with legal, regulatory, and
other requirements.3 Further, costs must be reasonable and allocable as outlined in 2
CFR 200.404 and 2 CFR 200.405. Pursuant to the SLFRF Award Terms and
Conditions, recipients are permitted to charge both direct and indirect costs to their
SLFRF award as administrative costs. Direct costs are those that are identified
specifically as costs of implementing the SLFRF program objectives, such as
contract support, materials, and supplies for a project. Indirect costs are general
overhead costs of an organization where a portion of such costs are allocable to the
SLFRF award such as the cost of facilities or administrative functions like a director's
office.45 Each category of cost should be treated consistently in like circumstances as
direct or indirect, and recipients may not charge the same administrative costs to
both direct and indirect cost categories, or to other programs. If a recipient has a
current Negotiated Indirect Costs Rate Agreement (NICRA) established with a
Federal cognizant agency responsible for reviewing, negotiating, and approving cost
allocation plans or indirect cost proposals, then the recipient may use its current
NICRA. Alternatively, if the recipient does not have a NICRA, the recipient may elect
to use the de minimis rate of 10 percent of the modified total direct costs pursuant to
2 CFR 200.414(f).
b. Salaries and Expenses: In general, certain employees' wages, salaries, and covered
benefits are an eligible use of SLFRF award funds. Please see Treasury's Interim
Final Rule for details.
3. Cash Management. SLFRF payments made to recipients are not subject to the
requirements of the Cash Management Improvement Act and Treasury's implementing
regulations at 31 CFR part 205 or 2 CFR 200.305(b)(8)-(9).
As such, recipients can place funds in interest -bearing accounts, do not need to remit
interest to Treasury, and are not limited to using that interest for eligible uses under the
SLFRF award.
4. Eligibility. Under this program, recipients are responsible for ensuring funds are used for
eligible purposes. Generally, recipients must develop and implement policies and
procedures, and record retention, to determine and monitor implementation of criteria for
2 See 42 CFR 433.51 and 45 CFR 75.306.
3 Recipients also may use SLFRF funds directly for administrative costs to improve efficacy of
programs that respond to the COVID-19 public health emergency. 31 CFR 35.6(b)(10).
4 2 CFR 200.413 Direct Costs.
5 2 CFR 200.414 Indirect Costs.
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determining the eligibility of beneficiaries and/or subrecipients. Your organization, and if
applicable, the subrecipient(s) administering a program on behalf of your organization, will
need to maintain procedures for obtaining information evidencing a given beneficiary,
subrecipient, or contractor's eligibility including a valid SAM.gov registration. Implementing
risk -based due diligence for eligibility determinations is a best practice to augment your
organization's existing controls.
5. Equipment and Real Property Management. Any purchase of equipment or real
property with SLFRF funds must be consistent with the Uniform Guidance at 2 CFR Part
200, Subpart D. Equipment and real property acquired under this program must be used
for the originally authorized purpose. Consistent with 2 CFR 200.311 and 2 CFR 200.313,
any equipment or real property acquired using SLFRF funds shall vest in the non -Federal
entity. Any acquisition and maintenance of equipment or real property must also be in
compliance with relevant laws and regulations.
6. Matching, Level of Effort, Earmarking. There are no matching, level of effort, or
earmarking compliance responsibilities associated with the SLFRF award. SLFRF funds
may only be used for non -Federal match in other programs where costs are eligible under
both SLFRF and the other program and use of such funds is not prohibited by the other
program.
7. Period of Performance. Your organization should also develop and implement internal
controls related to activities occurring outside the period of performance. For example,
each recipient should articulate each project's policy on allowability of costs incurred prior
to award or start of the period of performance. All funds remain subject to statutory
requirements that they must be used for costs incurred by the recipient during the period
that begins on March 3, 2021, and ends on December 31, 2024, and that award funds for
the financial obligations incurred by December 31, 2024 must be expended by December
31, 2026. Any funds not used must be returned to Treasury.
8. Procurement, Suspension & Debarment. Recipients are responsible for ensuring that
any procurement using SLFRF funds, or payments under procurement contracts using
such funds are consistent with the procurement standards set forth in the Uniform
Guidance at 2 CFR 200.317 through 2 CFR 200.327, as applicable. The Uniform Guidance
establishes in 2 CFR 200.319 that all procurement transactions for property or services
must be conducted in a manner providing full and open competition, consistent with
standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only
in circumstances where at least one of the conditions below is true: the item is below the
micro -purchase threshold; the item is only available from a single source; the public
exigency or emergency will not permit a delay from publicizing a competitive solicitation;
or after solicitation of a number of sources, competition is determined inadequate.6
Recipients must have and use documented procurement procedures that are consistent
with the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. The Uniform
Guidance requires an infrastructure for competitive bidding and contractor oversight,
including maintaining written standards of conduct and prohibitions on dealing with
suspended or debarred parties. Your organization must ensure adherence to all applicable
local, State, and federal procurement laws and regulations.
9. Program Income. Generally, program income includes, but is not limited to, income from
fees for services performed, the use or rental or real or personal property acquired under
Federal awards and principal and interest on loans made with Federal award funds.
Program income does not include interest earned on advances of Federal funds, rebates,
credits, discounts, or interest on rebates, credits, or discounts. Recipients of SLFRF funds
6 2 CFR 200.320(c)(1)-(3) and (5)
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should calculate, document, and record the organization's program income. Additional
controls that your organization should implement include written policies that explicitly
identify appropriate allocation methods, accounting standards and principles, compliance
monitoring checks for program income calculations, and records.
The Uniform Guidance outlines the requirements that pertain to program income at 2 CFR
200.307. Treasury intends to provide additional guidance regarding program income and
the application of 2 CFR 200.307(e)(1), including with respect to lending programs.
10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures
may be reported on a cash or accrual basis, as long as the methodology is disclosed and
consistently applied. Reporting must be consistent with the definition of expenditures
pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting
records for compiling and reporting accurate, compliant financial data, in accordance with
appropriate accounting standards and principles.
In addition, where appropriate, your organization needs to establish controls to ensure
completion and timely submission of all mandatory performance and/or compliance
reporting. See Part 2 of this guidance for a full overview of recipient reporting
responsibilities.
11. Subrecipient Monitoring. SLFRF recipients that are pass -through entities as defined
under 2 CFR 200.1 are required to manage and monitor their subrecipients to ensure
compliance with requirements of the SLFRF award pursuant to 2 CFR 200.332 regarding
requirements for pass -through entities.
First, your organization must clearly identify to the subrecipient: (1) that the award is a
subaward of SLFRF funds; (2) any and all compliance requirements for use of SLFRF
funds; and (3) any and all reporting requirements for expenditures of SLFRF funds.
Next, your organization will need to evaluate each subrecipient's risk of noncompliance
based on a set of common factors. These risk assessments may include factors such as
prior experience in managing Federal funds, previous audits, personnel, and policies or
procedures for award execution and oversight. Ongoing monitoring of any given
subrecipient should reflect its assessed risk and include monitoring, identification of
deficiencies, and follow-up to ensure appropriate remediation.
Accordingly, your organization should develop written policies and procedures for
subrecipient monitoring and risk assessment and maintain records of all award
agreements identifying or otherwise documenting subrecipients' compliance obligations.
12. Special Tests and Provisions. Treasury has set a deadline of July 16, 2021, for receipt
of public comment on its Interim Final Rule and will adopt a final rule responding to these
comments. In addition, Treasury may add clarifications to the implementing guidance.
Across each of the compliance requirements above, Treasury described some best practices
for development of internal controls. The table below provides a brief description and example
of each best practice.
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Table 1: Internal controls best practices
Written policies and
Formal documentation of
Documented procedure for
procedures
recipient policies and
determining worker eligibility
procedures
for premium pay
Written standards of conduct
Formal statement of mission,
Documented code of conduct /
values, principles, and
ethics for subcontractors
professional standards
Risk -based due diligence
Pre -payment validations
Enhanced eligibility review of
conducted according to an
subrecipient with imperfect
assessed level of risk
performance history
Risk -based compliance
Ongoing validations conducted
Higher degree of monitoring for
monitoring
according to an assessed level
projects that have a higher risk
of risk
of fraud, given program
characteristics
Record maintenance and
Creation and storage of
Storage of all subrecipient
retention
financial and non -financial
payment information.
records.
E. Award Terms and Conditions
The Award Terms and Conditions of the SLFRF financial assistance agreement sets forth the
compliance obligations for recipients pursuant to the SLFRF statute, the Uniform Guidance,
and Treasury's Interim Final Rule. Recipients should ensure they remain in compliance with
all Award Terms and Conditions. These obligations include the following items in addition to
those described above:
1. SAM.gov Requirements. All eligible recipients are also required to have an active
registration with the System for Award Management (SAM) (https://www.sam.gov). To
ensure timely receipt of funding, Treasury has stated that Non -entitlement Units of
Government (NEUs) who have not previously registered with SAM.gov may do so after
receipt of the award, but before the submission of mandatory reporting.7
2. Recordkeeping Requirements. Generally, your organization must maintain records and
financial documents for five years after all funds have been expended or returned to
Treasury, as outlined in paragraph 4.c. of the Award Terms and Conditions. Treasury may
request transfer of records of long-term value at the end of such period. Wherever
practicable, such records should be collected, transmitted, and stored in open and
machine-readable formats.
Your organization must agree to provide or make available such records to Treasury upon
request, and to any authorized oversight body, including but not limited to the Government
Accountability Office ("GAO"), Treasury's Office of Inspector General ("OIG"), and the
Pandemic Relief Accountability Committee ("PRAC").
3. Single Audit Requirements. Recipients and subrecipients that expend more than
$750,000 in Federal awards during their fiscal year will be subject to an audit under the
Single Audit Act and its implementing regulation at 2 CFR Part 200, Subpart F regarding
audit requirements.8 Recipients and subrecipients may also refer to the Office of
See flexibility provided in https://www.whitehouse.gov/wp-content/uploads/2021/03/M_21_20.pdf.
8 For-profit entities that receive SLFRF subawards are not subject to Single Audit requirements.
However, they are subject to other audits as deemed necessary by authorized governmental entities,
including Treasury, the GAO, the PRAC and the Treasury's 0IG.
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Management and Budget (OMB) Compliance Supplements for audits of federal funds and
related guidance and the Federal Audit Clearinghouse to see examples and single audit
submissions.
4. Civil Rights Compliance. Recipients of Federal financial assistance from the Treasury
are required to meet legal requirements relating to nondiscrimination and
nondiscriminatory use of Federal funds. Those requirements include ensuring that entities
receiving Federal financial assistance from the Treasury do not deny benefits or services,
or otherwise discriminate on the basis of race, color, national origin (including limited
English proficiency), disability, age, or sex (including sexual orientation and gender
identity), in accordance with the following authorities: Title VI of the Civil Rights Act of 1964
(Title VI) Public Law 88-352, 42 U.S.C. 2000d-1 et seq., and the Department's
implementing regulations, 31 CFR part 22; Section 504 of the Rehabilitation Act of 1973
(Section 504), Public Law 93-112, as amended by Public Law 93-516, 29 U.S.C. 794; Title
IX of the Education Amendments of 1972 (Title IX), 20 U.S.C. 1681 et seq., and the
Department's implementing regulations, 31 CFR part 28; Age Discrimination Act of 1975,
Public Law 94-135, 42 U.S.C. 6101 et seq., and the Department implementing regulations
at 31 CFR part 23.
In order to carry out its enforcement responsibilities under Title VI of the Civil Rights Act,
Treasury will collect and review information from recipients to ascertain their compliance
with the applicable requirements before and after providing financial assistance.
Treasury's implementing regulations, 31 CFR part 22, and the Department of Justice
(DOJ) regulations, Coordination of Non-discrimination in Federally Assisted Programs, 28
CFR part 42, provide for the collection of data and information from recipients (see 28 CFR
42.406). Treasury may request that recipients submit data for post -award compliance
reviews, including information such as a narrative describing their Title VI compliance
status.
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Part 2: Reporting Guidance
There are three types of reporting requirements for the SLFRF program.
Interim Report: Provide initial overview of status and uses of funding. This is a one-time
report. See Section A, page 13.
• Project and Expenditure Report: Report on projects funded, expenditures, and contracts
and subawards over $50,000, and other information. See Section B, page 15.
Recovery Plan Performance Report: The Recovery Plan Performance Report (the
"Recovery Plan") will provide information on the projects that large recipients are
undertaking with program funding and how they plan to ensure program outcomes are
achieved in an effective, efficient, and equitable manner. It will include key performance
indicators identified by the recipient and some mandatory indicators identified by
Treasury. The Recovery Plan will be posted on the website of the recipient as well as
provided to Treasury. See Section C, page 23.
Table 2: Reporting requirements by recipient type
..
States, U.S. territories,
By August 31,
..
By October 31,
-..
By August 31,
metropolitan cities and counties
2021, with
2021, and then
2021, and
with a population that exceeds
expenditures
30 days after the
annually
250,000 residents
by category
end of each
thereafter by
quarter
thereafter9
July 31 10
Metropolitan cities and counties
Not required
with a population below 250,000
residents which received more
than $5 million in SLFRF funding
Tribal Governments
Metropolitan cities and counties
By October 31,
with a population below 250,000
2021, and then
residents which received less than
annually
$5 million in SLFRF funding
thereafter"
NEUs
Not required
The remainder of this document describes these reporting requirements. A users' guide will
be provided with additional information on how and where to submit required reports.
9 Interim Final Rule Page 111
10 Interim Final Rule page 112
11 Interim Final Rule Page 111
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Comparison to reporting for the CRF
This guidance does not change the reporting or compliance requirements pertaining to
the CRF. Reporting and compliance requirements for the SLFRF are separate from
CRF reporting requirements. Changes from CRF to SLFRF include:
Project, Expenditure, and Subaward Reporting: The SLFRF reporting
requirements leverage the existing reporting regime used for CRF to foster
continuity and provide many recipients with a familiar reporting mechanism. The
data elements for the Project and Expenditure Report will largely mirror those used
for CRF, with some minor exceptions noted in this guidance. The users' guide will
describe how reporting for CRF funds will relate to reporting for the SLFRF.
• Timing of Reports: CRF reports were due within 10 days of each calendar
quarter. SLFRF quarterly reporting will be due 30 days from quarter end.
• Program and Performance Reporting: The CRF reporting did not include any
program or performance reporting. To build public awareness and accountability
and allow Treasury to monitor compliance with eligible uses, some program and
performance reporting is required.
A. Interim Report
States, U.S. territories, metropolitan cities, counties, and Tribal governments are required to
submit a one-time interim report with expenditures12 by Expenditure Category from the date
of award to July 31, 2021. The recipient will be required to enter obligations13 and
expenditures and, for each, select the specific expenditure category from the available options.
See Appendix 1 for Expenditure Categories (EC).
1. Required Programmatic Data
Recipients will also be required to provide the following information if they have or plan to have
expenditures in the following Expenditure Categories.
a. Revenue replacement (EC 6.11: Key inputs into the revenue replacement formula in the
Interim Final Rule and estimated revenue loss due to the Covid-19 public health
emergency calculated using the formula in the Interim Final Rule as of December 31,
2020.
• Base year general revenue (e.g., revenue in the last full fiscal year prior to the public
health emergency)
• Fiscal year end date
• Growth adjustment used (either 4.1 percent or average annual general revenue growth
over 3 years prior to pandemic)
• Actual general revenue as of the twelve months ended December 31, 2020
• Estimated revenue loss due to the Covid-19 public health emergency as of December
31, 2020
• An explanation of how revenue replacement funds were allocated to government
services (Note: additional instructions and/or template to be provided in users' guide)
12 For purposes of reporting in the SLFRF portal, an expenditure is the amount that has been incurred
as a liability of the entity (the service has been rendered or the good has been delivered to the entity).
13 For purposes of reporting in the SLFRF portal, an obligation is an order placed for property and
services, contracts and subawards made, and similar transactions that require payment.
14 See Appendix 1 for the full Expenditure Category (EC) list. References to Expenditure Categories
are identified by "EC" followed by numbers from the table in Appendix 1.
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In calculating general revenue and the other items discussed above, recipients should
use audited data if it is available. When audited data is not available, recipients are not
required to obtain audited data if substantially accurate figures can be produced on an
unaudited basis. Recipients should use their own data sources to calculate general
revenue, and do not need to rely on revenue data published by the Census Bureau.
Treasury acknowledges that due to differences in timing, data sources, and definitions,
recipients' self -reported general revenue figures may differ from those published by the
Census Bureau. Recipients 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. Recipients' reporting should
align with their own financial reporting.
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 CRF or SLFRF. To the extent federal funds are
passed through States or other entities or intermingled with other funds, recipients
should attempt to identify and exclude the federal portion of those funds from the
calculation of general revenue on a best-efforts basis.
Consistent with the broad latitude provided to recipients to use funds for government
services to the extent of reduction in revenue, recipients will be required to submit a
description of services provided. This description may be in narrative or in another form,
and recipients are encouraged to report based on their existing budget processes and to
minimize administrative burden. For example, a recipient with $100 in revenue
replacement funds available could indicate that $50 were used for law enforcement
operating expenses and $50 were used for pay -go building of sidewalk infrastructure. As
discussed in the Interim Final Rule, these services can include a broad range of services
but may not be used directly for pension deposits or debt service.
Reporting requirements will not require tracking the indirect effects of Fiscal Recovery
Funds, apart from the restrictions on use of Fiscal Recovery Funds to offset a reduction
in net tax revenue. In addition, recipients must indicate that Fiscal Recovery Funds were
not used to make a deposit in a pension fund.
b. Distributions to NEUs - States and territories only (EC 7.4): Information on SLFRF
distributions to eligible NEUs. Each State and territory will be asked to provide an
update on distributions to individual NEUs, including whether the NEU has (1) received
funding; (2) declined funding and requested a transfer to the State under Section
603(c)(4) of the Act; or (3) not taken action on its funding. States and territories should
be prepared to report on their information, including the following:
• NEU name
• NEU DUNS number
• NEU Taxpayer Identification Number (TIN)
• NEU Recipient Number (a unique identification code for each NEU assigned by the
State to the NEU as part of the request for funding)
• NEU contact information (e.g., address, point of contact name, point of contact email
address, and point of contact phone number)
• NEU authorized representative name and email address
• Initial allocation and, if applicable, subsequent allocation to the NEU (before
application of the 75 percent cap)
• Total NEU reference budget (as submitted by the NEU to the State as part of the
request for funding)
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Amount of the initial and, if applicable, subsequent allocation above 75 percent of the
NEU's reference budget which will be returned to Treasury
Payment amount(s)
Payment date(s)
For each eligible NEU that declined funding and requested a transfer to the State under
Section 603(c)(4), the State must also attach a form signed by the NEU, as detailed in
the Guidance on Distributions of Funds to Non -Entitlement Units of Local Government.
States with "weak" minor civil divisions (i.e., Illinois, Indiana, Kansas, Missouri,
Nebraska, North Dakota, Ohio, and South Dakota) should also list any minor civil
divisions that the State deemed ineligible.
B. Project and Expenditure Report
All recipients are required to submit Project and Expenditure Reports.
1. Quarterly Reporting
The following recipients are required to submit quarterly Project and Expenditure Reports:
• States, U.S. territories, and Tribal governments
• Metropolitan cities and counties that received more than $5 million in SLFRF funding
For these recipients, the initial quarterly Project and Expenditure Report will cover two
calendar quarters from the date of award to September 30, 2021 and must be submitted to
Treasury by October 31, 2021. The subsequent quarterly reports will cover one calendar
quarter and must be submitted to Treasury within 30 calendar days after the end of each
calendar quarter. Quarterly reports are not due concurrently with applicable annual reports.
The table below summarizes the quarterly report timelines:
..
1
2021
2 and 3
..
I Award Date — September 30
�.
October 31, 2021
2
2021
4
October 1 — December 31
January 31, 2022
3
2022
1
January 1 — March 31
April 30, 2022
4
2022
2
April 1 — June 30
Jul 31, 2022
5
2022
3
Jul 1 - September 30
October 31, 2022
6
2022
4
October 1 — December 31
January 31, 2023
7
2023
1
January 1 — March 31
April 30, 2023
8
2023
2
April 1 — June 30
July 31, 2023
9
2023
3
July 1 - September 30
October 31, 2023
10
2023
4
October 1 — December 31
January 31, 2024
11
2024
1
January 1 — March 31
April 30, 2024
12
2024
2
April 1 — June 30
Jul 31, 2024
13
2024
3
Jul 1 - September 30
October 31, 2024
14
2024
4
October 1 — December 31
January 31, 2025
15
2025
1
January 1 — March 31
April 30, 2025
16
2025
2
Aril 1 — June 30
Jul 31, 2025
17
2025
3
Jul 1 — September 30
October 31, 2025
18
2025
4
October 1 — December 31
January 31, 2026
19
2026
1
January 1 — March 31
April 30, 2026
20
2026
2
April 1 — June 30
Jul 31, 2026
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
15
0 U.S. DEPARTMENT OF THE TREASURY
2. Annual Reporting
The following recipients are required to submit annual Project and Expenditure Reports:
• Metropolitan cities and counties that received less than $5 million in SLFRF funding.
• NEUs. To facilitate reporting, each NEU will need a NEU Recipient Number. This is a
unique identification code for each NEU assigned by the State to the NEU as part of its
request for funding.
For these recipients, the initial Project and Expenditure Report will cover from the date of
award to September 30, 2021 and must be submitted to Treasury by October 31, 2021. The
subsequent annual reports will cover one calendar year and must be submitted to Treasury
by October 31. The table below summarizes the report timelines:
ti..
1
..
Award Date — September 30, 2021
..
October 31, 2021
2
October 1, 2021 — September 30, 2022
October 31, 2022
3
October 1, 2022 - September 30, 2023
October 31, 2023
4
October 1, 2023 - September 30, 2024
October 31, 2024
5
October 1, 2024 — September 30, 2025
October 31, 2025
6
October 1, 2025 — September 30, 2026
October 31, 2026
7
October 1, 2026 — December 31, 2026
March 31, 2027
3. Required Information
The following information will be required in Project and Expenditure Reports:
a. Projects: Provide information on all SLFRF funded projects. Projects are new or existing
eligible government services or investments funded in whole or in part by SLFRF funding.
For each project, the recipient will be required to enter the project name, identification
number (created by the recipient), project expenditure category (see Appendix 1),
description, and status of completion. Project descriptions must describe the project in
sufficient detail to provide understanding of the major activities that will occur, and will be
required to be between 50 and 250 words. Projects should be defined to include only
closely related activities directed toward a common purpose. In particular, recipients should
review the Required Programmatic Data described below and define their projects at a
sufficient level of granularity to report these metrics for a reasonably specific activity or set
of activities in each project.
Note: For each project, the recipient will be asked to select the appropriate Expenditure
Category based on the scope of the project (see Appendix 1). Projects should be scoped
to align to a single Expenditure Category. For select Expenditure Categories, the recipient
will also be asked to provide additional programmatic data (described further below).
b. Expenditures: Once a project is entered the recipient will be able to report on the project's
obligations and expenditures. Recipients will be asked to report:
• Current period obligation
• Cumulative obligation
• Current period expenditure
• Cumulative expenditure
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
Project Status: Once a project is entered the recipient will be asked to report on project
status each reporting period, in four categories:
• Not Started
• Completed less than 50 percent
• Completed 50 percent or more
• Completed
d. Project Demographic Distribution: Recognizing the disproportionate impact of the
pandemic -related recession on low-income communities, recipients must report whether
certain types of projects15 are targeted to economically disadvantaged communities, as
defined by HUD's Qualified Census Tract.16 Recipients will be asked to identify whether or
not the project is serving an economically disadvantaged community. To minimize the
administrative burden on recipients while ensuring that this important aspect of program
performance is tracked, recipients may assume that the funds for a project count as being
targeted towards economically disadvantaged communities if the project funds are spent
on:
• A program or service is provided at a physical location in a Qualified Census Tract (for
multi -site projects, if a majority of sites are within Qualified Census Tracts);
• A program or service where the primary intended beneficiaries live within a Qualified
Census Tract;
• A program or service for which the eligibility criteria are such that the primary intended
beneficiaries earn less than 60 percent of the median income for the relevant
jurisdiction (e.g., State, county, metropolitan area, or other jurisdiction); or
• A program or service for which the eligibility criteria are such that over 25 percent of
intended beneficiaries are below the federal poverty line.
Recipients may use reasonable estimates to determine if a project meets one of these
criteria, including identifying the intended beneficiaries of a program or service in terms of
income characteristics, geographic location, or otherwise estimating the beneficiaries of a
program based on its eligibility criteria. Recipients do not need to track information on
each individual beneficiary to make the determination of whether or not the project is
serving an economically disadvantaged community. If a recipient is unable to measure
economic characteristics of the primary intended beneficiaries of a program or service
due to data limitations or for other reasons, that program or service may not be counted
as targeted to economically disadvantaged communities. Treasury recognizes that in
some circumstances, recipients may fund eligible programs or services that benefit
economically disadvantaged communities but may lack adequate data to assess
conclusively that such a program or service is targeted to economically disadvantaged
communities based on the criteria described above.
e. Subawards: Each recipient shall also provide detailed obligation and expenditure
information for any contracts and grants awarded, loans issued, transfers made to other
government entities, and direct payments made by the recipient that are greater than or
equal to $50,000.
15 Specifically recipients must report this information for projects in the Expenditure Categories that
are marked with "^" in the expenditure category listing in Appendix 1 of this guidance
16 HUD defines as a 0CT as having "50 percent of households with incomes below 60 percent of the
Area Median Gross Income (AMGI) or have a poverty rate of 25 percent or more." To view median
income area for their jurisdiction, recipients may visit the U.S. Census website on median incomes
and select the geography for their jurisdiction and relevant unit of measurement (household or
individual) for the project.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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-� U.S. DEPARTMENT OF THE TREASURY
Recipients do not also need to submit separate monthly subaward reports to FSRS.gov as
required pursuant to the 2 CFR Part 170, Appendix A award term regarding reporting
subaward and executive compensation, which is included in the SLFRF Award Terms and
Conditions. Treasury will submit this reporting on behalf of recipients using the $50,000
reporting threshold, timing, and data elements discussed in this guidance. If recipients
choose to continue reporting to FSRS.gov in addition to reporting directly to Treasury on
these funds, they may do so and will be asked to notify Treasury as part of their quarterly
submission.
In general, recipients will be asked to provide the following information for each Contract,
Grant, Loan, Transfer, or Direct Payment greater than or equal to $50,000:
• Subrecipient identifying and demographic information (e.g., DUNS number and
location)
• Award number (e.g., Award number, Contract number, Loan number)
• Award date, type, amount, and description
• Award payment method (reimbursable or lump sum payment(s))
• For loans, expiration date (date when loan expected to be paid in full)
• Primary place of performance
• Related project name(s)
• Related project identification number(s) (created by the recipient)
• Period of performance start date
• Period of performance end date
• Quarterly obligation amount
• Quarterly expenditure amount
• Project(s)
• Additional programmatic performance indicators for select Expenditure Categories (see
below)
Aggregate reporting is required for contracts, grants, transfers made to other government
entities, loans, direct payments, and payments to individuals that are below $50,000. This
information will be accounted for by expenditure category at the project level.
As required by the 2 CFR Part 170, Appendix A award term regarding reporting subaward
and executive compensation, recipients must also report the names and total compensation
of their five most highly compensated executives and their subrecipients' executives for the
preceding completed fiscal year if (1) the recipient received 80 percent or more of its annual
gross revenues from Federal procurement contracts (and subcontracts) and Federal
financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and
subawards), and received $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal financial assistance subject to the
Transparency Act (and subawards), and (2) if the information is not otherwise public. In
general, most SLFRF Recipients are governmental entities with executive salaries that are
already disclosed, so no additional information must be reported. The recipient is
responsible for the subrecipients' compliance with registering and maintaining an updated
profile on SAM.gov.
f. Civil Rights Compliance: Treasury will request information on recipients' compliance with
Title VI of the Civil Rights Act of 1964 on an annual basis. This information may include a
narrative describing the recipient's compliance with Title VI, along with other questions and
assurances.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
g. Required Programmatic Data (other than infrastructure projects): For all projects listed
under the following Expenditure Categories (see Appendix 1), the information listed must
be provided in each report.
Payroll for Public Health and Safety Employees (EC 1.9):
• Number of government FTEs responding to COVID-19 supported under this
authority
2. Household Assistance (EC 2.1-2.5):
• Brief description of structure and objectives of assistance program(s) (e.g., nutrition
assistance for low-income households)
• Number of individuals served (by program if recipient establishes multiple separate
household assistance programs)
• Brief description of recipient's approach to ensuring that aid to households
responds to a negative economic impact of Covid-19, as described in the Interim
Final Rule
3. Small Business Economic Assistance (EC 2.9):
• Brief description of the structure and objectives of assistance program(s) (e.g.,
grants for additional costs related to Covid-1 9 mitigation)
• Number of small businesses served (by program if recipient establishes multiple
separate small businesses assistance programs)
• Brief description of recipient's approach to ensuring that aid to small businesses
responds to a negative economic impact of COVID-19, as described in the Interim
Final Rule
4. Aid to Travel, Tourism, and Hospitality or Other Impacted Industries (EC 2.11-2.12):
• If aid is provided to industries other than travel, tourism, and hospitality (EC 2.12),
a description of pandemic impact on the industry and rationale for providing aid to
the industry
• Brief narrative description of how the assistance provided responds to negative
economic impacts of the COVID-19 pandemic
• For each subaward:
o Sector of employer (Note: additional detail, including list of sectors to be
provided in a users' guide)
O Purpose of funds (e.g., payroll support, safety measure implementation)
5. Rehiring Public Sector Staff (EC 2.14):
• Number of FTEs rehired by governments under this authority
6. Education Assistance (EC 3.1-3.5):
The National Center for Education Statistics ("NCES") School ID or NCES District
ID. List the School District if all schools within the school district received some
funds. If not all schools within the school district received funds, list the School ID
of the schools that received funds. These can allow evaluators to link data from the
NCES to look at school -level demographics and, eventually, student
performance."
" For more information on NCES identification numbers see https://nces.ed.gov/ccd/districtsearch/
(districts) and https://nces.ed.gov/ccd/schoolsearch/ (schools).
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
7. Premium Pay (both Public Sector EC 4.1 and Private Sector EC 4.2
• List of sectors designated as critical to the health and well-being of residents by
the chief executive of the jurisdiction, if beyond those included in the Interim Final
Rule (Note: a list of sectors will be provided in the forthcoming users' guide).
• Number of workers to be served
• Employer sector for all subawards to third -party employers (i.e., employers other
than the State, local, or Tribal government) (Note: a list of sectors will be provided
in the forthcoming users' guide).
• For groups of workers (e.g., an operating unit, a classification of worker, etc.) or,
to the extent applicable, individual workers, for whom premium pay would
increase total pay above 150 percent of their residing State's average annual
wage, or their residing county's18 average annual wage, whichever is higher, on
an annual basis:
o A brief written narrative justification of how the premium pay or grant is
responsive to workers performing essential work during the public health
emergency. This could include a description of the essential workers' duties,
health or financial risks faced due to COVID-19, and why the recipient
government determined that the premium pay was responsive to workers
performing essential work during the pandemic. This description should not
include personally identifiable information; when addressing individual
workers, recipients should be careful not to include this information.
Recipients may consider describing the workers' occupations and duties in a
general manner as necessary to protect privacy.
8. Revenue replacement (EC 6.1):
Under the Interim Final Rule, recipients calculate revenue loss using data as of four
discrete points during the program: December 31, 2020, December 31, 2021,
December 31, 2022, and December 31, 2023. Revenue loss calculated as of
December 31, 2020 will be reported in the Interim Report, as described above. For
future calculation dates, revenue loss will be reported only in the Quarter 4 reports
due January 31, 2022, January 31, 2023, and January 31, 2024. Reporting on
revenue loss should include:
• General revenue collected over the past 12 months as of the most recent
calculation date, as outlined in the Interim Final Rule (for example, for the
January 31, 2022 report, recipients should provide 12 month general revenue as
of December 31, 2021);
• Calculated revenue loss due to the Covid-19 public health emergency; and
• An explanation of how the revenue replacement funds were allocated to
government services (note: additional instructions and/or template to be provided
in user guide).
In calculating general revenue and the revenue loss due to the COVID-19 public
health emergency, recipients should follow the same guidance as described above
for the Interim Report.
h. Required Programmatic Data for Infrastructure Projects (EC 5): For all projects listed under
the Water, Sewer, and Broadband Expenditure Categories (see Appendix 1), more detailed
project -level information is required. Each project will be required to report expenditure
data as described above, but will also report the following information:
18 County means a county, parish, or other equivalent county division (as defined by the Census
Bureau). See 31 CFR 35.3.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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-� U.S. DEPARTMENT OF THE TREASURY
1. All infrastructure Droiects (EC 51:
• Projected/actual construction start date (month/year)
• Projected/actual initiation of operations date (month/year)
• Location (for broadband, geospatial location data)
• For projects over $10 million:
a. A recipient may provide a certification that, for the relevant project, all laborers
and mechanics employed by contractors and subcontractors in the
performance of such project are paid wages at rates not less than those
prevailing, as determined by the U.S. Secretary of Labor in accordance with
subchapter IV of chapter 31 of title 40, United States Code (commonly known
as the "Davis -Bacon Act"), for the corresponding classes of laborers and
mechanics employed on projects of a character similar to the contract work in
the civil subdivision of the State (or the District of Columbia) in which the work
is to be performed, or by the appropriate State entity pursuant to a corollary
State prevailing -wage -in -construction law (commonly known as "baby Davis -
Bacon Acts"). If such certification is not provided, a recipient must provide a
project employment and local impact report detailing:
■ The number of employees of contractors and sub -contractors working on
the project;
■ The number of employees on the project hired directly and hired through a
third party;
■ The wages and benefits of workers on the project by classification; and
■ Whether those wages are at rates less than those prevailing.19
Recipients must maintain sufficient records to substantiate this information
upon request.
b. A recipient may provide a certification that a project includes a project labor
agreement, meaning a pre -hire collective bargaining agreement consistent with
section 8(f) of the National Labor Relations Act (29 U.S.C. 158(f)). If the
recipient does not provide such certification, the recipient must provide a
project workforce continuity plan, detailing:
• How the recipient will ensure the project has ready access to a sufficient
supply of appropriately skilled and unskilled labor to ensure high -quality
construction throughout the life of the project;
• How the recipient will minimize risks of labor disputes and disruptions that
would jeopardize timeliness and cost-effectiveness of the project; and
• How the recipient will provide a safe and healthy workplace that avoids
delays and costs associated with workplace illnesses, injuries, and
fatalities;
• Whether workers on the project will receive wages and benefits that will
secure an appropriately skilled workforce in the context of the local or
regional labor market; and
• Whether the project has completed a project labor agreement.
c. Whether the project prioritizes local hires.
d. Whether the project has a Community Benefit Agreement, with a description of
any such agreement.
19 As determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of
title 40, United States Code (commonly known as the "Davis -Bacon Act"), for the corresponding
classes of laborers and mechanics employed on projects of a character similar to the contract work in
the civil subdivision of the State (or the District of Columbia) in which the work is to be performed.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
2. Water and sewer projects (EC 5.1-5.15):
• National Pollutant Discharge Elimination System (NPDES) Permit Number (if
applicable; for projects aligned with the Clean Water State Revolving Fund)
• Public Water System (PWS) ID number (if applicable; for projects aligned with the
Drinking Water State Revolving Fund)
3. Broadband projects (EC 5.16-5.17):
• Speeds/pricing tiers to be offered, including the speed/pricing of its affordability
offering
• Technology to be deployed
• Miles of fiber
Cost per mile
Cost per passing
Number of households (broken out by households on Tribal lands and those not on
Tribal lands) projected to have increased access to broadband meeting the
minimum speed standards in areas that previously lacked access to service of at
least 25 Mbps download and 3 Mbps upload
o Number of households with access to minimum speed standard of reliable 100
Mbps symmetrical upload and download
o Number of households with access to minimum speed standard of reliable 100
Mbps download and 20 Mbps upload
Number of institutions and businesses (broken out by institutions on Tribal lands
and those not on Tribal lands) projected to have increased access to broadband
meeting the minimum speed standards in areas that previously lacked access to
service of at least 25 Mbps download and 3 Mbps upload, in each of the following
categories: business, small business, elementary school, secondary school, higher
education institution, library, healthcare facility, and public safety organization
o Specify the number of each type of institution with access to the minimum speed
standard of reliable 100 Mbps symmetrical upload and download; and
o Specify the number of each type of institution with access to the minimum speed
standard of reliable 100 Mbps download and 20 Mbps upload
Distributions to NEUs - States and territories only (EC 7.4): Information on SLFRF
distributions to eligible NEUs. Each State and territory will be asked to provide an update
on distributions to individual NEUs, including whether the NEU has (1) received funding;
(2) declined funding and requested a transfer to the State under Section 603(c)(4) of the
Act; or (3) not taken action on its funding. States and territories should be prepared to report
on their information, including the following:
• NEU name
• NEU DUNS number
• NEU Taxpayer Identification Number (TIN)
• NEU Recipient Number (a unique identification code for each NEU assigned by the
State to the NEU as part of the request for funding)
• NEU contact information (e.g., address, point of contact name, point of contact email
address, and point of contact phone number)
• NEU authorized representative name and email address
• Initial allocation and, if applicable, subsequent allocation to the NEU (before
application of the 75 percent cap)
• Total NEU reference budget (as submitted by the NEU to the State as part of the
request for funding)
• Amount of the initial and, if applicable, subsequent allocation above 75 percent of the
NEU's reference budget which will be returned to Treasury
• Payment amount(s)
• Payment date(s)
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
For each eligible NEU that declined funding and requested a transfer to the State under
Section 603(c)(4), the State must also attach a form signed by the NEU, as detailed in the
Guidance on Distributions of Funds to Non -Entitlement Units of Local Government.
States with "weak" minor civil divisions (i.e., Illinois, Indiana, Kansas, Missouri, Nebraska,
North Dakota, Ohio, and South Dakota) should also list any minor civil divisions that the
State deemed ineligible.
NEU Documentation (NEUs only): Each NEU will also be asked to provide the following
information with their first report submitted by October 31, 2021:
• Copy of the signed award terms and conditions agreement (which was signed and
submitted to the State as part of the request for funding)
• Copy of the signed assurances of compliance with Title VI of the Civil Rights Act of
1964 (which was signed and submitted to the State as part of the request for funding)
• Copy of actual budget documents validating the top -line budget total provided to the
State as part of the request for funding
C. Recovery Plan Performance Report
States, territories, metropolitan cities, and counties with a population that exceeds 250,000
residents will also be required to publish and submit to Treasury a Recovery Plan performance
report ("Recovery Plan"). Each Recovery Plan must be posted on the public -facing website of
the recipient by the same date the recipient submits the report to Treasury. This reporting
requirement includes uploading a link to the publicly available document report along with
providing data in the Treasury reporting portal.
The Recovery Plan will provide the public and Treasury information on the projects recipients
are undertaking with program funding and how they are planning to ensure program outcomes
are achieved in an effective, efficient, and equitable manner. While this guidance outlines
some minimum requirements for the Recovery Plan, each recipient is encouraged to add
information to the plan they feel is appropriate to provide information to their constituents on
efforts they are taking to respond to the pandemic and promote economic recovery. Each
jurisdiction may determine the general form and content of the Recovery Plan, as long as it
includes the minimum information determined by Treasury. Treasury will provide a
recommended template but recipients may modify this template as appropriate for their
jurisdiction. The Recovery Plan will include key performance indicators identified by the
recipient and some mandatory indicators identified by Treasury.
The initial Recovery Plan will cover the period from the date of award to July 31, 2021 and
must be submitted to Treasury by August 31, 2021. Thereafter, the Recovery Plan will cover
a 12 -month period and recipients will be required to submit the report to Treasury within 30
days after the end of the 12 -month period (by July 31). The table below summarizes the report
timelines:
1 ,
Award Date — Jul
31, 2021 I
August 31, 2021
2
July
1,2021
—June
30, 2022
Jul
31, 2022
3
July
1, 2022
— June
30, 2023
July
31, 2023
4
July
1,2023
—June
30, 2024
Jul
31, 2024
5
July
1,2024
—June
30, 2025
Jul
31, 2025
6
July
1, 2025
— June
30, 2026
July
31, 2026
7
July 1, 2026 — December 31, 2026
March 31, 2027
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
23
U.S. DEPARTMENT OF THE TREASURY
The Recovery Plan will include, at a minimum, the following information:
1. Executive Summary
Provide a high-level overview of the jurisdiction's intended and actual uses of funding
including, but not limited to: the jurisdiction's plan for use of funds to promote a response to
the pandemic and economic recovery, key outcome goals, progress to date on those
outcomes, and any noteworthy challenges or opportunities identified during the reporting
period.
2. Uses of Funds
Describe in further detail your jurisdiction's intended and actual uses of the funds, such as
how your jurisdiction's approach would help support a strong and equitable recovery from the
COVID-19 pandemic and economic downturn. Describe any strategies employed to maximize
programmatic impact and effective, efficient, and equitable outcomes. Given the broad eligible
uses of funds and the specific needs of the jurisdiction, please also explain how the funds
would support the communities, populations, or individuals in your jurisdiction. Your
description should address how you are promoting each of the following, to the extent they
apply:
a. Public Health (EC 1): As relevant, describe how funds are being used to respond to
COVID-19 and the broader health impacts of COVID-19 and the COVID-19 public health
emergency.
b. Negative Economic Impacts (EC 2): As relevant, describe how funds are being used to
respond to negative economic impacts of the COVID-19 public health emergency,
including to households and small businesses.
c. Services to Disproportionately Impacted Communities (EC 3): As relevant, describe how
funds are being used to provide services to communities disproportionately impacted by
the COVID-19 public health emergency.
d. Premium Pay (EC 4): As relevant, describe the approach, goals, and sectors or
occupations served in any premium pay program. Describe how your approach prioritizes
low-income workers.
e. Water, sewer, and broadband infrastructure (EC 5): Describe the approach, goals, and
types of projects being pursued, if pursuing.
f. Revenue Replacement (EC 6): Describe the loss in revenue due to the COVID-19 public
health emergency and how funds have been used to provide government services.
Where appropriate, recipients should also include information on your jurisdiction's use (or
planned use) of other federal recovery funds including other programs under the American
Rescue Plan such as the Emergency Rental Assistance, Housing Assistance, and so forth, to
provide broader context on the overall approach for pandemic recovery.
3. Promoting equitable outcomes
Describe efforts to promote equitable outcomes, including how programs were designed with
equity in mind. Please include in your description how your jurisdiction will consider and
measure equity at the various stages of the program, including:
a. Goals: Are there particular historically underserved, marginalized, or adversely affected
groups that you intend to serve within your jurisdiction?
b. Awareness: How equal and practical is the ability for residents or businesses to become
aware of the services funded by the SLFRF?
c. Access and Distribution: Are there differences in levels of access to benefits and services
across groups? Are there administrative requirements that result in disparities in ability to
complete applications or meet eligibility criteria?
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
d. Outcomes: Are intended outcomes focused on closing gaps, reaching universal levels of
service, or disaggregating progress by race, ethnicity, and other equity dimensions
where relevant for the policy objective?
Treasury encourages uses of funds that promote strong, equitable growth, including racial
equity. Please describe how your jurisdiction's planned or current use of funds prioritizes
economic and racial equity as a goal, names specific targets intended to produce meaningful
equity results at scale, and articulates the strategies to achieve those targets. In addition,
please explain how your jurisdiction's overall equity strategy translates into the specific
services or programs offered by your jurisdiction in the following Expenditure Categories:
a. Negative Economic Impacts (EC 2): assistance to households, small businesses, and
non -profits to address impacts of the pandemic, which have been most severe among
low-income populations. This includes assistance with food, housing, and other needs;
employment programs for people with barriers to employment who faced negative
economic impacts from the pandemic (such as residents of low-income neighborhoods,
minorities, disconnected youth, the unemployed, formerly incarcerated people, veterans,
and people with disabilities); and other strategies that provide disadvantaged groups with
access to education, jobs, and opportunity.
b. Services to Disproportionately Impacted Communities (EC 3): services to address health
disparities and the social determinants of health, build stronger neighborhoods and
communities (e.g., affordable housing), address educational disparities (e.g., evidence -
based tutoring, community schools, and academic, social -emotional, and mental health
supports for high poverty schools), and promote healthy childhood environments (e.g.,
home visiting, child care).
The initial report must describe efforts to date and intended outcomes to promote equity.
Each annual report thereafter must provide an update, using qualitative and quantitative
data, on how the recipients' approach achieved or promoted equitable outcomes or
progressed against equity goals during the performance period. Please also describe any
constraints or challenges that impacted project success in terms of increasing equity. In
particular, this section must describe the geographic and demographic distribution of
funding, including whether it is targeted toward traditionally marginalized communities.
For the purposes of the SLFRF, equity is defined in the Executive Order 13985 On Advancing
Racial Equity and Support for Underserved Communities Through the Federal Government,
as issued on January 20, 2021.
4. Community Engagement
Please describe how your jurisdiction's planned or current use of funds incorporates written,
oral, and other forms of input that capture diverse feedback from constituents, community -
based organizations, and the communities themselves. Where relevant, this description must
include how funds will build the capacity of community organizations to serve people with
significant barriers to services, including people of color, people with low incomes, limited
English proficient populations, and other traditionally underserved groups.
5. Labor Practices
Describe workforce practices on any infrastructure projects being pursued (EC 5). How are
projects using strong labor standards to promote effective and efficient delivery of high -quality
infrastructure projects while also supporting the economic recovery through strong
employment opportunities for workers? For example, report whether any of the following
practices are being utilized: project labor agreements, community benefits agreements,
prevailing wage requirements, and local hiring.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
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U.S. DEPARTMENT OF THE TREASURY
6. Use of Evidence
The Recovery Plan should identify whether SLFRF funds are being used for evidence -based
interventions20 and/or if projects are being evaluated through rigorous program evaluations
that are designed to build evidence. Recipients must briefly describe the goals of the project,
and the evidence base for the interventions funded by the project. Recipients must specifically
identify the dollar amount of the total project spending that is allocated towards evidence -
based interventions for each project in the Public Health (EC 1), Negative Economic Impacts
(EC 2), and Services to Disproportionately Impacted Communities (EC 3) Expenditure
Categories.21
Recipients are exempt from reporting on evidence -based interventions in cases where a
program evaluation is being conducted. Recipients are encouraged to use relevant evidence
Clearinghouses, among other sources, to assess the level of evidence for their interventions
and identify evidence -based models that could be applied in their jurisdiction; such evidence
clearinghouses include the U.S. Department of Education's What Works Clearinghouse, the
U.S. Department of Labor's CLEAR, and the Childcare & Early Education Research
Connections and the Home Visiting Evidence of Effectiveness clearinghouses from
Administration for Children and Families, as well as other clearinghouses relevant to particular
projects conducted by the recipient. In such cases where a recipient is conducting a program
evaluation in lieu of reporting the amount of spending on evidence -based interventions, they
must describe the evaluation design including whether it is a randomized or quasi -
experimental design; the key research questions being evaluated; whether the study has
sufficient statistical power to disaggregate outcomes by demographics; and the timeframe for
the completion of the evaluation (including a link to completed evaluation if relevant).22 Once
the evaluation has been completed, recipients must post the evaluation publicly and link to the
completed evaluation in the Recovery Plan. Once an evaluation has been completed (or has
sufficient interim findings to determine the efficacy of the intervention), recipients should
determine whether the spending for the evaluated interventions should be counted towards
the dollar amount categorized as evidence -based for the relevant project.
For all projects, recipients may be selected to participate in a national evaluation, which would
study their project along with similar projects in other jurisdictions that are focused on the same
set of outcomes. In such cases, recipients may be asked to share information and data that is
needed for the national evaluation.
Recipients are encouraged to consider how a Learning Agenda, either narrowly focused on
SLFRF or broadly focused on the recipient's broader policy agenda, could support their
overarching evaluation efforts in order to create an evidence -building strategy for their
jurisdiction. 23
Appendix 2 contains additional information on evidence -based interventions for the purposes
of the Recovery Plan.
20As noted in Appendix 2, evidence -based refers to interventions with strong or moderate levels of
evidence.
21 Of note, recipients are only required to report the amount of the total funds that are allocated to
evidence -based interventions in the areas of Public Health, Negative Economic Impacts, and Services
to Disproportionately Impacted Communities that are marked by an asterisk in Appendix 1:
Expenditure Categories.
22 For more information on the required standards for program evaluation, see OMB M-20-12.
23 For more information on learning agendas, please see OMB M-19-23
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7. Table of Expenses by Expenditure Category
Please include a table listing the amount of funds used in each Expenditure Category (See
Appendix 1). The table should include cumulative expenses to date within each category, and
the additional amount spent within each category since the last annual Recovery Plan.
8. Project Inventory
List the name and provide a brief description of all SLFRF funded projects. Projects are new
or existing eligible government services or investments funded in whole or in part by SLFRF
funding. For each project, include the project name, funding amount, identification number
(created by the recipient and used thereafter in the quarterly Program and Expenditure
Report), project Expenditure Category (see Appendix 1), and a description of the project which
includes an overview of the main activities of the project, the approximate timeline, primary
delivery mechanisms and partners, if applicable, and intended outcomes. Include a link to the
website of the project if available. This information will provide context and additional detail
for the information reported quarterly in the Project and Expenditure Report.
For infrastructure investment projects (EC 5), project -level reporting will be more detailed, as
described for the Project and Expenditure Report above. Projects in this area may be grouped
by Expenditure Category if needed, with further detail (such as the specific project name and
identification number) provided in the Project and Expenditure Report. For infrastructure
projects, descriptions should note how the project contributes to addressing climate change.
9. Performance Report
The Recovery Plan must include key performance indicators for the major SLFRF funded
projects undertaken by the recipient. The recipient has flexibility in terms of how this
information is presented in the Recovery Plan, and may report key performance indicators for
each project, or may group projects with substantially similar goals and the same outcome
measures. In some cases, the recipient may choose to include some indicators for each
individual project as well as crosscutting indicators.
Performance indicators should include both output and outcome measures. Output measures,
such as number of students enrolled in an early learning program, provide valuable information
about the early implementation stages of a project. Outcome measures, such as the percent
of students reading on grade level, provide information about whether a project is achieving
its overall goals. Recipients are encouraged to use logic models24 to identify their output and
outcome measures. While the initial report will focus heavily on early output goals, recipients
must include the related outcome goal for each project and provide updated information on
achieving these outcome goals in annual reports. In cases where recipients are conducting a
program evaluation for a project (as described above), the outcome measures in the
performance report should be aligned with those being evaluated in the program. To support
their performance measurement and program improvement efforts, recipients are permitted to
use funds to make improvements to data or technology infrastructure and data analytics, as
well as program evaluations.
10. Required Performance Indicators and Programmatic Data
While recipients have discretion on the full suite of performance indicators to include, a number
of mandatory performance indicators and programmatic data must be included. These are
necessary to allow Treasury to conduct oversight as well as understand and aggregate
program outcomes across recipients. This section provides an overview of the mandatory
performance indicators and programmatic data. This information may be included in each
recipient's Recovery Plan as they determine most appropriate, including combining with the
24 A logic model is a tool that depicts the intended links between program investments and outcomes,
specifically the relationships among the resources, activities, outputs, outcomes, and impact of a
program.
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section above, but this data will also need to be entered directly into the Treasury reporting
portal. Below is a list of required data for each Expenditure Category:
a. Household Assistance (EC 2.2 & 2.5) and Housing Support (EC 3.10-3.12):
• Number of people or households receiving eviction prevention services (including legal
representation)
• Number of affordable housing units preserved or developed
b. Negative Economic Impacts (EC 2):
• Number of workers enrolled in sectoral job training programs
• Number of workers completing sectoral job training programs
• Number of people participating in summer youth employment programs
c. Education Assistance (EC 3.1-3.5):
• Number of students participating in evidence -based tutoring programs25
d. Healthy Childhood Environments (EC 3.6-3.9):
• Number of children served by childcare and early learning (pre-school/pre-K/ages 3-
5)
• Number of families served by home visiting
The initial report should include the key indicators above. Each annual report thereafter should
include updated data for the performance period as well as prior period data, and a brief
narrative adding any additional context to help the reader interpret the results and understand
the any changes in performance indicators over time. To the extent possible, Treasury also
encourages recipients to provide data disaggregated by race, ethnicity, gender, income, and
other relevant factors.
11. Ineligible Activities: Tax Offset Provision (States and territories only)
The following information is required for Treasury to ensure SLFRF funding is not used for
ineligible activities.
In each reporting year, States and territories will report certain items related to the Tax Offset
Provision 31 CFR 35.8, as detailed below. As indicated in the Interim Final Rule, Treasury is
seeking comment on reporting requirements related to the Tax Offset Provision, including
ways to better rely on information already produced by States and territories and to minimize
burden.
The terms "reporting year," "baseline," "covered change," "net reduction in total spending," and
"tax revenue" are defined in the Interim Final Rule, 31 CFR 35.3. For purposes of calculating
a net reduction in total spending, total spending for the fiscal year ending 2019 should be
reported on an inflation -adjusted basis, consistent with the Interim Final Rule, 31 CFR 35.3.
Similarly, for purposes of calculating baseline, tax revenue for the fiscal year 2019 should be
reported on an inflation -adjusted basis, consistent with the Interim Final Rule, 31 CFR 35.3.
For purposes of reporting actual tax revenue and calculating tax revenue for the fiscal year
ending 2019,26 (a) if available, recipients should report information using audited financials
and (b) recipients may provide data on a cash, accrual, or modified accrual basis, but must be
consistent in their approach across all reporting periods. Similarly, for purposes of calculating
25 For more information on evidence -based tutoring programs, refer to the U.S. Department of
Education's 2021 ED COVID-19 Handbook (Volume 2), which summarizes research on evidence -
based tutoring programs (see the bottom of page 20.
26 Tax revenue for fiscal year ending 2019 is relevant for calculating the recipient's baseline.
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a net reduction in total spending, recipients should report data using audited financials where
available.
a. Revenue -reducing Covered Changes:
For each reporting year, a recipient must report the value of covered changes that the
recipient predicts will have the effect of reducing tax revenue in a given reporting year
(revenue -reducing covered changes), similar to the way it would in the ordinary course of
its budgeting process. The value of these covered changes may be reported based on
estimated values produced by a budget model, incorporating reasonable assumptions,
that aligns with the recipient government's existing approach for measuring the effects of
fiscal policies, and that measures relative to a current law baseline. The covered changes
may also be reported based on actual values using a statistical methodology to isolate the
change in year -over -year revenue attributable to the covered change(s), relative to the
current law baseline prior to the change(s). Estimation approaches should not use
dynamic methodologies that incorporate the projected effects of the policies on
macroeconomic growth. In general and where possible, reported values should be
produced by the agency of the recipient government responsible for estimating the costs
and effects of fiscal policy changes. Recipients must maintain records regarding the
identification and predicted effects of revenue -reducing covered changes.
b. Baseline Revenue:
Baseline has the meaning defined in the Interim Final Rule, 31 CFR 35.3.
Whether the revenue -reducing covered changes are in excess of the de minimis.
Recipients must determine whether the aggregate value of the revenue -reducing covered
changes in the reporting year is less than one percent of baseline revenue.
c. Actual Tax Revenue:
Actual tax revenue means the actual tax revenue received by the recipient government in
the reporting year. Tax revenue has the meaning defined in the Interim Final Rule, 31 CFR
35.3.
d. Reduction in Net Tax Revenue:
The reduction in net tax revenue is equal to baseline revenue minus actual tax revenue in
each reporting year. If this value is zero or negative, there is no reduction in net tax
revenue.
e. Any revenue -increasing covered changes:
A recipient must report the value of covered changes that have had or that the recipient
predicts will have the effect of increasing tax revenue in a given reporting year (revenue -
increasing covered changes), similar to the way it would in the ordinary course of its
budgeting process. The value of these covered changes may be reported based on
estimated values produced by a budget model, incorporating reasonable assumptions,
that aligns with the recipient's existing approach for measuring the effects of fiscal policies,
and that measures relative to a current law baseline. The covered changes may also be
reported based on actual values using a statistical methodology to isolate the change in
year -over -year revenue attributable to the covered change(s), relative to the current law
baseline prior to the change(s). Estimation approaches should not use dynamic
methodologies that incorporate the projected effects of the policies on macroeconomic
growth. In general and where possible, reporting should be produced by the agency of
the recipient responsible for estimating the costs and effects of fiscal policy changes.
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Recipients should maintain records regarding revenue -reducing covered changes and
estimates of such changes.
Net reduction in total spending, and tables of specific spending cuts:
Recipients must report on spending cuts. To calculate the amount of spending cuts that
are available to offset a reduction in tax revenue, the recipient must first consider whether
there has been a reduction in total net spending, excluding Fiscal Recovery Funds (net
reduction in total spending). As in the Interim Final Rule, 35 CFR 35.3, net reduction in
total spending is measured as the recipient government's total spending for a given
reporting year excluding Fiscal Recovery Funds, subtracted from its total spending for its
fiscal year ending in 2019, adjusted for inflation using the Bureau of Economic Analysis's
Implicit Price Deflator for the gross domestic product of the United States. If that
subtraction yields a positive value, there has been a net reduction; if it yields zero or a
negative value, there has not been a net reduction. If there has been no net reduction in
total spending, a recipient will have no spending cuts to offset a reduction in net tax
revenue.
Next, a recipient must determine and aggregate the value of spending cuts in each
"reporting unit," as defined below. For each reporting unit, the recipient must report (1) the
amount of the reduction in spending in the reporting unit relative to its inflation -adjusted
FY 2019 level, (2) the amount of any Fiscal Recovery Funds spent in the reporting unit,
and (3) the amount by which the reduction in spending exceeds the Fiscal Recovery funds
spent in the reporting unit. If a recipient has not spent amounts received from the Fiscal
Recovery Funds in a reporting unit, the full amount of the reduction in spending counts as
a covered spending cut and may be included in aggregate spending cuts. If the recipient
has spent amounts received from the Fiscal Recovery Funds, such amounts generally
would be deemed to have replaced the amount of spending cut, and only reductions in
spending above the amount of Fiscal Recovery Funds spent on the reporting unit would
be eligible to offset a reduction in net tax revenue. Only such amounts above the amount
of Fiscal Recovery Funds spent on the reporting unit should be included in the aggregate
of spending cuts.
To align with existing reporting and accounting, the Interim Final Rule considers the
department, agency, or authority from which spending has been cut and whether the
recipient government has spent amounts received from the Fiscal Recovery Funds on that
same department, agency, or authority. Recipients may also choose to report at a more
granular sub -department level. Recipients are encouraged to define and report spending
in departments, sub -departments (e.g., bureaus), agencies, or authorities (each a
"reporting unit") in a manner consistent with their existing budget process and should, to
the extent possible, report using the same reporting unit in each reporting year. For
example, if a State health department maintains separate budgets for different units (e.g.,
medical and public health units), those units may be reported and considered separately.
Spending cuts must be reported relative to FY 2019 spending levels, adjusted for inflation,
and excluding Fiscal Recovery Funds from reporting year spending levels.
Recipients should maintain records regarding spending cuts. As discussed in the Interim
Final Rule, in order to help ensure governments use Fiscal Recovery Funds in a manner
consistent with the prescribed eligible uses and do not use Fiscal Recovery Funds to
indirectly offset a reduction in net tax revenue resulting from a covered change, Treasury
will monitor changes in spending throughout the covered period. Evasions of the Tax
Offset Provision may be subject to recoupment.
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Appendix 1: Expenditure Categories
The Expenditure Categories (EC) listed below must be used to categorize each project as
noted in Part 2 above. The term "Expenditure Category" refers to the detailed level (e.g., 1.1
COVID-10 Vaccination). When referred to as a category (e.g., EC 1) it includes all Expenditure
Categories within that level.
.
1.1
.
COVID-19 Vaccination A
1.2
COVID-19 Testing A
1.3
COVID-19 Contact Tracing
1.4
Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites,
Schools, etc.)*
1.5
Personal Protective Equipment
1.6
Medical Expenses (including Alternative Care Facilities)
1.7
Capital Investments or Physical Plant Changes to Public Facilities that respond to the
COVID-19 public health emergency
1.8
Other COVID-19 Public Health Expenses (including Communications, Enforcement,
Isolation/Quarantine)
1.9
Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to
COVID-19
1.10
Mental Health Services*
1.11
Substance Use Services*
1.12
2.1
Other Public Health Services
Household Assistance: Food Programs* ^
2.2
Household Assistance: Rent, Mortgage, and Utility Aid* A
2.3
Household Assistance: Cash Transfers* A
2.4
Household Assistance: Internet Access Programs* A
2.5
Household Assistance: Eviction Prevention* A
2.6
Unemployment Benefits or Cash Assistance to Unemployed Workers*
2.7
Job Training Assistance (e.g., Sectoral job -training, Subsidized Employment,
Employment Supports or Incentives)* A
2.8
Contributions to UI Trust Funds
2.9
Small Business Economic Assistance (General)* A
2.10
Aid to Nonprofit Organizations*
2.11
Aid to Tourism, Travel, or Hospitality
2.12
Aid to Other Impacted Industries
2.13
Other Economic Support* A
2.14
Rehiring Public Sector Staff
3.1
Education Assistance: Early Learning* A
3.2
Education Assistance: Aid to High -Poverty Districts A
3.3
Education Assistance: Academic Services* A
3.4
Education Assistance: Social, Emotional, and Mental Health Services* A
3.5
Education Assistance: Other* A
3.6
Healthy Childhood Environments: Child Care*
3.7
Healthy Childhood Environments: Home Visiting* A
3.8
Healthy Childhood Environments: Services to Foster Youth or Families Involved in
Child Welfare System* A
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3.9
Healthy Childhood Environments: Other* A
3.10
Housing Support: Affordable Housing* A
3.11
Housing Support: Services for Unhoused Persons* A
3.12
Housing Support: Other Housing Assistance* A
3.13
Social Determinants of Health: Other* A
3.14
Social Determinants of Health: Community Health Workers or Benefits Navigators* ^
3.15
Social Determinants of Health: Lead Remediation A
3.16
4.1
Social Determinants of Health: Community Violence Interventions* A
Public Sector Employees
4.2
5.1
Private Sector: Grants to Other Employers
Clean Water: Centralized Wastewater Treatment
5.2
Clean Water: Centralized Wastewater Collection and Conveyance
5.3
Clean Water: Decentralized Wastewater
5.4
Clean Water: Combined Sewer Overflows
5.5
Clean Water: Other Sewer Infrastructure
5.6
Clean Water: Stormwater
5.7
Clean Water: Energy Conservation
5.8
Clean Water: Water Conservation
5.9
Clean Water: Non point Source
5.10
Drinking water: Treatment
5.11
Drinking water: Transmission & Distribution
5.12
Drinking water: Transmission & Distribution: Lead Remediation
5.13
Drinking water: Source
5.14
Drinking water: Storage
5.15
Drinking water: Other water infrastructure
5.16
Broadband: "Last Mile" projects
5.17
6.1
7.1 •
Broadband: Other projects
Provision of Government Services
Administrative Expenses
7.2
Evaluation and Data Analysis
7.3
Transfers to Other Units of Government
7.4
Transfers to Non -entitlement Units (States and territories only)
*Denotes areas where recipients must identify the amount of the total funds that are allocated
to evidence -based interventions (see Use of Evidence section above for details)
ADenotes areas where recipients must report on whether projects are primarily serving
disadvantaged communities (see Project Demographic Distribution section above for details)
27 Definitions for water and sewer Expenditure Categories can be found in the EPA's handbooks. For
"clean water" expenditure category definitions, please see:
https://www.epa.gov/sites/production/files/2018-03/documents/cwdefinitions.pdf. For "drinking water"
expenditure category definitions, please see: https://www.epa.gov/dwsrf/drinking-water-state-
revolving-fund-national-information-management-system-reports.
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Appendix 2: Evidenced -Based Intervention Additional Information
What is evidence -based?
For the purposes of the SLFRF, evidence -based refers to interventions with strong or
moderate evidence as defined below:
Strong evidence means the evidence base that can support causal conclusions for the specific
program proposed by the applicant with the highest level of confidence. This consists of one
or more well -designed and well -implemented experimental studies conducted on the proposed
program with positive findings on one or more intended outcomes.
Moderate evidence means that there is a reasonably developed evidence base that can
support causal conclusions. The evidence base consists of one or more quasi -experimental
studies with positive findings on one or more intended outcomes OR two or more non -
experimental studies with positive findings on one or more intended outcomes. Examples of
research that meet the standards include: well -designed and well -implemented quasi -
experimental studies that compare outcomes between the group receiving the intervention
and a matched comparison group (i.e., a similar population that does not receive the
intervention).
Preliminary evidence means that the evidence base can support conclusions about the
program's contribution to observed outcomes. The evidence base consists of at least one non -
experimental study. A study that demonstrates improvement in program beneficiaries over
time on one or more intended outcomes OR an implementation (process evaluation) study
used to learn and improve program operations would constitute preliminary evidence.
Examples of research that meet the standards include: (1) outcome studies that track program
beneficiaries through a service pipeline and measure beneficiaries' responses at the end of
the program; and (2) pre- and post-test research that determines whether beneficiaries have
improved on an intended outcome.
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Revision Log
1.0
i 11
June 17, 2021
Initial publication
1.1
June 24, 2021
• Pg. 12, removed references to "summary" level with
respect to reporting by Expenditure Categories in the
Interim Report to avoid confusion.
• Pg. 13, revised the coverage period end date for the
Interim Report from June 30, 2021 to July 31, 2021 to
align with the IFR.
• Pg. 13, removed references to "summary" level with
respect to reporting by Expenditure Categories in the
Interim Report to avoid confusion.
• Pg. 31, removed references to "summary level" with
respect to Expenditure Categories in Appendix 1 to
avoid confusion.
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City of Fayetteville, Arkansas - Budget Adjustment Form (Legistar)
Budget Year Division Adjustment Number
/Org2 Non -Departmental (800)
2021
Requestor: Paul A Becker
BUDGET ADJUSTMENT DESCRIPTION / JUSTIFICATION:
A PROGRAM TO USE FEDERAL COVID-19 FUNDS:
A RESOLUTION TO APPROVING A SUBRECIPIENT AGREEMENT WITH THE NORTHWEST ARKANSAS COUNCIL
FOUNDATION TO PROVIDE A COVID COMMUNICATIONS CAMPAIGN AND VACCINATION CAMPAIGN ON A REGION -
WIDE BASIS IN WASHINGTON AND BENTON COUNTIES
RESOLUTION/ORDINANCE
COUNCIL DATE: 10/24/2021
LEGISTAR FILE ID#: 2021-0786
KeivCwsprC4
10/1/2021 4:56 PM
Budget Director Date
TYPE: D - (City Council)
JOURNAL #:
GLDATE:
CHKD/POSTED:
TOTAL
Account Number
93,969 93,969
Increase / (Decrease)
Expense Revenue
v.20210831
Proiect.Sub#
Project Sub.Detl AT Account Name
2246.800.9711-5729.00
93,969 -
20023 2021 EX Transfer to - NWA Council
2246.800.9246-4309.01
- 93,969
20023 2021 RE Federal Grants - Operational
H:\Budget Adjustments\2021_Budget\City
Council\10-19-2021\2021-0786 BA NWA Council COVID Campaign.xlsm 1 of 1
City of Fayetteville Staff Review Form
2021-0786
Legistar File ID
10/19/2021
City Council Meeting Date - Agenda Item Only
N/A for Non -Agenda Item
Paul Becker 10/1/2021 CHIEF OF STAFF (070)
Submitted By Submitted Date Division / Department
Action Recommendation:
Staff recommends approving a subrecipient agreement with the Northwest Arkansas Council Foundation to provide
a COVID communications campaign and vaccination campaign on a region -wide basis in Washington and Benton
counties and approval of a budget adjustment.
Budget Impact:
2246.800.9711-5729.00
2246 - American Rescue Plan Act
Account Number
Fund
20023.2021
American Rescue Plan Grant
Project Number
Project Title
Budgeted Item? Yes
Current Budget
$ 400,000.00
Funds Obligated
$ 400,000.00
Current Balance
$
Does item have a cost? Yes
Item Cost
$ 93,969.00
Budget Adjustment Attached? Yes
Budget Adjustment
$ 93,969.00
Remaining Budget
V20210527
Purchase Order Number: Previous Ordinance or Resolution #
Change Order Number: Approval Date:
Original Contract Number:
Comments:
CITY OF
FAYETTEVILLE
ARKANSAS
MEETING OF OCTOBER 19, 2021
TO: Mayor and City Council
THRU: Paul Becker, Chief Financial Officer
FROM: Paul Becker and Andrea Foren
DATE: October 1, 2021
CITY COUNCIL MEMO
SUBJECT: Staff recommends approving a Subrecipient Agreement with the Northwest
Arkansas Council Foundation to provide a COVID Communications Campaign
and Vaccination Campaign on a region- wide basis in Washington and Benton
Counties and approval of a Budget Adjustment.
RECOMMENDATION:
To approve the attached Subrecipient Agreement with the Northwest Arkansas Council
Foundation and provide funding from American Rescue Plan Local Recovery Funds for the
scope of work identified in Appendix A of this resolution.
DISCUSSION:
The City was contacted by the Northwest Arkansas Council to request funds needed to perform
a region -wide communication and vaccination campaign in Benton and Washington Counties
Total funding for this campaign is being solicited from private philanthropy businesses as well as
large Northwest Arkansas Cities and Counties and the State of Arkansas. The amounts
requested from the Cities of Fayetteville, Springdale, Rodgers and Bentonville is one dollar per
resident based on the latest census.
As structured, the Northwest Arkansas Council Foundation would function as a subrecipient of
the Fayetteville grant award and must, therefore, agree to meet the terms and reporting
requirements of the grant as specified in the attached Subrecipient Agreement.
BUDGET/STAFF IMPACT:
This request will be funded by approval of the attach budget adjustment for $93,969 which will
be appropriated from the American Rescue Plan Local Recovery Grant received by the City.
Attachments:
ARPA Subrecipient Contract with Northwest Arkansas Council
Mailing Address:
113 W. Mountain Street www.fayetteville-ar.gov
Fayetteville, AR 72701
SEE REVISED 10/12/21 CONTRACT
CITY OF
FAYETTEVI LLE
ARKANSAS
SUBRECIPIENT AGREEMENT for AMERICAN RESCUE PLAN
City of Fayetteville, AR
and
Northwest Arkansas Council Foundation
City of Fayetteville Subrecipient# ARPA-001
This Subrecipient Agreement (Agreement) is made entered into on this day of ,
2021 between the City of Fayetteville, hereafter referred to as ("the City) and the Northwest Arkansas Council
Foundation, hereafter referred to as ("the NACF" or "subrecipient").
WHEREAS, The NAC requested funding to contribute to a region wide COVID communication and vaccination
campaign with the City of Fayetteville contributing a proportional amount of funding based on current
population. Other contributing City's include Bentonville, Rogers, and Springdale;
WHEREAS, The City of Fayetteville has received funding through the American Rescue Plan Act (ARPA), 31 CFR
Part 35 from the United States Department of the Treasury;
WHEREAS, it shall be hereby disclosed this Agreement shall make NACF a subrecipient / pass -through entity
under 2 CFR 200.1 receiving a subaward under sections 602(c)(3) and 603(c)(3) and be considered for this
subaward to carry out a program or project on behalf of the City with the City's Federal award funding;
WHEREAS, the City notifies the subrecipient: (1) that this funding shall be considered a subaward of ARPA
funds; (2) subrecipient shall adhere to any and all compliance requirements for use of ARPA funds; and (3) any
and all reporting requirements for expenditures of ARPA funds.
WHEREAS, NACF shall also be identified with EIN 46-0807914 and SAM.gov Unique Entity ID UXTWG5AF9945;
WHEREAS, this Agreement is reflective of requirements issued and identified with the Interim Final Rule of the
Department of the Treasury and this agreement is subject to change with the Final Rule of the Department of
the Treasury, which has not been yet issued as of the date of this Agreement;
In consideration of the covenants and conditions hereinafter set forth, the City and subrecipient agree as
follows:
1. INFORMATION REQUIRED BY THE UNIFORM GRANT GUIDANCE (UGG) §200.332:
a) Subrecipient Name (must match the name associated with its Unique Entity Identifier):
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
Page 1 of 19
CITY OF
FAYETTEVILLE
ARKANSAS
Northwest Arkansas Council Foundation
4100 Corporate Center Dr., Suite 205
Springdale, AR 72762-5768
b) Subrecipient's Unique Entity Identifier (formerly known as DUNS number):
DUNS Unique Entity ID: 933792038
SAM Unique Entity ID: UXTWG5AF9945
c) Subaward Budget Period: Subaward budget period shall begin on the Start date as defined above and
shall ends on the end date.
d) Total Amount of Federal Funds obligated to the subrecipient by the City: $93,969.00
e) Name of Federal Awarding Agency and Contact Information:
United States Department of Treasury (US Treasury)
Attn: State and Local Fiscal Recovery Funds
1500 Pennsylvania Avenue NW,
Washington, DC 20220
SLFRP@treasury.gov
Telephone: 202-622-6415
Website: https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local- and-tribal-
governments/state-and-local-fiscal-recovery-fund
Contact Information for the City:
Paul A. Becker
Chief Financial Officer
113 W. Mountain
Fayetteville, AR 72701
pbecker@fayetteville-ar.gov
Telephone: 479-575-8330
Contact Information for the Subrecipient:
Northwest Arkansas Council Foundation
Attn: Mike Harvey
4100 Corporate Center Drive, Suite 205
Springdale, AR 72762
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f) Assistance Listings Number and Title: 21.027 Coronavirus State and Local Fiscal Recovery Funds
(CSLFRF) (AKA the American Rescue Plan Local Recovery Funds, hereinafter ARPA) See
https://sam.gov/fal/7cecfdef62dc42729a3fdcd449bd62b8/view
This subaward is a program grant and not for Research and Development.
g) Indirect Cost Rate: (de minimis cost rate) maximum of 10% of direct costs if indicated in the budget.
2. AGREEMENT: This Agreement, contains the entire agreement and understanding between the parties
hereto and supersedes any prior or contemporaneous written or oral agreements, representations and
warranties between them respecting the subject matter hereof. This Agreement is also composed of the
following appendices:
a. Appendix A — Scope of Work & Project Allocation
b. Appendix B — Department of the Treasury, 31 CFR Part 35, RIN 1505-AC77, Coronavirus State and
Local Fiscal Recovery Finds, Action: Interim Final Rule
c. Appendix C — Compliance and Reporting Guidance, State and Local Fiscal Recovery Funds
i. This appendix document shall be replaced in its entirety immediately upon issuance of the
Final Rule.
3. SUBCONTRACTING: Subrecipient is permitted to sub -contract with third parties to complete the scope of
work identified in this contract not enter into any sub -agreements, in whole or in part, without the prior
written approval of the City; however, any subcontract shall follow all federal, local and state regulations.
Subrecipient shall not be allowed to disperse funds in a subrecipient manner to another third party without
prior approval.
4. PERIOD OF PERFORMANCE: This Agreement shall commence on the date stated above and shall expire one
year from commencement. The Agreement may be extended or shortened upon mutual written agreement
of the parties.
5. STANDARDS OF WORK: Subrecipient agrees that the performance of the work and services of this
Agreement shall conform to the highest professional standards.
6. TAXES: Subrecipient shall pay all current and applicable local, city, county, state and federal taxes, licenses
and assessments related to the Scope of Work to be performed by Subrecipient including but not limited to
those payments required by all federal, state and local laws, and any other laws and Acts under which
Subrecipient may be liable.
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7. COMPLIANCE WITH APPLICABLE LAWS: Subrecipient shall perform all activities funded by this Agreement in
accordance with all applicable federal, state and local laws, including without limitation laws which regulate
the use of funds allocated under ARPA. The term "federal, state and local laws" as used in this Agreement
shall mean all applicable statutes, rules, regulations, executive orders, directives or other laws, including all
laws as presently in effect and as may be amended or otherwise altered during the Agreement Term, as well
as all such laws which may be enacted or otherwise become effective during the Agreement Term. The
term "federal, state and local laws" shall include, without limitation:
a. Federal Requirements:
Subrecipient agrees to comply with the requirements of section 603 of the Rescue Act,
regulations adopted by Treasury pursuant to section 603(f) of the Act, and guidance issued
by Treasury regarding the foregoing. The Subrecipient also agrees to comply with all other
applicable federal statutes, regulations, and executive orders, and the Subrecipient shall
provide for such compliance by other parties in any agreements it enters into with other
parties relating to this award.
ii. Federal regulations applicable to this award include, without limitation, the following:
a. Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards, 2 C.F.R. Part 200, other than such
provisions as Treasury may determine are inapplicable to this Award and
subject to such exceptions as may be otherwise provided by Treasury. Subpart
F — Audit Requirements of the Uniform Guidance, implementing the Single
Audit Act, shall apply to this award. The following 2 CFR Part 200 Policy
requirements are excluded from coverage under this assistance listing: For 2
CFR Part 200, Subpart C, the following provisions do not apply to the CSLFRF
program: 2 C.F.R. § 200.204 (Notices of Funding Opportunities); 2 C.F.R. §
200.205 (Federal awarding agency review of merit of proposal); 2 C.F.R. §
200.210 (Pre -award costs);and 2 C.F.R. § 200.213(Reporting a determination
that a non -Federal entity is not qualified for a Federal award). For 2 CFR Part
200, Subpart D, the following provisions do not apply to the SLFRF program: 2
C.F.R. § 200.308 (revision of budget or program plan); 2 C.F.R. § 200.309
(modifications to period of performance); C.F.R. § 200.305 (b)(8) and (9)
(Federal Payment).
b. Universal Identifier and System for Award Management (SAM), 2 C.F.R. Part
25, pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part
25 is hereby incorporated by reference. As SAM is scheduled to be phased
out, compliance with a successor government -wide system officially
designated by the Office of Management and Budget (OMB).
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c. Reporting Subaward and Executive Compensation Information, 2 C.F.R. Part
170, pursuant to which the award term set forth in Appendix A to 2 C.F.R. Part
170 is hereby incorporated by reference.
d. OMB Guidelines to Agencies on Governmentwide Debarment and Suspension
(Nonprocurement), 2 C.F.R. Part 180, including the requirement to include a
term or condition in all lower tier covered transactions (contracts and
subcontracts described in 2 C.F.R. Part 180, subpart B) that the award is
subject to 2 C.F.R. Part 180 and Treasury's implementing regulation at 31
C.F.R. Part 19.
e. Subrecipient Integrity and Performance Matters, pursuant to which the award
term set forth in 2 C.F.R. Part 200, Appendix XII to Part 200 is hereby
incorporated by reference.
f. Governmentwide Requirements for Drug -Free Workplace, 31 C.F.R. Part 20.
g. New Restrictions on Lobbying, 31 C.F.R. Part 21.
h. Uniform Relocation Assistance and Real Property Acquisitions Act of 1970 (42
U.S.C. §§ 4601-4655) and implementing regulations.
i. Generally applicable federal environmental laws and regulations.
iii. Statutes and regulations prohibiting discrimination applicable to this award include without
limitation, the following:
a. Title VI of the Civil Rights Act of 1964 (42 U.S.C. §§ 2000d et seq.) and
Treasury's implementing regulations at 31 C.F.R. Part 22, which prohibit
discrimination on the basis of race, color, or national origin under programs or
activities receiving federal financial assistance; Subrecipient and its sub-
contractors, sub -recipients, sub -grantees, successors, transferees, or
assignees, shall comply with: Title VI of the Civil Rights Act of 1964 (42 U.S.C. §
2000d et seq., 78 stat. 252) and its applicable federal statutory, regulatory
authorities, other pertinent directives, circulars, policy, memoranda, and
guidance prohibiting discrimination on the basis of race, color, national origin,
age, sex, and disability and give assurance that it will promptly take any
measures necessary to ensure such compliance.
b. The Fair Housing Act, Title VIII of the Civil Rights Act of 1968 (42 U.S.C. §§
3601 et seq.), which prohibits discrimination in housing on the basis of race,
color, religion, national origin, sex, familial status, or disability;
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c. Section 504 of the Rehabilitation Act of 1973, as amended (29 U.S.C. § 794),
which prohibits discrimination on the basis of disability under any program or
activity receiving federal financial assistance;
d. The Age Discrimination Act of 1975, as amended (42 U.S.C. §§ 6101 et seq.),
and Treasury's implementing regulations at 31 C.F.R. Part 23, which prohibit
discrimination on the basis of age in programs or activities receiving federal
financial assistance; and
e. Title II of the Americans with Disabilities Act of 1990, as amended (42 U.S.C.
§§ 12101 et seq.), which prohibits discrimination on the basis of disability
under programs, activities, and services provided or made available by state
and local governments or instrumentalities or agencies thereto.
iv. Remedial Actions. In the event of the Subecipient's noncompliance with section 603 of the
Act, other applicable laws, Treasury's implementing regulations, guidance, or any reporting
or other program requirements, the City may impose additional conditions on the receipt of
a subsequent payments, if any, or take other available remedies as set forth in 2 C.F.R. §
200.339. In the case of a violation of section 603(c) of the Act regarding the use of funds,
previous payments shall be subject to recoupment as provided in section 603(e) of the Act.
v. Hatch Act The Subrecipient agrees to comply, as applicable, with requirements of the Hatch
Act (5 U.S.C. §§ 1501-1508 and 7324-7328), which limit certain political activities of State or
local government employees whose principal employment is in connection with an activity
financed in whole or in part by this federal assistance.
vi. False Statements. The Subrecipient understands that making false statements or claims in
connection with this award is a violation of federal law and may result in criminal, civil, or
administrative sanctions, including fines, imprisonment, civil damages and penalties,
debarment from participating in federal awards or contracts, and/or any other remedy
available by law.
vii. Monitoring: The Subrecipient agrees to allow the City and the US Treasury to monitor the
subaward in accordance with all applicable statutes, regulations, OMB circulars, and
guidelines. The Subrecipient shall allow the City to have oversight of any Subrecipient's
spending and monitoring of specific outcomes and benefits attributable to use of subaward
funds by Subrecipient.
viii. Audits In accordance with the provisions of 2 CFR 200, Subpart F - Audit Requirements,
nonfederal entities that expend financial assistance of $750,000 or more in Federal awards
will have a single audit conducted for that year. Non-federal entities that expend less than
$750,000 a year in Federal awards are exempt from Federal audit requirements for that year,
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except as noted in 2 CFR 200.503. The City is responsible for resolving audit findings
specifically related to the subaward and not responsible for resolving cross -cutting findings
(§200.332(d)(4)).
ix. Disclosure of Information. Any confidential or personally identifiable information (PII)
acquired during the course of the subaward shall not be disclosed by the Subrecipient to any
person, firm, corporation, association, or other entity for any reason or purpose whatsoever
without the prior written consent of the City, either during the term of the Agreement or
after termination of the Agreement for any reasons whatsoever. The Subrecipient agrees to
abide by applicable federal regulations regarding confidential information and research
standards, as appropriate, for federally supported projects.
x. Conflicts of Interest. The Subrecipient understands and agrees it must maintain a conflict of
interest policy consistent with 2 C.F.R. § 200.318(c) and that such conflict of interest policy is
applicable to each activity funded under this award. Subrecipients must disclose in writing to
the City, as appropriate, any potential conflict of interest affecting the awarded funds in
accordance with 2 C.F.R. § 200.112.
b. City and Other City Requirements (see §200.332(a)(3)):
i. Reporting: Subrecipient agrees to comply with any reporting obligations established by the
City as it relates to this award. Subrecipient shall submit a Monthly Grant Report by the 6th
of the month to the Contact for the City.
ii. Maintenance of and Access to Records:
a. The Subrecipient shall maintain records and financial documents sufficient to
evidence compliance with section 603(c) of the Act, Treasury's regulations
implementing that section, and guidance issued by Treasury regarding the
foregoing.
b. The US Treasury Office of Inspector General and the Government
Accountability Office, the City, or their authorized representatives, shall have
the right of access to records (electronic and otherwise) of the Subrecipient in
order to conduct audits or other investigations.
c. Records shall be maintained by Subrecipient for a period of five (5) years after
all funds have been audited, the audit resolved, and all funds expended or
returned to Treasury, whichever is later.
iii. Administrative Considerations. Where policies of the Subrecipient differ from those of, such
as travel reimbursement, fringe benefits, indirect costs, etc., the policies of the subrecipient
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shall be applicable to cost incurrences under the Agreement provided such policies comply
with awarding agency regulations.
iv. Responsibilities. The Subrecipient agrees to furnish the necessary resources, materials,
services, and otherwise to do all things necessary for the performance of the work described
in Scope of Work, which is incorporated into the Agreement as Attachment , along with the
Budget required for that performance, which is incorporated into the Agreement as
Attachment B and C respectively. (see Attachment B: Scope of Work and Attachment C
Budget). Subrecipient shall provide Monthly Reports as provided above.
v. Relationship of Parties. The parties are independent, and neither party is the agent, joint
venturer, partner, or employer of the other.
vi. Rebudgeting and Prior Approvals. Subrecipient is permitted to rebudget direct costs, if
necessary, as described in the uniform guidance (§200.308) to better reflect spending
requirements, subject to the City's written approval, and subject to the federal awarding
agency's policy and UGG's that would define requirements for prior written approval
(§200.407) before implementation.
vii. Monitoring Plan and Reporting. The City will monitor the Subrecipient to ensure that the
subaward is used for authorized purposes, in compliance with federal statutes, regulations,
and the terms and conditions of the subaward; and that subaward performance goals are
achieved, as required by §200.332(d). The City will monitor the Subrecipient and identify any
failures in the administration and performance of the award. The monitoring plan will also
serve to identify whether the Subrecipient needs technical assistance.
In addition to program performance, The City will monitor financial performance as required
by §200.332(d)(1)). Monitoring will be used to document allowable and unallowable costs,
time and effort reporting and travel. Monitoring also will be used to follow up on findings
identified in an earlier monitoring visit, from document reviews or after an audit to ensure
the Subrecipient took corrective action (§200.332(d)(2)).
As appropriate, the cooperative audit resolution process may be applied. The monitoring
plan may include on -site visits, follow-up, document and/or desk reviews, third -party
evaluations, virtual monitoring, technical assistance and informal monitoring such as email
and telephone interviews.
The City will also issue management decisions for applicable audit findings as required by
§200.521 (§200.332(d)(3)). For reporting, UGG requires that the City and the Subrecipient
use 0MB approved government -wide standard information collections when providing
performance information and data in reports.
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The books and records of the Subrecipient shall be made available, if needed and upon
request, at subrecipient's regular place of business, for audit by personnel authorized by the
City or federal government. The Subrecipient books and records must be retained for a
period of five (5) years following receipt of final report, understanding no other actions
require an extension of the record retention period, such as open audit findings, committed
program income, or other reasons, as applicable.
viii. Risk Assessments, Specific Conditions and Remedies. The City has conducted a risk
assessment as required by §200.332(b) and determined the subrecipient's level of risk as
[low, moderate, high — select]. Risk assessments may be repeated throughout the project
period after scheduled reports, audits, unanticipated issues or other adverse circumstances
that may arise. [If appropriate: Because the level of risk was evaluated as [moderate, high -
select] at the time of award, the City requires specific conditions (§200.208) to be noted in
the sub -award agreement, including but not limited to: correction of prior audit findings by
(date), monthly reporting, prior approvals for or other specific condition until the
Subrecipient is eligible for a low risk rating, at which time the specific condition(s) will be
removed and the award instrument amended.] In the event of noncompliance or failure to
perform, the City has the authority to apply remedies, as defined in the uniform guidance
(§200.339), including but not limited to: temporarily withholding payments, disallowances,
suspension or termination of the federal award, suspension of other federal awards received
by the subrecipient, debarment or other remedies including civil and/or criminal penalties, as
appropriate (§200.332(h). The City will also consider whether the monitoring results of the
Subrecipient necessitate adjustments to the its own record (see §200.332(9)).
ix. Copyright/Intellectual Property. The federal government will possess the entire copyright,
title, and interest in all materials, inventions or deliverables produced as a result of this
subaward, including use of logos, as appropriate. As a general principle, subject to the rights
of the federal government and with respect to any subject, invention, material, or deliverable
in which the City [and subrecipient] retain title resulting from this subaward, the federal
government shall ha.ve a nonexclusive, nontransferable, irrevocable paid -up license to
practice or have practiced for or on behalf of the United States the subject invention,
material or deliverable throughout the world. The City and Subrecipient will credit the
federal award agency on any materials, inventions or deliverables produced under the
federal award and subaward.
c. Suspension and Debarment. Subrecipient represents that neither it nor any of its principals has
been debarred, suspended or determined ineligible to participate in federal assistance awards or
contracts as defined in regulations implementing Office of Management and Budget Guidelines on
Governmentwide Debarment and Suspension (Non -procurement) in Executive Order 12549.
Subrecipient further agrees that it will notify the City immediately if it or any of its principals is
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placed on the list of parties excluded from federal procurement or non -procurement programs
available at www.sam.gov.;
d. DUNS Number. Subrecipient agrees and acknowledges the City may not grant the Subaward and
Subrecipient may not receive the Subaward unless Subrecipient has provided its Data Universal
Numbering System ("DUNS") number to the City. The DUNS number is the nine -digit number
established and assigned by Dun and Bradstreet, Inc. to uniquely identify business entities;
e. Federal Funding Accountability and Transparency Act of 2006. Subrecipient agrees to provide the
City with all information requested by the City to enable the City to comply with the reporting
requirements of the Federal Funding Accountability and Transparency Act of 2006;
f. Licenses, Certifications, Permits, Accreditation. Subrecipient shall procure and keep current any
license, certification, permit or accreditation required by federal, state or local law and shall submit
to the City proof of any licensure, certification, permit or accreditation upon request; and
g. Other City Agreements. Subrecipient shall fulfill all other agreements with the City and shall comply
with all federal, state and local laws applicable to programs funded by such agreements.
8. LIMITATION OF FUNDING AND COMPENSATION: It is expressly agreed and understood that upon execution
of the Agreement, the City agrees to allocate no more than the amount of $93,969.00 US DOLLARS for the
City's proportionate allocation based on population for full and complete satisfactory performance of this
Agreement. Drawdowns for the payment of eligible expenses shall be made against the line item budgets
specified in Appendix A and in accordance with performance.
a. Compensation. This is a subaward agreement, using the working advance method of payment. The
amount of the subaward is $93,969.00 US DOLLARS. The subrecipient may invoice the City monthly.
Invoices shall state the period for which reimbursement is being requested and will itemize the cost
by budget category per Appendix A. Copies of invoices and other supporting documentation shall be
attached. All deliverables and reports defined in Appendix A are to be submitted to the City for the
compensation defined herein. Subrecipient shall not be entitled to receive any additional or
separate compensation from the City in connection with the project without prior written approval
of the City.
9. SCOPE OF WORK: The Subrecipient shall perform all services according to the Scope of Work as indicated in
Appendix A. Any deviation from the provisions detailed in the Scope of Work shall be prohibited unless
prior approval is granted by formal change order to this Agreement.
10. PUBLICITY AND USE OF NAME:
a. Any and all news releases, advertising, promotion, sales literature containing the City of Fayetteville
logo or name shall be subject to prior written approval of the other party, and subject to the prior
written approval of the City, as appropriate. Any such publicity shall credit the contributions of each
party.
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b. Neither party shall use the name, insignia, or trademark of the other party, nor any adaptation
thereof, nor the names of any of its employees in any advertising, promotion or sales literature
without the written consent of the other party.
11. FISCAL AND ADMINISTRATIVE RESPONSIBILITIES: The Subrecipient agrees to comply with the provisions of
the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2
CFR part 200) (the Uniform Guidance), including the cost principles and restrictions on general provisions
for selected items of cost. as applicable, and all requirements and standards which shall include but are not
limited to the following:
a. Compliance with Federal Procurement Laws: The City hereby designates and the Subrecipient
hereby agrees to receive funding through the City's ARPA funding and to administer such funding in
accordance the United States Treasury Interim Final Rule, currently, and Final Rule, upon issuance
from the US Treasury, 31 CFR Part 35, RIN 1505-AC77, Coronavirus State and Local Fiscal Recovery
Funds with this agreement. Compliance with procurement laws shall be inclusive of all appendices
within this Agreement.
All contracts for services and procurement for materials shall be carried out in compliance with 2
CFR Part 200 Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards.
b. Compliance with Other Federal, State and Local Procurement: All contracts for services and
procurement for materials shall be carried out in compliance with and all other applicable federal,
state, and local rules and regulations, including regulations and policies from the City's Purchasing
Division.
City of Fayetteville Procurement Thresholds:
a. $0 - $999: No quotes required
b. $1,000 - $2,499: minimum of 3 verbal quotes required
c. $2,500 - $19,999: minimum of 3 written quotes required
d. $20,000 and up: Formal sealed bid / solicitation process
i. Refer to State of Arkansas Procurement laws, City of Fayetteville Purchasing Policies and
Ordinances for requirements for formal solicitation processes.
c. Records and Reports: The Subrecipient shall, at a minimum, submit the following reports to the City
and report as required in Appendix D:
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Monthly reports shall be submitted to the City fifteen (15) calendar days after month end.
Monthly reports shall be submitted on the City provided form and will provide and outline
funded activities undertaken during each month for the duration of the project as it relates
to Appendix A — Scope of Work & Project Allocation. Failure to provide the required
documentation and information will affect the funding in this agreement and future requests
for funding.
ii. A Final Summary Report due no later than thirty (30) calendar days after the end of the
Agreement period shall include a summary of all compiled information and activities related
to this Agreement
iii. The Subrecipient agrees to maintain records and reports related to the project for a period of
no less than five years following the term of this Agreement.
iv. Access to Records (See §200.332(a)(5))
a. The City, its auditors, and if necessary, the federal agency, will be provided
access to the subrecipient's programmatic and financial records (§200.337(a)).
b. The Subrecipient will maintain all programmatic and financial records,
including but not limited to:
i. records providing a full description of each activity undertaken;
ii. records demonstrating that each activity undertaken meets the
national objectives of the federally- connected program;
iii. records required to determine the eligibility of activities;
iv. records required to document the acquisition, improvement, use or
disposition of real property acquired or improved with the subaward
assistance;
v. records documenting compliance with federal and local laws; and
vi. financial records required by program regulations and the Office of
Management and Budget.
c. The Subrecipient shall retain all records pertinent to program activities and
financial expenditures incurred under this Agreement for a period of three
years after the date of submission of the final expenditure report under this
award (§200.334). Notwithstanding the above, if there are litigation, claims,
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audits, negotiations, written notification from the federal program or
cognizant agencies or the City, or other actions that involve any of the records
cited and that have started before the expiration of the three year period,
then such records must be retained until completion of the actions and
resolutions of all issues (§200.334(a)), or the expiration of the three-year
period, whichever occurs later.
d. Documentation of Costs: The Subrecipient shall maintain records on materials purchased, services
performed, individuals and families served. All costs shall be supported by evidencing in proper
detail the nature and propriety of charges. All checks, payrolls, invoices, contracts, vouchers, orders
or other accounting documents pertaining in whole or in part to this Agreement shall be clearly
identified and readily accessible.
e. Limitations on Expenditures. Subrecipient shall not be reimbursed or otherwise compensated for
any expenditures incurred or services provided prior to the Effective Date or following the earlier of
the expiration or termination of this Agreement. The City shall only reimburse Subrecipient for
documented expenditures incurred during the Agreement Term that are: (i) reasonable and
necessary to carry out the Scope of Work; (ii) documented by contracts or other evidence of liability
consistent with established federal, state and local procurement guidelines; and (iii) incurred in
accordance with all applicable requirements for the expenditure of funds payable under this
Agreement.
f. Improper Payments. Any item of expenditure by Subrecipient under the terms of this Agreement
which is found by auditors, investigators, and other authorized representatives of the City, the U.S.
Government Accountability Office or the Comptroller General of the United States to be improper,
unallowable, in violation of federal or state law or the terms of the Notice of Prime Award or this
Agreement, or involving any fraudulent, deceptive, or misleading representations or activities of
Subrecipient, shall become Subrecipient's liability, to be paid by Subrecipient from funds other than
those provided by City under this Agreement or any other agreements between City and
Subrecipient. This provision shall survive the expiration or termination of this Agreement.
g. Audited Financial Statements. In any fiscal year in which Subrecipient expends $750,000 or more in
federal awards during such fiscal year, including awards received as a subrecipient, Subrecipient
must comply with the federal audit requirements contained in 2 CFR § 200, including the
preparation of an audit by an independent Certified Public Accountant in accordance with the Single
Audit Act Amendments of 1996, 31 U.S.C. 7501-7507, and with Generally Accepted Accounting
Principles.' If Subrecipient expends less than $750,000 in federal awards in any fiscal year, it is
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exempt from federal audit requirements, but its records must be available for review by the City and
appropriate officials of the U.S. Government Accountability Office and the Comptroller General of
the United States, and it must still have a financial audit performed for that year by an independent
Certified Public Accountant. Subrecipient shall provide the City with a copy of Subrecipient's most
recent audited financial statements, federal Single Audit report, if applicable (including financial
statements, schedule of expenditures of federal awards, schedule of findings and questioned costs,
summary of prior audit findings, and corrective action plan, if applicable), and management letter
within thirty (30) days after execution of this Agreement and thereafter within nine (9) months
following the end of Subrecipient's most recently ended fiscal year.
h. Closeout (see 200.332(a)(6)): The City will determine whether all applicable administrative actions
and all required work have been completed by the Subrecipient at the end of the period of
performance. If the Subrecipient fails to complete the requirements, the federal awarding agency or
pass -through will proceed to closeout the award with the information available (§200.344). The
pass -through will note if closeout relates to the end of a 12 -month period and termination of
subaward, or if the closeout relates to the end of a 12 -month period and preparation for an
upcoming continuation period.
i. The City must provide timelines for completion of tasks (see §200.344).
ii. The City must identify submission dates of all performance and financial reports (no later
than 90 calendar days after the period of performance) (§200.344(a}).
iii. The City must describe requirements for liquidation of financial obligations if the award is
ending, or identification of carry-over of funds, if needed, to the next award period
(§200.344(b))
iv. The City must include completion of any other required closeout activities, such as
submission of deliverables, payments, if any, due to the Subrecipient from the City,
attribution to the federal agency and/or copyright or patent rights, and any accounting of
real or personal property (§200.344(c) and (f)).
v. The Subrecipient must permit the City and auditors to have access to the subrecipient's
records and financial statements as necessary for audits and monitoring during the record
retention period of three years, or more as appropriate (§200.337(a)).
vi. The federal agency and/or City has the right to return to audit the program after close-out at
any time during the record retention period and as long as the records are retained, to
conduct recovery audits including the recovery of funds, as appropriate (§200.337(c)}.
12. COOPERATION IN MONITORING AND EVALUATION:
a. City Responsibilities. The City shall monitor, evaluate and provide guidance and direction to
Subrecipient in the conduct of Approved Services performed under this Agreement. The City has the
responsibility to determine whether Subrecipient has spent funds in accordance with applicable
laws, regulations, including the federal audit requirements and agreements and shall monitor the
City of Fayetteville, AR and Northwest Arkansas Council
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CITY OF
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activities of Subrecipient to ensure that Subrecipient has met such requirements. The City may
require Subrecipient to take corrective action if deficiencies are found.
b. Subrecipient Responsibilities:
i. Subrecipient shall permit the City to carry out monitoring and evaluation activities, including
any performance measurement system required by applicable law, regulation, funding
sources guidelines or by the terms and conditions of the applicable Notice of Prime Award,
and Subrecipient agrees to ensure, to the greatest extent possible, the cooperation of its
agents, employees and board members in such monitoring and evaluation efforts. This
provision shall survive the expiration or termination of this Agreement.
ii. Subrecipient shall cooperate fully with any reviews or audits of the activities under this
Agreement by authorized representatives of the City, the U.S. Government Accountability
Office or the Comptroller General of the United States and Subrecipient agrees to ensure to
the extent possible the cooperation of its agents, employees and board members in any such
reviews and audits. This provision shall survive the expiration or termination of this
Agreement.
13. PROGRAM INCOME: It is not the intent of this Agreement to produce income relating from the Scope of
Work; however, income directly generated from the use funds associated with this Agreement by the
Subrecipient shall be returned to the City of Fayetteville.
14. MONITORING AND AUDITS: The City is required to ensure that federal funding requirements are met, that
the funds are used for the purpose of the program, and the Subrecipient complies with reporting and
auditing requirements. The City will monitor and audit the Subrecipient to assure the compliance of
project.
15. REMEDIES FOR NONCOMPLIANCE: If the Subrecipient fails to comply with any term in this Agreement, the
City may take one or more of the actions indicated in 2 CFR Part 200.338 Remedies for noncompliance.
16. PERFORMANCE TERM EXTENSION: The City may consider an extension of the term of performance based
on justifiable circumstances beyond the control of the Subrecipient. The Subrecipient shall make
application and submit documentation to the City regarding such circumstances, and acceptance of a
proposal for the new time frame constitutes an amendment to this Agreement. Any such request for
extensions shall be subject to the written approval of the City. The decision of the City shall be final and
conclusive.
17. TERMINATION OF AGREEMENT:
a. This Agreement may be terminated at any time by either party, upon giving 30 calendar days written
notice to the non -terminating party. This Agreement shall be automatically terminated in the event
that funds under federal award, number are discontinued by the awarding agency for any reason.
City of Fayetteville, AR and Northwest Arkansas Council
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CITY OF
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Such termination shall take effect upon receipt of written notice to Subrecipient from the City. If
there is a need to settle on an early termination, partial payment up to the termination date would
be determined by incurrence of allowable cost, by completion of task, by percent of time completed
up to the settlement, or some other method as defined by the City upon review of the subrecipient's
records.
18. CLAIMS AGAINST THE CITY: The Subrecipient agrees to defend, indemnify and save harmless the City from
any and all claims of any nature whatsoever which may arise from the Subrecipient's performance of this
Agreement; provided, however, that nothing contained in this Agreement shall be construed as rendering
the Subrecipient liable for acts of the City, its officers, agents or employees.
19. CONFLICTS OF INTEREST: The Subrecipient represents that none of its employees, officers, or directors
presently have any interest, either directly or indirectly, which would conflict in any manner with the
Subrecipient's performance or procurement under this Agreement, and that no person having such interest
will be appointed or employed by the Subrecipient.
20. BINDING EFFECT: This Agreement shall be binding upon and shall ensure to the benefit of the parties
hereto and their respective heirs and assigns; provided, however, that no assignment shall be effective to
relieve a party of any liability under this Agreement unless the other party has consented in writing to the
assignment and agreed to the release of such liability. The City and the Subrecipient hereby acknowledge
receipt of a duly executed copy of this Agreement complete with all Appendices attached hereto.
21. PAYMENTS: Specific project completion dates may be negotiated during the contract term. Payment may
be reduced, delayed, or denied until acceptable work products are produced.
a. Costs shall be necessary, reasonable and directly related to the scope of the project in this
agreement. All costs shall be legal and proper. The budget included in Appendix A shall control
amounts of allowable expenditures within budget categories.
b. The total amount invoiced to the City over the course of the contract period shall not exceed
$93,969.00 US Dollars, the agreed upon contribution of the City to a regional COVID Vaccination and
Communication plan pursuant to Appendix A.
c. On or before the fifteenth (15th) day of each month and in any event no later than thirty (30)
calendar days after the earlier of the expiration or termination of this Agreement, Subrecipient shall
submit invoices for the most recent month ended, to the City, setting forth actual expenditures of
Subrecipient in accordance with this Agreement The Subrecipient shall provide backup
documentation with all invoices to show compliance with all federal, state and local laws.
d. The City may disapprove the requested compensation. If the compensation is so disapproved, the
City shall notify Subrecipient as to the disapproval. If payment is approved, no notice will be given.
City of Fayetteville, AR and Northwest Arkansas Council
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CITY OF
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ARKANSAS
e. Indirect Cost Rate (see §200.332(a)(4))
i. The Subrecipient has an approved indirect cost rate of from its cognizant agency;
ii. OR The Subrecipient will use the indirect cost rate of 10%.
iii. In the event the Subrecipient does not have an indirect cost rate, but wants one, the City
must use the rate of 10% or as allowed by ARPA.
22. INSURANCE: Subrecipient shall, at all times throughout the Agreement Term, carry insurance in such form
and in such amounts as City may from time to time reasonably require against other insurable hazards and
casualties that are commonly insured against in the performance of similar services as are to be provided
under this Agreement. At a minimum, Subrecipient shall maintain during the Agreement Term at least the
following types and limits of insurance coverage:
a. Workers' compensation in amounts no less than required by law and statutory amount;
b. Employer's Liability Insurance with a limit of no less than $1,000,000;
c. Commercial general liability insurance, including personal injury, contractual liability and
property damage, with limits of $1,000,000 per occurrence and $3,000,000 aggregate;
d. Umbrella liability insurance with a limit of $[5,000,000] per occurrence and in the aggregate.
All policies (other than workers' compensation and employer's liability insurance) providing such
coverage shall name the City as an additional insured with respect to Subrecipient's performance of
services under this Agreement. Subrecipient shall provide the City with certificates of insurance
evidencing such coverage within thirty (30) calendar days after execution of this Agreement, which
certificates shall provide that the City shall receive thirty (30) days' advance written notice of any
pending cancellation or non -renewal of any of the coverages required by the City pursuant to this
Agreement. Insurance coverages that expire before the expiration of the Agreement Term shall be
promptly renewed by Subrecipient so that there is no gap in coverage and certificates of insurance
evidencing such renewal coverage shall be provided to the City, by a copy provided to the City
immediately upon renewal. Subrecipient's failure to maintain insurance in the form and/or amounts
required by the Citypursuant to this Agreement shall be deemed a material breach of this Agreement
and the City shall have the right thereupon to terminate this Agreement immediately in addition to any
other remedy provided herein.
City of Fayetteville, AR and Northwest Arkansas Council
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CITY OF
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23. Changes in Scope or Price: Changes, modifications or amendments in scope, price or fees to this agreement
shall not be allowed without a prior formal contract amendment approved by the City in advance of the
change in scope, price or fees.
24. Freedom of Information Act: This Agreement is subject to the Arkansas Freedom of Information Act. If a
Freedom of Information Act request is presented to the City of Fayetteville, the subrecipient shall do
everything possible to provide the documents in a prompt and timely manner as prescribed in the Arkansas
Freedom of Information Act (A.C.A. §25-19-101 et. seq.). Only legally authorized photocopying costs
pursuant to the FOIA may be assessed for this compliance.
25. Jurisdiction: Venue to resolve any disputes shall be Washington County, Arkansas with Arkansas law
applying to the case. This Agreement shall be governed by and construed in accordance with the laws of the
State of Arkansas without regard to conflict of law principles.
26. Miscellaneous
a. Notices: Any notice, request, consent or approval required or permitted to be given under this
Agreement or pursuant to law shall be sufficient if in writing, and if and when sent by certified or
registered mail, with postage prepaid, to City's address or to the NAC's address as listed below.
CITY OF FAYETTEVILLE, AR SUBRECIPIENT
City of Fayetteville, AR Northwest Arkansas Council Foundation ATTN:
Mayor Lioneld Jordan ATTN: Mike Harvey
113 W. Mountain 4100 Corporate Center Drive, Suite 205
Fayetteville, AR 72701 Springdale, AR. 72762
City of Fayetteville, AR and Northwest Arkansas Council
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CITY OF
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b. Severability. If any term, provision, covenant or condition of this Agreement, or the application
thereof to any person, place or circumstance, shall be held to be invalid, unenforceable or void, the
remainder of this Agreement and such term, provision, covenant or condition as applied to other
persons, places and circumstances shall remain in full force and effect.
c. Construction. The headings and captions of this Agreement are provided for convenience only and
are intended to have no effect in construing or interpreting this Agreement. The language in all
parts of this Agreement shall be in all cases construed according to its fair meaning and not strictly
for or against either party.
d. Rights Cumulative. The rights and remedies provided by this Agreement are cumulative, and the
exercise of any right or remedy by either party hereto (or by its successor), whether pursuant to this
Agreement, to any other agreement, or to law, shall not preclude or waive its right to exercise any or
all other rights and remedies.
e. Assistance. The NAC shall, during and after termination of services rendered, upon reasonable
notice, furnish such information and proper assistance to the City as may reasonably be required by
the City in connection with work performed by NAC.
f. Compliance with Law. The Parties mutually represent that throughout the term of this Agreement
their respective performance under this Agreement shall be, and shall remain, in compliance with all
applicable federal, state and local laws and regulations.
CITY OF FAYETTEVILLE, AR
By:
Lioneld Jordan, Mayor
Attest
By:
Kara Paxton, City Clerk
Date Signed:
City of Fayetteville, AR and Northwest Arkansas Council
City of Fayetteville Subrecipient Agreement# ARPA-0001
Page 19 of 19
NORTHWEST ARKANSAS COUNCIL
By:
Mike Harvey, Chief Operating Officer
Date Signed:
SUBRECIPIENT AGREEMENT
AMERICAN RESCUE PLAN
Subrecipient # ARPA-001
APPENDIX A
Scope of Work & Project Allocation
1. SCOPE OF WORK:
a. The Northwest Arkansas Council Foundation (NACF) shall be responsible for managing all aspects of a
COVID Communications Campaign and Vaccination Campaign not to exceed 12 months.
b. The vaccination campaign is needed both to provide relief to hospital staff that has been overburdened
due to the pandemic and to achieve the maximum number of vaccinations possible.
c. NACF shall continue to focus significant efforts on communications and education on the virus to care for
the northwest Arkansas community.
d. NACF shall maintain an online resource for COVID-19, currently located athttps://nwacouncil.org/covidl9
and information on the vaccine, currently located at,https://nwacouncil.org/covidvaccine.
e. NACF shall manage and promote vaccine safety and resources with the support of local community
leaders, as available.
f. NACF shall manage and promote vaccine safety and resources campaign in the the northwest Arkansas
community to develop awareness of health and safety measuires as the community continues to be
impacted by COVID-19.
2. COMMUNICATIONS PLAN:
a. The communications plan is based on research on vaccine hesitancy and will focus at least initially on
encouraging people to get vaccinated. The length of each campaign will depend on the amount of funds
raised. The communications plan is structured in three month intervals to allow for it to be adapted to
accommodate changes in the virus and medical guidance.
b. Manage and maintain the "Safe and Strong PSA Campaign":
i. Safe & Strong is a public service announcement campaign developed by the Northwest Arkansas
Council in partnership with the Northwest Arkansas Healthcare Community. The campaign was
launched in the Spring of 2020 and is intended to continue for the foreseeable future.
ii. NACF current mandate is to develop a fully integrated communications strategy for the next 3
months. The immediate goal is to provide general education to the public about the safety and
importance of vaccinations. Messaging objectives will pivot as needed throughout the campaign
to address concerns as they arise.
iii. The plan shall include but not be limited to the following:
1. Creative development of communication assets (i.e. Commercial PSA's, social
video content, media for news outlets, print materials, ads, and digital assets for
web platforms).
2. Public Relations including a robust community integration component
3. Digital campaign management including all Safe & Strong media properties
4. Media Buy including TV, radio, outdoor, and other placements as needed
5. Trilingual communication in Spanish, Marshallese, and English.
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 1 of 4
Creative Development: NACF will heavily on research, focus groups, community
partners, and nonprofits, develop a new series of creative messaging to drive the next
phase of communications. The messaging wil be tailored specifically to reach the NWA
community by partnering with trusted experts, and utilizing members of the
community in the materials developed.
a. Campaign Refresh
b. PSA's on COVID Vaccinations
c. Radio
d. Artwork Refresh
e. Promotional Products
f. Other resources as needed
Digital: In conjunction with creative messaging, media buys and the community
integration strategy NACF will support the overall campaign online, maximizing overall
reach.
a. Google Ad Campaign
b. Spcial Media Ad Campaign
c. Geo Targeted Event Campaigs
d. Reporting
ii. Public Relations: Full PR campaign with a strong community integration strategy. Plan
to include:
a. Develop a Communications & PR strategy
b. Develop an editorial calendar/communications plan
c. Outline and plan key editorial elements for the communications plan
d. Tri-lingual communications
e. Media releases and community updates
f. Community leadership and provider messaging
g. Government relations
h. Leveraging community partnerships
i. Speaking engagements and forums
j. Identification of key audiences and message delivery
k. Employer engagement and outreach
I. Event development
m. Nontraditional "media buys" and planning
n. Staffing Support
o. Reporting
ii. Media Mix Plan
a. Television
b. Radio
c. Outdoor/Billboard
d. Reporting
3. TOTAL CAMPAIGN BUDGET:
a. The breakdown of expenses is as follows. NACF intends to enforce a reduction in the media campaign in
the event funds are not fully raised. NACF shall report report monthly to the City, no later than the 5th day
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 2 of 4
after the last day of each month and provide the status of fundraising and campaign income, expenses
and progress.
Needs
Cost per item
Total Cost
Quantities
Cost
Actual Spend
Factors
PR CAMPAIGN
Verge Media x 6 months
$500,000
$500,000
Verge Media x 12 months
$1,000,000
$1,000,000
$1,000,000
Human Capital
Vaccinators x 30
$30 per hour
$72,000
40 hrs x 4
weeks
Infusion of covid + patients x 15
$75 per hour
$45,000
40hrs x 4
weeks
COVID Testing Swabbers x 20
$30 per hour
$96,000
40hrs x 4
weeks
$213,000
Supplies
N95 (per case)
$150.00
$3,750
25
Gloves (per case)
$360.00
$9,000
25
OR mask (per box)
$25.00
$625
25
Gowns (per case)
$315.00
$7,875
25
Face Shields (each)
$17.00
$8,500
500
BioHazard Bag (red bag) x box
$8.00
$200
25
$29,950
Testing Kits
Antigen Test Kits (each)
$25.00
$12,500
500
$12,500
Total cost
$1,255,450
4. CAMPAIGN INCOME AND FEES TO BE PAID BY THE CITY
a. In total, NACF is requesting $305,217 from cities of Fayetteville, Bentonville, Springdale and Rogers. The
Council arrived at this figure by assessing $1.00 per resident based on the population of each city as
determined by the 2020 Census.
Community asks
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 3 of 4
Walmart Foundation
(confirmed)
$125,000
Walton Family Foundation
(under consideration/not yet
approved)
$250,000
Visit Bentonville (confirmed)
$10,000
Bentonville Chamber of
Commerce (confirmed)
$10,000
Northwest Arkansas Chamber
of Commerce (confirmed)
$5,000
Amazeum (confirmed)
$5,000
Total need if all philanthropic
goals are met.
$850,450
Total Protentional funds
raised from cities, counties,
and state
$682,813
• Bentonville
$54,164
• Fayetteville
$93,969
• Rogers
$69,908
• Springdale
$87,176
• Washington County
$125,023
• Benton County
$112,877.50
• State Ask (may
change/increase)
$139,695.00
Deficit/amount still needed if
all funds listed above are
raised
$167,637
b. Payments from the City resulting from this scope of work shall not exceed $93,969.00 US Dollars for the
contract period.
The City of Fayetteville shall be responsible only for the portion of the total expense committed,
which is $93,969. If the full amount needed is not raised, the NACF will shorten the length of the
campaign to adjust for reduced funds and notify the City accordingly.
c. NACF shall be responsible for submitting an invoice for actual expenses incurred. The services rendered
and the period being invoiced shall be clearly stated on the invoice. Each invoice payment, once accepted
by the NACF will be considered final for the period being invoiced and any future charges for the same
period will be disallowed.
City of Fayetteville, AR and Northwest Arkansas Council
Subrecipient Agreement# ARPA-0001 — Appendix A
Page 4 of 4
26786 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
DEPARTMENT OF THE TREASURY
31 CFR Part 35
RIN 1505-AC77
Coronavirus State and Local Fiscal
Recovery Funds
AGENCY: Department of the Treasury
ACTION: Interim final rule.
SUMMARY: The Secretary of the Treasury
(Treasury) is issuing this interim final
rule to implement the Coronavirus State
Fiscal Recovery Fund and the
Coronavirus Local Fiscal Recovery Fund
established under the American Rescue
Plan Act.
DATES: Effective date: The provisions in
this interim final rule are effective May
17, 2021.
Comment date: Comments must be
received on or before July 16, 2021.
ADDRESSES: Please submit comments
electronically through the Federal
eRulemaking Portal: http://
www.regulations.gov. Comments can be
mailed to the Office of the
Undersecretary for Domestic Finance,
Department of the Treasury, 1500
Pennsylvania Avenue NW, Washington,
DC 20220. Because postal mail may be
subject to processing delay, it is
recommended that comments be
submitted electronically. All comments
should be captions with "Coronavirus
State and Local Fiscal Recovery Funds
Interim Final Rule Comments." Please
include your name, organization
affiliation, address, email address and
telephone number in your comment.
Where appropriate, a comment should
include a short executive summary.
In general, comments received will be
posted on http://www.regulations.gov
without change, including any business
or personal information provided.
Comments received, including
attachments and other supporting
materials, will be part of the public
record and subject to public disclosure.
Do not enclose any information in your
comment or supporting materials that
you consider confidential or
inappropriate for public disclosure.
FOR FURTHER INFORMATION CONTACT:
Katharine Richards, Senior Advisor,
Office of Recovery Programs,
Department of the Treasury, (844) 529-
9527.
SUPPLEMENTARY INFORMATION:
I. Background Information
A. Overview
Since the first case of coronavirus
disease 2019 (COVID-19) was
discovered in the United States in
January 2020, the disease has infected
over 32 million and killed over 575,000
Americans.1 The disease has impacted
every part of life: As social distancing
became a necessity, businesses closed,
schools transitioned to remote
education, travel was sharply reduced,
and millions of Americans lost their
jobs. In April 2020, the national
unemployment rate reached its highest
level in over seventy years following the
most severe month -over -month decline
in employment on record.2 As of April
2021, there were still 8.2 million fewer
jobs than before the pandemic.3 During
this time, a significant share of
households have faced food and
housing insecurity.4 Economic
disruptions impaired the flow of credit
to households, State and local
governments, and businesses of all
sizes.5 As businesses weathered
closures and sharp declines in revenue,
many were forced to shut down,
especially small businesses.6
Amid this once -in -a -century crisis,
State, territorial, Tribal, and local
governments (State, local, and Tribal
governments) have been called on to
respond at an immense scale.
Governments have faced myriad needs
to prevent and address the spread of
1 Centers for Disease Control and Prevention,
COVID Data Tracker, http://www.covid.cdc.gov/
covid-data-tracker/#datatracker-home (last visited
May 8, 2021).
2 U.S. Bureau of Labor Statistics, Unemployment
Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/UNRATE, May 3, 2021.
U.S. Bureau of Labor Statistics, Employment Level
[LNU02000000], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNU02000000, May 3,
2021.
3 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm [PAYEMS], retrieved from FRED,
Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/PAYEMS, May 7, 2021.
4 Nirmita Panchal et al., The Implications of
COVID-19 for Mental Health and Substance Abuse
(Feb. 10, 2021), https://www.kff.org/coronavirus-
covid-19/issue-brief/the-implications-of-covid-19-
for-mental-health-and-substance-use/#: LI text=
Older % 2 0 adults % 2 0 ar a% 2 0 al s o% 2 0
more,prior%20to%20the%20current%20crisis; U.S.
Census Bureau, Household Pulse Survey:
Measuring Social and Economic Impacts during the
Coronavirus Pandemic, https://www.census.gov/
programs-surveys/household-pulse-survey.html
(last visited Apr. 26, 2021); Rebecca T. Leeb et al.,
Mental Health -Related Emergency Department
Visits Among Children Aged <18 Years During the
COVID Pandemic —United States, January 1 —
October 17, 2020, Morb. Mortal. Wkly. Rep.
69(45):1675-80 (Nov. 13, 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6945a3.htm.
5 Board of Governors of the Federal Reserve
System, Monetary Policy Report (June 12, 2020),
https://www.federalreserve.gov/monetazypolicy/
2020-06-m pr-summary.htm.
6 Joseph R. Biden, Remarks by President Biden on
Helping Small Businesses (Feb. 22, 2021), https://
www. whitehouse.gov/briefing-room/speeches-
remarks/202l /02/22/remarks-by-president-biden-
on-helping-small-businesses/.
COVID-19, including testing, contact
tracing, isolation and quarantine, public
communications, issuance and
enforcement of health orders,
expansions to health system capacity
like alternative care facilities, and in
recent months, a massive nationwide
mobilization around vaccinations.
Governments also have supported major
efforts to prevent COVID-19 spread
through safety measures in settings like
nursing homes, schools, congregate
living settings, dense worksites,
incarceration settings, and public
facilities. The pandemic's impacts on
behavioral health, including the toll of
pandemic -related stress, have increased
the need for behavioral health resources.
At the same time, State, local and
Tribal governments launched major
efforts to address the economic impacts
of the pandemic. These efforts have
been tailored to the needs of their
communities and have included
expanded assistance to unemployed
workers; food assistance; rent, mortgage,
and utility support; cash assistance;
internet access programs; expanded
services to support individuals
experiencing homelessness; support for
individuals with disabilities and older
adults; and assistance to small
businesses facing closures or revenue
loss or implementing new safety
measures.
In responding to the public health
emergency and its negative economic
impacts, State, local, and Tribal
governments have seen substantial
increases in costs to provide these
services, often amid substantial declines
in revenue due to the economic
downturn and changing economic
patterns during the pandemic.? Facing
these budget challenges, many State,
local, and Tribal governments have been
forced to make cuts to services or their
workforces, or delay critical
investments. From February to May of
2020, State, local, and Tribal
governments reduced their workforces
by more than 1.5 million jobs and, in
April of 2021, State, local, and Tribal
government employment remained
nearly 1.3 million jobs below pre -
pandemic levels.$ These cuts to State,
local, and Tribal government workforces
7 Michael Leachman, House Budget Bill Provides
Needed Fiscal Aid for States, Localities, Tribal
Nations, and Territories (Feb. 10, 2021), https://
www.cbpp. org/research/state-budget-and-tax/
house-budget-bill-provides-neededfiscal-aid for -
states -localities.
5U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
CES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited May 8, 2021).
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26787
come at a time when demand for
government services is high, with State,
local, and Tribal governments on the
frontlines of fighting the pandemic.
Furthermore, State, local, and Tribal
government austerity measures can
hamper overall economic growth, as
occurred in the recovery from the Great
Recession.9
Finally, although the pandemic's
impacts have been widespread, both the
public health and economic impacts of
the pandemic have fallen most severely
on communities and populations
disadvantaged before it began. Low-
income communities, people of color,
and Tribal communities have faced
higher rates of infection, hospitalization,
and death,10 as well as higher rates of
unemployment and lack of basic
necessities like food and housing.11 Pre-
existing social vulnerabilities magnified
the pandemic in these communities,
where a reduced ability to work from
home and, frequently, denser housing
amplified the risk of infection. Higher
rates of pre-existing health conditions
also may have contributed to more
severe COVID-19 health outcomes.12
Similarly, communities or households
facing economic insecurity before the
pandemic were less able to weather
business closures, job losses, or declines
in earnings and were less able to
participate in remote work or education
due to the inequities in access to
reliable and affordable broadband
infrastructure.13 Finally, though schools
in all areas faced challenges, those in
high poverty areas had fewer resources
to adapt to remote and hybrid learning
models.14 Unfortunately, the pandemic
9 Tracy Gordon, State and Local Budgets and the
Great Recession, Brookings Institution (Dec. 31,
2012), http://www.brookings.edu/articles/state-and-
local-budgets-an d -the -great -recession.
10 Sebastian D. Romano et al., Trends in Racial
and Ethnic Disparities in COVID-19
Hospitalizations, by Region —United States, March —
December 2020, MMWR Morb Mortal Wkly Rep
2021, 70:560-565 (Apr. 16, 2021), https://
www.cdc.gov/mmwr/volumes/70/wr/
mm7015e2.htm?s cid=mm7015e2w.
11 Center on Budget and Policy Priorities,
Tracking the COVID-19 Recession's Effects on
Food, Housing, and Employment Hardships,
https://www.cbpp. org/research/poverty-and-
in equali ty/tracking-th e-covi d -19 -recessions -e ffects-
on-housing-and (last visited May 4, 2021).
12 Lisa R. Fortuna et al., Inequity and the
Disproportionate Impact of COVID-19 on
Communities of Color in the United States: The
Need for Trauma -Informed Social Justice Response,
Psychological Trauma Vol. 12(5):443-45 (2020),
available at https:I/psycnet.apa.orglfulltext/2020-
37320-001.pdf.
13 Emily Vogles et al., 53% of Americans Say the
internet Has Been Essential During the COVID-19
Outbreak (Apr. 30, 2020), https:I/
www.pewresearch.org/intern et/2020/04/30/53-of-
americans-say-the-internet-has-been-essential-
during-the-covid-19-outbreak/.
14 Emma Dorn et al., COVID-19 and student
learning in the United States: The hurt could last
also has reversed many gains made by
communities of color in the prior
economic expansion.15
B. The Statute and Interim Final Rule
On March 11, 2021, the American
Rescue Plan Act (ARPA) was signed into
law by the President.16 Section 9901 of
ARPA amended Title VI of the Social
Security Act 17 (the Act) to add section
602, which establishes the Coronavirus
State Fiscal Recovery Fund, and section
603, which establishes the Coronavirus
Local Fiscal Recovery Fund (together,
the Fiscal Recovery Funds).18 The Fiscal
Recovery Funds are intended to provide
support to State, local, and Tribal
governments (together, recipients) in
responding to the impact of COVID-19
and in their efforts to contain COVID-
19 on their communities, residents, and
businesses. The Fiscal Recovery Funds
build on and expand the support
provided to these governments over the
last year, including through the
Coronavirus Relief Fund (CRF).19
a lifetime (June 2020), https://
webtest.childrensinstitute.net/sites/default/files/
documents/CO VID-1 9 -and -student-1 earning -in -th e -
United -States FINAL.pdf,• Andrew Bacher-Hicks et
al., Inequality in Household Adaptation to
Schooling Shocks: Covid-Induced Online
Engagement in Real Time, J. of Public Econ. Vol.
193(C) (July 2020), available at https://
www.nber.org/papers/w27555.
15 See, e.g., Tyler Atkinson & Alex Richter,
Pandemic Disproportionately Affects Women,
Minority Labor Force Participation, https://
www.dollasfed.org/research/economics/2020/1110
(last visited May 9, 2021); Jared Bernstein & Janelle
Jones, The Impact of the COVID19 Recession on the
Jobs and Incomes of Persons of Color, https://
www.cbpp.org/sites/default/files/atoms/files/6-2-
20bud0 .pdf (last visited May 9, 2021).
16 American Rescue Plan Act of 2021 (ARPA), sec.
9901, Public Law 117-2, codified at 42 U.S.C. 802
et seq. The term "state" as used in this
SUPPLEMENTARY INFORMATION and defined in section
602 of the Act means each of the 50 States and the
District of Columbia. The term "territory" as used
in this SUPPLEMENTARY INFORMATION and defined in
section 602 of the Act means the Commonwealth
of Puerto Rico, the United States Virgin Islands,
Guam, the Commonwealth of Northern Mariana
Islands, and American Samoa. Tribal government is
defined in the Act and the interim final rule to
mean "the recognized governing body of any Indian
or Alaska Native tribe, band, nation, pueblo, village,
community, component band, or component
reservation, individually identified (including
parenthetically) in the list published most recently
as of the date of enactment of the [American Rescue
Plan Act] pursuant to section 104 of the Federally
Recognized Indian Tribe List Act of 1994 (25 U.S.C.
5131)." See section 602(g)(7) of the Social Security
Act, as added by the American Rescue Plan Act. On
January 29, 2021, the Bureau of Indian Affairs
published a current list of 574 Tribal entities. See
86 FR 7554, January 29, 2021. The term "local
governments" as used in this SUPPLEMENTARY
INFORMATION includes metropolitan cities, counties,
and nonentitlement units of local government.
1742 U.S.C. 801 et seq.
18 Sections 602, 603 of the Act.
19 The CRF was established by the section 601 of
the Act as added by the Coronavirus Aid, Relief,
and Economic Security Act (CARES Act), Public
Law 116-136, 134 Stat. 281 (2020).
Through the Fiscal Recovery Funds,
Congress provided State, local, and
Tribal governments with significant
resources to respond to the COVID-19
public health emergency and its
economic impacts through four
categories of eligible uses. Section 602
and section 603 contain the same
eligible uses; the primary difference
between the two sections is that section
602 establishes a fund for States,
territories, and Tribal governments and
section 603 establishes a fund for
metropolitan cities, nonentitlement
units of local government, and counties.
Sections 602(c)(1) and 603(c)(1) provide
that funds may be used:
(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; and
(d) To make necessary investments in
water, sewer, or broadband
infrastructure.
In addition, Congress clarified two
types of uses which do not fall within
these four categories. Sections
602(c)(2)(B) and 603(c)(2) provide that
these eligible uses do not include, and
thus funds may not be used for,
depositing funds into any pension fund.
Section 602(c)(2)(A) also provides, for
States and territories, that the eligible
uses do not include "directly or
indirectly offset[ting] a reduction in the
net tax revenue of [the] State or territory
resulting from a change in law,
regulation, or administrative
interpretation."
The ARPA provides a substantial
infusion of resources to meet pandemic
response needs and rebuild a stronger,
more equitable economy as the country
recovers. First, payments from the Fiscal
Recovery Funds help to ensure that
State, local, and Tribal governments
have the resources needed to continue
to take actions to decrease the spread of
COVID-19 and bring the pandemic
under control. Payments from the Fiscal
Recovery Funds may also be used by
recipients to provide support for costs
incurred in addressing public health
and economic challenges resulting from
the pandemic, including resources to
offer premium pay to essential workers,
in recognition of their sacrifices over the
26788 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
last year. Recipients may also use
payments from the Fiscal Recovery
Funds to replace State, local, and Tribal
government revenue lost due to COVID-
19, helping to ensure that governments
can continue to provide needed services
and avoid cuts or layoffs. Finally, these
resources lay the foundation for a
strong, equitable economic recovery, not
only by providing immediate economic
stabilization for households and
businesses, but also by addressing the
systemic public health and economic
challenges that may have contributed to
more severe impacts of the pandemic
among low-income communities and
people of color.
Within the eligible use categories
outlined in the Fiscal Recovery Funds
provisions of ARPA, State, local, and
Tribal governments have flexibility to
determine how best to use payments
from the Fiscal Recovery Funds to meet
the needs of their communities and
populations. The interim final rule
facilitates swift and effective
implementation by establishing a
framework for determining the types of
programs and services that are eligible
under the ARPA along with examples of
uses that State, local, and Tribal
governments may consider. These uses
build on eligible expenditures under the
CRF, including some expansions in
eligible uses to respond to the public
health emergency, such as vaccination
campaigns. They also reflect changes in
the needs of communities, as evidenced
by, for example, nationwide data
demonstrating disproportionate impacts
of the COVID-19 public health
emergency on certain populations,
geographies, and economic sectors. The
interim final rule takes into
consideration these disproportionate
impacts by recognizing a broad range of
eligible uses to help States, local, and
Tribal governments support the
families, businesses, and communities
hardest hit by the COVID-19 public
health emergency.
Implementation of the Fiscal
Recovery Funds also reflect the
importance of public input,
transparency, and accountability.
Treasury seeks comment on all aspects
of the interim final rule and, to better
facilitate public comment, has included
specific questions throughout this
SUPPLEMENTARY INFORMATION. Treasury
encourages State, local, and Tribal
governments in particular to provide
feedback and to engage with Treasury
regarding issues that may arise
regarding all aspects of this interim final
rule and Treasury's work in
administering the Fiscal Recovery
Funds. In addition, the interim final
rule establishes certain regular reporting
requirements, including by requiring
State, local, and Tribal governments to
publish information regarding uses of
Fiscal Recovery Funds payments in
their local jurisdiction. These reporting
requirements reflect the need for
transparency and accountability, while
recognizing and minimizing the burden,
particularly for smaller local
governments. Treasury urges State,
territorial, Tribal, and local governments
to engage their constituents and
communities in developing plans to use
these payments, given the scale of
funding and its potential to catalyze
broader economic recovery and
rebuilding.
II. Eligible Uses
A. Public Health and Economic Impacts
Sections 602(c)(1)(A) and 603(c)(1)(A)
provide significant resources for State,
territorial, Tribal governments, and
counties, metropolitan cities, and
nonentitlement units of local
governments (each referred to as a
recipient) to meet the wide range of
public health and economic impacts of
the COVID-19 public health emergency.
These provisions authorize the use of
payments from the Fiscal Recovery
Funds to respond to the public health
emergency with respect to COVID-19 or
its negative economic impacts. Section
602 and section 603 also describe
several types of uses that would be
responsive to the impacts of the COVID-
19 public health emergency, including
assistance to households, small
businesses, and nonprofits and aid to
impacted industries, such as tourism,
travel, and hospitality.20
Accordingly, to assess whether a
program or service is included in this
category of eligible uses, a recipient
should consider whether and how the
use would respond to the COVID-19
public health emergency. Assessing
whether a program or service "responds
to" the COVID-19 public health
emergency requires the recipient to,
first, identify a need or negative impact
of the COVID-19 public health
emergency and, second, identify how
the program, service, or other
intervention addresses the identified
need or impact. While the COVID-19
public health emergency affected many
aspects of American life, eligible uses
under this category must be in response
to the disease itself or the harmful
consequences of the economic
disruptions resulting from or
exacerbated by the COVID-19 public
health emergency.
20 Sections 602(c)(1)(A), 603(c)(1)(A) of the Act.
The interim final rule implements
these provisions by identifying a non-
exclusive list of programs or services
that may be funded as responding to
COVID-19 or the negative economic
impacts of the COVID-19 public health
emergency, along with considerations
for evaluating other potential uses of the
Fiscal Recovery Funds not explicitly
listed. The interim final rule also
provides flexibility for recipients to use
payments from the Fiscal Recovery
Funds for programs or services that are
not identified on these non-exclusive
lists but that fall under the terms of
section 602(c)(1)(A) or 603(c)(1)(A) by
responding to the COVID-19 public
health emergency or its negative
economic impacts. As an example, in
determining whether a program or
service responds to the negative
economic impacts of the COVID-19
public health emergency, the interim
final rule provides that payments from
the Fiscal Recovery Funds should be
designed to address an economic harm
resulting from or exacerbated by the
public health emergency. Recipients
should assess the connection between
the negative economic harm and the
COVID-19 public health emergency, the
nature and extent of that harm, and how
the use of this funding would address
such harm.
As discussed, the pandemic and the
necessary actions taken to control the
spread had a severe impact on
households and small businesses,
including in particular low-income
workers and communities and people of
color. While eligible uses under sections
602(c)(1)(A) and 603(c)(1)(A) provide
flexibility to recipients to identify the
most pressing local needs, Treasury
encourages recipients to provide
assistance to those households,
businesses, and non -profits in
communities most disproportionately
impacted by the pandemic.
1. Responding to COVID-19
On January 21, 2020, the Centers for
Disease Control and Prevention (CDC)
identified the first case of novel
coronavirus in the United States.21 By
late March, the virus had spread to
many States and the first wave was
growing rapidly, centered in the
northeast.22 This wave brought acute
21 Press Release, Centers for Disease Control and
Prevention, First Travel -related Case of 2019 Novel
Coronavirus Detected in United States (Jan. 21,
2020), https://www.cdc.gov/media/releases/2020/
p0121-novel-coronavirus-travel-case.html.
22 Anne Schuchat et al., Public Health Response
to the Initiation and Spread of Pandemic COVID-
19 in the United States, February 24 —April 21, 2021,
MMWR Morb Mortal Wkly Rep 2021, 69(18):551-
56 (May 8, 2021), https://www.cdc.gov/mmwr/
volumes/69/wr/mm 6918e2.h tm.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26789
strain on health care and public health
systems: Hospitals and emergency
medical services struggled to manage a
major influx of patients; response
personnel faced shortages of personal
protective equipment; testing for the
virus was scarce; and congregate living
facilities like nursing homes and prisons
saw rapid spread. State, local, and
Tribal governments mobilized to
support the health care system, issue
public health orders to mitigate virus
spread, and communicate safety
measures to the public. The United
States has since faced at least two
additional COVID-19 waves that
brought many similar challenges: The
second in the summer, centered in the
south and southwest, and a wave
throughout the fall and winter, in which
the virus reached a point of
uncontrolled spread across the country
and over 3,000 people died per day.23
By early May 2021, the United States
has experienced over 32 million
confirmed COVID-19 cases and over
575,000 deaths.24
Mitigating the impact of COVID-19,
including taking actions to control its
spread and support hospitals and health
care workers caring for the sick,
continues to require a major public
health response from State, local and
Tribal governments. New or heightened
public health needs include COVID-19
testing, major expansions in contact
tracing, support for individuals in
isolation or quarantine, enforcement of
public health orders, new public
communication efforts, public health
surveillance (e.g., monitoring case
trends and genomic sequencing for
variants), enhancement to health care
capacity through alternative care
facilities, and enhancement of public
health data systems to meet new
demands or scaling needs. State, local,
and Tribal governments have also
supported major efforts to prevent
COVID-19 spread through safety
measures at key settings like nursing
homes, schools, congregate living
settings, dense worksites, incarceration
settings, and in other public facilities.
This has included implementing
infection prevention measures or
making ventilation improvements in
congregate settings, health care settings,
or other key locations.
Other response and adaptation costs
include capital investments in public
facilities to meet pandemic operational
23 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in Number of
COVID-19 Cases and Deaths in the US Reported to
CDC, by State/Territory, https://covid.cdc.govl
covid-data-tracker/#trends_dailytrendscases (last
visited May 8, 2021).
24 Id.
needs, such as physical plant
improvements to public hospitals and
health clinics or adaptations to public
buildings to implement COVID-19
mitigation tactics. In recent months,
State, local, and Tribal governments
across the country have mobilized to
support the national vaccination
campaign, resulting in over 250 million
doses administered to date.25
The need for public health measures
to respond to COVID-19 will continue
in the months and potentially years to
come. This includes the continuation of
the vaccination campaign for the general
public and, if vaccinations are approved
for children in the future, eventually for
youths. This also includes monitoring
the spread of COVID-19 variants,
understanding the impact of these
variants (especially on vaccination
efforts), developing approaches to
respond to those variants, and
monitoring global COVID-19 trends to
understand continued risks to the
United States. Finally, the long-term
health impacts of COVID-19 will
continue to require a public health
response, including medical services for
individuals with "long COVID," and
research to understand how COVID-19
impacts future health needs and raises
risks for the millions of Americans who
have been infected.
Other areas of public health have also
been negatively impacted by the
COVID-19 pandemic. For example, in
one survey in January 2021, over 40
percent of American adults reported
symptoms of depression or anxiety, up
from 11 percent in the first half of
2019.26, The proportion of children's
emergency department visits related to
mental health has also risen
noticeably.27 Similarly, rates of
substance misuse and overdose deaths
have spiked: Preliminary data from the
CDC show a nearly 30 percent increase
in drug overdose mortality from
September 2019 to September 2020.28
Stay-at-home orders and other
pandemic responses may have also
reduced the ability of individuals
affected by domestic violence to access
25 Centers for Disease Control and Prevention,
COVID Data Tracker: COVID-19 Vaccinations in the
United States, https://covid.cdc.gov/covid-dota-
tracker/#vaccinations (last visited May 8, 2021).
26 Panchal, supra note 4; Mark E. Czeisler et al.,
Mental Health, Substance Abuse, and Suicidal
Ideation During COVID-19 Pandemic— United
States, June 24-30 2020, Morb. Mortal. Wkly. Rep.
69(32):1049-57 (Aug. 14, 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6932a1.htm.
27 Leeb, supra note 4.
28 Centers for Disease Prevention and Control,
National Center for Health Statistics, Provisional
Drug Overdose Death Counts, https://www.cdc.gov/
nchs/nvss/vsrr/drug-overdose-data.htm (last visited
May 8, 2021).
services.29 Finally, some preventative
public health measures like childhood
vaccinations have been deferred and
potentially forgone.3°
While the pandemic affected
communities across the country, it
disproportionately impacted some
demographic groups and exacerbated
health inequities along racial, ethnic,
and socioeconomic lines.31 The CDC
has found that racial and ethnic
minorities are at increased risk for
infection, hospitalization, and death
from COVID-19, with Hispanic or
Latino and Native American or Alaska
Native patients at highest risk.32
Similarly, low-income and socially
vulnerable communities have seen the
most severe health impacts. For
example, counties with high poverty
rates also have the highest rates of
infections and deaths, with 223 deaths
per 100,000 compared to the U.S.
average of 175 deaths per 100,000, as of
May 2021.33 Counties with high social
vulnerability, as measured by factors
such as poverty and educational
attainment, have also fared more poorly
than the national average, with 211
deaths per 100,000 as of May 2021.34
29 Megan L. Evans, et al., A Pandemic within a
Pandemic —Intimate Partner Violence during
Covid-19, N. Engl. J. Med. 383:2302-04 (Dec. 10,
2020), available at https://www.nejm.org/doi/full/
10.1056/NEJMp2024046.
3o Jeanne M. Santoli et al., Effects of the
COVID-19 Pandemic on Routine Pediatric Vaccine
Ordering and Administration —United States, Morb.
Mortal. Wkly. Rep. 69(19):591-93 (May 8, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/
mm6919e2.htm; Marisa Langdon-Embry et al.,
Notes from the Field: Rebound in Routine
Childhood Vaccine Administration Following
Decline During the COVID-19 Pandemic —New
York City, March 1 —June 27, 2020, Morb. Mortal.
Wkly. Rep. 69(30):999-1001 (Jul. 31 2020), https://
www.cdc.gov/mmwr/volumes/69/wr/
mm6930a3.htm.
31 Office of the White House, National Strategy for
the COVID-19 Response and Pandemic
Preparedness (Jan. 21, 2021), https://
www.whitehouse.gov/wp-content/uploodsl2o2l/01I
National -Strategy for-the-COVID-19-Response-and-
Pandemic-Preparedness. pd f.
32In a study of 13 states from October to
December 2020, the CDC found that Hispanic or
Latino and Native American or Alaska Native
individuals were 1.7 times more likely to visit an
emergency room for COVID-19 than White
individuals, and Black individuals were 1.4 times
more likely to do so than White individuals. See
Romano, supra note 10.
33 Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID-19 Cases
and Deaths in the United States, by County -level
Population Factors, https://covid.cdc.gov/covid-
data-tracker/#pop factors_totaldeaths (last visited
May 8, 2021).
34 The CDC's Social Vulnerability Index includes
fifteen variables measuring social vulnerability,
including unemployment, poverty, education
levels, single -parent households, disability status,
non-English speaking households, crowded
housing, and transportation access.
Centers for Disease Control and Prevention,
COVID Data Tracker: Trends in COVID-19 Cases
Continued
26790 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Over the last year, Native Americans
have experienced more than one and a
half times the rate of COVID-19
infections, more than triple the rate of
hospitalizations, and more than double
the death rate compared to White
Americans.35 Low-income and minority
communities also exhibit higher rates of
pre-existing conditions that may
contribute to an increased risk of
COVID-19 mortality.3°
In addition, individuals living in low-
income communities may have had
more limited ability to socially distance
or to self -isolate when ill, resulting in
faster spread of the virus, and were
over -represented among essential
workers, who faced greater risk of
exposure.37 Social distancing measures
in response to the pandemic may have
also exacerbated pre-existing public
health challenges. For example, for
children living in homes with lead
paint, spending substantially more time
at home raises the risk of developing
elevated blood lead levels, while
screenings for elevated blood lead levels
declined during the pandemic.38 The
combination of these underlying social
and health vulnerabilities may have
contributed to more severe public health
outcomes of the pandemic within these
communities, resulting in an
exacerbation of pre-existing disparities
in health outcomes.39
and Deaths in the United States, by Social
Vulnerability Index, https://covid.cdc.gov/covid-
data-tracker/#pop factors_totaldeaths (last visited
May 8, 2021).
35 Centers for Disease Control and Prevention,
Risk for COVID-19 Infection, Hospitalization, and
Death By Race/Ethnicity, https://www.cdc.gov/
coron avirus/2019-ncov/covi d-data/in vestigati ons-
discovery/hospitalization-death-by-race-
ethnicity.html (last visited Apr. 26, 2021).
36 See, e.g., Centers for Disease Control and
Prevention, Risk of Severe Illness or Death from
COVID-19 (Dec. 10, 2020), https://www.cdc.gov/
coronavirus/2019-ncov/community/health-equity/
racial-ethnic-disparities/disparities-illness.html
(last visited Apr. 26, 2021).
37 Milena Almagro et al., Racial Disparities in
Frontline Workers and Housing Crowding During
COVID-19: Evidence from Geolocation Data (Sept.
22, 2020), NYU Stern School of Business
(forthcoming), available at https://papers.ssrn.com/
so13/papers.cfm?abstract_id=3695249; Grace
McCormack et al., Economic Vulnerability of
Households with Essential Workers, JAMA
324(4):388-90 (2020), available at https://
jamanetwork.com/journals/jama/fullarticle/
2767630.
36 See, e.g., Joseph G. Courtney et al., Decreases
in Young Children Who Received Blood Lead Level
Testing During COVID-19-34 Jurisdictions,
January —May 2020, Morb. Mort. Wkly. Rep.
70(5):155-61 (Feb. 5, 2021), https://www.cdc.gov/
mmwr/volumes/70/wr/mm7005a2.htm; Emily A.
Benfer & Lindsay F. Wiley, Health Justice Strategies
to Combat COVID-19: Protecting Vulnerable
Communities During a Pandemic, Health Affairs
Blog (Mar. 19, 2020), https://www.healthaffairs.org/
do/b. 1377/hbl og20200319.757883/f u ll /.
39 See, e.g., Centers for Disease Control and
Prevention, supra note 34; Benfer & Wiley, supra
Eligible Public Health Uses. The
Fiscal Recovery Funds provide
resources to meet and address these
emergent public health needs, including
through measures to counter the spread
of COVID-19, through the provision of
care for those impacted by the virus,
and through programs or services that
address disparities in public health that
have been exacerbated by the pandemic.
To facilitate implementation and use of
payments from the Fiscal Recovery
Funds, the interim final rule identifies
a non-exclusive list of eligible uses of
funding to respond to the COVID-19
public health emergency. Eligible uses
listed under this section build and
expand upon permissible expenditures
under the CRF, while recognizing the
differences between the ARPA and
CARES Act, and recognizing that the
response to the COVID-19 public health
emergency has changed and will
continue to change over time. To assess
whether additional uses would be
eligible under this category, recipients
should identify an effect of COVID-19
on public health, including either or
both of immediate effects or effects that
may manifest over months or years, and
assess how the use would respond to or
address the identified need.
The interim final rule identifies a
non-exclusive list of uses that address
the effects of the COVID-19 public
health emergency, including:
❑ COVID-19 Mitigation and
Prevention. A broad range of services
and programming are needed to contain
COVID-19. Mitigation and prevention
efforts for COVID-19 include
vaccination programs; medical care;
testing; contact tracing; support for
isolation or quarantine; supports for
vulnerable populations to access
medical or public health services;
public health surveillance (e.g.,
monitoring case trends, genomic
sequencing for variants); enforcement of
public health orders; public
communication efforts; enhancement to
health care capacity, including through
alternative care facilities; purchases of
personal protective equipment; support
for prevention, mitigation, or other
services in congregate living facilities
(e.g., nursing homes, incarceration
settings, homeless shelters, group living
facilities) and other key settings like
schools; 40 ventilation improvements in
note 38; Nathaniel M. Lewis et al., Disparities in
COVID-19 Incidence, Hospitalizations, and Testing,
by Area -Level Deprivation —Utah, March 3 —July 9,
2020, Morb. Mortal. Wkly. Rep. 69(38):1369-73
(Sept. 25, 2020), https://www.cdc.gov/mmwr/
volumes/69/wr/mm6938a4.htm.
40 This includes implementing mitigation
strategies consistent with the Centers for Disease
Control and Prevention's (CDC) Operational
congregate settings, health care settings,
or other key locations; enhancement of
public health data systems; and other
public health responses.41 They also
include capital investments in public
facilities to meet pandemic operational
needs, such as physical plant
improvements to public hospitals and
health clinics or adaptations to public
buildings to implement COVID-19
mitigation tactics. These COVID-19
prevention and mitigation programs and
services, among others, were eligible
expenditures under the CRF and are
eligible uses under this category of
eligible uses for the Fiscal Recovery
Funds.42
❑ Medical Expenses. The COVID-19
public health emergency continues to
have devastating effects on public
health; the United States continues to
average hundreds of deaths per day and
the spread of new COVID-19 variants
has raised new risks and genomic
surveillance needs.43 Moreover, our
understanding of the potentially serious
and long-term effects of the virus is
growing, including the potential for
symptoms like shortness of breath to
continue for weeks or months, for multi -
organ impacts from COVID-19, or for
post -intensive care syndrome. ## State
and local governments may need to
continue to provide care and services to
address these near- and longer -term
needs.45
Strategy for K-12 Schools through Phased
Prevention, available at https://www.cdc.gov/
coron avirus/2019-ncov/community/school s-
chil dcareloperation-strategy.html.
41 Many of these expenses were also eligible in
the CRF. Generally, funding uses eligible under CRF
as a response to the direct public health impacts of
COVID-19 will continue to be eligible under the
ARPA, including those not explicitly listed here
(e.g., telemedicine costs, costs to facilitate
compliance with public health orders, disinfection
of public areas, facilitating distance learning,
increased solid waste disposal needs related to PPE,
paid sick and paid family and medical leave to
public employees to enable compliance with
COVID-19 public health precautions), with the
following two exceptions: (1) The standard for
eligibility of public health and safety payrolls has
been updated (see section II.A of this
SUPPLEMENTARY INFORMATION) and (2) expenses
related to the issuance of tax -anticipation notes are
no longer an eligible funding use (see discussion of
debt service in section II.B of this SUPPLEMENTARY
INFORMATION).
42 Coronavirus Relief Fund for States, Tribal
Governments, and Certain Eligible Local
Governments, 86 FR 4182 (Jan. 15, 2021), available
at https://home.treasury.gov/system/files/136/CRF-
Guidance-Federal-Register 2021-00827.pdf.
43 Centers for Disease Control and Prevention,
supra note 24.
44 Centers for Disease Control and Prevention,
Long -Term Effects (Apr. 8, 2021), https://
www.cdc.gov/coronavirus/2019-ncov/long-term-
effects.html (last visited Apr. 26, 2021).
45 Pursuant to 42 CFR 433.51 and 45 CFR 75.306,
Fiscal Recovery Funds may not serve as a State or
locality's contribution of certain Federal funds.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26791
❑ Behavioral Health Care. In addition,
new or enhanced State, local, and Tribal
government services may be needed to
meet behavioral health needs
exacerbated by the pandemic and
respond to other public health impacts.
These services include mental health
treatment, substance misuse treatment,
other behavioral health services,
hotlines or warmlines, crisis
intervention, overdose prevention,
infectious disease prevention, and
services or outreach to promote access
to physical or behavioral health primary
care and preventative medicine.
❑ Public Health and Safety Staff.
Treasury recognizes that responding to
the public health and negative economic
impacts of the pandemic, including
administering the services described
above, requires a substantial
commitment of State, local, and Tribal
government human resources. As a
result, the Fiscal Recovery Funds may
be used for payroll and covered benefits
expenses for public safety, public
health, health care, human services, and
similar employees, to the extent that
their services are devoted to mitigating
or responding to the COVID-19 public
health emergency.46 Accordingly, the
Fiscal Recovery Funds may be used to
support the payroll and covered benefits
for the portion of the employee's time
that is dedicated to responding to the
COVID-19 public health emergency. 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. Recipients may
consider other presumptions for
assessing the extent to which an
employee, division, or operating unit is
engaged in activities that respond to the
COVID-19 public health emergency,
provided that the recipient reassesses
periodically and maintains records to
support its assessment, such as payroll
records, attestations from supervisors or
staff, or regular work product or
correspondence demonstrating work on
46 In general, if an employee's wages and salaries
are an eligible use of Fiscal Recovery Funds,
recipients may treat the employee's covered
benefits as an eligible use of Fiscal Recovery Funds.
For purposes of the Fiscal Recovery Funds, covered
benefits include costs of all types of leave (vacation,
family -related, sick, military, bereavement,
sabbatical, jury duty), employee insurance (health,
life, dental, vision), retirement (pensions, 401(k)),
unemployment benefit plans (Federal and state),
workers compensation insurance, and Federal
Insurance Contributions Act (FICA) taxes (which
includes Social Security and Medicare taxes).
the COVID-19 response. Recipients
need not routinely track staff hours.
❑ Expenses to Improve the Design and
Execution of Health and Public Health
Programs. 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.
Eligible Uses to Address Disparities in
Public Health Outcomes. In addition, in
recognition of the disproportionate
impacts of the COVID-19 pandemic on
health outcomes in low-income and
Native American communities and the
importance of mitigating these effects,
the interim final rule identifies a
broader range of services and programs
that will be presumed to be responding
to the public health emergency when
provided in these communities.
Specifically, Treasury will presume that
certain types of services, outlined
below, are eligible uses when provided
in a Qualified Census Tract (QCT),47 to
families living in QCTs, or when these
services are provided by Tribal
governments.48 Recipients may also
provide these services to other
populations, households, or geographic
areas that are disproportionately
impacted by the pandemic. In
identifying these disproportionately -
impacted communities, recipients
should be able to support their
determination that the pandemic
resulted in disproportionate public
health or economic outcomes to the
47 Qualified Census Tracts are a common, readily -
accessible, and geographically granular method of
identifying communities with a large proportion of
low-income residents. Using an existing measure
may speed implementation and decrease
administrative burden, while identifying areas of
need at a highly -localized level.
While QCTs are an effective tool generally, many
tribal communities have households with a wide
range of income levels due in part to non -tribal
member, high income residents living in the
community. Mixed income communities, with a
significant share of tribal members at the lowest
levels of income, are often not included as eligible
QCTs yet tribal residents are experiencing
disproportionate impacts due to the pandemic.
Therefore, including all services provided by Tribal
governments is a more effective means of ensuring
that disproportionately impacted Tribal members
can receive services.
48 U.S. Department of Housing and Urban
Development (HUD), Qualified Census Tracts and
Difficult Development Areas, https://
www.huduser.gov/portal/datasets/gct.html (last
visited Apr. 26, 2021); U.S. Department of the
Interior, Bureau of Indian Affairs, Indian Lands of
Federally Recognized Tribes of the United States
(June 2016), https://www.bia.gov/siteslbia.gov/files/
assets/bia/ots/webteam/pdf/idcl-028635.pdf (last
visited Apr. 26, 2021).
specific populations, households, or
geographic areas to be served.
Given the exacerbation of health
disparities during the pandemic and the
role of pre-existing social vulnerabilities
in driving these disparate outcomes,
services to address health disparities are
presumed to be responsive to the public
health impacts of the pandemic.
Specifically, recipients may use
payments from the Fiscal Recovery
Funds to facilitate access to resources
that improve health outcomes,
including services that connect
residents with health care resources and
public assistance programs and build
healthier environments, such as:
❑ Funding community health workers
to help community members access
health services and services to address
the social determinants of health; 49
❑ Funding public benefits navigators
to assist community members with
navigating and applying for available
Federal, State, and local public benefits
or services;
❑ Housing services to support healthy
living environments and neighborhoods
conducive to mental and physical
wellness;
❑ Remediation of lead paint or other
lead hazards to reduce risk of elevated
blood lead levels among children; and
❑ Evidence -based community
violence intervention programs to
prevent violence and mitigate the
increase in violence during the
pandemics°
2. Responding to Negative Economic
Impacts
Impacts on Households and
Individuals. The public health
emergency, including the necessary
measures taken to protect public health,
resulted in significant economic and
financial hardship for many Americans.
As businesses closed, consumers stayed
home, schools shifted to remote
49 The social determinants of health are the social
and environmental conditions that affect health
outcomes, specifically economic stability, health
care access, social context, neighborhoods and built
environment, and education access. See, e.g., U.S.
Department of Health and Human Services, Office
of Disease Prevention and Health Promotion,
Healthy People 2030: Social Determinants of
Health, https://health.gov/healthypeople/objectives-
and-data/social-determinants-health (last visited
Apr. 26, 2021).
50 National Commission on COVID-19 and
Criminal Justice, Impact Report: COVID-19 and
Crime (Jan. 31, 2021), https://
covid l9.counciloncj. org/2021 /01 /31 /impact-report-
covid-19-and-crime-3/ (showing a spike in
homicide and assaults); Brad Boesrup et al.,
Alarming Trends in US domestic violence during
the COVID-19 pandemic, Am. J. of Emerg. Med.
38(12): 2753-55 (Dec. 1, 2020), available at https://
www.ajemjournal.com/article/S0735-
6757(20)30307-7/fulltext (showing a spike in
domestic violence).
26792 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
education, and travel declined
precipitously, over 20 million jobs were
lost in March and April 2020.51
Although many have returned to work,
as of April 2021, the economy remains
8.2 million jobs below its pre -pandemic
peak,52 and more than 3 million workers
have dropped out of the labor market
altogether relative to February 2020.53
Rates of unemployment are
particularly severe among workers of
color and workers with lower levels of
educational attainment; for example, the
overall unemployment rate in the
United States was 6.1 percent in April
2021, but certain groups saw much
higher rates: 9.7 percent for Black
workers, 7.9 percent for Hispanic or
Latino workers, and 9.3 percent for
workers without a high school
diploma.54 Job losses have also been
particularly steep among low wage
workers, with these workers remaining
furthest from recovery as of the end of
2020.55 A severe recession —and its
concentrated impact among low-income
workers —has amplified food and
housing insecurity, with an estimated
nearly 17 million adults living in
households where there is sometimes or
often not enough food to eat and an
estimated 10.7 million adults living in
households that were not current on
rent.56 Over the course of the pandemic,
51 U.S. Bureau of Labor Statistics, All Employees,
Total Nonfarm (PAYEMS), retrieved from FRED,
Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/PAYEMS (last visited May
8, 2021).
52Id.
53 U.S. Bureau of Labor Statistics, Civilian Labor
Force Level [CLF16OV], retrieved from FRED,
Federal Reserve Bank of St. Louis, https://
fred.stlouisfed.org/series/CLF16OV (last visited May
8, 2021).
54 U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian population by sex
and age (May 8 2021), https://www.bls.gov/
news.release/empsit.t0l.htm (last visited May 8,
2021); U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian noninstitutional
population by race, Hispanic or Latino ethnicity,
sex, and age (May 8, 2021), https://www.bls.gov/
web/empsit/cpseea04.htm (last visited May 8,
2021); U.S. Bureau of Labor Statistics, Labor Force
Statistics from the Current Population Survey:
Employment status of the civilian noninstitutional
population 25 years and over by educational
attainment (May 8, 2021), https://www.bls.gov/web/
empsiticpseea05.htm (last visited May 8, 2021).
55 Elise Gould & Jori Kandra, Wages grew in 2020
because the bottom fell out of the low -wage labor
market, Economic Policy Institute (Feb. 24, 2021),
https://files.epi.org/pdf/219418.pdf. See also,
Michael Dalton et al., The K -Shaped Recovery:
Examining the Diverging Fortunes of Workers in the
Recovery from the COVID-19 Pandemic using
Business and Household Survey Microdata, U.S.
Bureau of Labor Statistics Working Paper Series
(Feb. 2021), https:I/www.bls.gov/osmr/research-
papers/2021/pdf/ec210020.pdf.
p d f.
56 Center on Budget and Policy Priorities,
Tracking the COVID-19 Recession's Effects on
inequities also manifested along gender
lines, as schools closed to in -person
activities, leaving many working
families without child care during the
day.57 Women of color have been hit
especially hard: The labor force
participation rate for Black women has
fallen by 3.2 percentage points 58 during
the pandemic as compared to 1.0
percentage points for Black men 59 and
2.0 percentage points for White
women.6o
As the economy recovers, the effects
of the pandemic -related recession may
continue to impact households,
including a risk of longer -term effects on
earnings and economic potential. For
example, unemployed workers,
especially those who have experienced
longer periods of unemployment, earn
lower wages over the long term once
rehired.61 In addition to the labor
market consequences for unemployed
workers, recessions can also cause
longer -term economic challenges
through, among other factors, damaged
consumer credit scores 62 and reduced
familial and childhood wellbeing.63
Food, Housing, and Employment Hardships,
https://www. cbpp.org/research/poverty-and-
inequality/tracking-the-covid-19-recessions-effects-
onfood-housing-and (last visited May 8, 2021).
57 Women have carried a larger share of childcare
responsibilities than men during the COVID-19
crisis. See, e.g., Gema Zamarro & Maria J. Prados,
Gender differences in couples' division of
childcare, work and mental health during COVID-
19, Rev. Econ. Household 19:11-40 (2021),
available at https://link.springer.com/article/
10.1007/s11150-020-09534-7; Titan Alan et al., The
Impact of COVID-19 on Gender Equality, National
Bureau of Economic Research Working Paper 26947
(April 2020), available at https://www.nber.org/
papers/w26947.
58 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate -20 Yrs. & Over, Black or African
American Women [LNS11300032], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300032 (last visited
May 8, 2021).
59 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate -20 Yrs. & Over, Black or African
American Men [LNS11300031], retrieved from
FRED, Federal Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300031 (last visited
May 8, 2021).
60 U.S. Bureau of Labor Statistics, Labor Force
Participation Rate -20 Yrs. & Over, White Women
[LNS11300029], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://
fred.stlouisfed.org/series/LNS11300029 (last visited
May 8, 2021).
61 See, e.g., Michael Greenstone & Adam Looney,
Unemployment and Earnings Losses: A Look at
Long -Term Impacts of the Great Recession on
American Workers, Brookings Institution (Nov. 4,
2021), https://www.brookings.edu/blog/jobs/2011/
11 /04/unem ployment-an d-earnings-losses-a-look-
at-long-term-impacts-of-the-great-recession-on-
american-workers/.
62 Chi Chi Wu, Solving the Credit Conundrum:
Helping Consumers' Credit Records Impaired by the
Foreclosure Crisis and Great Recession (Dec. 2013),
https:/!www.ncic.org/images!pdf!credit_reports/
report-credit-conundrum-2013.pdf.
63Irwin Garfinkel, Sara McLanahan, Christopher
Wimer, eds., Children of the Great Recession,
These potential long-term economic
consequences underscore the continued
need for robust policy support.
Impacts on Businesses. The pandemic
has also severely impacted many
businesses, with small businesses hit
especially hard. Small businesses make
up nearly half of U.S. private -sector
employment 64 and play a key role in
supporting the overall economic
recovery as they are responsible for two-
thirds of net new jobs.65 Since the
beginning of the pandemic, however,
400,000 small businesses have closed,
with many more at risk.66 Sectors with
a large share of small business
employment have been among those
with the most drastic drops in
employment.67 The negative outlook for
small businesses has continued: As of
April 2021, approximately 70 percent of
small businesses reported that the
pandemic has had a moderate or large
negative effect on their business, and
over a third expect that it will take over
6 months for their business to return to
their normal level of operations.68
This negative outlook is likely the
result of many small businesses having
faced periods of closure and having seen
declining revenues as customers stayed
home.69 In general, small businesses can
face greater hurdles in accessing
credit,70 and many small businesses
were already financially fragile at the
outset of the pandemic.71 Non -profits,
which provide vital services to
communities, have similarly faced
Russell Sage Foundation (Aug. 2016), available at
https://www.russellsage. org/publications/chil dren-
great-recession.
64 Board of Governors of the Federal Reserve
System, supra note 5.
65 U.S. Small Business Administration, Office of
Advocacy, Small Businesses Generate 44 Percent of
U.S. Economic Activity (Jan. 30, 2019), https://
advocacy.sba.gov/2019/01 /30/small-businesses-
genera to -4 4 -percent -o f- u -s-economic-activity/.
66 Biden, supra note 6.
67Daniel Wilmoth, U.S. Small Business
Administration Office of Advocacy, The Effects of
the COVID-19 Pandemic on Small Businesses, Issue
Brief No. 16 (Mar. 2021), available at https://
cdn.advocacy.sba.gov/wp-content/uploads/2021/
03/02112318/CO VID-19-Impact-On-Small-
Business.pd f.
6s U.S. Census Bureau, Small Business Pulse
Survey, https://portal.census.gov/pulse/data/ (last
visited May 8, 2021).
69 Olivia S. Kim et al., Revenue Collapses and the
Consumption of Small Business Owners in the
Early Stages of the COVID-19 Pandemic (Nov.
2020), https://www.nber.org/papers/w28151.
70 See e.g., Board of Governors of the Federal
Reserve System, Report to Congress on the
Availability of Credit to Small Businesses (Sept.
2017), available at https://www.federalreserve.gov/
publications/2017-september-availability-of-credit-
to-small-businesses.h tm.
71 Alexander W. Bartik et al., The Impact of
COVID-19 on small business outcomes and
expectations, PNAS 117(30): 17656-66 (July 28,
2020), available at https://www.pnas.org/content/
117/30/17656.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26793
economic and financial challenges due
to the pandemic.72
Impacts to State, Local, and Tribal
Governments. State, local, and Tribal
governments have felt substantial fiscal
pressures. As noted above, State, local,
and Tribal governments have faced
significant revenue shortfalls and
remain over 1 million jobs below their
pre -pandemic staffing levels.73 These
reductions in staffing may undermine
the ability to deliver services effectively,
as well as add to the number of
unemployed individuals in their
jurisdictions.
Exacerbation of Pre-existing
Disparities. The COVID-19 public
health emergency may have lasting
negative effects on economic outcomes,
particularly in exacerbating disparities
that existed prior to the pandemic.
The negative economic impacts of the
COVID-19 pandemic are particularly
pronounced in certain communities and
families. Low- and moderate -income
jobs make up a substantial portion of
both total pandemic job losses,74 and
jobs that require in -person frontline
work, which are exposed to greater risk
of contracting COVID-19.75 Both factors
compound pre-existing vulnerabilities
and the likelihood of food, housing, or
other financial insecurity in low- and
moderate -income families and, given
the concentration of low- and moderate -
income families within certain
communities,76 raise a substantial risk
that the effects of the COVID-19 public
health emergency will be amplified
within these communities.
These compounding effect of
recessions on concentrated poverty and
the long-lasting nature of this effect
were observed after the 2007-2009
recession, including a large increase in
concentrated poverty with the number
of people living in extremely poor
72 Federal Reserve Bank of San Francisco, Impacts
of COVID-19 on Nonprofits in the Western United
States (May 2020), https://www.frbsf.org/
community-development/files/impact-o f -co vi d -
nonprofits -serving -western -united -states. pd f.
73 Bureau of Labor Statistics, supra note 8; Elijah
Moreno & Heather Sobrepena, Tribal entities remain
resilient as COVID-19 batters their finances,
Federal Reserve Bank of Minneapolis (Nov. 10,
2021), https://www.minneapolisfed.org/article/
2020/tribal -en ti ti es -rem ain -resilient-a s -c o vi d -19-
batters-their finances.
74 Kim Parker et al., Economic Fallout from
COVID-19 Continues to Hit Lower -Income
Americans the Hardest, Pew Research Center (Sept.
24, 2020), https://www.pewresearch.org/social-
trends/2020/09/24/economic falloutfrom-covid-19-
contin ues-to-hit-lower-income-americans-the-
hardest/; Gould, supra note 55.
75 See infra Section II.B of this Supplementary
Information.
76 Elizabeth Kneebone, The Changing geography
of US poverty, Brookings Institution (Feb. 15, 2017),
https://www.brookings. edu/testimonies/the-
changing-geography-o f -us -poverty/.
neighborhoods more than doubling by
2010-2014 relative to 2000.77
Concentrated poverty has a range of
deleterious impacts, including
additional burdens on families and
reduced economic potential and social
cohesion.78 Given the disproportionate
impact of COVID-19 on low-income
households discussed above, there is a
risk that the current pandemic -induced
recession could further increase
concentrated poverty and cause long-
term damage to economic prospects in
neighborhoods of concentrated poverty.
The negative economic impacts of
COVID-19 also include significant
impacts to children in
disproportionately affected families and
include impacts to education, health,
and welfare, all of which contribute to
long-term economic outcomes.79 Many
low-income and minority students, who
were disproportionately served by
remote or hybrid education during the
pandemic, lacked the resources to
participate fully in remote schooling or
live in households without adults
available throughout the day to assist
with online coursework.80 Given these
trends, the pandemic may widen
educational disparities and worsen
outcomes for low-income students,81 an
77 Elizabeth Kneebone & Natalie Holmes, U.S.
concentrated poverty in the wake of the Great
Recession, Brookings Institution (Mar. 31, 2016),
https://www.brookings.ed u/research/u-s-
concentrated-poverty-in-the-wake-of-the-great-
recession!.
78 David Erickson et al., The Enduring Challenge
of Concentrated Poverty in America: Case Studies
from Communities Across the U.S. (2008), available
at https://www. frbsf.org/community-development/
files/cp fullreport. p d f.
79 Educational quality, as early as Kindergarten,
has a long-term impact on children's public health
and economic outcomes. See, e.g., Tyler W. Watts
et al., The Chicago School Readiness Project:
Examining the long-term impacts of an early
childhood intervention, PLoS ONE 13(7) (2018),
available at https://journals.plos.org/plosone/
article?id=10.1371 /journal. pone.0200144;
Opportunity Insights, How Can We Amplify
Education as an Engine of Mobility? Using big data
to help children get the most from school, https://
opportunityinsights.org/education/ (last visited
Apr. 26, 2021); U.S. Department of Health and
Human Services (HHS), Office of Disease
Prevention and Health Promotion, Early Childhood
Development and Education, https://
www.healthypeople.gov!2020/topics-objectives!
topic/social-determinants-heal th/interventions-
resources/early-childhood-development-and-
education (last visited Apr. 26, 2021).
so See, e.g., Bacher-Hicks, supra note 14.
81 A Department of Education survey found that,
as of February 2021, 42 percent of fourth grade
students nationwide were offered only remote
education, compared to 48 percent of economically
disadvantaged students, 54 percent of Black
students and 57 percent of Hispanic students. Large
districts often disproportionately serve low-income
students. See Institute of Education Sciences,
Monthly School Survey Dashboard, https://
ies.ed.gov/schoolsurvey/ (last visited Apr. 26, 2021).
In summer 2020, a review found that 74 percent of
the largest 100 districts chose remote learning only.
effect that would substantially impact
their long-term economic outcomes.
Increased economic strain or material
hardship due to the pandemic could
also have a long-term impact on health,
educational, and economic outcomes of
young children.82 Evidence suggests
that adverse conditions in early
childhood, including exposure to
poverty, food insecurity, housing
insecurity, or other economic hardships,
are particularly impactful.83
The pandemic's disproportionate
economic impacts are also seen in
Tribal communities across the
country —for Tribal governments as well
as families and businesses on and off
Tribal lands. In the early months of the
pandemic, Native American
unemployment spiked to 26 percent
and, while partially recovered, remains
at nearly 11 percent.S4 Tribal enterprises
are a significant source of revenue for
Tribal governments to support the
provision of government services. These
enterprises, notably concentrated in
gaming, tourism, and hospitality,
frequently closed, significantly reducing
both revenues to Tribal governments
and employment. As a result, Tribal
governments have reduced essential
services to their citizens and
communities.85
Eligible Uses. Sections 602(c)(1)(A)
and 603(c)(1)(A) permit use of payments
from the Fiscal Recovery Funds to
respond to the negative economic
impacts of the COVID-19 public health
emergency. Eligible uses that respond to
the negative economic impacts of the
public health emergency must be
designed to address an economic harm
resulting from or exacerbated by the
public health emergency. In considering
whether a program or service would be
See Education Week, School Districts' Reopening
Plans: A Snapshot (Jul. 15, 2020), https://
www.edweek.org/leadership/school-districts-
reopening-plans-a-snapshot/2020/07 (last visited
May 4, 2021).
82 HHS, supra note 79.
83 Hirokazu Yoshikawa, Effects of the Global
Coronavirus Disease -2019 Pandemic on Early
Childhood Development: Short- and Long -Term
Risks and Mitigating Program and Policy Actions,
J. of Pediatrics Vol. 223:188-93 (Aug. 1, 2020),
available at https://www.jpeds.com/article/S0022-
3476(20)30606-5/abstract.
84 Based on calculations conducted by the
Minneapolis Fed's Center for Indian Country
Development using Flood et al. (2020)5 Current
Population Survey." Sarah Flood, Miriam King,
Renae Rodgers, Steven Ruggles and J. Robert
Warren. Integrated Public Use Microdata Series,
Current Population Survey: Version 8.0 [dataset].
Minneapolis, MN: IPUMS, 2020. https://doi.orgl
10.18128/D030.V8.0; see also Donna Feir & Charles
Golding, Native Employment During COVID-19:
Hard hit in April but Starting to Rebount? (Aug. 5,
2020), https://www.minneapolisfed.org/article/
2020/native-em ployment-during-covid-19-hit-hard-
in-a pril-but-starting-to-rebound.
85 Moreno & Sobrepena, supra note 73.
26794 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
eligible under this category, the
recipient should assess whether, and the
extent to which, there has been an
economic harm, such as loss of earnings
or revenue, that resulted from the
COVID-19 public health emergency and
whether, and the extent to which, the
use would respond or address this
harm.86 A recipient should first
consider whether an economic harm
exists and whether this harm was
caused or made worse by the COVID-19
public health emergency. While
economic impacts may either be
immediate or delayed, assistance or aid
to individuals or businesses that did not
experience a negative economic impact
from the public health emergency
would not be an eligible use under this
category.
In addition, the eligible use must
"respond to" the identified negative
economic impact. Responses must be
related and reasonably proportional to
the extent and type of harm
experienced; uses that bear no relation
or are grossly disproportionate to the
type or extent of harm experienced
would not be eligible uses. Where there
has been a negative economic impact
resulting from the public health
emergency, States, local, and Tribal
governments have broad latitude to
choose whether and how to use the
Fiscal Recovery Funds to respond to
and address the negative economic
impact. Sections 602(c)(1)(A) and
603(c)(1)(A) describe several types of
uses that would be eligible under this
category, including assistance to
households, small businesses, and
nonprofits and aid to impacted
industries such as tourism, travel, and
hospitality.
To facilitate implementation and use
of payments from the Fiscal Recovery
Funds, the interim final rule identifies
a non-exclusive list of eligible uses of
funding that respond to the negative
economic impacts of the public health
emergency. Consistent with the
discussion above, the eligible uses listed
below would respond directly to the
economic or financial harms resulting
from and or exacerbated by the public
health emergency.
❑ Assistance to Unemployed Workers.
This includes assistance to unemployed
workers, including services like job
training to accelerate rehiring of
unemployed workers; these services
may extend to workers unemployed due
to the pandemic or the resulting
recession, or who were already
unemployed when the pandemic began
86 In some cases, a use may be permissible under
another eligible use category even if it falls outside
the scope of section (c)(1)(A) of the Act.
and remain so due to the negative
economic impacts of the pandemic.
❑ State Unemployment Insurance
Trust Funds. Consistent with the
approach taken in the CRF, recipients
may make deposits into the state
account of the Unemployment Trust
Fund established under section 904 of
the Social Security Act (42 U.S.C. 1104)
up to the level needed to restore the pre -
pandemic balances of such account as of
January 27, 2020 or to pay back
advances received under Title XII of the
Social Security Act (42 U.S.C. 1321) for
the payment of benefits between January
27, 2020 and May 17, 2021, given the
close nexus between Unemployment
Trust Fund costs, solvency of
Unemployment Trust Fund systems,
and pandemic economic impacts.
Further, Unemployment Trust Fund
deposits can decrease fiscal strain on
Unemployment Insurance systems
impacted by the pandemic. States facing
a sharp increase in Unemployment
Insurance claims during the pandemic
may have drawn down positive
Unemployment Trust Fund balances
and, after exhausting the balance,
required advances to fund continuing
obligations to claimants. Because both
of these impacts were driven directly by
the need for assistance to unemployed
workers during the pandemic,
replenishing Unemployment Trust
Funds up to the pre -pandemic level
responds to the pandemic's negative
economic impacts on unemployed
workers.
❑ Assistance to Households.
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 (discussed below); 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. As
discussed above, in considering whether
a potential use is eligible under this
category, a recipient must consider
whether, and the extent to which, the
household has experienced a negative
economic impact from the pandemic. In
assessing whether a household or
population experienced economic harm
as a result of the pandemic, a recipient
may presume that a household or
population that experienced
unemployment or increased food or
housing insecurity or is low- or
moderate -income experienced negative
economic impacts resulting from the
pandemic. For example, a cash transfer
program may focus on unemployed
workers or low- and moderate -income
families, which have faced
disproportionate economic harms due to
the pandemic. Cash transfers must be
reasonably proportional to the negative
economic impact they are intended to
address. Cash transfers grossly in excess
of the amount needed to address the
negative economic impact identified by
the recipient would not be considered to
be a response to the COVID-19 public
health emergency or its negative
impacts. In particular, when considering
the appropriate size of permissible cash
transfers made in response to the
COVID-19 public health emergency,
State, local and Tribal governments may
consider and take guidance from the per
person amounts previously provided by
the Federal Government in response to
the COVID-19 crisis. Cash transfers that
are grossly in excess of such amounts
would be outside the scope of eligible
uses under sections 602(c)(1)(A) and
603(c)(1)(A) and could be subject to
recoupment. In addition, a recipient
could provide survivor's benefits to
surviving family members of COVID-19
victims, or cash assistance to widows,
widowers, and dependents of eligible
COVID-19 victims.
❑ Expenses to Improve Efficacy of
Economic Relief Programs. State, local,
and Tribal governments may use
payments from the Fiscal Recovery
Funds to improve efficacy of programs
addressing negative economic impacts,
including through use of data analysis,
targeted consumer outreach,
improvements to data or technology
infrastructure, and impact evaluations.
❑ Small Businesses and Non -profits.
As discussed above, small businesses
and non -profits faced significant
challenges in covering payroll,
mortgages or rent, and other operating
costs as a result of the public health
emergency and measures taken to
contain the spread of the virus. State,
local, and Tribal governments may
provide assistance to small businesses
to adopt safer operating procedures,
weather periods of closure, or mitigate
financial hardship resulting from the
COVID-19 public health emergency,
including:
o Loans or grants to mitigate financial
hardship such as declines in revenues
or impacts of periods of business
closure, for example by supporting
payroll and benefits costs, costs to retain
employees, mortgage, rent, or utilities
costs, and other operating costs;
o Loans, grants, or in -kind assistance
to implement COVID-19 prevention or
mitigation tactics, such as physical
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26795
plant changes to enable social
distancing, enhanced cleaning efforts,
barriers or partitions, or COVID-19
vaccination, testing, or contact tracing
programs; and
O Technical assistance, counseling, or
other services to assist with business
planning needs.
As discussed above, these services
should respond to the negative
economic impacts of COVID-19.
Recipients may consider additional
criteria to target assistance to businesses
in need, including small businesses.
Such criteria may include businesses
facing financial insecurity, substantial
declines in gross receipts (e.g.,
comparable to measures used to assess
eligibility for the Paycheck Protection
Program), or other economic harm due
to the pandemic, as well as businesses
with less capacity to weather financial
hardship, such as the smallest
businesses, those with less access to
credit, or those serving disadvantaged
communities. Recipients should
consider local economic conditions and
business data when establishing such
criteria.87
❑ Rehiring State, Local, and Tribal
Government Staff. State, local, and
Tribal governments continue to see
pandemic impacts in overall staffing
levels: State, local, and Tribal
government employment remains more
than 1 million jobs lower in April 2021
than prior to the pandemic.88
Employment losses decrease a state or
local government's ability to effectively
administer services. Thus, the interim
final rule includes as an eligible use
payroll, covered benefits, and other
costs associated with rehiring public
sector staff, up to the pre -pandemic
staffing level of the government.
❑ Aid to Impacted Industries.
Sections 602(c)(1)(A) and 603(c)(1)(A)
recognize that certain industries, such
as tourism, travel, and hospitality, were
disproportionately and negatively
impacted by the COVID-19 public
health emergency. Aid provided to
tourism, travel, and hospitality
industries should respond to the
negative economic impacts of the
8'] See Federal Reserve Bank of Cleveland, An
Uphill Battle: COVID-19's Outsized Toll on
Minority -Owned Firms (Oct. 8, 2020), https://
www.clevelandfed.org/newsroom-and-events/
publications/comm unity-development-briefs/db-
20201008-misera-report.aspx (discussing the
impact of COVID-19 on minority owned
businesses).
8a U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
CES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited May 8, 2021).
pandemic on those and similarly
impacted industries. For example, aid
may include assistance to implement
COVID-19 mitigation and infection
prevention measures to enable safe
resumption of tourism, travel, and
hospitality services, for example,
improvements to ventilation, physical
barriers or partitions, signage to
facilitate social distancing, provision of
masks or personal protective equipment,
or consultation with infection
prevention professionals to develop safe
reopening plans.
Aid may be considered responsive to
the negative economic impacts of the
pandemic if it supports businesses,
attractions, business districts, and Tribal
development districts operating prior to
the pandemic and affected by required
closures and other efforts to contain the
pandemic. For example, a recipient may
provide aid to support safe reopening of
businesses in the tourism, travel, and
hospitality industries and to business
districts that were closed during the
COVID-19 public health emergency, as
well as aid for a planned expansion or
upgrade of tourism, travel, and
hospitality facilities delayed due to the
pandemic.
When considering providing aid to
industries other than tourism, travel,
and hospitality, recipients should
consider the extent of the economic
impact as compared to tourism, travel,
and hospitality, the industries
enumerated in the statute. For example,
on net, the leisure and hospitality
industry has experienced an
approximately 24 percent decline in
revenue and approximately 17 percent
decline in employment nationwide due
to the COVID-19 public health
emergency.89 Recipients should also
consider whether impacts were due to
the COVID-19 pandemic, as opposed to
longer -term economic or industrial
trends unrelated to the pandemic.
To facilitate transparency and
accountability, the interim final rule
requires that State, local, and Tribal
governments publicly report assistance
provided to private -sector businesses
under this eligible use, including
89 From February 2020 to April 2021,
employment in "Leisure and hospitality" has fallen
by approximately 17 percent. See U.S. Bureau of
Labor Statistics, All Employees, Leisure and
Hospitality, retrieved from FRED, Federal Reserve
Bank of St. Louis, https://fred.stlouisfed.org/series/
USLAH (last visited May 8, 2021). From 2019Q4 to
2020Q4, gross output (e.g. revenue) in arts,
entertainment, recreation, accommodation, and
food services has fallen by approximately 24
percent. See Bureau of Economic Analysis, News
Release: Gross Domestic Product (Third Estimate),
Corporate Profits, and GDP by Industry, Fourth
Quarter and Year 2020 (Mar. 25, 2021), Table 17,
https://www.bea.gov/sites/default/files/2021-03/
gdp4q20_3rd.pdf.
tourism, travel, hospitality, and other
impacted industries, and its connection
to negative economic impacts of the
pandemic. Recipients also should
maintain records to support their
assessment of how businesses or
business districts receiving assistance
were affected by the negative economic
impacts of the pandemic and how the
aid provided responds to these impacts.
As discussed above, economic
disparities that existed prior to the
COVID-19 public health emergency
amplified the impact of the pandemic
among low-income and minority
groups. These families were more likely
to face housing, food, and financial
insecurity; are over -represented among
low -wage workers; and many have seen
their livelihoods deteriorate further
during the pandemic and economic
contraction. In recognition of the
disproportionate negative economic
impacts on certain communities and
populations, the interim final rule
identifies services and programs that
will be presumed to be responding to
the negative economic impacts of the
COVID-19 public health emergency
when provided in these communities.
Specifically, Treasury will presume
that certain types of services, outlined
below, are eligible uses when provided
in a QCT, to families and individuals
living in QCTs, or when these services
are provided by Tribal governments.90
Recipients may also provide these
services to other populations,
households, or geographic areas
disproportionately impacted by the
pandemic. In identifying these
disproportionately impacted
communities, recipients should be able
to support their determination that the
pandemic resulted in disproportionate
public health or economic outcomes to
the specific populations, households, or
geographic areas to be served. The
interim final rule identifies a non-
exclusive list of uses that address the
disproportionate negative economic
effects of the COVID-19 public health
emergency, including:
O Building Stronger Communities
through Investments in Housing and
Neighborhoods. The economic impacts
of COVID-19 have likely been most
acute in lower -income neighborhoods,
including concentrated areas of high
unemployment, limited economic
opportunity, and housing insecurity.91
90 HUD, supra note 48.
91 Stuart M. Butler & Jonathan Grabinsky,
Tackling the legacy of persistent urban inequality
and concentrated poverty, Brookings Institution
(Nov. 16, 2020), https://www.brookings.edu/blog/
upfront/2020/11/16/tackling-the-legacy-of-
Continued
26796 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Services in this category alleviate the
immediate economic impacts of the
COVID-19 pandemic on housing
insecurity, while addressing conditions
that contributed to poor public health
and economic outcomes during the
pandemic, namely concentrated areas
with limited economic opportunity and
inadequate or poor -quality housing.92
Eligible services include:
■ Services to address homelessness
such as supportive housing, and to
improve access to stable, affordable
housing among unhoused individuals;
■ Affordable housing development to
increase supply of affordable and high -
quality living units; and
■ Housing vouchers, residential
counseling, or housing navigation
assistance to facilitate household moves
to neighborhoods with high levels of
economic opportunity and mobility for
low-income residents, to help residents
increase their economic opportunity
and reduce concentrated areas of low
economic opportunity.93
o Addressing Educational Disparities.
As outlined above, school closures and
the transition to remote education raised
particular challenges for lower -income
students, potentially exacerbating
educational disparities, while increases
in economic hardship among families
could have long-lasting impacts on
children's educational and economic
prospects. Services under this prong
would enhance educational supports to
help mitigate impacts of the pandemic.
Eligible services include:
■ New, expanded, or enhanced early
learning services, including pre-
kindergarten, Head Start, or
partnerships between pre -kindergarten
programs and local education
authorities, or administration of those
services;
■ Providing assistance to high -poverty
school districts to advance equitable
funding across districts and
geographies;
■ Evidence -based educational
services and practices to address the
academic needs of students, including
tutoring, summer, afterschool, and other
persistent -urban -inequality -and -concentrated -
poverty!.
92 U.S. Department of Health and Human Services
(HHS), Office of Disease Prevention and Health
Promotion, Quality of Housing, https://
www.healthypeople.gov/2020/topics-objectives/
topic/social-determinants-health /in terven ti ons-
resources/quality-of-housing#11 (last visited Apr.
26, 2021).
93 The Opportunity Atlas, https://
www.opportunityatlas.org/ (last visited Apr. 26,
2021); Raj Chetty & Nathaniel Hendren, The
Impacts of Neighborhoods on Intergenerational
Mobility I: Childhood Exposure Effects, Quarterly J.
of Econ. 133(3):1107-162 (2018), available at
https://opportunityinsights. org/paper/
neighborhoodsi/.
extended learning and enrichment
programs; and
■ Evidence -based practices to address
the social, emotional, and mental health
needs of students;
o Promoting Healthy Childhood
Environments. Children's economic and
family circumstances have a long-term
impact on their future economic
outcomes.94 Increases in economic
hardship, material insecurity, and
parental stress and behavioral health
challenges all raise the risk of long-term
harms to today's children due to the
pandemic. Eligible services to address
this challenge include:
■ New or expanded high -quality
childcare to provide safe and supportive
care for children;
■ Home visiting programs to provide
structured visits from health, parent
educators, and social service
professionals to pregnant women or
families with young children to offer
education and assistance navigating
resources for economic support, health
needs, or child development; and
■ Enhanced services for child welfare -
involved families and foster youth to
provide support and training on child
development, positive parenting, coping
skills, or recovery for mental health and
substance use challenges.
State, local, and Tribal governments
are encouraged to use payments from
the Fiscal Recovery Funds to respond to
the direct and immediate needs of the
pandemic and its negative economic
impacts and, in particular, the needs of
households and businesses that were
disproportionately and negatively
impacted by the public health
emergency. As highlighted above, low-
income communities and workers and
people of color have faced more severe
health and economic outcomes during
the pandemic, with pre-existing social
vulnerabilities like low -wage or
insecure employment, concentrated
neighborhoods with less economic
opportunity, and pre-existing health
disparities likely contributing to the
magnified impact of the pandemic. The
Fiscal Recovery Funds provide
resources to not only respond to the
immediate harms of the pandemic but
also to mitigate its longer -term impact in
compounding the systemic public
health and economic challenges of
disproportionately impacted
populations. Treasury encourages
recipients to consider funding uses that
foster a strong, inclusive, and equitable
recovery, especially uses with long-term
benefits for health and economic
outcomes.
94 See supra notes 52 and 84.
Uses Outside the Scope of this
Category. Certain uses would not be
within the scope of this eligible use
category, although may be eligible under
other eligible use categories. A general
infrastructure project, for example,
typically would not be included unless
the project responded to a specific
pandemic public health need (e.g.,
investments in facilities for the delivery
of vaccines) or a specific negative
economic impact like those described
above (e.g., affordable housing in a
QCT). The ARPA explicitly includes
infrastructure if it is "necessary" and in
water, sewer, or broadband. See Section
II.D of this SUPPLEMENTARY INFORMATION.
State, local, and Tribal governments also
may use the Fiscal Recovery Funds
under sections 602(c)(1)(C) or
603(c)(1)(C) to provide "government
services" broadly to the extent of their
reduction in revenue. See Section II.C of
this SUPPLEMENTARY INFORMATION.
This category of eligible uses also
would not include contributions to
rainy day funds, financial reserves, or
similar funds. Resources made available
under this eligible use category are
intended to help meet pandemic
response needs and provide relief for
households and businesses facing near -
and long-term negative economic
impacts. Contributions to rainy day
funds and similar financial reserves
would not address these needs or
respond to the COVID-19 public health
emergency but would rather constitute
savings for future spending needs.
Similarly, this eligible use category
would not include payment of interest
or principal on outstanding debt
instruments, including, for example,
short-term revenue or tax anticipation
notes, or other debt service costs. As
discussed below, payments from the
Fiscal Recovery Funds are intended to
be used prospectively and the interim
final rule precludes use of these funds
to cover the costs of debt incurred prior
to March 3, 2021. Fees or issuance costs
associated with the issuance of new
debt would also not be covered using
payments from the Fiscal Recovery
Funds because such costs would not
themselves have been incurred to
address the needs of pandemic response
or its negative economic impacts. The
purpose of the Fiscal Recovery Funds is
to provide fiscal relief that will permit
State, local, and Tribal governments to
continue to respond to the COVID-19
public health emergency.
For the same reasons, this category of
eligible uses would not include
satisfaction of any obligation arising
under or pursuant to a settlement
agreement, judgment, consent decree, or
judicially confirmed debt restructuring
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26797
plan in a judicial, administrative, or
regulatory proceeding, except to the
extent the judgment or settlement
requires the provision of services that
would respond to the COVID-19 public
health emergency. That is, satisfaction
of a settlement or judgment would not
itself respond to COVID-19 with respect
to the public health emergency or its
negative economic impacts, unless the
settlement requires the provision of
services or aid that did directly respond
to these needs, as described above.
In addition, as described in Section
VIII of this SUPPLEMENTARY
INFORMATION, Treasury will establish
reporting and record keeping
requirements for uses within this
category, including enhanced reporting
requirements for certain types of uses.
Question 1: Are there other types of
services or costs that Treasury should
consider as eligible uses to respond to
the public health impacts of COVID-19?
Describe how these respond to the
COVID-19 public health emergency.
Question 2: The interim final rule
permits coverage of payroll and benefits
costs of public health and safety staff
primarily dedicated to COVID-19
response, as well as rehiring of public
sector staff up to pre -pandemic levels.
For how long should these measures
remain in place? What other measures
or presumptions might Treasury
consider to assess the extent to which
public sector staff are engaged in
COVID-19 response, and therefore
reimbursable, in an easily -administrable
manner?
Question 3: The interim final rule
permits rehiring of public sector staff up
to the government's pre -pandemic
staffing level, which is measured based
on employment as of January 27, 2020.
Does this approach adequately measure
the pre -pandemic staffing level in a
manner that is both accurate and easily
administrable? Why or why not?
Question 4: The interim final rule
permits deposits to Unemployment
Insurance Trust Funds, or using funds
to pay back advances, up to the pre -
pandemic balance. What, if any,
conditions should be considered to
ensure that funds repair economic
impacts of the pandemic and strengthen
unemployment insurance systems?
Question 5: Are there other types of
services or costs that Treasury should
consider as eligible uses to respond to
the negative economic impacts of
COVID-19? Describe how these respond
to the COVID-19 public health
emergency.
Question 6: What other measures,
presumptions, or considerations could
be used to assess "impacted industries"
affected by the COVID-19 public health
emergency?
Question 7: What are the advantages
and disadvantages of using Qualified
Census Tracts and services provided by
Tribal governments to delineate where a
broader range of eligible uses are
presumed to be responsive to the public
health and economic impacts of
COVID-19? What other measures might
Treasury consider? Are there other
populations or geographic areas that
were disproportionately impacted by the
pandemic that should be explicitly
included?
Question 8: Are there other services or
costs that Treasury should consider as
eligible uses to respond to the
disproportionate impacts of COVID-19
on low-income populations and
communities? Describe how these
respond to the COVID-19 public health
emergency or its negative economic
impacts, including its exacerbation of
pre-existing challenges in these areas.
Question 9: The interim final rule
includes eligible uses to support
affordable housing and stronger
neighborhoods in disproportionately -
impacted communities. Discuss the
advantages and disadvantages of
explicitly including other uses to
support affordable housing and stronger
neighborhoods, including rehabilitation
of blighted properties or demolition of
abandoned or vacant properties. In
what ways does, or does not, this
potential use address public health or
economic impacts of the pandemic?
What considerations, if any, could
support use of Fiscal Recovery Funds in
ways that do not result in resident
displacement or loss of affordable
housing units?
B. Premium Pay
Fiscal Recovery Funds payments may
be used by recipients to provide
premium pay to eligible workers
performing essential work during the
COVID-19 public health emergency or
to provide grants to third -party
employers with eligible workers
performing essential work.95 These are
workers who have been and continue to
be relied on to maintain continuity of
operations of essential critical
infrastructure sectors, including those
who are critical to protecting the health
and wellbeing of their communities.
Since the start of the COVID-19
public health emergency in January
2020, essential workers have put their
physical wellbeing at risk to meet the
daily needs of their communities and to
provide care for others. In the course of
this work, many essential workers have
95 Sections 602(c)(1)(B), 603(c)(1)(B) of the Act.
contracted or died of COVID-19.96
Several examples reflect the severity of
the health impacts for essential workers.
Meat processing plants became
"hotspots" for transmission, with 700
new cases reported at a single plant on
a single day in May 2020.97 In New York
City, 120 employees of the Metropolitan
Transit Authority were estimated to
have died due to COVID-19 by mid -May
2020, with nearly 4,000 testing positive
for the virus.98 Furthermore, many
essential workers are people of color or
low -wage workers.99 These workers, in
particular, have borne a
disproportionate share of the health and
economic impacts of the pandemic.
Such workers include:
❑ 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; and
❑ Social service and human services
staff.
During the public health emergency,
employers' policies on COVID-19-
related hazard pay have varied widely,
with many essential workers not yet
compensated for the heightened risks
they have faced and continue to face.100
96 See, e.g., Centers for Disease Control and
Prevention, COVID Data Tracker: Cases & Death
among Healthcare Personnel, https://covid.cdc.gov/
covid-data-tracker/#health-care-personnel (last
visited May 4, 2021); Centers for Disease Control
and Prevention, COVID Data Tracker: Confirmed
COVID-19 Cases and Deaths among Staff and Rate
per 1,000 Resident -Weeks in Nursing Homes, by
Week —United States, https://covid.cdc.gov/covid-
data-tracker/#nursing-home-staff (last visited May
4, 2021).
97 See, e.g., The Lancet, The plight of essential
workers during the COVID-19 pandemic, Vol. 395,
Issue 10237:1587 (May 23, 2020), available at
https://www.thelancet.com/journals/lancet/article/
PIIS0140-6736 %2820 %2931200-9/f ull text.
98 Id.
99 Joanna Gaitens et al., Covid-19 and essential
workers: A narrative review of health outcomes and
moral injury, Int'l J. of Envtl. Research and Pub.
Health 18(4):1446 (Feb. 4, 2021), available at
https://pubmed.ncbi.nlm.nih.gov/335570751; Tiana
N. Rogers et al., Racial Disparities in COVID-19
Mortality Among Essential Workers in the United
States, World Med. & Health policy 12(3):311-27
(Aug. 5, 2020), available at https://
onlinelibrary.wiley.com/doilfull/10. l002lwmh3.358
(finding that vulnerability to coronavirus exposure
was increased among non -Hispanic blacks, who
disproportionately occupied the top nine essential
occupations).
100 Economic Policy Institute, Only 30% of those
working outside their home are receiving hazard
pay (June 16, 2020), https://www.epi.org/press/only-
30-of-those-working-outside-their-home-are-
receiving-hazard-pay-black-an d-hispanic-workers-
are-most-concerned-about-bringing-the-
coronavirus-home/.
26798 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Many of these workers earn lower wages
on average and live in
socioeconomically vulnerable
communities as compared to the general
population.101 A recent study found that
25 percent of essential workers were
estimated to have low household
income, with 13 percent in high -risk
households.102 The low pay of many
essential workers makes them less able
to cope with the financial consequences
of the pandemic or their work -related
health risks, including working hours
lost due to sickness or disruptions to
childcare and other daily routines, or
the likelihood of COVID-19 spread in
their households or communities. Thus,
the threats and costs involved with
maintaining the ongoing operation of
vital facilities and services have been,
and continue to be, borne by those that
are often the most vulnerable to the
pandemic. The added health risk to
essential workers is one prominent way
in which the pandemic has amplified
pre-existing socioeconomic inequities.
The Fiscal Recovery Funds will help
respond to the needs of essential
workers by allowing recipients to
remunerate essential workers for the
elevated health risks they have faced
and continue to face during the public
health emergency. To ensure that
premium pay is targeted to workers that
faced or face heightened risks due to the
character of their work, the interim final
rule defines essential work as work
involving regular in -person interactions
or regular physical handling of items
that were also handled by others. A
worker would not be engaged in
essential work and, accordingly may not
receive premium pay, for telework
performed from a residence.
Sections 602(g)(2) and 603(g)(2)
define eligible worker to mean "those
workers needed to maintain continuity
of operations of essential critical
infrastructure sectors and additional
sectors as each Governor of a State or
territory, or each Tribal government,
may designate as critical to protect the
health and well-being of the residents of
their State, territory, or Tribal
government." 103 The rule incorporates
this definition and provides a list of
industries recognized as essential
critical infrastructure sectors.104 These
sectors include healthcare, public health
and safety, childcare, education,
sanitation, transportation, and food
production and services, among others
101 McCormack, supra note 37.
102 Id.
103 Sections 602(g)(2), 603(g)(2) of the Act.
104 The list of critical infrastructure sectors
provided in the interim final rule is based on the
list of essential workers under The Heroes Act, H.R.
6800, 116th Cong. (2020).
as noted above. As provided under
sections 602(g)(2) and 603(g)(2), the
chief executive of each recipient has
discretion to add additional sectors to
this list, so long as additional sectors are
deemed critical to protect the health and
well-being of residents.
In providing premium pay to essential
workers or grants to eligible employers,
a recipient must consider whether the
pay or grant would "respond to" to the
worker or workers performing essential
work. Premium pay or grants provided
under this section respond to workers
performing essential work if it addresses
the heightened risk to workers who
must be physically present at a jobsite
and, for many of whom, the costs
associated with illness were hardest to
bear financially. Many of the workers
performing critical essential services are
low- or moderate -income workers, such
as those described above. The ARPA
recognizes this by defining premium
pay to mean an amount up to $13 per
hour in addition to wages or
remuneration the worker otherwise
receives and in an aggregate amount not
to exceed $25,000 per eligible worker.
To ensure the provision is implemented
in a manner that compensates these
workers, the interim final rule provides
that any premium pay or grants
provided using the Fiscal Recovery
Funds should prioritize compensation
of those lower income eligible workers
that perform essential work.
As such, providing premium pay to
eligible workers responds to such
workers by helping address the
disparity between the critical services
and risks taken by essential workers and
the relatively low compensation they
tend to receive in exchange. If premium
pay would increase a worker's total pay
above 150 percent of their residing
state's average annual wage for all
occupations, as defined by the Bureau of
Labor Statistics' Occupational
Employment and Wage Statistics, or
their residing county's average annual
wage, as defined by the Bureau of Labor
Statistics' Occupational Employment
and Wage Statistics, whichever is
higher, on an annual basis, the State,
local, or Tribal government must
provide Treasury and make publicly
available, whether for themselves or on
behalf of a grantee, a written
justification of how the premium pay or
grant is responsive to workers
performing essential worker during the
public health emergency.105
105 County median annual wage is taken to be that
of the metropolitan or nonmetropolitan area that
includes the county. See U.S. Bureau of Labor
Statistics, State Occupational Employment and
Wage Estimates, https://www.bls.gov/oes/current/
oessrcst.htm (last visited May 1, 2021); U.S. Bureau
The threshold of 150 percent for
requiring additional written justification
is based on an analysis of the
distribution of labor income for a
sample of 20 occupations that generally
correspond to the essential workers as
defined in the interim final rule.106 For
these occupations, labor income for the
vast majority of workers was under 150
percent of average annual labor income
across all occupations. Treasury
anticipates that the threshold of 150
percent of the annual average wage will
be greater than the annual average wage
of the vast majority of eligible workers
performing essential work. These
enhanced reporting requirements help
to ensure grants are directed to essential
workers in critical infrastructure sectors
and responsive to the impacts of the
pandemic observed among essential
workers, namely the mis-alignment
between health risks and compensation.
Enhanced reporting also provides
transparency to the public. Finally,
using a localized measure reflects
differences in wages and cost of living
across the country, making this standard
administrable and reflective of essential
worker incomes across a diverse range
of geographic areas.
Furthermore, because premium pay is
intended to compensate essential
workers for heightened risk due to
COVID-19, it must be entirely additive
to a worker's regular rate of wages and
other remuneration and may not be used
to reduce or substitute for a worker's
normal earnings. The definition of
premium pay also 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.107 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
of Labor Statistics, May 2020 Metropolitan and
Nonmetropolitan Area Estimates listed by county or
town, https://www.bls.gov/oes/current/county_
links.htm (last visited May 1, 2021).
106 Treasury performed this analysis with data
from the U.S. Census Bureau's 2019 Annual Social
and Economic Supplement. In determining which
occupations to include in this analysis, Treasury
excluded management and supervisory positions, as
such positions may not necessarily involve regular
in -person interactions or physical handling of items
to the same extent as non -managerial positions.
107 However, such compensation must be "in
addition to" remuneration or wages already
received. That is, employers may not reduce such
workers' current pay and use Fiscal Recovery Funds
to compensate themselves for premium pay
previously provided to the worker.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26799
months. Essential workers who have
already earned premium pay for
essential work performed during the
COVID-19 public health emergency
remain eligible for additional payments,
and an essential worker may receive
both retrospective premium pay for
prior work as well as prospective
premium pay for current or ongoing
work.
To ensure any grants respond to the
needs of essential workers and are made
in a fair and transparent manner, the
rule imposes some additional reporting
requirements for grants to third -party
employers, including the public
disclosure of grants provided. See
Section VIII of this SUPPLEMENTARY
INFORMATION, discussing reporting
requirements. In responding to the
needs of essential workers, a grant to an
employer may provide premium pay to
eligible workers performing essential
work, as these terms are defined in the
interim final rule and discussed above.
A grant provided to an employer may
also be for essential work performed by
eligible workers pursuant to a contract.
For example, if a municipality contracts
with a third party to perform sanitation
work, the third -party contractor could
be eligible to receive a grant to provide
premium pay for these eligible workers.
Question 10: Are there additional
sectors beyond those listed in the
interim final rule that should be
considered essential critical
infrastructure sectors?
Question 11: What, if any, additional
criteria should Treasury consider to
ensure that premium pay responds to
essential workers?
Question 12: What consideration, if
any, should be given to the criteria on
salary threshold, including measure and
level, for requiring written justification?
C. Revenue Loss
Recipients may use payments from
the Fiscal Recovery Funds for the
provision of government services to the
extent of the reduction in revenue
experienced due to the COVID-19
public health emergency.108 Pursuant to
sections 602(c)(1)(C) and 603(c)(1)(C) of
the Act, a recipient's reduction in
revenue is measured relative to the
revenue collected in the most recent full
fiscal year prior to the emergency.
Many State, local, and Tribal
governments are experiencing
significant budget shortfalls, which can
have a devastating impact on
communities. State government tax
revenue from major sources were down
4.3 percent in the six months ended
September 2020, relative to the same
108ARPA, supra note 16.
period 2019.109 At the local level, nearly
90 percent of cities have reported being
less able to meet the fiscal needs of their
communities and, on average, cities
expect a double-digit decline in general
fund revenues in their fiscal year
2021.110 Similarly, surveys of Tribal
governments and Tribal enterprises
found majorities of respondents
reporting substantial cost increases and
revenue decreases, with Tribal
governments reporting reductions in
healthcare, housing, social services, and
economic development activities as a
result of reduced revenues.111 These
budget shortfalls are particularly
problematic in the current environment,
as State, local, and Tribal governments
work to mitigate and contain the
COVID-19 pandemic and help citizens
weather the economic downturn.
Further, State, local, and Tribal
government budgets affect the broader
economic recovery. During the period
following the 2007-2009 recession,
State and local government budget
pressures led to fiscal austerity that was
a significant drag on the overall
economic recovery.112 Inflation -
adjusted State and local government
revenue did not return to the previous
peak until 2013,113 while State, local,
and Tribal government employment did
not recover to its prior peak for over a
decade, until August 2019 —just a few
months before the COVID-19 public
health emergency began.114
109 Major sources include personal income tax,
corporate income tax, sales tax, and property tax.
See Lucy Dadayan., States Reported Revenue
Growth in July —September Quarter, Reflecting
Revenue Shifts from the Prior Quarter, State Tax
and Econ. Rev. (Q. 3, 2020), available at https://
www. urban.org/sites/default/files/publication/
103938/state-tax-and-economic-review-2020-q3_
0.pdf.
110 National League of Cities, City Fiscal
Conditions (2020), available at https://www.nlc.org/
wp-content/uploads/2020/08lCity_Fiscal_
Conditions_ 2020_FINAL. pd f.
111 Surveys conducted by the Center for Indian
Country Development at the Federal Reserve Bank
of Minneapolis in March, April, and September
2020. See Moreno & Sobrepena, supra note 73.
112 See, e.g., Fitzpatrick, Haughwout & Setren,
Fiscal Drag from the State and Local Sector?,
Liberty Street Economics Blog, Federal Reserve
Bank of New York (June 27, 2012), https://
www.libertystreeteconomics.newyorkfed.org/2012/
06/fiscal-drag-from-the-state-and-local-sector.html;
Jiri Jonas, Great Recession and Fiscal Squeeze at
U.S. Subnational Government Level, IMF Working
Paper 12/184, (July 2012), available at https://
www.imf.org/external/pubs/ft/wp/2012/
org/external/pubs/ft/wp/2012/
wp12184.pdf, Gordon, supra note 9.
113 State and local government general revenue
from own sources, adjusted for inflation using the
GDP price index. U.S. Census Bureau, Annual
Survey of State Government Finances and U.S.
Bureau of Economic Analysis, National Income and
Product Accounts.
114 U.S. Bureau of Labor Statistics, All Employees,
State Government [CES9092000001] and All
Employees, Local Government [CES9093000001],
Sections 602(c)(1)(C) and 603(c)(1)(C)
of the Act allow recipients facing budget
shortfalls to use payments from the
Fiscal Recovery Funds to avoid cuts to
government services and, thus, enable
State, local, and Tribal governments to
continue to provide valuable services
and ensure that fiscal austerity measures
do not hamper the broader economic
recovery. The interim final rule
implements these provisions by
establishing a definition of "general
revenue" for purposes of calculating a
loss in revenue and by providing a
methodology for calculating revenue
lost due to the COVID-19 public health
emergency.
General Revenue. The interim final
rule adopts a definition of "general
revenue" based largely on the
components reported under "General
Revenue from Own Sources" in the
Census Bureau's Annual Survey of State
and Local Government Finances, and for
purposes of this interim final rule, helps
to ensure that the components of general
revenue would be calculated in a
consistent manner.115 By relying on a
methodology that is both familiar and
comprehensive, this approach
minimizes burden to recipients and
provides consistency in the
measurement of general revenue across
a diverse set of recipients.
The interim final rule defines the term
"general revenue" to include revenues
collected by a recipient and generated
from its underlying economy and would
capture a range of different types of tax
revenues, as well as other types of
revenue that are available to support
government services.116 In calculating
revenue, recipients should sum across
all revenue streams covered as general
revenue. This approach minimizes the
administrative burden for recipients,
provides for greater consistency across
recipients, and presents a more accurate
representation of the overall impact of
retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/
GES9092000001 and https://fred.stlouisfed.org/
series/CES9093000001 (last visited Apr. 27, 2021).
11s U.S. Census Bureau, Annual Survey of State
and Local Government Finances, https://
www.census.gov/programs-surveys/go
finances.html (last visited Apr. 30, 2021).
116 The interim final rule would define tax
revenue in a manner consistent with the Census
Bureau's definition of tax revenue, with certain
changes (i.e., inclusion of revenue from liquor
stores and certain intergovernmental transfers).
Current charges are defined as "charges imposed for
providing current services or for the sale of
products in connection with general government
activities." It includes revenues such as public
education institution, public hospital, and toll
revenues. Miscellaneous general revenue comprises
of all other general revenue of governments from
their own sources (i.e., other than liquor store,
utility, and insurance trust revenue), including
rents, royalties, lottery proceeds, and fines.
26800 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
the COVID-19 public health emergency
on a recipient's revenue, rather than
relying on financial reporting prepared
by each recipient, which vary in
methodology used and which generally
aggregates revenue by purpose rather
than by source.117
Consistent with the Census Bureau's
definition of "general revenue from own
sources," the definition of general
revenue in the interim final rule would
exclude refunds and other correcting
transactions, proceeds from issuance of
debt or the sale of investments, and
agency or private trust transactions. The
definition of general revenue also would
exclude revenue generated by utilities
and insurance trusts. In this way, the
definition of general revenue focuses on
sources that are generated from
economic activity and are available to
fund government services, rather than a
fund or administrative unit established
to account for and control a particular
activity.118 For example, public utilities
typically require financial support from
the State, local, or Tribal government,
rather than providing revenue to such
government, and any revenue that is
generated by public utilities typically is
used to support the public utility's
continued operation, rather than being
used as a source of revenue to support
government services generally.
The definition of general revenue
would include all revenue from Tribal
enterprises, as this revenue is generated
from economic activity and is available
to fund government services. Tribes are
not able to generate revenue through
taxes in the same manner as State and
local governments and, as a result,
Tribal enterprises are critical sources of
revenue for Tribal governments that
enable Tribal governments to provide a
range of services, including elder care,
health clinics, wastewater management,
and forestry.
Finally, the term "general revenue"
includes intergovernmental transfers
between State and local governments,
but excludes intergovernmental
transfers from the Federal Government,
including Federal transfers made via a
State to a local government pursuant to
the CRF or as part of the Fiscal Recovery
Funds. States and local governments
often share or collect revenue on behalf
of one another, which results in
117 Fund -oriented reporting, such as what is used
under the Governmental Accounting Standards
Board (GASB), focuses on the types of uses and
activities funded by the revenue, as opposed to the
economic activity from which the revenue is
sourced. See Governmental Accounting Standards
Series, Statement No. 54 of the Governmental
Accounting Standards Board: Fund Balance
Reporting and Governmental Fund Type
Definitions, No. 287—B (Feb. 2009).
115 Supra note 116.
intergovernmental transfers. When
attributing revenue to a unit of
government, the Census Bureau's
methodology considers which unit of
government imposes, collects, and
retains the revenue and assigns the
revenue to the unit of government that
meets at least two of those three
factors.119 For purposes of measuring
loss in general revenue due to the
COVID-19 public health emergency and
to better allow continued provision of
government services, the retention and
ability to use the revenue is a more
critical factor. Accordingly, and to better
measure the funds available for the
provision of government services, the
definition of general revenue would
include intergovernmental transfers
from States or local governments other
than funds transferred pursuant to
ARPA, CRF, or another Federal
program. This formulation recognizes
the importance of State transfers for
local government revenue.120
Calculation of Loss. In general,
recipients will compute the extent of the
reduction in revenue by comparing
actual revenue to a counterfactual trend
representing what could have been
expected to occur in the absence of the
pandemic. This approach measures
losses in revenue relative to the most
recent fiscal year prior to the COVID-19
public health emergency by using the
most recent pre -pandemic fiscal year as
the starting point for estimates of
revenue growth absent the pandemic. In
other words, the counterfactual trend
starts with the last full fiscal year prior
to the COVID-19 public health
emergency and then assumes growth at
a constant rate in the subsequent years.
Because recipients can estimate the
revenue shortfall at multiple points in
time throughout the covered period as
revenue is collected, this approach
accounts for variation across recipients
in the timing of pandemic impacts.121
Although revenue may decline for
119 U.S. Census Bureau, Government Finance and
Employment Classification Manual (Dec. 2000),
https://www2.census.gov/govs/class/classfuil.pdf.
120 For example, in 2018, state transfers to
localities accounted for approximately 27 percent of
local revenues. U.S. Census Bureau, Annual Survey
of State and Local Government Finances, Table 1
(2018), https://www.census.gov/data/datasets/2018/
econ/1oca1/public-use-datasets.html.
121 For example, following the 2007-09 recession,
local government property tax collections did not
begin to decline until 2011, suggesting that property
tax collection declines can lag downturns. See U.S.
Bureau of Economic Analysis, Personal current
taxes: State and local: Property taxes
[S210401A027NBEA], retrieved from Federal
Reserve Economic Data, Federal Reserve Bank of St.
Louis, https:I/fred.stlouisfed.org/graph/?g=r3YI (last
visited Apr. 22, 2021). Estimating the reduction in
revenue at points throughout the covered period
will allow for this type of lagged effect to be taken
into account during the covered period.
reasons unrelated to the COVID-19
public health emergency, to minimize
the administrative burden on recipients
and taking into consideration the
devastating effects of the COVID-19
public health emergency, any
diminution in actual revenues relative
to the counterfactual pre -pandemic
trend would be presumed to have been
due to the COVID-19 public health
emergency.
For purposes of measuring revenue
growth in the counterfactual trend,
recipients may use a growth adjustment
of either 4.1 percent per year or the
recipient's average annual revenue
growth over the three full fiscal years
prior to the COVID-19 public health
emergency, whichever is higher. The
option of 4.1 percent represents the
average annual growth across all State
and local government "General Revenue
from Own Sources" in the most recent
three years of available data.122 This
approach provides recipients with a
standardized growth adjustment when
calculating the counterfactual revenue
trend and thus minimizes
administrative burden, while not
disadvantaging recipients with revenue
growth that exceeded the national
average prior to the COVID-19 public
health emergency by permitting these
recipients to use their own revenue
growth rate over the preceding three
years.
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) 0 (nl
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
122 Together with revenue from liquor stores from
2015 to 2018. This estimate does not include any
intergovernmental transfers. A recipient using the
three-year average to calculate their growth
adjustment must be based on the definition of
general revenue, including treatment of
intergovernmental transfers. 2015-2018 represents
the most recent available data. See U.S. Census
Bureau, State & Local Government Finance
Historical Datasets and Tables (2018), https://
www.census.gov/programs-surveys/go v -finances/
data/datasets.html.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26801
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.
For illustration, consider a
hypothetical recipient with base year
revenue equal to 100. In Step 2, the
hypothetical recipient finds that 4.1
percent is greater than the recipient's
average annual revenue growth in the
three full fiscal years prior to the public
health emergency. Furthermore, this
recipient's base year ends June 30. In
this illustration, n (months elapsed) and
counterfactual revenue would be equal
to:
As of:
12/31/2020
12/31/2021
12/31/2022
12/31/2023
n (months elapsed)..........................................................................................
Counterfactual revenue:..................................................................................
18
106.2
30
110.6
42
115.1
54
119.8
The overall methodology for
calculating the reduction in revenue is
illustrated in the figure below:
140 _____'Base year revenue
Extent of reduction in revenue
130 Actual revenue (last twelve months)
Counterfactual revenue
120
110
100
90
80
I
. G' G G'
<)e
Upon receiving Fiscal Recovery Fund
payments, recipients may immediately
calculate revenue loss for the period
ending December 31, 2020.
Sections 602(c)(1)(C) and 603(c)(1)(C)
of the Act provide recipients with broad
latitude to use the Fiscal Recovery
Funds for the provision of government
services. Government services can
include, but are not limited to,
maintenance or pay -go funded
building 123 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
123 Pay -go infrastructure funding refers to the
practice of funding capital projects with cash -on -
hand from taxes, fees, grants, and other sources,
rather than with borrowed sums.
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.
Question 13: Are there sources of
revenue that either should or should not
be included in the interim final rule's
measure of "general revenue" for
recipients? If so, discuss why these
sources either should or should not be
included.
Question 14: In the interim final rule,
recipients are expected to calculate the
reduction in revenue on an aggregate
basis. Discuss the advantages and
disadvantages of, and any potential
concerns with, this approach, including
circumstances in which it could be
necessary or appropriate to calculate
the reduction in revenue by source.
Question 15: Treasury is considering
whether to take into account other
factors, including actions taken by the
recipient as well as the expiration of the
COVID-19 public health emergency, in
determining whether to presume that
revenue losses are "due to" the COVID—
26802 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
19 public health emergency. Discuss the
advantages and disadvantages of this
presumption, including when, if ever,
during the covered period it would be
appropriate to reevaluate the
presumption that all losses are
attributable to the COVID-19 public
health emergency.
Question 16: Do recipients anticipate
lagged revenue effects of the public
health emergency? If so, when would
these lagged effects be expected to
occur, and what can Treasury to do
support these recipients through its
implementation of the program?
Question 17: In the interim final rule,
paying interest or principal on
government debt is not considered
provision of a government service.
Discuss the advantages and
disadvantages of this approach,
including circumstances in which
paying interest or principal on
government debt could be considered
provision of a government service.
D. Investments in Infrastructure
To assist 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. The
interim final rule outlines eligible uses
within each category, allowing for a
broad range of necessary investments in
projects that improve access to clean
drinking water, improve wastewater and
stormwater infrastructure systems, and
provide access to high -quality
broadband service. Necessary
investments are designed to provide an
adequate minimum level of service and
are unlikely to be made using private
sources of funds. Necessary investments
include projects that are required to
maintain a level of service that, at least,
meets applicable health -based
standards, taking into account resilience
to climate change, or establishes or
improves broadband service to unserved
or underserved populations to reach an
adequate level to permit a household to
work or attend school, and that are
unlikely to be met with private sources
of funds.124
It is important that necessary
investments in water, sewer, or
broadband infrastructure be carried out
in ways that produce high -quality
infrastructure, avert disruptive and
costly delays, and promote efficiency.
Treasury encourages recipients to
124 Treasury notes that using funds to support or
oppose collective bargaining would not be included
as part of "necessary investments in water, sewer,
or broadband infrastructure."
ensure that water, sewer, and broadband
projects use strong labor standards,
including project labor agreements and
community benefits agreements that
offer wages at or above the prevailing
rate and include local hire provisions,
not only to promote effective and
efficient delivery of high -quality
infrastructure projects but also to
support the economic recovery through
strong employment opportunities for
workers. Using these practices in
construction projects may help to
ensure a reliable supply of skilled labor
that would minimize disruptions, such
as those associated with labor disputes
or workplace injuries.
To provide public transparency on
whether projects are using practices that
promote on -time and on -budget
delivery, Treasury will seek information
from recipients on their workforce plans
and practices related to water, sewer,
and broadband projects undertaken with
Fiscal Recovery Funds. Treasury will
provide additional guidance and
instructions on the reporting
requirements at a later date.
1. Water and Sewer Infrastructure
The ARPA provides funds to State,
local, and Tribal governments to make
necessary investments in water and
sewer infrastructure. 125 By permitting
funds to be used for water and sewer
infrastructure needs, Congress
recognized the critical role that clean
drinking water and services for the
collection and treatment of wastewater
and stormwater play in protecting
public health. Understanding that State,
local, and Tribal governments have a
broad range of water and sewer
infrastructure needs, the interim final
rule provides these governments with
wide latitude to identify investments in
water and sewer infrastructure that are
of the highest priority for their own
communities, which may include
projects on privately -owned
infrastructure. The interim final rule
does this by aligning eligible uses of the
Fiscal Recovery Funds with the wide
range of types or categories of projects
that would be eligible to receive
financial assistance through the
Environmental Protection Agency's
(EPA) Clean Water State Revolving
Fund (CWSRF) or Drinking Water State
Revolving Fund (DWSRF).126
125 Sections 602(c)(1)(D), 603(c)(1)(D) of the Act.
116 Environmental Protection Agency, Drinking
Water State Revolving fund, https://www.epa.gov/
dwarf (last visited Apr. 30, 2021); Environmental
Protection Agency, Clean Water State Revolving
Fund, https://www.epa.gov/cwsrf (last visited Apr.
30, 2021).
Established by the 1987
amendments 127 to the Clean Water Act
(CWA),128 the CWSRF provides
financial assistance for a wide range of
water infrastructure projects to improve
water quality and address water
pollution in a way that enables each
State to address and prioritize the needs
of their populations. The types of
projects eligible for CWSRF assistance
include projects to construct, improve,
and repair wastewater treatment plants,
control non -point sources of pollution,
improve resilience of infrastructure to
severe weather events, create green
infrastructure, and protect waterbodies
from pollution.129 Each of the 51 State
programs established under the CWSRF
have the flexibility to direct funding to
their particular environmental needs,
and each State may also have its own
statutes, rules, and regulations that
guide project eligibility.130
The DWSRF was modeled on the
CWSRF and created as part of the 1996
amendments to the Safe Drinking Water
Act (SDWA),131 with the principal
objective of helping public water
systems obtain financing for
improvements necessary to protect
public health and comply with drinking
water regulations.132 Like the CWSRF,
127 Water Quality Act of 1987, Public Law 100-
4.
128 Federal Water Pollution Control Act as
amended, codified at 33 U.S.C. 1251 et seq.,
common name (Clean Water Act). In 2009, the
American Recovery and Reinvestment Act created
the Green Project Reserve, which increased the
focus on green infrastructure, water and energy
efficient, and environmentally innovative projects.
Public Law 111-5. The CWA was amended by the
Water Resources Reform and Development Act of
2014 to further expand the CWSRF's eligibilities.
Public Law 113-121. The CWSRF's eligibilities were
further expanded in 2018 by the America's Water
Infrastructure Act of 2018, Public Law 115-270.
129 See Environmental Protection Agency, The
Drinking Water State Revolving Funds: Financing
America's Drinking Water, EPA -816—R—00-023
(Nov. 2000), https://nepis.epa.gov/Exe/ZyPDF.cgil
200024WB.PDF?Docket'=200024WB.PDF; See also
Environmental Protection Agency, Learn About the
Clean Water State Revolving Fund, https://
www. a pa.gov/cwsr f/learn-about-clean-water-sta te-
revolving fund-cwsrf (last visited Apr. 30, 2021).
130 33 U.S.C. 1383(c). See also Environmental
Protection Agency, Overview of Clean Water State
Revolving Fund Eligibilities (May 2016), https://
www.epa.gov/sites/production/files/2016-07/
documents/overview of cwsrf eligibilities_may
_
2016.pdf Claudia Copeland, Clean Water Act: A
Summary of the Law, Congressional Research
Service (Oct. 18, 2016), https://fas.org/sgp/crs/misc/
RL30030.pdf; Jonathan L Ramseur, Wastewater
Infrastructure: Overview, Funding, and Legislative
Developments, Congressional Research Service
(May 22, 2018), https://fas.org/sgp/crs/misc/
R44963.pdf.
13142 U.S.C. 300j-12.
131 Environmental Protection Agency, Drinking
Water State Revolving Fund Eligibility Handbook,
(June 2017), https://www.epa.gov/sites/production/
files/2017-06/documents/dwsrf eligibility_
handbookjune132017_updated _508_version. pd f,•
Environmental Protection Agency, Drinking Water
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26803
the DWSRF provides States with the
flexibility to meet the needs of their
populations.133 The primary use of
DWSRF funds is to assist communities
in making water infrastructure capital
improvements, including the
installation and replacement of failing
treatment and distribution systems.134
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.135
By aligning use of Fiscal Recovery
Funds with the categories or types of
eligible projects under the existing EPA
state revolving fund programs, the
interim final rule provides recipients
with the flexibility to respond to the
needs of their communities while
ensuring that investments in water and
sewer infrastructure made using Fiscal
Recovery Funds are necessary. As
discussed above, the CWSRF and
DWSRF were designed to provide
funding for projects that protect public
health and safety by ensuring
compliance with wastewater and
drinking water health standards.136 The
need to provide funding through the
state revolving funds suggests that these
projects are less likely to be addressed
with private sources of funding; for
example, by remediating failing or
inadequate infrastructure, much of
which is publicly owned, and by
addressing non -point sources of
pollution. This approach of aligning
with the EPA state revolving fund
programs also supports expedited
project identification and investment so
that needed relief for the people and
communities most affected by the
pandemic can deployed expeditiously
and have a positive impact on their
health and wellbeing as soon as
possible. Further, the interim final rule
is intended to preserve flexibility for
award recipients to direct funding to
their own particular needs and priorities
and would not preclude recipients from
applying their own additional project
eligibility criteria.
Infrastructure Needs Survey and Assessment: Sixth
Report to Congress (March 2018), https://
www.epa.govlsites/production/files/2018-1O/
documents/corrected_sixth_drinking_wa ter_
infrastructure_ needs_survey_and_assessment. pd f.
1331d
134 Id.
13542 U.S.C. 300j-12(b)(3)(A).
136 Environmental Protection Agency, Learn
About the Clean Water State Revolving Fund,
https://www.epa.gov/cwsrf/learn-about-clean-water-
state-revolving fund-cwsrf (last visited Apr. 30,
2021); 42 U.S.C. 300j-12.
In addition, responding to the
immediate needs of the COVID-19
public health emergency may have
diverted both personnel and financial
resources from other State, local, and
Tribal priorities, including projects to
ensure compliance with applicable
water health and quality standards and
provide safe drinking and usable
water.137 Through sections 602(c)(1)(D)
and 603(c)(1)(D), the ARPA provides
resources to address these needs.
Moreover, using Fiscal Recovery Funds
in accordance with the priorities of the
CWA and SWDA to "assist systems
most in need on a per household basis
according to state affordability criteria"
would also have the benefit of providing
vulnerable populations with safe
drinking water that is critical to their
health and, thus, their ability to work
and learn.138
Recipients may use Fiscal Recovery
Funds to invest in a broad range of
projects that improve drinking water
infrastructure, such as building or
upgrading facilities and transmission,
distribution, and storage systems,
including replacement of lead service
lines. Given the lifelong impacts of lead
exposure for children, and the
widespread nature of lead service lines,
Treasury encourages recipients to
consider projects to replace lead service
lines.
Fiscal Recovery Funds may also be
used to support the consolidation or
establishment of drinking water
systems. 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,
and secure publicly owned treatment
works, among other uses. Finally,
consistent with the CWSRF and
DWSRF, Fiscal Recovery Funds may be
used for cybersecurity needs to protect
water or sewer infrastructure, such as
developing effective cybersecurity
practices and measures at drinking
water systems and publicly owned
treatment works.
Many of the types of projects eligible
under either the CWSRF or DWSRF also
131 House Committee on the Budget, State and
Local Governments are in Dire Need of Federal
Relief (Aug. 19, 2020), https://budget.house.govI
publication s/report/state -and -local -go vern m en ts-
are-dire-need-federal-relief.
138 Environmental Protection Agency, Drinking
Water State Revolving Fund (Nov. 2019), https://
www.epa.gov/sites/production/files/2019-11/
documents/fact _sheet_ dwsrfoverviewfinal_
O.pdf,• Environmental Protection Agency, National
Benefits Analysis for Drinking Water Regulations,
https://www. epa.gov/sdwa/national-benefits-
analysis-drinking-water-regulations (last visited
Apr. 30, 2020).
support efforts to address climate
change. For example, by taking steps to
manage potential sources of pollution
and preventing these sources from
reaching sources of drinking water,
projects eligible under the DWSRF and
the ARPA may reduce energy required
to treat drinking water. Similarly,
projects eligible under the CWSRF
include measures to conserve and reuse
water or reduce the energy consumption
of public water treatment facilities.
Treasury encourages recipients to
consider green infrastructure
investments and projects to improve
resilience to the effects of climate
change. For example, more frequent and
extreme precipitation events combined
with construction and development
trends have led to increased instances of
stormwater runoff, water pollution, and
flooding. Green infrastructure projects
that support stormwater system
resiliency could include rain gardens
that provide water storage and filtration
benefits, and green streets, where
vegetation, soil, and engineered systems
are combined to direct and filter
rainwater from impervious surfaces. In
cases of a natural disaster, recipients
may also use Fiscal Recovery Funds to
provide relief, such as interconnecting
water systems or rehabilitating existing
wells during an extended drought.
Question 18: What are the advantages
and disadvantages of aligning eligible
uses with the eligible project type
requirements of the DWSRF and
CWSRF? What other water or sewer
project categories, if any, should
Treasury consider in addition to DWSRF
and CWSRF eligible projects? Should
Treasury consider a broader general
category of water and sewer projects?
Question 19: What additional water
and sewer infrastructure categories, if
any, should Treasury consider to
address and respond to the needs of
unserved, undeserved, or rural
communities? How do these projects
differ from DWSFR and CWSRF eligible
projects?
Question 20: What new categories of
water and sewer infrastructure, if any,
should Treasury consider to support
State, local, and Tribal governments in
mitigating the negative impacts of
climate change? Discuss emerging
technologies and processes that support
resiliency of water and sewer
infrastructure. Discuss any challenges
faced by States and local governments
when pursuing or implementing climate
resilient infrastructure projects.
Question 21: Infrastructure projects
related to dams and reservoirs are
generally not eligible under the CWSRF
and DWSRF categories. Should Treasury
consider expanding eligible
26804 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
infrastructure under the interim final
rule to include dam and reservoir
projects? Discuss public health,
environmental, climate, or equity
benefits and costs in expanding the
eligibility to include these types of
projects.
2. Broadband Infrastructure
The COVID-19 public health
emergency has underscored the
importance of universally available,
high-speed, reliable, and affordable
broadband coverage as millions of
Americans rely on the internet to
participate in, among critical activities,
remote school, healthcare, and work.
Recognizing the need for such
connectivity, the ARPA provides funds
to State, territorial, local, and Tribal
governments to make necessary
investments in broadband
infrastructure.
The National Telecommunications
and Information Administration (NTIA)
highlighted the growing necessity of
broadband in daily lives through its
analysis of NTIA Internet Use Survey
data, noting that Americans turn to
broadband internet access service for
every facet of daily life including work,
study, and healthcare.139 With increased
use of technology for daily activities and
the movement by many businesses and
schools to operating remotely during the
pandemic, broadband has become even
more critical for people across the
country to carry out their daily lives.
By at least one measure, however,
tens of millions of Americans live in
areas where there is no broadband
infrastructure that provides download
speeds greater than 25 Mbps and upload
speeds of 3 Mbps.140 By contrast, as
noted below, many households use
upload and download speeds of 100
Mbps to meet their daily needs. Even in
areas where broadband infrastructure
139 See, e.g., https://www.ntia.gov/blog/2020/
more-hal f-american-households-used-internet-
health-related-activities-2019-ntia-data-show;
https://www.ntia.gov/blog/2020/nearly-third-
american-em ployees-worked-remotely-2019-ntia-
data-show; and generally, https://www.ntia.govl
data/digital-nation-data-explorer.
140 As an example, data from the Federal
Communications Commission shows that as of June
2020, 9.07 percent of the U.S. population had no
available cable or fiber broadband providers
providing greater than 25 Mbps download speeds
and 3 Mbps upload speeds. Availability was
significantly less for rural versus urban populations,
with 35.57 percent of the rural population lacking
such access, compared with 2.57 percent of the
urban population. Availability was also
significantly less for tribal versus non -tribal
populations, with 35.93 percent of the tribal
population lacking such access, compared with 8.74
of the non -tribal population. Federal
Communications Commission, Fixed Broadband
Deployment, https://broadbandmap.fcc.gov/#/ (last
visited May 9, 2021).
exists, broadband access may be out of
reach for millions of Americans because
it is unaffordable, as the United States
has some of the highest broadband
prices in the Organisation for Economic
Co-operation and Development
(OECD).141 There are disparities in
availability as well; historically,
Americans living in territories and
Tribal lands as well as rural areas have
disproportionately lacked sufficient
broadband infrastructure.142 Moreover,
rapidly growing demand has, and will
likely continue to, quickly outpace
infrastructure capacity, a phenomenon
acknowledged by various states around
the country that have set scalability
requirements to account for this
anticipated growth in demand.143
The interim final rule provides that
eligible investments in broadband are
those that are designed to provide
services meeting adequate speeds and
are provided to unserved and
underserved households and
businesses. Understanding that States,
territories, localities, and Tribal
governments have a wide range of
varied broadband infrastructure needs,
the interim final rule provides award
recipients with flexibility to identify the
specific locations within their
communities to be served and to
otherwise design the project.
Under the interim final rule, eligible
projects are expected to be designed to
deliver, upon project completion,
service that reliably meets or exceeds
symmetrical upload and download
speeds of 100 Mbps. There may be
instances in which it would not be
practicable for a project to deliver such
service speeds because of the geography,
topography, or excessive costs
associated with such a project. In these
instances, the affected project would be
expected to be designed to deliver, upon
project completion, service that reliably
meets or exceeds 100 Mbps download
and between at least 20 Mbps and 100
Mbps upload speeds and be scalable to
141 How Do U.S. Internet Costs Compare To The
Rest Of The World?, BroadbandSearch Blog Post,
available at https://www.broadbandsearch.net/blog/
internet-costs-compared-worldwide.
142 See, e.g., Federal Communications
Commission, Fourteenth Broadband Deployment
Report, available at https://docs.fcc.gov/public/
attachments/FCC-21-18A1. pd f.
143 See, e.g., Illinois Department of Commerce &
Economic Opportunity, Broadband Grants, h (last
visited May 9, 2021), https://www2.illinois.govl
dceo/Connectlllinois/Pages/BroadbandGrants. aspx;
Kansas Office of Broadband Development,
Broadband Acceleration Grant, https://
www.kansascommerce.gov/wp-content/uploads/
2020/11/Broadband-Acceleration-Grant.pdf (last
visited May 9, 2021); New York State Association
of Counties, Universal Broadband: Deploying High
Speed Internet Access in NYS (Jul. 2017), https://
www.nysoc.org/files/BroodbandUpdate
Report2017(1).pdf.
a minimum of 100 Mbps symmetrical
for download and upload speeds.144 In
setting these standards, Treasury
identified speeds necessary to ensure
that broadband infrastructure is
sufficient to enable users to generally
meet household needs, including the
ability to support the simultaneous use
of work, education, and health
applications, and also sufficiently
robust to meet increasing household
demands for bandwidth. Treasury also
recognizes that different communities
and their members may have a broad
range of internet needs and that those
needs may change over time.
In considering the appropriate speed
requirements for eligible projects,
Treasury considered estimates of typical
households demands during the
pandemic. Using the Federal
Communication Commission's (FCC)
Broadband Speed Guide, for example, a
household with two telecommuters and
two to three remote learners today are
estimated to need 100 Mbps download
to work simultaneously. 145 In
households with more members, the
demands may be greater, and in
households with fewer members, the
demands may be less.
In considering the appropriate speed
requirements for eligible projects,
Treasury also considered data usage
patterns and how bandwidth needs have
changed over time for U.S. households
and businesses as people's use of
technology in their daily lives has
evolved. In the few years preceding the
pandemic, market research data showed
that average upload speeds in the
United States surpassed over 10 Mbps
in 2017146 and continued to increase
significantly, with the average upload
speed as of November, 2019 increasing
to 48.41 Mbps,147 attributable, in part to
a shift to using broadband and the
internet by individuals and businesses
144 This scalability threshold is consistent with
scalability requirements used in other jurisdictions.
Id.
145 Federal Communications Commission,
Broadband Speed Guide, https://www.fcc.govl
consumers/guides/broadband-speed-guide (last
visited Apr. 30, 2021).
146 Letter from Lisa R. Youngers, President and
CEO of Fiber Broadband Association to FCC, WC
Docket No. 19-126 (filed Jan. 3, 2020), including an
Appendix with research from RVA LLC, Data
Review Of The Importance of Upload Speeds (Jan.
2020), and Ookla speed test data, available at
https://ecfsapi. fcc.govlfile/101030085118517/
FCC%20RDOF%20Jan %203 %20
Ex%20Parte.pdf.Additional information on historic
growth in data usage is provided in Schools, Health
& Libraries Broadband Coalition, Common Sense
Solutions for closing the Digital Divide, Apr. 29,
2021.
147 Id. See also United States's Mobile and
Broadband internet Speeds—Speedtest Global
Index, available at https://www.speedtest.net/
gl obal-index/united-states#fixed.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26805
to create and share content using video
sharing, video conferencing, and other
applications.148
The increasing use of data accelerated
markedly during the pandemic as
households across the country became
increasingly reliant on tools and
applications that require greater internet
capacity, both to download data but also
to upload data. Sending information
became as important as receiving it. A
video consultation with a healthcare
provider or participation by a child in
a live classroom with a teacher and
fellow students requires video to be sent
and received simultaneously.149 As an
example, some video conferencing
technology platforms indicate that
download and upload speeds should be
roughly equal to support two-way,
interactive video meetings.150 For both
work and school, client materials or
completed school assignments, which
may be in the form of PDF files, videos,
or graphic files, also need to be shared
with others. This is often done by
uploading materials to a collaboration
site, and the upload speed available to
a user can have a significant impact on
the time it takes for the content to be
shared with others. 151 These activities
require significant capacity from home
internet connections to both download
and upload data, especially when there
are multiple individuals in one
household engaging in these activities
simultaneously.
This need for increased broadband
capacity during the pandemic was
reflected in increased usage patterns
seen over the last year. As OpenVault
noted in recent advisories, the
pandemic significantly increased the
amount of data users consume. Among
data users observed by OpenVault, per -
subscriber average data usage for the
fourth quarter of 2020 was 482.6
gigabytes per month, representing a 40
percent increase over the 344 gigabytes
consumed in the fourth quarter of 2019
and a 26 percent increase over the third
quarter 2020 average of 383.8
148 Id.
149 One high definition Zoom meeting or class
requires approximately 3.8 Mbps/3.0 Mbps (up/
down).
150 See, e.g., Zoom, System Requirements for
Windows, macOS, and Linux, https://
support.zoom. us/hc/en-us/articles/201362023-
System-requirements-for-Win d ows-macOS-an d -
Lin ux#h_d278c327-e03d-4896-b19a-96a8f3c0c69c
(last visited May 8, 2021).
151 By one estimate, to upload a one gigabit video
file to YouTube would take 15 minutes at an upload
speed of 10 Mbps compared with 1 minute, 30
seconds at an upload speed of 100 Mbps, and 30
seconds at an upload speed of 300 Mbps.
Reviews.org: What is Symmetrical internet? (March
2020).
gigabytes.152 OpenVault also noted
significant increases in upstream usage
among the data users it observed, with
upstream data usage growing 63
percent —from 19 gigabytes to 31
gigabytes —between December, 2019 and
December, 2020.153 According to an
OECD Broadband statistic from June
2020, the largest percentage of U.S.
broadband subscribers have services
providing speeds between 100 Mbps
and 1 Gbps.154
Jurisdictions and Federal programs
are increasingly responding to the
growing demands of their communities
for both heightened download and
upload speeds. For example, Illinois
now requires 100 Mbps symmetrical
service as the construction standard for
its state broadband grant programs. This
standard is also consistent with speed
levels, particularly download speed
levels, prioritized by other Federal
programs supporting broadband
projects. Bids submitted as part of the
FCC in its Rural Digital Opportunity
Fund (RDOF), established to support the
construction of broadband networks in
rural communities across the country,
are given priority if they offer faster
service, with the service offerings of 100
Mbps download and 20 Mbps upload
being included in the "above baseline"
performance tier set by the FCC.155 The
Broadband Infrastructure Program
(BBIP) 156 of the Department of
Commerce, which provides Federal
funding to deploy broadband
152 OVBI: Covid-19 Drove 15 percent Increase in
Broadband Traffic in 2020, OpenVault, Quarterly
Advisory, (Feb. 10, 2021), available at https://
openvault. com/ovbi-covid-19-drove-51-increase-in-
broadband-traffic-in-2020; See OpenVault's data set
incorporates information on usage by subscribers
across multiple continents, including North
America and Europe. Additional data and detail on
increases in the amount of data users consume and
the broadband speeds they are using is provided in
Open Vault Broadband Insights Report Q4,
Quarterly Advisory (Feb. 10, 2021), available at
https://openvault.com/compliinentary-report-4q20/.
153OVBI Special Report: 202 Upstream Growth
Nearly 4X of Pre -Pandemic Years, OpenVault,
Quarterly Advisory, (April 1, 20201), available at
https://openvault. com/ovbi-special-report-2020-
u pstream-growth-rate-nearly-4x-of-pre-pandemic-
years/; Additional data is provided in Open Vault
Broadband Insights Pandemic Impact on Upstream
Broadband Usage and Network Capacity, available
at https://openvault.com/upstream-whitepaper/.
154 Organisation for Economic Co-operation and
Development, Fixed broadband subscriptions per
100 inhabitants, per speed tiers (June 2020), https://
www.oecd.org/sti/broadband/5. 1-FixedBB-
SpeedTiers-2020-06.xls www.oecd.org/sti/
broadband/broadband-statistics.
155 Rural Digital Opportunity Fund, Report and
Order, 35 FCC Rcd 686, 690, para. 9 (2020),
available at https://www.fcc.gov/document/fcc-
launches-20-billion-rural-digital-opportunity fund -
0.
156 The BIPP was authorized by the Consolidated
Appropriations Act, 2021, Section 905, Public Law
116-260, 134 Stat. 1182 (Dec. 27, 2020).
infrastructure to eligible service areas of
the country also prioritizes projects
designed to provide broadband service
with a download speed of not less than
100 Mbps and an upload speed of not
less than 20 Mbps.157
The 100 Mbps upload and download
speeds will support the increased and
growing needs of households and
businesses. Recognizing that, in some
instances, 100 Mbps upload speed may
be impracticable due to geographical,
topographical, or financial constraints,
the interim final rule permits upload
speeds of between at least 20 Mbps and
100 Mbps in such instances. To provide
for investments that will accommodate
technologies requiring symmetry in
download and upload speeds, as noted
above, eligible projects that are not
designed to deliver, upon project
completion, service that reliably meets
or exceeds symmetrical speeds of 100
Mbps because it would be impracticable
to do so should be designed so that they
can be scalable to such speeds.
Recipients are also encouraged to
prioritize investments in fiber optic
infrastructure where feasible, as such
advanced technology enables the next
generation of application solutions for
all communities.
Under the interim final rule, eligible
projects are expected to focus on
locations that are unserved or
underserved. The interim final rule
treats users as being unserved or
underserved if they lack access to a
wireline connection capable of reliably
delivering at least minimum speeds of
25 Mbps download and 3 Mbps upload
as households and businesses lacking
this level of access are generally not
viewed as being able to originate and
receive high -quality voice, data,
graphics, and video
telecommunications. This threshold is
consistent with the FCC's benchmark for
an "advanced telecommunications
capability." 158 This threshold is also
consistent with thresholds used in other
Federal programs to identify eligible
areas to be served by programs to
improve broadband services. For
example, in the FCC's RDOF program,
eligible areas include those without
current (or already funded) access to
terrestrial broadband service providing
25 Mbps download and 3 Mbps upload
speeds.159 The Department of
Commerce's BBIP also considers
households to be "unserved" generally
if they lack access to broadband service
157 Section 905(d)(4) of the Consolidated
Appropriations Act, 2021.
1513 Deployment Report, supra note 142.
159 Rural Digital Opportunity Fund, supra note
156.
26806 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
with a download speed of not less than
25 Mbps download and 3 Mbps upload,
among other conditions. In selecting an
area to be served by a project, recipients
are encouraged to avoid investing in
locations that have existing agreements
to build reliable wireline service with
minimum speeds of 100 Mbps
download and 20 Mbps upload by
December 31, 2024, in order to avoid
duplication of efforts and resources.
Recipients are also encouraged to
consider ways to integrate affordability
options into their program design. To
meet the immediate needs of unserved
and underserved households and
businesses, recipients are encouraged to
focus on projects that deliver a physical
broadband connection by prioritizing
projects that achieve last mile -
connections. Treasury also encourages
recipients to prioritize support for
broadband networks owned, operated
by, or affiliated with local governments,
non -profits, and co -operatives —
providers with less pressure to turn
profits and with a commitment to
serving entire communities.
Under sections 602(c)(1)(A) and
603(c)(1)(A), assistance to households
facing negative economic impacts due to
COVID-19 is also an eligible use,
including internet access or digital
literacy assistance. As discussed above,
in considering whether a potential use
is eligible under this category, a
recipient must consider whether, and
the extent to which, the household has
experienced a negative economic impact
from the pandemic.
Question 22: What are the advantages
and disadvantages of setting minimum
symmetrical download and upload
speeds of 100 Mbps? What other
minimum standards would be
appropriate and why?
Question 23: Would setting such a
minimum be impractical for particular
types of projects? If so, where and on
what basis should those projects be
identified? How could such a standard
be set while also taking into account the
practicality of using this standard in
particular types of projects? In addition
to topography, geography, and financial
factors, what other constraints, if any,
are relevant to considering whether an
investment is impracticable?
Question 24: What are the advantages
and disadvantages of setting a
minimum level of service at 100 Mbps
download and 20 Mbps upload in
projects where it is impracticable to set
minimum symmetrical download and
upload speeds of 100 Mbps? What are
the advantages and disadvantages of
setting a scalability requirement in these
cases? What other minimum standards
would be appropriate and why?
Question 25: What are the advantages
and disadvantages of focusing these
investments on those without access to
a wireline connection that reliably
delivers 25 Mbps download by 3 Mbps
upload? Would another threshold be
appropriate and why?
Question 26: What are the advantages
and disadvantages of setting any
particular threshold for identifying
unserved or underserved areas,
minimum speed standards or scalability
minimum? Are there other standards
that should be set (e.g., latency)? If so,
why and how? How can such threshold,
standards, or minimum be set in a way
that balances the public's interest in
making sure that reliable broadband
services meeting the daily needs of all
Americans are available throughout the
country with the providing recipients
flexibility to meet the varied needs of
their communities?
III. Restrictions on Use
As discussed above, recipients have
considerable flexibility to use Fiscal
Recovery Funds to address the diverse
needs of their communities. To ensure
that payments from the Fiscal Recovery
Funds are used for these congressionally
permitted purposes, the ARPA includes
two provisions that further define the
boundaries of the statute's eligible uses.
Section 602(c)(2)(A) of the Act provides
that States and territories may not "use
the funds . . . to either directly or
indirectly offset a reduction in . . . net
tax revenue . . . resulting from a change
in law, regulation, or administrative
interpretation during the covered period
that reduces any tax . . . or delays the
imposition of any tax or tax increase."
In addition, sections 602(c)(2)(B) and
603(c)(2) prohibit any recipient,
including cities, nonentitlement units of
government, and counties, from using
Fiscal Recovery Funds for deposit into
any pension fund. These restrictions
support the use of funds for the
congressionally permitted purposes
described in Section II of this
Supplementary Information by
providing a backstop against the use of
funds for purposes outside of the
eligible use categories.
These provisions give force to
Congress's clear intent that Fiscal
Recovery Funds be spent within the
four eligible uses identified in the
statute —(1) to respond to the public
health emergency and its negative
economic impacts, (2) to provide
premium pay to essential workers, (3) to
provide government services to the
extent of eligible governments' revenue
losses, and (4) to make necessary water,
sewer, and broadband infrastructure
investments —and not otherwise. These
four eligible uses reflect Congress's
judgment that the Fiscal Recovery
Funds should be expended in particular
ways that support recovery from the
COVID-19 public health emergency.
The further restrictions reflect
Congress's judgment that tax cuts and
pension deposits do not fall within
these eligible uses. The interim final
rule describes how Treasury will
identify when such uses have occurred
and how it will recoup funds put
toward these impermissible uses and, as
discussed in Section VIII of this
SUPPLEMENTARY INFORMATION, establishes
a reporting framework for monitoring
the use of Fiscal Recovery Funds for
eligible uses.
A. Deposit Into Pension Funds
The statute provides that recipients
may not use Fiscal Recovery Funds for
"deposit into any pension fund." For
the reasons discussed below, Treasury
interprets "deposit" in this context to
refer to an extraordinary payment into a
pension fund for the purpose of
reducing an accrued, unfunded liability.
More specifically, the interim final rule
does not permit this assistance to be
used to make a payment into a pension
fund if both:
1. The payment reduces a liability
incurred prior to the start of the COVID-
19 public health emergency, and
2. the payment occurs outside the
recipient's regular timing for making
such payments.
Under this interpretation, a "deposit"
is distinct from a "payroll
contribution," which occurs when
employers make payments into pension
funds on regular intervals, with
contribution amounts based on a pre-
determined percentage of employees'
wages and salaries.
As discussed above, eligible uses for
premium pay and responding to the
negative economic impacts of the
COVID-19 public health emergency
include hiring and compensating public
sector employees. Interpreting the scope
of "deposit" to exclude contributions
that are part of payroll contributions is
more consistent with these eligible uses
and would reduce administrative
burden for recipients. Accordingly, if an
employee's wages and salaries are an
eligible use of Fiscal Recovery Funds,
recipients may treat the employee's
covered benefits as an eligible use of
Fiscal Recovery Funds. For purposes of
the Fiscal Recovery Funds, covered
benefits include costs of all types of
leave (vacation, family -related, sick,
military, bereavement, sabbatical, jury
duty), employee insurance (health, life,
dental, vision), retirement (pensions,
401(k)), unemployment benefit plans
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26807
(Federal and State), workers'
compensation insurance, and Federal
Insurance Contributions Act taxes
(which includes Social Security and
Medicare taxes).
Treasury anticipates that this
approach to employees' covered benefits
will be comprehensive and, for
employees whose wage and salary costs
are eligible expenses, will allow all
covered benefits listed in the previous
paragraph to be eligible under the Fiscal
Recovery Funds. Treasury expects that
this will minimize the administrative
burden on recipients by treating all the
specified covered benefit types as
eligible expenses, for employees whose
wage and salary costs are eligible
expenses.
Question 27: Beyond a "deposit" and
a "payroll contribution," are there other
types of payments into a pension fund
that Treasury should consider?
B. Offset a Reduction in Net Tax
Revenue
For States and territories (recipient
governments 160), section 602(c)(2)(A)—
the offset provision —prohibits the use
of Fiscal Recovery Funds to directly or
indirectly offset a reduction in net tax
revenue resulting from a change in law,
regulation, or administrative
interpretation 161 during the covered
period. If a State or territory uses Fiscal
Recovery Funds to offset a reduction in
net tax revenue, the ARPA provides that
the State or territory must repay to the
Treasury an amount equal to the lesser
of (i) the amount of the applicable
reduction attributable to the
impermissible offset and (ii) the amount
received by the State or territory under
the ARPA. See Section IV of this
SUPPLEMENTARY INFORMATION. As
discussed below Section IV of this
SUPPLEMENTARY INFORMATION, a State or
territory that chooses to use Fiscal
Recovery Funds to offset a reduction in
net tax revenue does not forfeit its entire
allocation of Fiscal Recovery Funds
(unless it misused the full allocation to
offset a reduction in net tax revenue) or
any non-ARPA funding received.
The interim final rule implements
these conditions by establishing a
framework for States and territories to
determine the cost of changes in law,
regulation, or interpretation that reduce
tax revenue and to identify and value
the sources of funds that will offset-
160In this sub -section, "recipient governments"
refers only to States and territories. In other
sections, "recipient governments" refers more
broadly to eligible governments receiving funding
from the Fiscal Recovery Funds.
161 For brevity, referred to as "changes in law,
regulation, or interpretation" for the remainder of
this preamble.
i.e., cover the cost of —any reduction in
net tax revenue resulting from such
changes. A recipient government would
only be considered to have used Fiscal
Recovery Funds to offset a reduction in
net tax revenue resulting from changes
in law, regulation, or interpretation if,
and to the extent that, the recipient
government could not identify sufficient
funds from sources other than the Fiscal
Recovery Funds to offset the reduction
in net tax revenue. If sufficient funds
from other sources cannot be identified
to cover the full cost of the reduction in
net tax revenue resulting from changes
in law, regulation, or interpretation, the
remaining amount not covered by these
sources will be considered to have been
offset by Fiscal Recovery Funds, in
contravention of the offset provision.
The interim final rule recognizes three
sources of funds that may offset a
reduction in net tax revenue other than
Fiscal Recovery Funds —organic growth,
increases in revenue (e.g., an increase in
a tax rate), and certain cuts in spending.
In order to reduce burden, the interim
final rule's approach also incorporates
the types of information and modeling
already used by States and territories in
their own fiscal and budgeting
processes. By incorporating existing
budgeting processes and capabilities,
States and territories will be able to
assess and evaluate the relationship of
tax and budget decisions to uses of the
Fiscal Recovery Funds based on
information they likely have or can
obtain. This approach ensures that
recipient governments have the
information they need to understand the
implications of their decisions regarding
the use of the Fiscal Recovery Funds —
and, in particular, whether they are
using the funds to directly or indirectly
offset a reduction in net tax revenue,
making them potentially subject to
recoupment.
Reporting on both the eligible uses
and on a State's or territory's covered
tax changes that would reduce tax
revenue will enable identification of,
and recoupment for, use of Fiscal
Recovery Funds to directly offset
reductions in tax revenue resulting from
tax relief. Moreover, this approach
recognizes that, because money is
fungible, even if Fiscal Recovery Funds
are not explicitly or directly used to
cover the costs of changes that reduce
net tax revenue, those funds may be
used in a manner inconsistent with the
statute by indirectly being used to
substitute for the State's or territory's
funds that would otherwise have been
needed to cover the costs of the
reduction. By focusing on the cost of
changes that reduce net tax revenue —
and how a recipient government is
offsetting those reductions in
constructing its budget over the covered
period —the framework prevents efforts
to use Fiscal Recovery Funds to
indirectly offset reductions in net tax
revenue for which the recipient
government has not identified other
offsetting sources of funding.
As discussed in greater detail below
in this preamble, the framework set
forth in the interim final rule establishes
a step-by-step process for determining
whether, and the extent to which, Fiscal
Recovery Funds have been used to offset
a reduction in net tax revenue. Based on
information reported annually by the
recipient government:
❑ First, each year, each recipient
government will identify and value the
changes in law, regulation, or
interpretation that would result in a
reduction in net tax revenue, as it would
in the ordinary course of its budgeting
process. The sum of these values in the
year for which the government is
reporting is the amount it needs to "pay
for" with sources other than Fiscal
Recovery Funds (total value of revenue
reducing changes).
❑ Second, the interim final rule
recognizes that it may be difficult to
predict how a change would affect net
tax revenue in future years and,
accordingly, provides that if the total
value of the changes in the year for
which the recipient government is
reporting is below a de minimis level,
as discussed below, the recipient
government need not identify any
sources of funding to pay for revenue
reducing changes and will not be
subject to recoupment.
❑ Third, a recipient government will
consider the amount of actual tax
revenue recorded in the year for which
they are reporting. If the recipient
government's actual tax revenue is
greater than the amount of tax revenue
received by the recipient for the fiscal
year ending 2019, adjusted annually for
inflation, the recipient government will
not be considered to have violated the
offset provision because there will not
have been a reduction in net tax
revenue.
❑ Fourth, if the recipient
government's actual tax revenue is less
than the amount of tax revenue received
by the recipient government for the
fiscal year ending 2019, adjusted
annually for inflation, in the reporting
year the recipient government will
identify any sources of funds that have
been used to permissibly offset the total
value of covered tax changes other than
Fiscal Recovery Funds. These are:
o State or territory tax changes that
would increase any source of general
26808 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
fund revenue, such as a change that
would increase a tax rate; and
o Spending cuts in areas not being
replaced by Fiscal Recovery Funds.
The recipient government will
calculate the value of revenue reduction
remaining after applying these sources
of offsetting funding to the total value of
revenue reducing changes —that, is, how
much of the tax change has not been
paid for. The recipient government will
then compare that value to the
difference between the baseline and
actual tax revenue. A recipient
government will not be required to
repay to the Treasury an amount that is
greater than the recipient government's
actual tax revenue shortfall relative to
the baseline (i.e., fiscal year 2019 tax
revenue adjusted for inflation). This
"revenue reduction cap," together with
Step 3, ensures that recipient
governments can use organic revenue
growth to offset the cost of revenue
reductions.
❑ Finally, if there are any amounts
that could be subject to recoupment,
Treasury will provide notice to the
recipient government of such amounts.
This process is discussed in greater
detail in Section IV of this
SUPPLEMENTARY INFORMATION.
Together, these steps allow Treasury
to identify the amount of reduction in
net tax revenue that both is attributable
to covered changes and has been
directly or indirectly offset with Fiscal
Recovery Funds. This process ensures
Fiscal Recovery Funds are used in a
manner consistent with the statute's
defined eligible uses and the offset
provision's limitation on these eligible
uses, while avoiding undue interference
with State and territory decisions
regarding tax and spending policies.
The interim final rule also
implements a process for recouping
Fiscal Recovery Funds that were used to
offset reductions in net tax revenue,
including the calculation of any
amounts that may be subject to
recoupment, a process for a recipient
government to respond to a notice of
recoupment, and clarification regarding
amounts excluded from recoupment.
See Section IV of this SUPPLEMENTARY
INFORMATION.
The interim final rule includes several
definitions that are applicable to the
implementation of the offset provision.
Covered change. The offset provision
is triggered by a reduction in net tax
revenue resulting from "a change in
law, regulation, or administrative
interpretation." A covered change
includes any final legislative or
regulatory action, a new or changed
administrative interpretation, and the
phase -in or taking effect of any statute
or rule where the phase -in or taking
effect was not prescribed prior to the
start of the covered period. Changed
administrative interpretations would
not include corrections to replace prior
inaccurate interpretations; such
corrections would instead be treated as
changes implementing legislation
enacted or regulations issued prior to
the covered period; the operative change
in those circumstances is the underlying
legislation or regulation that occurred
prior to the covered period. Moreover,
only the changes within the control of
the State or territory are considered
covered changes. Covered changes do
not include a change in rate that is
triggered automatically and based on
statutory or regulatory criteria in effect
prior to the covered period. For
example, a state law that sets its earned
income tax credit (EITC) at a fixed
percentage of the Federal EITC will see
its EITC payments automatically
increase —and thus its tax revenue
reduced —because of the Federal
Government's expansion of the EITC in
the ARPA.162 This would not be
considered a covered change. In
addition, the offset provision applies
only to actions for which the change in
policy occurs during the covered period;
it excludes regulations or other actions
that implement a change or law
substantively enacted prior to March 3,
2021. Finally, Treasury has determined
and previously announced that income
tax changes —even those made during
the covered period —that simply
conform with recent changes in Federal
law (including those to conform to
recent changes in Federal taxation of
unemployment insurance benefits and
taxation of loan forgiveness under the
Paycheck Protection Program) are
permissible under the offset provision.
Baseline. For purposes of measuring a
reduction in net tax revenue, the interim
final rule measures actual changes in tax
revenue relative to a revenue baseline
(baseline). The baseline will be
calculated as fiscal year 2019 (FY 2019)
tax revenue indexed for inflation in
each year of the covered period, with
inflation calculated using the Bureau of
Economic Analysis's Implicit Price
Deflator.163
FY 2019 was chosen as the starting
year for the baseline because it is the
last full fiscal year prior to the COVID-
162 See, e.g., Tax Policy Center, How do state
earned income tax credits work?, https://
www. taxpolicycenter. org/briefing-book/how-do-
state-earned-income-tax-credits-work/ (last visited
May 9, 2021).
163 U.S. Department of Commerce, Bureau of
Economic Analysis, GDP Price Deflator, https://
www.bea.gov/data/prices-inflation/gdp-price-
deflator (last visited May 9, 2021).
19 public health emergency.164 This
baseline year is consistent with the
approach directed by the ARPA in
sections 602(c)(1)(C) and 603(c)(1)(C),
which identify the "most recent full
fiscal year of the [State, territory, or
Tribal government] prior to the
emergency" as the comparator for
measuring revenue loss. U.S. gross
domestic product is projected to
rebound to pre -pandemic levels in
2021,165 suggesting that an FY 2019 pre -
pandemic baseline is a reasonable
comparator for future revenue levels.
The FY 2019 baseline revenue will be
adjusted annually for inflation to allow
for direct comparison of actual tax
revenue in each year (reported in
nominal terms) to baseline revenue in
common units of measurement; without
inflation adjustment, each dollar of
reported actual tax revenue would be
worth less than each dollar of baseline
revenue expressed in 2019 terms.
Reporting year. The interim final rule
defines "reporting year" as a single year
within the covered period, aligned to
the current fiscal year of the recipient
government during the covered period,
for which a recipient government
reports the value of covered changes
and any sources of offsetting revenue
increases ("in -year" value), regardless of
when those changes were enacted. For
the fiscal years ending in 2021 or 2025
(partial years), the term "reporting year"
refers to the portion of the year falling
within the covered period. For example,
the reporting year for a fiscal year
beginning July 2020 and ending June
2021 would be from March 3, 2021 to
July 2021.
Tax revenue. The interim final rule's
definition of "tax revenue" is based on
the Census Bureau's definition of taxes,
used for its Annual Survey of State
Government Finances.166 It provides a
consistent, well -established definition
with which States and territories will be
familiar and is consistent with the
approach taken in Section II.C of this
SUPPLEMENTARY INFORMATION describing
the implementation of sections
602(c)(1)(C) and 603(c)(1)(C) of the Act,
regarding revenue loss. Consistent with
the approach described in Section II.C
of this SUPPLEMENTARY INFORMATION, tax
164 Using Fiscal Year 2019 is consistent with
section 602 as Congress provided for using that
baseline for determining the impact of revenue loss
affecting the provision of government services. See
section 602(c)(1)(C).
165 Congressional Budget Office, An Overview of
the Economic Outlook: 2021 to 2031 (February 1,
2021), available at https://www.cbo.gov/
publication/56965.
166 U.S. Census Bureau, Annual Survey of State
and Local Government Finances Glossary, https://
www.census.go v/programs-surveys/state/about/
glossary.html (last visited Apr. 30, 2021).
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26809
revenue does not include revenue taxed
and collected by a different unit of
government (e.g., revenue from taxes
levied by a local government and
transferred to a recipient government).
Framework. The interim final rule
provides a step-by-step framework, to be
used in each reporting year, to calculate
whether the offset provision applies to
a State's or territory's use of Fiscal
Recovery Funds:
(1) Covered changes that reduce tax
revenue. For each reporting year, a
recipient government will identify and
value covered changes that the recipient
government predicts will have the effect
of reducing tax revenue in a given
reporting year, similar to the way it
would in the ordinary course of its
budgeting process. The value of these
covered changes may be reported based
on estimated values produced by a
budget model, incorporating reasonable
assumptions, that aligns with the
recipient government's existing
approach for measuring the effects of
fiscal policies, and that measures
relative to a current law baseline. The
covered changes may also be reported
based on actual values using a statistical
methodology to isolate the change in
year -over -year revenue attributable to
the covered change(s), relative to the
current law baseline prior to the
change(s). Further, estimation
approaches should not use dynamic
methodologies that incorporate the
projected effects of macroeconomic
growth because macroeconomic growth
is accounted for separately in the
framework. Relative to these dynamic
scoring methodologies, scoring
methodologies that do not incorporate
projected effects of macroeconomic
growth rely on fewer assumptions and
thus provide greater consistency among
States and territories. Dynamic scoring
that incorporates macroeconomic
growth may also increase the likelihood
of underestimation of the cost of a
reduction in tax revenue.
In general and where possible,
reporting should be produced by the
agency of the recipient government
responsible for estimating the costs and
effects of fiscal policy changes. This
approach offers recipient governments
the flexibility to determine their
reporting methodology based on their
existing budget scoring practices and
capabilities. In addition, the approach of
using the projected value of changes in
law that enact fiscal policies to estimate
the net effect of such policies is
consistent with the way many States
and territories already consider tax
changes.167
(2) In excess of the de minimis. The
recipient government will next calculate
the total value of all covered changes in
the reporting year resulting in revenue
reductions, identified in Step 1. If the
total value of the revenue reductions
resulting from these changes is below
the de minimis level, the recipient
government will be deemed not to have
any revenue -reducing changes for the
purpose of determining the recognized
net reduction. If the total is above the de
minimis level, the recipient government
must identify sources of in -year revenue
to cover the full costs of changes that
reduce tax revenue.
The de minimis level is calculated as
1 percent of the reporting year's
baseline. Treasury recognizes that,
pursuant to their taxing authority, States
and territories may make many small
changes to alter the composition of their
tax revenues or implement other
policies with marginal effects on tax
revenues. They may also make changes
based on projected revenue effects that
turn out to differ from actual effects,
unintentionally resulting in minor
revenue changes that are not fairly
described as "resulting from" tax law
changes. The de minimis level
recognizes the inherent challenges and
uncertainties that recipient governments
face, and thus allows relatively small
reductions in tax revenue without
consequence. Treasury determined the 1
percent level by assessing the historical
effects of state -level tax policy changes
in state EITCs implemented to effect
policy goals other than reducing net tax
revenues.168 The 1 percent de minimis
level reflects the historical reductions in
revenue due to minor changes in state
fiscal policies.
(3) Safe harbor. The recipient
government will then compare the
reporting year's actual tax revenue to
the baseline. If actual tax revenue is
greater than the baseline, Treasury will
deem the recipient government not to
have any recognized net reduction for
the reporting year, and therefore to be in
a safe harbor and outside the ambit of
the offset provision. This approach is
consistent with the ARPA, which
contemplates recoupment of Fiscal
Recovery Funds only in the event that
167 See, e.g., Megan Randall & Kim Rueben, Tax
Policy Center, Sustainable Budgeting in the States:
Evidence on State Budget Institutions and Practices
(Nov. 2017), available at https://
www.taxpolicycenter.org/sites/default/filesI
publication/149186/sustain able-budgeting-in-th e-
states_1.pdf.
168 Data provided by the Urban -Brookings Tax
Policy Center for state -level EITC changes for 2004-
2017.
such funds are used to offset a reduction
in net tax revenue. If net tax revenue has
not been reduced, this provision does
not apply. In the event that actual tax
revenue is above the baseline, the
organic revenue growth that has
occurred, plus any other revenue -raising
changes, by definition must have been
enough to offset the in -year costs of the
covered changes.
(4) Consideration of other sources of
funding. Next, the recipient government
will identify and calculate the total
value of changes that could pay for
revenue reduction due to covered
changes and sum these items. This
amount can be used to pay for up to the
total value of revenue -reducing changes
in the reporting year. These changes
consist of two categories:
(a) Tax and other increases in
revenue. The recipient government must
identify and consider covered changes
in policy that the recipient government
predicts will have the effect of
increasing general revenue in a given
reporting year. As when identifying and
valuing covered changes that reduce tax
revenue, the value of revenue -raising
changes may be reported based on
estimated values produced by a budget
model, incorporating reasonable
assumptions, aligned with the recipient
government's existing approach for
measuring the effects of fiscal policies,
and measured relative to a current law
baseline, or based on actual values using
a statistical methodology to isolate the
change in year -over -year revenue
attributable to the covered change(s).
Further, and as discussed above,
estimation approaches should not use
dynamic scoring methodologies that
incorporate the effects of
macroeconomic growth because growth
is accounted for separately under the
interim final rule. In general and where
possible, reporting should be produced
by the agency of the recipient
government responsible for estimating
the costs and effects of fiscal policy
changes. This approach offers recipient
governments the flexibility to determine
their reporting methodology based on
their existing budget scoring practices
and capabilities.
(b) Covered spending cuts. A recipient
government also may cut spending in
certain areas to pay for covered changes
that reduce tax revenue, up to the
amount of the recipient government's
net reduction in total spending as
described below. These changes must be
reductions in government outlays not in
an area where the recipient government
has spent Fiscal Recovery Funds. To
better align with existing reporting and
accounting, the interim final rule
considers the department, agency, or
26810 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
authority from which spending has been
cut and whether the recipient
government has spent Fiscal Recovery
Funds on that same department, agency,
or authority. This approach was selected
to allow recipient governments to report
how Fiscal Recovery Funds have been
spent using reporting units already
incorporated into their budgeting
process. If they have not spent Fiscal
Recovery Funds in a department,
agency, or authority, the full amount of
the reduction in spending counts as a
covered spending cut, up to the
recipient government's net reduction in
total spending. If they have, the Fiscal
Recovery Funds generally would be
deemed to have replaced the amount of
spending cut and only reductions in
spending above the amount of Fiscal
Recovery Funds spent on the
department, agency, or authority would
count.
To calculate the amount of spending
cuts that are available to offset a
reduction in tax revenue, the recipient
government must first consider whether
there has been a reduction in total net
spending, excluding Fiscal Recovery
Funds (net reduction in total spending).
This approach ensures that reported
spending cuts actually create fiscal
space, rather than simply offsetting
other spending increases. A net
reduction in total spending is measured
as the difference between total spending
in each reporting year, excluding Fiscal
Recovery Funds spent, relative to total
spending for the recipient's fiscal year
ending in 2019, adjusted for inflation.
Measuring reductions in spending
relative to 2019 reflects the fact that the
fiscal space created by a spending cut
persists so long as spending remains
below its original level, even if it does
not decline further, relative to the same
amount of revenue. Measuring spending
cuts from year to year would, by
contrast, not recognize any available
funds to offset revenue reductions
unless spending continued to decline,
failing to reflect the actual availability of
funds created by a persistent change and
limiting the discretion of States and
territories. In general and where
possible, reporting should be produced
by the agency of the recipient
government responsible for estimating
the costs and effects of fiscal policy
changes. Treasury chose this approach
because while many recipient
governments may score budget
legislation using projections, spending
cuts are readily observable using actual
values.
This approach —allowing only
spending reductions in areas where the
recipient government has not spent
Fiscal Recovery Funds to be used as an
offset for a reduction in net tax
revenue —aims to prevent recipient
governments from using Fiscal Recovery
Funds to supplant State or territory
funding in the eligible use areas, and
then use those State or territory funds to
offset tax cuts. Such an approach helps
ensure that Fiscal Recovery Funds are
not used to "indirectly" offset revenue
reductions due to covered changes.
In order to help ensure recipient
governments use Fiscal Recovery Funds
in a manner consistent with the
prescribed eligible uses and do not use
Fiscal Recovery Funds to indirectly
offset a reduction in net tax revenue
resulting from a covered change,
Treasury will monitor changes in
spending throughout the covered
period. If, over the course of the covered
period, a spending cut is subsequently
replaced with Fiscal Recovery Funds
and used to indirectly offset a reduction
in net tax revenue resulting from a
covered change, Treasury may consider
such change to be an evasion of the
restrictions of the offset provision and
seek recoupment of such amounts.
(5) Identification of amounts subject
to recoupment. If a recipient
government (i) reports covered changes
that reduce tax revenue (Step 1); (ii) to
a degree greater than the de minimis
(Step 2); (iii) has experienced a
reduction in net tax revenue (Step 3);
and (iv) lacks sufficient revenue from
other, permissible sources to pay for the
entirety of the reduction (Step 4), then
the recipient government will be
considered to have used Fiscal Recovery
Funds to offset a reduction in net tax
revenue, up to the amount that revenue
has actually declined. That is, the
maximum value of reduction in revenue
due to covered changes which a
recipient government must cover is
capped at the difference between the
baseline and actual tax revenue.169 In
the event that the baseline is above
actual tax revenue and the difference
between them is less than the sum of
revenue reducing changes that are not
paid for with other, permissible sources,
organic revenue growth has implicitly
offset a portion of the reduction. For
example, if a recipient government
reduces tax revenue by $1 billion,
makes no other changes, and
experiences revenue growth driven by
organic economic growth worth $500
million, it need only pay for the
remaining $500 million with sources
other than Fiscal Recovery Funds. The
revenue reduction cap implements this
169 This cap is applied in § 35.8(c) of the interim
final rule, calculating the amount of funds used in
violation of the tax offset provision.
approach for permitting organic revenue
growth to cover the cost of tax cuts.
Finally, as discussed further in
Section IV of this SUPPLEMENTARY
INFORMATION, a recipient government
may request reconsideration of any
amounts identified as subject to
recoupment under this framework. This
process ensures that all relevant facts
and circumstances, including
information regarding planned spending
cuts and budgeting assumptions, are
considered prior to a determination that
an amount must be repaid. Amounts
subject to recoupment are calculated on
an annual basis; amounts recouped in
one year cannot be returned if the State
or territory subsequently reports an
increase in net tax revenue.
To facilitate the implementation of
the framework above, and in addition to
reporting required on eligible uses, in
each year of the reporting period, each
State and territory will report to
Treasury the following items:
❑ Actual net tax revenue for the
reporting year;
❑ Each revenue -reducing change
made to date during the covered period
and the in -year value of each change;
❑ Each revenue -raising change made
to date during the covered period and
the in -year value of each change;
❑ Each covered spending cut made to
date during the covered period, the in -
year value of each cut, and
documentation demonstrating that each
spending cut is covered as prescribed
under the interim final rule;
Treasury will provide additional
guidance and instructions the reporting
requirements at a later date.
Question 28: Does the interim final
rule's definition of tax revenue accord
with existing State and territorial
practice and, if not, are there other
definitions or elements Treasury should
consider? Discuss why or why not.
Question 29: The interim final rule
permits certain spending cuts to cover
the costs of reductions in tax revenue,
including cuts in a department, agency,
or authority in which the recipient
government is not using Fiscal Recovery
Funds. How should Treasury and
recipient governments consider the
scope of a department, agency, or
authority for the use of funds to ensure
spending cuts are not being substituted
with Fiscal Recovery Funds while also
avoiding an overbroad definition of that
captures spending that is, in fact,
distinct?
Question 30: Discuss the budget
scoring methodologies currently used by
States and territories. How should the
interim final rule take into
consideration differences in
approaches? Please discuss the use of
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26811
practices including but not limited to
macrodynamic scoring, microdynamic
scoring, and length of budget windows.
Question 31: If a recipient government
has a balanced budget requirement, how
will that requirement impact its use of
Fiscal Recovery Funds and ability to
implement this framework?
Question 32: To implement the
framework described above, the interim
final rule establishes certain reporting
requirements. To what extent do
recipient governments already produce
this information and on what timeline?
Discuss ways that Treasury and
recipient governments may better rely
on information already produced, while
ensuring a consistent application of the
framework.
Question 33: Discuss States' and
territories' ability to produce the figures
and numbers required for reporting
under the interim final rule. What
additional reporting tools, such as a
standardized template, would facilitate
States' and territories' ability to
complete the reporting required under
the interim final rule?
C. Other Restrictions on Use
Payments from the Fiscal Recovery
Funds are also subject to pre-existing
limitations provided in other Federal
statutes and regulations and may not be
used as non -Federal match for other
Federal programs whose statute or
regulations bar the use of Federal funds
to meet matching requirements. For
example, payments from the Fiscal
Recovery Funds may not be used to
satisfy the State share of Medicaid.170
As provided for in the award terms,
payments from the Fiscal Recovery
Funds as a general matter will be subject
to the provisions of the Uniform
Administrative Requirements, Cost
Principles, and Audit Requirements for
Federal Awards (2 CFR part 200) (the
Uniform Guidance), including the cost
principles and restrictions on general
provisions for selected items of cost.
D. Timeline for Use of Fiscal Recovery
Funds
Section 602(c)(1) and section 603(c)(1)
require that payments from the Fiscal
Recovery Funds be used only to cover
costs incurred by the State, territory,
Tribal government, or local government
by December 31, 2024. Similarly, the
CARES Act provided that payments
from the CRF be used to cover costs
incurred by December 31, 2021.171 The
170 See 42 CFR 433.51 and 45 CFR 75.306.
171 Section 1001 of Division N of the Consolidated
Appropriations Act, 2021 amended section
601(d)(3) of the Act by extending the end of the
covered period for CRF expenditures from
December 30. 2020 to December 31. 2021.
definition of "incurred" does not have
a clear meaning. With respect to the
CARES Act, on the understanding that
the CRF was intended to be used to
meet relatively short-term needs,
Treasury interpreted this requirement to
mean that, for a cost to be considered to
have been incurred, performance of the
service or delivery of the goods acquired
must occur by December 31, 2021. In
contrast, the ARPA, passed at a different
stage of the COVID-19 public health
emergency, was intended to provide
more general fiscal relief over a broader
timeline. In addition, the ARPA
expressly permits the use of Fiscal
Recovery Funds for improvements to
water, sewer, and broadband
infrastructure, which entail a longer
timeframe. In recognition of this,
Treasury is interpreting the requirement
in section 602 and section 603 that costs
be incurred by December 31, 2024, to
require only that recipients have
obligated the Fiscal Recovery Funds by
such date. The interim final rule adopts
a definition of "obligation" that is based
on the definition used for purposes of
the Uniform Guidance, which will allow
for uniform administration of this
requirement and is a definition with
which most recipients will be familiar.
Payments from the Fiscal Recovery
Funds are grants provided to recipients
to mitigate the fiscal effects of the
COVID-19 public health emergency and
to respond to the public health
emergency, consistent with the eligible
uses enumerated in sections 602(c)(1)
and 603(c)(1).172 As such, these funds
are intended to provide economic
stimulus in areas still recovering from
the economic effects of the pandemic. In
implementing and interpreting these
provisions, including what it means to
"respond to" the COVID-19 public
health emergency, Treasury takes into
consideration pre -pandemic facts and
circumstances (e.g., average revenue
growth prior to the pandemic) as well as
impact of the pandemic that predate the
enactment of the ARPA (e.g.,
replenishing Unemployment Trust
balances drawn during the pandemic).
While assessing the effects of the
COVID-19 public health emergency
necessarily takes into consideration the
facts and circumstances that predate the
ARPA, use of Fiscal Recovery Funds is
forward looking.
As discussed above, recipients are
permitted to use payments from the
Fiscal Recovery Funds to respond to the
public health emergency, to respond to
workers performing essential work by
providing premium pay or providing
172 Sections 602(a), 603(a), 602(c)(1) and 603(c)(1)
of the Act.
grants to eligible employers, and to
make necessary investments in water,
sewer, or broadband infrastructure,
which all relate to prospective uses. In
addition, sections 602(c)(1)(C) and
603(c)(1)(C) permit recipients to use
Fiscal Recovery Funds for the provision
of government services. This clause
provides that the amount of funds that
may be used for this purpose is
measured by reference to the reduction
in revenue due to the public health
emergency relative to revenues collected
in the most recent full fiscal year, but
this reference does not relate to the
period during which recipients may use
the funds, which instead refers to
prospective uses, consistent with the
other eligible uses.
Although as discussed above 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.
This aligns the period for use of Fiscal
Recovery Funds with the period during
which these funds may not be used to
offset reductions in net tax revenue.
Permitting Fiscal Recovery Funds to be
used to cover costs incurred beginning
on this date will also mean that
recipients that began incurring costs in
the anticipation of enactment of the
ARPA and in advance of the issuance of
this rule and receipt of payment from
the Fiscal Recovery Funds would be
able to cover them using these
payments.173
As set forth in the award terms, the
period of performance will run until
December 31, 2026, which will provide
recipients a reasonable amount of time
to complete projects funded with
payments from the Fiscal Recovery
Funds.
IV. Recoupment Process
Under the ARPA, failure to comply
with the restrictions on use contained in
sections 602(c) and 603(c) of the Act
may result in recoupment of funds.174
The interim final rule implements these
provisions by establishing a process for
recoupment.
Identification and Notice of
Violations. Failure to comply with the
restrictions on use will be identified
based on reporting provided by the
173 Given the nature of this program, recipients
will not be permitted to use funds to cover pre -
award costs, i.e., those incurred prior to March 3,
2021.
174 Sections 602(e) and 603(e) of the Act.
26812 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
recipient. As discussed further in
Sections III.B and VIII of this
SUPPLEMENTARY INFORMATION, Treasury
will collect information regarding
eligible uses on a quarterly basis and on
the tax offset provision on an annual
basis. Treasury also may consider other
information in identifying a violation,
such as information provided by
members of the public. If Treasury
identifies a violation, it will provide
written notice to the recipient along
with an explanation of such amounts.
Request for Reconsideration. Under
the interim final rule, a recipient may
submit a request for reconsideration of
any amounts identified in the notice
provided by Treasury. This
reconsideration process provides a
recipient the opportunity to submit
additional information it believes
supports its request in light of the notice
of recoupment, including, for example,
additional information regarding the
recipient's use of Fiscal Recovery Funds
or its tax revenues. The process also
provides the Secretary with an
opportunity to consider all information
relevant to whether a violation has
occurred, and if so, the appropriate
amount for recoupment.
The interim final rule also establishes
requirements for the timing of a request
for reconsideration. Specifically, if a
recipient wishes to request
reconsideration of any amounts
identified in the notice, the recipient
must submit a written request for
reconsideration to the Secretary within
60 calendar days of receipt of such
notice. The request must include an
explanation of why the recipient
believes that the finding of a violation
or recoupable amount identified in the
notice of recoupment should be
reconsidered. To facilitate the
Secretary's review of a recipient's
request for reconsideration, the request
should identify all supporting reasons
for the request. Within 60 calendar days
of receipt of the recipient's request for
reconsideration, the recipient will be
notified of the Secretary's decision to
affirm, withdraw, or modify the notice
of recoupment. Such notification will
include an explanation of the decision,
including responses to the recipient's
supporting reasons and consideration of
additional information provided.
The process and timeline established
by the interim final rule are intended to
provide the recipient with an adequate
opportunity to fully present any issues
or arguments in response to the notice
of recoupment.175 This process will
allow the Secretary to respond to the
17s The interim final rule also provides that
Treasury may extend any deadlines.
issues and considerations raised in the
request for reconsideration taking into
account the information and arguments
presented by the recipient along with
any other relevant information.
Repayment. Finally, the interim final
rule provides that any amounts subject
to recoupment must be repaid within
120 calendar days of receipt of any final
notice of recoupment or, if the recipient
has not requested reconsideration,
within 120 calendar days of the initial
notice provided by the Secretary.
Question 34: Discuss the timeline for
requesting reconsideration under the
interim final rule. What, if any,
challenges does this timeline present?
V. Payments in Tranches to Local
Governments and Certain States
Section 603 of the Act provides that
the Secretary will make payments to
local governments in two tranches, with
the second tranche being paid twelve
months after the first payment. In
addition, section 602(b)(6)(A)(ii)
provides that the Secretary may
withhold payment of up to 50 percent
of the amount allocated to each State
and territory for a period of up to twelve
months from the date on which the
State or territory provides its
certification to the Secretary. Any such
withholding for a State or territory is
required to be based on the
unemployment rate in the State or
territory as of the date of the
certification.
The Secretary has determined to
provide in this interim final rule for
withholding of 50 percent of the amount
of Fiscal Recovery Funds allocated to all
States (and the District of Columbia)
other than those with an unemployment
rate that is 2.0 percentage points or
more above its pre -pandemic (i.e.,
February 2020) level. The Secretary will
refer to the latest available monthly data
from the Bureau of Labor Statistics as of
the date the certification is provided.
Based on data available at the time of
public release of this interim final rule,
this threshold would result in a majority
of States being paid in two tranches.
Splitting payments for the majority of
States is consistent with the
requirement in section 603 of the Act to
make payments from the Coronavirus
Local Fiscal Recovery Fund to local
governments in two tranches.176
176 With respect to Federal financial assistance
more generally, States are subject to the
requirements of the Cash Management
Improvement Act (CMIA), under which Federal
funds are drawn upon only on an as needed basis
and States are required to remit interest on unused
balances to Treasury. Given the statutory
requirement for Treasury to make payments to
States within a certain period, these requirements
Splitting payments to States into two
tranches will help encourage recipients
to adapt, as necessary, to new
developments that could arise over the
coming twelve months, including
potential changes to the nature of the
public health emergency and its
negative economic impacts. While the
U.S. economy has been recovering and
adding jobs in aggregate, there is still
considerable uncertainty in the
economic outlook and the interaction
between the pandemic and the
economy.177 For these reasons, Treasury
believes it will be appropriate for a
majority of recipients to adapt their
plans as the recovery evolves. For
example, a faster -than -expected
economic recovery in 2021 could lead a
recipient to dedicate more Fiscal
Recovery Funds to longer -term
investments starting in 2022. In
contrast, a slower -than -expected
economic recovery in 2021 could lead a
recipient to use additional funds for
near -term stimulus in 2022.
At the same time, the statute
contemplates the possibility that
elevated unemployment in certain
States could justify a single payment.
Elevated unemployment is indicative of
a greater need to assist unemployed
workers and stimulate a faster economic
recovery. For this reason, the interim
final rule provides that States and
territories with an increase in their
unemployment rate over a specified
threshold may receive a single payment,
with the expectation that a single
tranche will better enable these States
and territories to take additional
immediate action to aid the unemployed
and strengthen their economies.
Following the initial pandemic -
related spike in unemployment in 2020,
States' unemployment rates have been
trending back towards pre -pandemic
levels. However, some States' labor
markets are healing more slowly than
others. Moreover, States varied widely
in their pre -pandemic levels of
unemployment, and some States remain
substantially further from their pre -
of the CMIA and Treasury's implementing
regulations at 31 CFR part 205 will not apply to
payments from the Fiscal Recovery Funds.
Providing funding in two tranches to the majority
of States reflects, to the maximum extent permitted
by section 602 of the Act, the general principles of
Federal cash management and stewardship of
Federal funding, yet will be much less restrictive
than the usual requirements to which States are
subject.
177 The potential course of the virus, and its
impact on the economy, has contributed to a
heightened degree of uncertainty relative to prior
periods. See, e.g., Dave Altig et al., Economic
uncertainty before and during the COVID-19
pandemic, J. of Public Econ. (Nov. 2020), available
at https://www.sciencedirect.com/science/article/
abs/pii/S0047272720301389.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26813
pandemic starting point. Consequently,
Treasury is delineating States with
significant remaining elevation in the
unemployment rate, based on the net
difference to pre -pandemic levels.
Treasury has established that
significant remaining elevation in the
unemployment rate is a net change in
the unemployment rate of 2.0
percentage points or more relative to
pre -pandemic levels. In the four
previous recessions going back to the
early 1980s, the national unemployment
rate rose by 3.6, 2.3, 2.0, and 5.0
percentage points, as measured from the
start of the recession to the eventual
peak during or immediately following
the recession.178 Each of these increases
can therefore represent a recession's
impact on unemployment. To identify
States with significant remaining
elevation in unemployment, Treasury
took the lowest of these four increases,
2.0 percentage points, to indicate states
where, despite improvement in the
unemployment rate, current labor
market conditions are consistent still
with a historical benchmark for a
recession.
No U.S. territory will be subject to
withholding of its payment from the
Fiscal Recovery Funds. For Puerto Rico,
the Secretary has determined that the
current level of the unemployment rate
(8.8 percent, as of March 2021179) is
sufficiently high such that Treasury
should not withhold any portion of its
payment from the Fiscal Recovery
Funds regardless of its change in
unemployment rate relative to its pre -
pandemic level. For U.S. territories that
are not included in the Bureau of Labor
Statistics' monthly unemployment rate
data, the Secretary will not exercise the
authority to withhold amounts from the
Fiscal Recovery Funds.
VI. Transfer
The statute authorizes State,
territorial, and Tribal governments;
counties; metropolitan cities; and
nonentitlement units of local
government (counties, metropolitan
178 Includes the period during and immediately
following recessions, as defined by the National
Bureau of Economic Research. National Bureau of
Economic Research, US Business Cycle Expansions
and Contractions, https://www.nber.org/research/
data/us-business-cycle-expansions-and-
contractions (last visited Apr. 27, 2021). Based on
data from U.S. Bureau of Labor Statistics,
Unemployment Rate [UNRATE], retrieved from
FRED, Federal Reserve Bank of St. Louis, https://
fred.stlouisfed.org/series/UNRATE (last visited Apr.
27, 2021).
179 U.S. Bureau of Labor Statistics, Economic
News Release —Table 1. Civilian labor force and
unemployment by state and selected area,
seasonally adjusted, https://www.bls.gov/
news.release/laus.tOl.htm (last visited Apr. 30,
2021).
cities, and nonentitlement units of local
government are collectively referred to
as "local governments") to transfer
amounts paid from the Fiscal Recovery
Funds to a number of specified entities.
By permitting these transfers, Congress
recognized the importance of providing
flexibility to governments seeking to
achieve the greatest impact with their
funds, including by working with other
levels or units of government or private
entities to assist recipient governments
in carrying out their programs. This
includes special-purpose districts that
perform specific functions in the
community, such as fire, water, sewer,
or mosquito abatement districts.
Specifically, under section 602(c)(3), a
State, territory, or Tribal government
may transfer funds to a "private
nonprofit organization . . . a Tribal
organization . . . a public benefit
corporation involved in the
transportation of passengers or cargo, or
a special-purpose unit of State or local
government." 180 Similarly, section
603(c)(3) authorizes a local government
to transfer funds to the same entities
(other than Tribal organizations).
The interim final rule clarifies that the
lists of transferees in sections 602(c)(3)
and 603(c)(3) are not exclusive. The
interim final rule permits State,
territorial, and Tribal governments to
transfer Fiscal Recovery Funds to other
constituent units of government or
private entities beyond those specified
in the statute. Similarly, local
governments are authorized to transfer
Fiscal Recovery Funds to other
constituent units of government (e.g., a
county is able to transfer Fiscal
Recovery Funds to a city, town, or
school district within it) or to private
entities. This approach is intended to
help provide funding to local
governments with needs that may
exceed the allocation provided under
the statutory formula.
State, local, territorial, and Tribal
governments that receive a Federal
award directly from a Federal awarding
agency, such as Treasury, are
"recipients." A transferee receiving a
transfer from a recipient under sections
602(c)(3) and 603(c)(3) will be a
subrecipient. Subrecipients are entities
that receive a subaward from a recipient
to carry out a program or project on
behalf of the recipient with the
recipient's Federal award funding. The
recipient remains responsible for
monitoring and overseeing the
subrecipient's use of Fiscal Recovery
Funds and other activities related to the
award to ensure that the subrecipient
complies with the statutory and
180 Section 602(c)(3) of the Act.
regulatory requirements and the terms
and conditions of the award. Recipients
also remain responsible for reporting to
Treasury on their subrecipients' use of
payments from the Fiscal Recovery
Funds for the duration of the award.
Transfers under sections 602(c)(3) and
603(c)(3) must qualify as an eligible use
of Fiscal Recovery Funds by the
transferor. Once Fiscal Recovery Funds
are received, the transferee must abide
by the restrictions on use applicable to
the transferor under the ARPA and other
applicable law and program guidance.
For example, if a county transferred
Fiscal Recovery Funds to a town within
its borders to respond to the COVID-19
public health emergency, the town
would be bound by the eligible use
requirements applicable to the county in
carrying out the county's goal. This also
means that county A may not transfer
Fiscal Recovery Funds to county B for
use in county B because such a transfer
would not, from the perspective of the
transferor (county A), be an eligible use
in county A.
Section 603(c)(4) separately provides
for transfers by a local government to its
State or territory. A transfer under
section 603(c)(4) will not make the State
a subrecipient of the local government,
and such Fiscal Recovery Funds may be
used by the State for any purpose
permitted under section 602(c). A
transfer under section 603(c)(4) will
result in a cancellation or termination of
the award on the part of the transferor
local government and a modification of
the award to the transferee State or
territory. The transferor must provide
notice of the transfer to Treasury in a
format specified by Treasury. If the local
government does not provide such
notice, it will remain legally obligated to
Treasury under the award and remain
responsible for ensuring that the
awarded Fiscal Recovery Funds are
being used in accordance with the
statute and program guidance and for
reporting on such uses to Treasury. A
State that receives a transfer from a local
government under section 603(c)(4) will
be bound by all of the use restrictions
set forth in section 602(c) with respect
to the use of those Fiscal Recovery
Funds, including the prohibitions on
use of such Fiscal Recovery Funds to
offset certain reductions in taxes or to
make deposits into pension funds.
Question 35: What are the advantages
and disadvantages of treating the list of
transferees in sections 602(c)(3) and
603(c)(3) as nonexclusive, allowing
States and localities to transfer funds to
entities outside of the list?
Question 36: Are there alternative
ways of defining "special-purpose unit
of State or local government" and
26814 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
"public benefit corporation" that would
better further the aims of the Funds?
VII. Nonentitlement Units of
Government
The Fiscal Recovery Funds provides
for $19.53 billion in payments to be
made to States and territories which
will distribute the funds to
nonentitlement units of local
government (NEUs); local governments
which generally have populations below
50,000. These local governments have
not yet received direct fiscal relief from
the Federal Government during the
COVID-19 public health emergency,
making Fiscal Recovery Funds
payments an important source of
support for their public health and
economic responses. Section 603
requires Treasury to allocate and pay
Fiscal Recovery Funds to the States and
territories and requires the States and
territories to distribute Fiscal Recovery
Funds to NEUs based on population
within 30 days of receipt unless an
extension is granted by the Secretary.
The interim final rule clarifies certain
aspects regarding the distribution of
Fiscal Recovery by States and territories
to NEUs, as well as requirements around
timely payments from the Fiscal
Recovery Funds.
The ARPA requires that States and
territories allocate funding to NEUs in
an amount that bears the same
proportion as the population of the NEU
bears to the total population of all NEUs
in the State or territory, subject to a cap
(described below). Because the statute
requires States and territories to make
distributions based on population,
States and territories may not place
additional conditions or requirements
on distributions to NEUs, beyond those
required by the ARPA and Treasury's
implementing regulations and guidance.
For example, a State may not impose
stricter limitations than permitted by
statute or Treasury regulations or
guidance on an NEU's use of Fiscal
Recovery Funds based on the NEU's
proposed spending plan or other
policies. States and territories are also
not permitted to offset any debt owed by
the NEU against the NEU's distribution.
Further, States and territories may not
provide funding on a reimbursement
basis—e.g., requiring NEUs to pay for
project costs up front before being
reimbursed with Fiscal Recovery Funds
payments —because this funding model
would not comport with the statutory
requirement that States and territories
make distributions to NEUs within the
statutory timeframe.
Similarly, States and territories
distributing Fiscal Recovery Funds
payments to NEUs are responsible for
complying with the Fiscal Recovery
Funds statutory requirement that
distributions to NEUs not exceed 75
percent of the NEU's most recent
budget. The most recent budget is
defined as the NEU's most recent annual
total operating budget, including its
general fund and other funds, as of
January 27, 2020. Amounts in excess of
such cap and therefore not distributed
to the NEU must be returned to Treasury
by the State or territory. States and
territories may rely for this
determination on a certified top -line
budget total from the NEU.
Under the interim final rule, the total
allocation and distribution to an NEU,
including the sum of both the first and
second tranches of funding, cannot
exceed the 75 percent cap. States and
territories must permit NEUs without
formal budgets as of January 27, 2020 to
self -certify their most recent annual
expenditures as of January 27, 2020 for
the purpose of calculating the cap. This
approach will provide an administrable
means to implement the cap for small
local governments that do not adopt a
formal budget.
Section 603(b)(3) of the Social
Security Act provides for Treasury to
make payments to counties but provides
that, in the case of an amount to be paid
to a county that is not a unit of general
local government, the amount shall
instead be paid to the State in which
such county is located, and such State
shall distribute such amount to each
unit of general local government within
such county in an amount that bears the
same proportion to the amount to be
paid to such county as the population
of such units of general local
government bears to the total population
of such county. As with NEUs, States
may not place additional conditions or
requirements on distributions to such
units of general local government,
beyond those required by the ARPA and
Treasury's implementing regulations
and guidance.
In the case of consolidated
governments, section 603(b)(4) allows
consolidated governments (e.g., a city -
county consolidated government) to
receive payments under each allocation
based on the respective formulas. In the
case of a consolidated government,
Treasury interprets the budget cap to
apply to the consolidated government's
NEU allocation under section 603(b)(2)
but not to the consolidated
government's county allocation under
section 603(b)(3).
If necessary, States and territories may
use the Fiscal Recovery Funds under
section 602(c)(1)(A) to fund expenses
related to administering payments to
NEUs and units of general local
government, as disbursing these funds
itself is a response to the public health
emergency and its negative economic
impacts. If a State or territory requires
more time to disburse Fiscal Recovery
Funds to NEUs than the allotted 30
days, Treasury will grant extensions of
not more than 30 days for States and
territories that submit a certification in
writing in accordance with section
603(b)(2)(C)(ii)(I). Additional extensions
may be granted at the discretion of the
Secretary.
Question 37: What are alternative
ways for States and territories to enforce
the 75 percent cap while reducing the
administrative burden on them?
Question 38: What criteria should
Treasury consider in assessing requests
for extensions for further time to
distribute NEU payments?
VIII. Reporting
States (defined to include the District
of Columbia), territories, metropolitan
cities, counties, and Tribal governments
will be required to submit one interim
report and thereafter quarterly Project
and Expenditure reports through the
end of the award period on December
31, 2026. The interim report will
include a recipient's expenditures by
category at the summary level from the
date of award to July 31, 2021 and, for
States and territories, information
related to distributions to
nonentitlement units. Recipients must
submit their interim report to Treasury
by August 31, 2021. Nonentitlement
units of local government are not
required to submit an interim report.
The quarterly Project and Expenditure
reports will include financial data,
information on contracts and subawards
over $50,000, types of projects funded,
and other information regarding a
recipient's utilization of the award
funds. The reports will include the same
general data (e.g., on obligations,
expenditures, contracts, grants, and sub -
awards) as those submitted by recipients
of the CRF, with some modifications.
Modifications will include updates to
the expenditure categories and the
addition of data elements related to
specific eligible uses, including some of
the reporting elements described in
sections above. The initial quarterly
Project and Expenditure report will
cover two calendar quarters from the
date of award to September 30, 2021,
and must be submitted to Treasury by
October 31, 2021. The subsequent
quarterly reports will cover one
calendar quarter and must be submitted
to Treasury within 30 days after the end
of each calendar quarter.
Nonentitlement units of local
government will be required to submit
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26815
annual Project and Expenditure reports
until the end of the award period on
December 31, 2026. The initial annual
Project and Expenditure report for
nonentitlement units of local
government will cover activity from the
date of award to September 30, 2021
and must be submitted to Treasury by
October 31, 2021. The subsequent
annual reports must be submitted to
Treasury by October 31 each year.
States, territories, metropolitan cities,
and counties with a population that
exceeds 250,000 residents will also be
required to submit an annual Recovery
Plan Performance report to Treasury.
The Recovery Plan Performance report
will provide the public and Treasury
information on the projects that
recipients are undertaking with program
funding and how they are planning to
ensure project outcomes are achieved in
an effective, efficient, and equitable
manner. Each jurisdiction will have
some flexibility in terms of the form and
content of the Recovery Plan
Performance report, as long as it
includes the minimum information
required by Treasury. The Recovery
Plan Performance report will include
key performance indicators identified
by the recipient and some mandatory
indicators identified by Treasury, as
well as programmatic data in specific
eligible use categories and the specific
reporting requirements described in the
sections above. The initial Recovery
Plan Performance report will cover the
period from the date of award to July 31,
2021 and must be submitted to Treasury
by August 31, 2021. Thereafter,
Recovery Plan Performance reports will
cover a 12 -month period, and recipients
will be required to submit the report to
Treasury within 30 days after the end of
the 12 -month period. The second
Recovery Plan Performance report will
cover the period from July 1, 2021 to
June 30, 2022, and must be submitted to
Treasury by July 31, 2022. Each annual
Recovery Plan Performance report must
be posted on the public -facing website
of the recipient. Local governments with
fewer than 250,000 residents, Tribal
governments, and nonentitlement units
of local government are not required to
develop a Recovery Plan Performance
report.
Treasury will provide additional
guidance and instructions on the
reporting requirements outlined above
for the Fiscal Recovery Funds at a later
date.
IX. Comments and Effective Date
This interim final rule is being issued
without advance notice and public
comment to allow for immediate
implementation of this program. As
discussed below, the requirements of
advance notice and public comment do
not apply "to the extent that there is
involved . . . a matter relating to agency
. . . grants." 181 The interim final rule
implements statutory conditions on the
eligible uses of the Fiscal Recovery
Funds grants, and addresses the
payment of those funds, the reporting
on uses of funds, and potential
consequences of ineligible uses. In
addition and as discussed below, the
Administrative Procedure Act also
provides an exception to ordinary
notice -and -comment procedures "when
the agency for good cause finds (and
incorporates the finding and a brief
statement of reasons therefor in the
rules issued) that notice and public
procedure thereon are impracticable,
unnecessary, or contrary to the public
interest." 182 This good cause
justification also supports waiver of the
60 -day delayed effective date for major
rules under the Congressional Review
Act at 5 U.S.C. 808(2). Although this
interim final rule is effective
immediately, comments are solicited
from interested members of the public
and from recipient governments on all
aspects of the interim final rule.
These comments must be submitted
on or before July 16, 2021.
X. Regulatory Analyses
Executive Orders 12866 and 13563
This interim final rule is
economically significant for the
purposes of Executive Orders 12866 and
13563. Treasury, however, is proceeding
under the emergency provision at
Executive Order 12866 section 6(a)(3)(D)
based on the need to act expeditiously
to mitigate the current economic
conditions arising from the COVID-19
public health emergency. The rule has
been reviewed by the Office of
Management and Budget (OMB) in
accordance with Executive Order 12866.
This rule is necessary to implement the
ARPA in order to provide economic
relief to State, local, and Tribal
governments adversely impacted by the
COVID-19 public health emergency.
Under Executive Order 12866, OMB
must determine whether this regulatory
action is "significant" and, therefore,
subject to the requirements of the
Executive Order and subject to review
by OMB. Section 3(f) of Executive Order
12866 defines a significant regulatory
1815 U.S.C. 553(a)(2).
182 5 U.S.C. 553(b)(3)(B); see also 5 U.S.C.
553(d)(3) (creating an exception to the requirement
of a 30 -day delay before the effective date of a rule
"for good cause found and published with the
rule").
action as an action likely to result in a
rule that may:
(1) Have an annual effect on the
economy of $100 million or more, or
adversely affect a sector of the economy;
productivity; competition; jobs; the
environment; public health or safety; or
State, local, or Tribal governments or
communities in a material way (also
referred to as "economically significant"
regulations);
(2) Create a serious inconsistency or
otherwise interfere with an action taken
or planned by another agency;
(3) Materially alter the budgetary
impacts of entitlements, grants, user
fees, or loan programs or the rights and
obligations of recipients thereof; or
(4) Raise novel legal or policy issues
arising out of legal mandates, the
President's priorities, or the principles
stated in the Executive order.
This regulatory action is an
economically significant regulatory
action subject to review by OMB under
section 3(f) of Executive Order 12866.
Treasury has also reviewed these
regulations under Executive Order
13563, which supplements and
explicitly reaffirms the principles,
structures, and definitions governing
regulatory review established in
Executive Order 12866. To the extent
permitted by law, section 1(b) of
Executive Order 13563 requires that an
agency:
(1) Propose or adopt regulations only
upon a reasoned determination that
their benefits justify their costs
(recognizing that some benefits and
costs are difficult to quantify);
(2) Tailor its regulations to impose the
least burden on society, consistent with
obtaining regulatory objectives taking
into account, among other things, and to
the extent practicable, the costs of
cumulative regulations;
(3) Select, in choosing among
alternative regulatory approaches, those
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety,
and other advantages; distributive
impacts; and equity);
(4) To the extent feasible, specify
performance objectives, rather than the
behavior or manner of compliance a
regulated entity must adopt; and
(5) Identify and assess available
alternatives to direct regulation,
including providing economic
incentives —such as user fees or
marketable permits —to encourage the
desired behavior, or providing
information that enables the public to
make choices.
Executive Order 13563 also requires
an agency "to use the best available
26816 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
techniques to quantify anticipated
present and future benefits and costs as
accurately as possible." OMB's Office of
Information and Regulatory Affairs
(OIRA) has emphasized that these
techniques may include "identifying
changing future compliance costs that
might result from technological
innovation or anticipated behavioral
changes."
Treasury has assessed the potential
costs and benefits, both quantitative and
qualitative, of this regulatory action, and
is issuing this interim final rule only on
a reasoned determination that the
benefits exceed the costs. In choosing
among alternative regulatory
approaches, Treasury selected those
approaches that would maximize net
benefits. Based on the analysis that
follows and the reasons stated
elsewhere in this document, Treasury
believes that this interim final rule is
consistent with the principles set forth
in Executive Order 13563.
Treasury also has determined that this
regulatory action does not unduly
interfere with States, territories, Tribal
governments, and localities in the
exercise of their governmental
functions.
This Regulatory Impact Analysis
discusses the need for regulatory action,
the potential benefits, and the potential
costs.
Need for Regulatory Action. This
interim final rule implements the $350
billion Fiscal Recovery Funds of the
ARPA, which Congress passed to help
States, territories, Tribal governments,
and localities respond to the ongoing
COVID-19 public health emergency and
its economic impacts. As the agency
charged with execution of these
programs, Treasury has concluded that
this interim final rule is needed to
ensure that recipients of Fiscal Recovery
Funds fully understand the
requirements and parameters of the
program as set forth in the statute and
deploy funds in a manner that best
reflects Congress' mandate for targeted
fiscal relief.
This interim final rule is primarily a
transfer rule: It transfers $350 billion in
aid from the Federal Government to
states, territories, Tribal governments,
and localities, generating a significant
macroeconomic effect on the U.S.
economy. In making this transfer,
Treasury has sought to implement the
program in ways that maximize its
potential benefits while minimizing its
costs. It has done so by aiming to target
relief in key areas according to the
congressional mandate; offering clarity
to States, territories, Tribal
governments, and localities while
maintaining their flexibility to respond
to local needs; and limiting
administrative burdens.
Analysis of Benefits. Relative to a pre -
statutory baseline, the Fiscal Recovery
Funds provide a combined $350 billion
to State, local, and Tribal governments
for fiscal relief and support for costs
incurred responding to the COVID-19
pandemic. Treasury believes that this
transfer will generate substantial
additional economic activity, although
given the flexibility accorded to
recipients in the use of funds, it is not
possible to precisely estimate the extent
to which this will occur and the timing
with which it will occur. Economic
research has demonstrated that state
fiscal relief is an efficient and effective
way to mitigate declines in jobs and
output during an economic
downturn.183 Absent such fiscal relief,
fiscal austerity among State, local, and
Tribal governments could exert a
prolonged drag on the overall economic
recovery, as occurred following the
2007-09 recession.184
This interim final rule provides
benefits across several areas by
implementing the four eligible funding
uses, as defined in statute:
Strengthening the response to the
COVID-19 public health emergency and
its economic impacts; easing fiscal
pressure on State, local, and Tribal
governments that might otherwise lead
to harmful cutbacks in employment or
government services; providing
premium pay to essential workers; and
making necessary investments in certain
types of infrastructure. In implementing
the ARPA, Treasury also sought to
support disadvantaged communities
that have been disproportionately
impacted by the pandemic. The Fiscal
Recovery Funds as implemented by the
interim final rule can be expected to
channel resources toward these uses in
order to achieve substantial near -term
economic and public health benefits, as
well as longer -term benefits arising from
the allowable investments in water,
sewer, and broadband infrastructure and
aid to families.
1113 Gabriel Chodorow-Reich et al., Does State
Fiscal Relief during Recessions Increase
Employment? Evidence from the American
Recovery and Reinvestment Act, American Econ. J.:
Econ. Policy, 4:3 118-45 (Aug. 2012), available at
https://wsvw.aeaweb.org/articles?id=1O.12571
pol.4.3.118.
184 See, e.g., Fitzpatrick, Haughwout & Setren,
Fiscal Drag from the State and Local Sector?,
Liberty Street Economics Blog, Federal Reserve
Bank of New York (June 27, 2012), https:I/
www.libertystreeteconomics.newyorkfed.orgl2Ol2/
06/fiscal-drag from-the-state-and-local-sector.html;
Jiri Jonas, Great Recession and Fiscal Squeeze at
U.S. Subnational Government Level, IMF Working
Paper 12/184, (July 2012), available at https://
www.imf.org/ext org/external/pubs/ft/wp/2012/
wp12184.pdf; Gordon, supra note 9.
These benefits are achieved in the
interim final rule through a broadly
flexible approach that sets clear
guidelines on eligible uses of Fiscal
Recovery Funds and provides State,
local, and Tribal government officials
discretion within those eligible uses to
direct Fiscal Recovery Funds to areas of
greatest need within their jurisdiction.
While preserving recipients' overall
flexibility, the interim final rule
includes several provisions that
implement statutory requirements and
will help support use of Fiscal Recovery
Funds to achieve the intended benefits.
The remainder of this section clarifies
how Treasury's approach to key
provisions in the interim final rule will
contribute to greater realization of
benefits from the program.
❑ Revenue Loss: Recipients will
compute the extent of reduction in
revenue by comparing actual revenue to
a counterfactual trend representing what
could have plausibly been expected to
occur in the absence of the pandemic.
The counterfactual trend begins with
the last full fiscal year prior to the
public health emergency (as required by
statute) and projects forward with an
annualized growth adjustment.
Treasury's decision to incorporate a
growth adjustment into the calculation
of revenue loss ensures that the formula
more fully captures revenue shortfalls
relative to recipients' pre -pandemic
expectations. Moreover, recipients will
have the opportunity to re -calculate
revenue loss at several points
throughout the program, recognizing
that some recipients may experience
revenue effects with a lag. This option
to re -calculate revenue loss on an
ongoing basis should result in more
support for recipients to avoid harmful
cutbacks in future years. 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.
❑ Premium Pay: Per the statute,
recipients have broad latitude to
designate critical infrastructure sectors
and make grants to third -party
employers for the purpose of providing
premium pay or otherwise respond to
essential workers. While the interim
final rule generally preserves the
flexibility in the statute, it does add a
requirement that recipients give written
justification in the case that premium
pay would increase a worker's annual
pay above a certain threshold. To set
this threshold, Treasury analyzed data
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26817
from the Bureau of Labor Statistics to
determine a level that would not require
further justification for premium pay to
the vast majority of essential workers,
while requiring higher scrutiny for
provision of premium pay to higher -
earners who, even without premium
pay, would likely have greater personal
financial resources to cope with the
effects of the pandemic. Treasury
believes the threshold in the interim
final rule strikes the appropriate balance
between preserving flexibility and
helping encourage use of these
resources to help those in greatest need.
The interim final rule also 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.
❑ Withholding of Payments to
Recipients: Treasury believes that for
the vast majority of recipient entities, it
will be appropriate to receive funds in
two separate payments. As discussed
above, withholding of payments ensures
that recipients can adapt spending plans
to evolving economic conditions and
that at least some of the economic
benefits will be realized in 2022 or later.
However, consistent with authorities
granted to Treasury in the statute,
Treasury recognizes that a subset of
States with significant remaining
elevation in the unemployment rate
could face heightened additional near -
term needs to aid unemployed workers
and stimulate the recovery. Therefore,
for a subset of State governments,
Treasury will not withhold any funds
from the first payment. Treasury
believes that this approach strikes the
appropriate balance between the general
reasons to provide funds in two
payments and the heightened additional
near -term needs in specific States. As
discussed above, Treasury set a
threshold based on historical analysis of
unemployment rates in recessions.
❑ Hiring Public Sector Employees:
The interim final rule states explicitly
that recipients may use funds to restore
their workforces up to pre -pandemic
levels. Treasury believes that this
statement is beneficial because it
eliminates any uncertainty that could
cause delays or otherwise negatively
impact restoring public sector
workforces (which, at time of
publication, remain significantly below
pre -pandemic levels).
Finally, the interim final rule aims to
promote and streamline the provision of
assistance to individuals and
communities in greatest need,
particularly communities that have been
historically disadvantaged and have
experienced disproportionate impacts of
the COVID-19 crisis. Targeting relief is
in line with Executive Order 13985,
"Advancing Racial Equity and Support
for Underserved Communities Through
the Federal Government," which laid
out an Administration -wide priority to
support "equity for all, including people
of color and others who have been
historically underserved, marginalized,
and adversely affected by persistent
poverty and inequality." 185 To this end,
the interim final rule enumerates a list
of services that may be provided using
Fiscal Recovery Funds in low-income
areas to address the disproportionate
impacts of the pandemic in these
communities; establishes the
characteristics of essential workers
eligible for premium pay and
encouragement to serve workers based
on financial need; provides that
recipients may use Fiscal Recovery
Funds to restore (to pre -pandemic
levels) state and local workforces, where
women and people of color are
disproportionately represented; 186 and
targets investments in broadband
infrastructure to unserved and
underserved areas. Collectively, these
provisions will promote use of resources
to facilitate the provision of assistance
to individuals and communities with
the greatest need.
Analysis of Costs. This regulatory
action will generate administrative costs
relative to a pre -statutory baseline. This
includes, chiefly, costs required to
administer Fiscal Recovery Funds,
oversee subrecipients and beneficiaries,
and file periodic reports with Treasury.
It also requires States to allocate Fiscal
Recovery Funds to nonentitlement
units, which are smaller units of local
government that are statutorily required
to receive their funds through States.
Treasury expects that the
administrative burden associated with
this program will be moderate for a
grant program of its size. Treasury
expects that most recipients receive
direct or indirect funding from Federal
Government programs and that many
185 Executive Order on Advancing Racial Equity
and Support for Underserved Communities through
the Federal Government (Jan. 20, 2021) (86 FR 7009,
January 25, 2021), https://www.whitehouse.govl
briefing-room/presidential-actions/2021/01/20!
executive -order -advancing -racial -equity -and -
support -for-underserved-communities-through-the-
federal-government! (last visited May 9, 2021).
186 David Cooper, Mary Gable & Algernon Austin,
Economic Policy Institute Briefing Paper, The
Public -Sector Jobs Crisis: Women and African
Americans hit hardest by job losses in state and
local governments, https://www.epi.org/
publication/bp339-public-sector jobs -crisis (last
visited May 9, 2021).
have familiarity with how to administer
and report on Federal funds or grant
funding provided by other entities. In
particular, States, territories, and large
localities will have received funds from
the CRF and Treasury expects them to
rely heavily on established processes
developed last year or through prior
grant funding, mitigating burden on
these governments.
Treasury expects to provide technical
assistance to defray the costs of
administration of Fiscal Recovery Funds
to further mitigate burden. In making
implementation choices, Treasury has
hosted numerous consultations with a
diverse range of direct recipients —
States, small cities, counties, and Tribal
governments —along with various
communities across the United States,
including those that are underserved.
Treasury lacks data to estimate the
precise extent to which this interim
final rule generates administrative
burden for State, local, and Tribal
governments, but seeks comment to
better estimate and account for these
costs, as well as on ways to lessen
administrative burdens.
Executive Order 13132
Executive Order 13132 (entitled
Federalism) prohibits an agency from
publishing any rule that has federalism
implications if the rule either imposes
substantial, direct compliance costs on
State, local, and Tribal governments,
and is not required by statute, or
preempts state law, unless the agency
meets the consultation and funding
requirements of section 6 of the
Executive order. This interim final rule
does not have federalism implications
within the meaning of the Executive
order and does not impose substantial,
direct compliance costs on State, local,
and Tribal governments or preempt state
law within the meaning of the Executive
order. The compliance costs are
imposed on State, local, and Tribal
governments by sections 602 and 603 of
the Social Security Act, as enacted by
the ARPA. Notwithstanding the above,
Treasury has engaged in efforts to
consult and work cooperatively with
affected State, local, and Tribal
government officials and associations in
the process of developing the interim
final rule. Pursuant to the requirements
set forth in section 8(a) of Executive
Order 13132, Treasury certifies that it
has complied with the requirements of
Executive Order 13132.
Administrative Procedure Act
The Administrative Procedure Act
(APA), 5 U.S.C. 551 et seq., generally
requires public notice and an
opportunity for comment before a rule
26818 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
becomes effective. However, the APA
provides that the requirements of 5
U.S.C. 553 do not apply "to the extent
that there is involved . . . a matter
relating to agency . . . grants." The
interim final rule implements statutory
conditions on the eligible uses of the
Fiscal Recovery Funds grants, and
addresses the payment of those funds,
the reporting on uses of funds, and
potential consequences of ineligible
uses. The rule is thus "both clearly and
directly related to a federal grant
program." National Wildlife Federation
v. Snow, 561 F.2d 227, 232 (D.C. Cir.
1976). The rule sets forth the "process
necessary to maintain state . . .
eligibility for federal funds," id., as well
as the "method[s] by which states can
qualify for federal aid," and other
"integral part[s] of the grant program,"
Center for Auto Safetyv. Ti emann, 414
F. Supp. 215, 222 (D.D.C. 1976). As a
result, the requirements of 5 U.S.C. 553
do not apply.
The APA also provides an exception
to ordinary notice -and -comment
procedures "when the agency for good
cause finds (and incorporates the
finding and a brief statement of reasons
therefor in the rules issued) that notice
and public procedure thereon are
impracticable, unnecessary, or contrary
to the public interest." 5 U.S.C.
553(b)(3)(B); see also 5 U.S.C. 553(d)(3)
(creating an exception to the
requirement of a 30 -day delay before the
effective date of a rule "for good cause
found and published with the rule").
Assuming 5 U.S.C. 553 applied,
Treasury would still have good cause
under sections 553(b)(3)(B) and
553(d)(3) for not undertaking section
553's requirements. The ARPA is a law
responding to a historic economic and
public health emergency; it is
"extraordinary" legislation about which
"both Congress and the President
articulated a profound sense of
`urgency." Petryv. Block, 737 F.2d
1193, 1200 (D.C. Cir. 1984). Indeed,
several provisions implemented by this
interim final rule (sections 602(c)(1)(A)
and 603(c)(1)(A)) explicitly provide
funds to "respond to the public health
emergency," and the urgency is further
exemplified by congress's command (in
sections 602(b)(6)(B) and 603(b)(7)(A))
that, "[t]o the extent practicable," funds
must be provided to Tribes and cities
"not later than 60 days after the date of
enactment." See Philadelphia Citizens
in Action v. Schweiker, 669 F.2d 877,
884 (3d Cir. 1982) (finding good cause
under circumstances, including
statutory time limits, where APA
procedures would have been "virtually
impossible"). Finally, there is an urgent
need for States to undertake the
planning necessary for sound fiscal
policymaking, which requires an
understanding of how funds provided
under the ARPA will augment and
interact with existing budgetary
resources and tax policies. Treasury
understands that many states require
immediate rules on which they can rely,
especially in light of the fact that the
ARPA "covered period" began on
March 3, 2021. The statutory urgency
and practical necessity are good cause to
forego the ordinary requirements of
notice -and -comment rulemaking.
Congressional Review Act
The Administrator of OIRA has
determined that this is a major rule for
purposes of Subtitle E of the Small
Business Regulatory Enforcement and
Fairness Act of 1996 (also known as the
Congressional Review Act or CRA) (5
U.S.C. 804(2) et seq.). Under the CRA,
a major rule takes effect 60 days after
the rule is published in the Federal
Register. 5 U.S.C. 801(a)(3).
Notwithstanding this requirement, the
CRA allows agencies to dispense with
the requirements of section 801 when
the agency for good cause finds that
such procedure would be impracticable,
unnecessary, or contrary to the public
interest and the rule shall take effect at
such time as the agency promulgating
the rule determines. 5 U.S.C. 808(2).
Pursuant to section 808(2), for the
reasons discussed above, Treasury for
good cause finds that a 60 -day delay to
provide public notice is impracticable
and contrary to the public interest.
Paperwork Reduction Act
The information collections
associated with State, territory, local,
and Tribal government applications
materials necessary to receive Fiscal
Recovery Funds (e.g., payment
information collection and acceptance
of award terms) have been reviewed and
approved by OMB pursuant to the
Paperwork Reduction Act (44 U.S.C.
chapter 35) (PRA) emergency processing
procedures and assigned control
number 1505-0271. The information
collections related to ongoing reporting
requirements, as discussed in this
interim final rule, will be submitted to
OMB for emergency processing in the
near future. Under the PRA, an agency
may not conduct or sponsor and a
respondent is not required to respond
to, an information collection unless it
displays a valid OMB control number.
Estimates of hourly burden under this
program are set forth in the table below.
Burden estimates below are preliminary.
Reporting
Number of
respondents
(estimated)
Number of
responses per
respondent
Total responses
Hours per
response
Total burden
in hours
Cost to respondent
($48.80 per hour*)
Recipient Payment Form .....................
5,050
1 .....................
5,050
.25 (15 minutes) ...
1,262.5
$61,610
Acceptance of Award Terms ...............
5,050
1 .....................
5,050
.25 (15 minutes) ...
1,262.5
61,610
Title VI Assurances .............................
5,050
1 .....................
5,050
.50 (30 minutes) ...
2,525
123,220
Quarterly Project and Expenditure Re-
5,050
4*** .................
20,200
25 .........................
505,000
24,644,000
port.
Annual Project and Expenditure Re-
TBD
1 per year .......
t 20,000-40,000
15 .........................
300,000-600,000
14,640,000-29,280,000
port from NEUs.
Annual Recovery Plan Performance
418
1 per year .......
418
100 .......................
41,800
2,039,840
report.
(**)
N/A .................
55,768-75,768
141 .......................
851,850-1,151,850
41,570,280-56,210,280
Total ..............................................
*Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants and Auditors, on the internet at https://www.bls.gov/ooh/busi-
ness-and-financial/accountants-and-auditors.htm (visited March 28, 2020). Base wage of $33.89/hour increased by 44 percent to account for fully loaded employer
cost of employee compensation (benefits, etc.) for a fully loaded wage rate of $48.80.
**5,050—TBD.
***Per year after first year.
t (Estimate only).
Periodic reporting is required by As discussed in Section VIII of this and thereafter quarterly Project and
section 602(c) of Section VI of the Social SUPPLEMENTARY INFORMATION, recipients Expenditure reports until the end of the
Security Act and under the interim final of Fiscal Recovery Funds will be award period. Recipients must submit
rule. required to submit one interim report interim reports to Treasury by August
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26819
31, 2021. The quarterly Project and
Expenditure reports will include
financial data, information on contracts
and subawards over $50,000, types of
projects funded, and other information
regarding a recipient's utilization of the
award funds.
Nonentitlement unit recipients will be
required to submit annual Project and
Expenditure reports until the end of the
award period. The initial annual Project
and Expenditure report for
Nonentitlement unit recipients must be
submitted to Treasury by October 31,
2021. The subsequent annual reports
must be submitted to Treasury by
October 31 each year. States, territories,
metropolitan cities, and counties with a
population that exceeds 250,000
residents will also be required to submit
an annual Recovery Plan Performance
report to Treasury. The Recovery Plan
Performance report will include
descriptions of the projects funded and
information on the performance
indicators and objectives of the award.
Each annual Recovery Plan Performance
report must be posted on the public -
facing website of the recipient. Treasury
will provide additional guidance and
instructions on the all the reporting
requirements outlined above for the
Fiscal Recovery Funds program at a
later date.
These and related periodic reporting
requirements are under consideration
and will be submitted to OMB for
approval under the PRA emergency
provisions in the near future.
Treasury invites comments on all
aspects of the reporting and
recordkeeping requirements including:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information has practical utility; (b) the
accuracy of the estimate of the burden
of the collection of information; (c) ways
to enhance the quality, utility, and
clarity of the information to be
collected; (d) ways to minimize the
burden of the collection of information;
and (e) estimates of capital or start-up
costs and costs of operation,
maintenance, and purchase of services
to provide information. Comments
should be sent by the comment deadline
to the www.regulations.gov docket with
a copy to the Office of Information and
Regulatory Affairs, U.S. Office of
Management and Budget, 725 17th
Street NW, Washington, DC 20503; or
email to oira_submission@omb.eop.gov.
Regulatory Flexibility Analysis
The Regulatory Flexibility Act (RFA)
generally requires that when an agency
issues a proposed rule, or a final rule
pursuant to section 553(b) of the
Administrative Procedure Act or
another law, the agency must prepare a
regulatory flexibility analysis that meets
the requirements of the RFA and
publish such analysis in the Federal
Register. 5 U.S.C. 603, 604.
Rules that are exempt from notice and
comment under the APA are also
exempt from the RFA requirements,
including the requirement to conduct a
regulatory flexibility analysis, when
among other things the agency for good
cause finds that notice and public
procedure are impracticable,
unnecessary, or contrary to the public
interest. Since this rule is exempt from
the notice and comment requirements of
the APA, Treasury is not required to
conduct a regulatory flexibility analysis.
List of Subjects in 31 CFR Part 35
Executive compensation, Public
health emergency, State and local
governments, Tribal governments.
For the reasons stated in the
preamble, the Department of the
Treasury amends 31 CFR part 35 as
follows:
PART 35 —PANDEMIC RELIEF
PROGRAMS
1. The authority citation for part 35 is
revised to read as follows:
Authority: 42 U.S.C. 802(f); 42 U.S.C.
803(f); 31 U.S.C. 321; Division N, Title V,
Subtitle B, Pub. L. 116-260, 134 Stat. 1182;
Section 104A, Pub. L. 103-325, 108 Stat.
2160, as amended (12 U.S.C. 4701 et seq.);
Pub. L. 117-2, 135 Stat. 4 (42 U.S.C. 802 et
seq.).
2. Revise the part heading to read as
set forth above.
3. Add subpart A to read as follows:
Subpart A—Coronavirus State and
Local Fiscal Recovery Funds
Sec.
35.1 Purpose.
35.2 Applicability.
35.3 Definitions.
35.4 Reservation of authority, reporting.
35.5 Use of funds.
35.6 Eligible uses.
35.7 Pensions.
35.8 Tax.
35.9 Compliance with applicable laws.
35.10 Recoupment.
35.11 Payments to States.
35.12 Distributions to nonentitlement units
of local government and units of general
local government.
§35.1 Purpose.
This subpart implements section 9901
of the American Rescue Plan Act
(Subtitle M of Title IX of Pub. L.
117-2), which amends Title VI of the
Social Security Act (42 U.S.C. 801 et
seq.) by adding sections 602 and 603 to
establish the Coronavirus State Fiscal
Recovery Fund and Coronavirus Local
Fiscal Recovery Fund.
§35.2 Applicability.
This subpart applies to States,
territories, Tribal governments,
metropolitan cities, nonentitlement
units of local government, counties, and
units of general local government that
accept a payment or transfer of funds
made under section 602 or 603 of the
Social Security Act.
§35.3 Definitions.
As used in this subpart:
Baseline means tax revenue of the
recipient for its fiscal year ending in
2019, adjusted for inflation in each
reporting year using the Bureau of
Economic Analysis's Implicit Price
Deflator for the gross domestic product
of the United States.
County means a county, parish, or
other equivalent county division (as
defined by the Census Bureau).
Covered benefits include, but are not
limited to, the costs of all types of leave
(vacation, family -related, sick, military,
bereavement, sabbatical, jury duty),
employee insurance (health, life, dental,
vision), retirement (pensions, 401(k)),
unemployment benefit plans (Federal
and State), workers' compensation
insurance, and Federal Insurance
Contributions Act taxes (which includes
Social Security and Medicare taxes).
Covered change means a change in
law, regulation, or administrative
interpretation. A change in law includes
any final legislative or regulatory action,
a new or changed administrative
interpretation, and the phase -in or
taking effect of any statute or rule if the
phase -in or taking effect was not
prescribed prior to the start of the
covered period.
Covered period means, with respect to
a State, Territory, or Tribal government,
the period that:
(1) Begins on March 3, 2021; and
(2) Ends on the last day of the fiscal
year of such State, Territory, or Tribal
government in which all funds received
by the State, Territory, or Tribal
government from a payment made
under section 602 or 603 of the Social
Security Act have been expended or
returned to, or recovered by, the
Secretary.
COVID-19 means the Coronavirus
Disease 2019.
COVID-19 public health emergency
means the period beginning on January
27, 2020 and until the termination of the
national emergency concerning the
COVID-19 outbreak declared pursuant
to the National Emergencies Act (50
U.S.C. 1601 et seq.).
26820 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
Deposit means an extraordinary
payment of an accrued, unfunded
liability. The term deposit does not refer
to routine contributions made by an
employer to pension funds as part of the
employer's obligations related to
payroll, such as either a pension
contribution consisting of a normal cost
component related to current employees
or a component addressing the
amortization of unfunded liabilities
calculated by reference to the
employer's payroll costs.
Eligible employer means an employer
of an eligible worker who performs
essential work.
Eligible workers means workers
needed to maintain continuity of
operations of essential critical
infrastructure sectors, including health
care; emergency response; sanitation,
disinfection, and cleaning work;
maintenance work; grocery stores,
restaurants, food production, and food
delivery; pharmacy; biomedical
research; behavioral health work;
medical testing and diagnostics; home -
and community -based health care or
assistance with activities of daily living;
family or child care; social services
work; public health work; vital services
to Tribes; any work performed by an
employee of a State, local, or Tribal
government; educational work, school
nutrition work, and other work required
to operate a school facility; laundry
work; elections work; solid waste or
hazardous materials management,
response, and cleanup work; work
requiring physical interaction with
patients; dental care work;
transportation and warehousing; work at
hotel and commercial lodging facilities
that are used for COVID-19 mitigation
and containment; work in a mortuary;
work in critical clinical research,
development, and testing necessary for
COVID-19 response.
(1) With respect to a recipient that is
a metropolitan city, nonentitlement unit
of local government, or county, workers
in any additional sectors as each chief
executive officer of such recipient may
designate as critical to protect the health
and well-being of the residents of their
metropolitan city, nonentitlement unit
of local government, or county; or
(2) With respect to a State, Territory,
or Tribal government, workers in any
additional sectors as each Governor of a
State or Territory, or each Tribal
government, may designate as critical to
protect the health and well-being of the
residents of their State, Territory, or
Tribal government.
Essential work means work that:
(1) Is not performed while
teleworking from a residence; and
(2) Involves:
(i) Regular in -person interactions with
patients, the public, or coworkers of the
individual that is performing the work;
or
(ii) Regular physical handling of items
that were handled by, or are to be
handled by patients, the public, or
coworkers of the individual that is
performing the work.
Funds means, with respect to a
recipient, amounts provided to the
recipient pursuant to a payment made
under section 602(b) or 603(b) of the
Social Security Act or transferred to the
recipient pursuant to section 603(c)(4)
of the Social Security Act.
General revenue means money that is
received from tax revenue, current
charges, and miscellaneous general
revenue, excluding refunds and other
correcting transactions, proceeds from
issuance of debt or the sale of
investments, agency or private trust
transactions, and intergovernmental
transfers from the Federal Government,
including transfers made pursuant to
section 9901 of the American Rescue
Plan Act. General revenue does not
include revenues from utilities. Revenue
from Tribal business enterprises must be
included in general revenue.
Intergovernmental transfers means
money received from other
governments, including grants and
shared taxes.
Metropolitan city has the meaning
given that term in section 102(a)(4) of
the Housing and Community
Development Act of 1974 (42 U.S.C.
5302(a)(4)) and includes cities that
relinquish or defer their status as a
metropolitan city for purposes of
receiving allocations under section 106
of such Act (42 U.S.C. 5306) for fiscal
year2021.
Net reduction in total spending is
measured as the State or Territory's total
spending for a given reporting year
excluding its spending of funds,
subtracted from its total spending for its
fiscal year ending in 2019, adjusted for
inflation using the Bureau of Economic
Analysis's Implicit Price Deflator for the
gross domestic product of the United
States.
Nonentitlement unit of local
government means a "city," as that term
is defined in section 102(a)(5) of the
Housing and Community Development
Act of 1974 (42 U.S.C. 5302(a)(5)), that
is not a metropolitan city.
Nonprofit means a nonprofit
organization that is exempt from Federal
income taxation and that is described in
section 501(c)(3) of the Internal Revenue
Code.
Obligation means an order placed for
property and services and entering into
contracts, subawards, and similar
transactions that require payment.
Pension fund means a defined benefit
plan and does not include a defined
contribution plan.
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. Premium pay will be
considered to be in addition to wages or
remuneration the eligible worker
otherwise receives if, as measured on an
hourly rate, the premium pay is:
(1) With regard to work that the
eligible worker previously performed,
pay and remuneration equal to the sum
of all wages and remuneration
previously received plus up to $13 per
hour with no reduction, substitution,
offset, or other diminishment of the
eligible worker's previous, current, or
prospective wages or remuneration; or
(2) With regard to work that the
eligible worker continues to perform,
pay of up to $13 that is in addition to
the eligible worker's regular rate of
wages or remuneration, with no
reduction, substitution, offset, or other
diminishment of the workers' current
and prospective wages or remuneration.
Qualified census tract has the same
meaning given in 26 U.S.C.
42(d)(5)(B)(ii)(I).
Recipient means a State, Territory,
Tribal government, metropolitan city,
nonentitlement unit of local
government, county, or unit of general
local government that receives a
payment made under section 602(b) or
603(b) of the Social Security Act or
transfer pursuant to section 603(c)(4) of
the Social Security Act.
Reporting year means a single year or
partial year within the covered period,
aligned to the current fiscal year of the
State or Territory during the covered
period.
Secretary means the Secretary of the
Treasury.
State means each of the 50 States and
the District of Columbia.
Small business means a business
concern or other organization that:
(1) Has no more than 500 employees,
or if applicable, the size standard in
number of employees established by the
Administrator of the Small Business
Administration for the industry in
which the business concern or
organization operates; and
(2) Is a small business concern as
defined in section 3 of the Small
Business Act (15 U.S.C. 632).
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26821
Tax revenue means revenue received
from a compulsory contribution that is
exacted by a government for public
purposes excluding refunds and
corrections and, for purposes of § 35.8,
intergovernmental transfers. Tax
revenue does not include payments for
a special privilege granted or service
rendered, employee or employer
assessments and contributions to
finance retirement and social insurance
trust systems, or special assessments to
pay for capital improvements.
Territory means the Commonwealth
of Puerto Rico, the United States Virgin
Islands, Guam, the Commonwealth of
the Northern Mariana Islands, or
American Samoa.
Tribal enterprise means a business
concern:
(1) That is wholly owned by one or
more Tribal governments, or by a
corporation that is wholly owned by one
or more Tribal governments; or
(2) That is owned in part by one or
more Tribal governments, or by a
corporation that is wholly owned by one
or more Tribal governments, if all other
owners are either United States citizens
or small business concerns, as these
terms are used and consistent with the
definitions in 15 U.S.C. 657a(b)(2)(D).
Tribal government means the
recognized governing body of any
Indian or Alaska Native tribe, band,
nation, pueblo, village, community,
component band, or component
reservation, individually identified
(including parenthetically) in the list
published by the Bureau of Indian
Affairs on January 29, 2021, pursuant to
section 104 of the Federally Recognized
Indian Tribe List Act of 1994 (25 U.S.C.
5131).
Unemployment rate means the U-3
unemployment rate provided by the
Bureau of Labor Statistics as part of the
Local Area Unemployment Statistics
program, measured as total
unemployment as a percentage of the
civilian labor force.
Unemployment trust fund means an
unemployment trust fund established
under section 904 of the Social Security
Act (42 U.S.C. 1104).
Unit of general local government has
the meaning given to that term in
section 102(a)(1) of the Housing and
Community Development Act of 1974
(42 U.S.C. 5302(a)(1)).
Unserved and underserved
households or businesses means one or
more households or businesses that are
not currently served by a wireline
connection that reliably delivers at least
25 Mbps download speed and 3 Mbps
of upload speed.
§35.4 Reservation of authority, reporting.
(a) Reservation of authority. Nothing
in this subpart shall limit the authority
of the Secretary to take action to enforce
conditions or violations of law,
including actions necessary to prevent
evasions of this subpart.
(b) Extensions or accelerations of
timing. The Secretary may extend or
accelerate any deadline or compliance
date of this subpart, including reporting
requirements that implement this
subpart, if the Secretary determines that
such extension or acceleration is
appropriate. In determining whether an
extension or acceleration is appropriate,
the Secretary will consider the period of
time that would be extended or
accelerated and how the modified
timeline would facilitate compliance
with this subpart.
(c) Reporting and requests for other
information. During the covered period,
recipients shall provide to the Secretary
periodic reports providing detailed
accounting of the uses of funds, all
modifications to a State or Territory's
tax revenue sources, and such other
information as the Secretary may
require for the administration of this
section. In addition to regular reporting
requirements, the Secretary may request
other additional information as may be
necessary or appropriate, including as
may be necessary to prevent evasions of
the requirements of this subpart. False
statements or claims made to the
Secretary may result in criminal, civil,
or administrative sanctions, including
fines, imprisonment, civil damages and
penalties, debarment from participating
in Federal awards or contracts, and/or
any other remedy available by law.
§35.5 Use of funds.
(a) 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, subject to the restrictions set
forth in sections 602(c)(2) and 603(c)(2)
of the Social Security Act, as applicable.
(b) 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.
(c) 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.
§35.6 Eligible uses.
(a) In general. Subject to §§ 35.7 and
35.8, a recipient may use funds for one
or more of the purposes described in
paragraphs (b) through (e) of this section
(b) Responding to the public health
emergency or its negative economic
impacts. A recipient may use funds to
respond to the public health emergency
or its negative economic impacts,
including for one or more of the
following purposes:
(1) COVID-19 response and
prevention. Expenditures for the
mitigation and prevention of COVID-19,
including:
(i) Expenses related to COVID-19
vaccination programs and sites,
including staffing, acquisition of
equipment or supplies, facilities costs,
and information technology or other
administrative expenses;
(ii) COVID-19-related expenses of
public hospitals, clinics, and similar
facilities;
(iii) COVID-19 related expenses in
congregate living facilities, including
skilled nursing facilities, long-term care
facilities, incarceration settings,
homeless shelters, residential foster care
facilities, residential behavioral health
treatment, and other group living
facilities;
(iv) Expenses of establishing
temporary public medical facilities and
other measures to increase COVID-19
treatment capacity, including related
construction costs and other capital
investments in public facilities to meet
COVID-19-related operational needs;
(v) Expenses of establishing
temporary public medical facilities and
other measures to increase COVID-19
treatment capacity, including related
construction costs and other capital
investments in public facilities to meet
COVID-19-related operational needs;
(vi) Costs of providing COVID-19
testing and monitoring, contact tracing,
and monitoring of case trends and
genomic sequencing for variants;
(vii) Emergency medical response
expenses, including emergency medical
transportation, related to COVID-19;
(viii) Expenses for establishing and
operating public telemedicine
capabilities for COVID-19-related
treatment;
(ix) Expenses for communication
related to COVID-19 vaccination
programs and communication or
enforcement by recipients of public
health orders related to COVID-19;
(x) Expenses for acquisition and
distribution of medical and protective
supplies, including sanitizing products
and personal protective equipment;
(xi) Expenses for disinfection of
public areas and other facilities in
26822 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
response to the COVID-19 public health
emergency;
(xii) Expenses for technical assistance
to local authorities or other entities on
mitigation of COVID-19-related threats
to public health and safety;
(xiii) Expenses for quarantining or
isolation of individuals;
(xiv) Expenses of providing paid sick
and paid family and medical leave to
public employees to enable compliance
with COVID-19 public health
precautions;
(xv) Expenses for treatment of the
long-term symptoms or effects of
COVID-19, including post -intensive
care syndrome;
(xvi) Expenses for the improvement of
ventilation systems in congregate
settings, public health facilities, or other
public facilities;
(xvii) Expenses related to establishing
or enhancing public health data
systems; and
(xviii) Mental health treatment,
substance misuse treatment, and other
behavioral health services.
(2) Public health and safety staff.
Payroll and covered benefit expenses for
public safety, public health, health care,
human services, and similar employees
to the extent that the employee's time is
spent mitigating or responding to the
COVID-19 public health emergency.
(3) Hiring State and local government
staff. Payroll, covered benefit, and other
costs associated with the recipient
increasing the number of its employees
up to the number of employees that it
employed on January 27, 2020.
(4) Assistance to unemployed
workers. Assistance, including job
training, for individuals who want and
are available for work, including those
who have looked for work sometime in
the past 12 months or who are
employed part time but who want and
are available for full-time work.
(5) Contributions to State
unemployment insurance trust funds.
Contributions to an unemployment trust
fund up to the level required to restore
the unemployment trust fund to its
balance on January 27, 2020 or to pay
back advances received under Title XII
of the Social Security Act (42 U.S.C.
1321) for the payment of benefits
between January 27, 2020 and May 17,
2021.
(6) Small businesses. Assistance to
small businesses, including loans,
grants, in -kind assistance, technical
assistance or other services, that
responds to the negative economic
impacts of the COVID-19 public health
emergency.
(7) Nonprofits. Assistance to nonprofit
organizations, including loans, grants,
in -kind assistance, technical assistance
or other services, that responds to the
negative economic impacts of the
COVID-19 public health emergency.
(8) Assistance to households.
Assistance programs, including cash
assistance programs, that respond to the
COVID-19 public health emergency.
(9) Aid to impacted industries. Aid to
tourism, travel, hospitality, and other
impacted industries that responds to the
negative economic impacts of the
COVID-19 public health emergency.
(10) Expenses to improve efficacy of
public health or economic relief
programs. Administrative costs
associated with the recipient's COVID-
19 public health emergency assistance
programs, including services responding
to the COVID-19 public health
emergency or its negative economic
impacts, that are not federally funded.
(11) Survivor's benefits. Benefits for
the surviving family members of
individuals who have died from
COVID-19, including cash assistance to
widows, widowers, or dependents of
individuals who died of COVID-19.
(12) Disproportionately impacted
populations and communities. A
program, service, or other assistance
that is provided in a qualified census
tract, that is provided to households and
populations living in a qualified census
tract, that is provided by a Tribal
government, or that is provided to other
households, businesses, or populations
disproportionately impacted by the
COVID-19 public health emergency,
such as:
(i) Programs or services that facilitate
access to health and social services,
including:
(A) Assistance accessing or applying
for public benefits or services;
(B) Remediation of lead paint or other
lead hazards; and
(C) Community violence intervention
programs;
(ii) Programs or services that address
housing insecurity, lack of affordable
housing, or homelessness, including:
(A) Supportive housing or other
programs or services to improve access
to stable, affordable housing among
individuals who are homeless;
(B) Development of affordable
housing to increase supply of affordable
and high -quality living units; and
(C) Housing vouchers and assistance
relocating to neighborhoods with higher
levels of economic opportunity and to
reduce concentrated areas of low
economic opportunity;
(iii) Programs or services that address
or mitigate the impacts of the COVID-
19 public health emergency on
education, including:
(A) New or expanded early learning
services;
(B) Assistance to high -poverty school
districts to advance equitable funding
across districts and geographies; and
(C) Educational and evidence -based
services to address the academic, social,
emotional, and mental health needs of
students; and
(iv) Programs or services that address
or mitigate the impacts of the COVID-
19 public health emergency on
childhood health or welfare, including:
(A) New or expanded childcare;
(B) Programs to provide home visits
by health professionals, parent
educators, and social service
professionals to individuals with young
children to provide education and
assistance for economic support, health
needs, or child development; and
(C) Services for child welfare -
involved families and foster youth to
provide support and education on child
development, positive parenting, coping
skills, or recovery for mental health and
substance use.
(c) Providing premium pay to eligible
workers. A recipient may use funds to
provide premium pay to eligible
workers of the recipient who perform
essential work or to provide grants to
eligible employers, provided that any
premium pay or grants provided under
this paragraph (c) must respond to
eligible workers performing essential
work during the COVID-19 public
health emergency. A recipient uses
premium pay or grants provided under
this paragraph (c) to respond to eligible
workers performing essential work
during the COVID-19 public health
emergency if it prioritizes low- and
moderate -income persons. The recipient
must provide, whether for themselves or
on behalf of a grantee, a written
justification to the Secretary of how the
premium pay or grant provided under
this paragraph (c) responds to eligible
workers performing essential work if the
premium pay or grant would increase an
eligible worker's total wages and
remuneration above 150 percent of such
eligible worker's residing State's average
annual wage for all occupations or their
residing county's average annual wage,
whichever is higher.
(d) Providing government services. For
the provision of government services to
the extent of a reduction in the
recipient's general revenue, calculated
according to paragraphs (d)(1) and (2) of
this section.
(1) Frequency. A recipient must
calculate the reduction in its general
revenue using information as -of
December 31, 2020, December 31, 2021,
December 31, 2022, and December 31,
2023 (each, a calculation date) and
following each calculation date.
Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations 26823
(2) Calculation. A reduction in a
recipient's general revenue equals:
Max {[Base Year Revenue * (1 + Growth Adjustment)(12)] — Actual General Revenuer; 0}
Where:
Base Year Revenue is the recipient's general
revenue for the most recent full fiscal
year prior to the COVD-19 public health
emergency;
Growth Adjustment is equal to the greater of
4.1 percent (or 0.041) and the recipient's
average annual revenue growth over the
three full fiscal years prior to the
COVID-19 public health emergency.
n equals the number of months elapsed from
the end of the base year to the
calculation date.
Actual General Revenue is a recipient's
actual general revenue collected during
12 -month period ending on each
calculation date;
Subscript t denotes the specific calculation
date.
(e) To make necessary investments in
infrastructure. A recipient may use
funds to make investments in:
(1) Clean Water State Revolving Fund
and Drinking Water State Revolving
Fund investments. Projects or activities
of the type that would be eligible under
section 603(c) of the Federal Water
Pollution Control Act (33 U.S.C.
1383(c)) or section 1452 of the Safe
Drinking Water Act (42 U.S.C. 300j-12);
or,
(2) Broadband. Broadband
infrastructure that is designed to
provide service to unserved or
underserved households and businesses
and that is designed to, upon
completion:
(i) Reliably meet or exceed
symmetrical 100 Mbps download speed
and upload speeds; or
(ii) In cases where it is not
practicable, because of the excessive
cost of the project or geography or
topography of the area to be served by
the project, to provide service meeting
the standards set forth in paragraph
(e)(2)(i) of this section:
(A) Reliably meet or exceed 100 Mbps
download speed and between at least 20
Mbps and 100 Mbps upload speed; and
(B) Be scalable to a minimum of 100
Mbps download speed and 100 Mbps
upload speed.
§ 35.7 Pensions.
A recipient may not use funds for
deposit into any pension fund.
§ 35.8 Tax.
(a) Restriction. A State or Territory
shall not use funds to either directly or
indirectly offset a reduction in the net
tax revenue of the State or Territory
resulting from a covered change during
the covered period.
(b) Violation. Treasury will consider a
State or Territory to have used funds to
offset a reduction in net tax revenue if,
during a reporting year:
(1) Covered change. The State or
Territory has made a covered change
that, either based on a reasonable
statistical methodology to isolate the
impact of the covered change in actual
revenue or based on projections that use
reasonable assumptions and do not
incorporate the effects of
macroeconomic growth to reduce or
increase the projected impact of the
covered change, the State or Territory
assesses has had or predicts to have the
effect of reducing tax revenue relative to
current law;
(2) Exceeds the de minimis threshold.
The aggregate amount of the measured
or predicted reductions in tax revenue
caused by covered changes identified
under paragraph (b)(1) of this section, in
the aggregate, exceeds 1 percent of the
State's or Territory's baseline;
(3) Reduction in net tax revenue. The
State or Territory reports a reduction in
net tax revenue, measured as the
difference between actual tax revenue
and the State's or Territory's baseline,
each measured as of the end of the
reporting year; and
(4) Consideration of other changes.
The aggregate amount of measured or
predicted reductions in tax revenue
caused by covered changes is greater
than the sum of the following, in each
case, as calculated for the reporting
year:
(i) The aggregate amount of the
expected increases in tax revenue
caused by one or more covered changes
that, either based on a reasonable
statistical methodology to isolate the
impact of the covered change in actual
revenue or based on projections that use
reasonable assumptions and do not
incorporate the effects of
macroeconomic growth to reduce or
increase the projected impact of the
covered change, the State or Territory
assesses has had or predicts to have the
effect of increasing tax revenue; and
(ii) Reductions in spending, up to the
amount of the State's or Territory's net
reduction in total spending, that are in:
(A) Departments, agencies, or
authorities in which the State or
Territory is not using funds; and
(B) Departments, agencies, or
authorities in which the State or
Territory is using funds, in an amount
equal to the value of the spending cuts
in those departments, agencies, or
authorities, minus funds used.
(c) Amount and revenue reduction
cap. If a State or Territory is considered
to be in violation pursuant to paragraph
(b) of this section, the amount used in
violation of paragraph (a) of this section
is equal to the lesser of:
(1) The reduction in net tax revenue
of the State or Territory for the reporting
year, measured as the difference
between the State's or Territory's
baseline and its actual tax revenue, each
measured as of the end of the reporting
year; and,
(2) The aggregate amount of the
reductions in tax revenues caused by
covered changes identified in paragraph
(b)(1) of this section, minus the sum of
the amounts in identified in paragraphs
(b)(4)(i) and (ii).
§ 35.9 Compliance with applicable laws.
A recipient must comply with all
other applicable Federal statutes,
regulations, and Executive orders, and a
recipient shall provide for compliance
with the American Rescue Plan Act, this
subpart, and any interpretive guidance
by other parties in any agreements it
enters into with other parties relating to
these funds.
§ 35.10 Recoupment.
(a) Identification of violations —(1) In
general. Any amount used in violation
of § 35.5, § 35.6, or § 35.7 may be
identified at any time prior to December
31, 2026.
(2) Annual reporting of amounts of
violations. On an annual basis, a
recipient that is a State or Territory
must calculate and report any amounts
used in violation of § 35.8.
(b) Calculation of amounts subject to
recoupment—(1) In general. Except as
provided in paragraph (b)(2) of this
section, Treasury will calculate any
amounts subject to recoupment
resulting from a violation of § 35.5,
§ 35.6, or § 35.7 as the amounts used in
violation of such restrictions.
(2) Violations of § 35.8. Treasury will
calculate any amounts subject to
recoupment resulting from a violation of
§ 35.8, equal to the lesser of:
(i) The amount set forth in § 35.8(c);
and,
26824 Federal Register/Vol. 86, No. 93/Monday, May 17, 2021/Rules and Regulations
(ii) The amount of funds received by
such recipient.
(c) Notice. If Treasury calculates an
amount subject to recoupment under
paragraph (b) of this section, Treasury
will provide the recipient a written
notice of the amount subject to
recoupment along with an explanation
of such amounts.
(d) Request for reconsideration.
Unless Treasury extends the time
period, within 60 calendar days of
receipt of a notice of recoupment
provided under paragraph (c) of this
section, a recipient may submit a
written request to Treasury requesting
reconsideration of any amounts subject
to recoupment under paragraph (b) of
this section. To request reconsideration
of any amounts subject to recoupment,
a recipient must submit to Treasury a
written request that includes:
(1) An explanation of why the
recipient believes all or some of the
amount should not be subject to
recoupment; and
(2) A discussion of supporting
reasons, along with any additional
information.
(e) Final amount subject to
recoupment. Unless Treasury extends
the time period, within 60 calendar days
of receipt of the recipient's request for
reconsideration provided pursuant to
paragraph (d) of this section, the
recipient will be notified of the
Secretary's decision to affirm, withdraw,
or modify the notice of recoupment.
Such notification will include an
explanation of the decision, including
responses to the recipient's supporting
reasons and consideration of additional
information provided.
(f) Repayment of funds. Unless
Treasury extends the time period, a
recipient shall repay to the Secretary
any amounts subject to recoupment in
accordance with instructions provided
by Treasury:
(1) Within 120 calendar days of
receipt of the notice of recoupment
provided under paragraph (c) of this
section, in the case of a recipient that
does not submit a request for
reconsideration in accordance with the
requirements of paragraph (d) of this
section; or
(2) Within 120 calendar days of
receipt of the Secretary's decision under
paragraph (e) of this section, in the case
of a recipient that submits a request for
reconsideration in accordance with the
requirements of paragraph (d) of this
section.
§ 35.11 Payments to States.
(a) In general. With respect to any
State or Territory that has an
unemployment rate as of the date that
it submits an initial certification for
payment of funds pursuant to section
602(d)(1) of the Social Security Act that
is less than two percentage points above
its unemployment rate in February
2020, the Secretary will withhold 50
percent of the amount of funds allocated
under section 602(b) of the Social
Security Act to such State or territory
until the date that is twelve months
from the date such initial certification is
provided to the Secretary.
(b) Payment of withheld amount. In
order to receive the amount withheld
under paragraph (a) of this section, the
State or Territory must submit to the
Secretary at least 30 days prior to the
date referenced in paragraph (a) the
following information:
(1) A certification, in the form
provided by the Secretary, that such
State or Territory requires the payment
to carry out the activities specified in
section 602(c) of the Social Security Act
and will use the payment in compliance
with section 602(c) of the Social
Security Act; and,
(2) Any reports required to be filed by
that date pursuant to this subpart that
have not yet been filed.
§ 35.12 Distributions to nonentitlement
units of local government and units of
general local government.
(a) Nonentitlement units of local
government. Each State or Territory that
receives a payment from Treasury
pursuant to section 603(b)(2)(B) of the
Social Security Act shall distribute the
amount of the payment to
nonentitlement units of government in
such State or Territory in accordance
with the requirements set forth in
section 603(b)(2)(C) of the Social
Security Act and without offsetting any
debt owed by such nonentitlement units
of local governments against such
payments.
(b) Budget cap. A State or Territory
may not make a payment to a
nonentitlement unit of local government
pursuant to section 603(b)(2)(C) of the
Social Security Act and paragraph (a) of
this section in excess of the amount
equal to 75 percent of the most recent
budget for the nonentitlement unit of
local government as of January 27, 2020.
A State or Territory shall permit a
nonentitlement unit of local government
without a formal budget as of January
27, 2020, to provide a certification from
an authorized officer of the
nonentitlement unit of local government
of its most recent annual expenditures
as of January 27, 2020, and a State or
Territory may rely on such certification
for purposes of complying with this
paragraph (b).
(c) Units of general local government.
Each State or Territory that receives a
payment from Treasury pursuant to
section 603(b)(3)(B)(ii) of the Social
Security Act, in the case of an amount
to be paid to a county that is not a unit
of general local government, shall
distribute the amount of the payment to
units of general local government within
such county in accordance with the
requirements set forth in section
603(b)(3)(B)(ii) of the Social Security
Act and without offsetting any debt
owed by such units of general local
government against such payments.
(d) Additional conditions. A State or
Territory may not place additional
conditions or requirements on
distributions to nonentitlement units of
local government or units of general
local government beyond those required
by section 603 of the Social Security Act
or this subpart.
Laurie Schaffer,
Acting General Counsel.
[FR Doc. 2021-10283 Filed 5-13-21; 11:15 am]
BILLING CODE 4810 -AK -P
Compliance and
Reporting Guidance
June 24, 2021
Version: 1.1
U.S. DEPARTMENT OF THE TREASURY
Coronavirus State and Local Fiscal Recovery Funds
Guidance on Recipient Compliance and Reporting
Responsibilities
On March 11, 2021, the American Rescue Plan Act was signed into law, and established the
Coronavirus State Fiscal Recovery Fund and Coronavirus Local Fiscal Recovery Funds,
which together make up the Coronavirus State and Local Fiscal Recovery Funds ("SLFRF")
program. This program is intended to provide support to State, territorial, local, and Tribal
governments in responding to the economic and public health impacts of COVID-19 and in
their efforts to contain impacts on their communities, residents, and businesses.
This guidance provides additional detail and clarification for each recipient's compliance and
reporting responsibilities under the SLFRF program, and should be read in concert with the
Award Terms and Conditions, the authorizing statute, the SLFRF implementing regulation,
and other regulatory and statutory requirements, including regulatory requirements under the
Uniform Guidance (2 CRF Part 200). Please see the Assistance Listing in SAM.gov under
assistance listing number (formerly known as CFDA number), 21.027 for more information.
Please Note: This guidance document applies to the SLFRF program only and does not
change nor impact reporting and compliance requirements for the Coronavirus Relief Fund
("CRF") established by the CARES Act.
This guidance includes two parts:
Part 1: General Guidance
This section provides an orientation to recipients' compliance responsibilities and the U.S.
Department of the Treasury's ("Treasury") expectations and recommends best practices
where appropriate under the SLFRF Program.
A. Key Principles....................................................................................... P. 3
B. Statutory Eligible Uses............................................................................ P. 3
C. Treasury's Rulemaking............................................................................ P. 4
D. Uniform Guidance (2 CFR Part 200)........................................................... P. 6
E. Award Terms and Conditions..................................................................... P. 10
Part 2: Reporting Requirements
This section provides information on the reporting requirements for the SLFRF program.
A. Interim Report........................................................................................ P. 13
B. Project and Expenditure Report................................................................. P. 15
C. Recovery Plan Performance Report............................................................ P. 23
Appendix 1: Expenditure Categories................................................................... P. 31
Appendix 2: Evidenced -Based Intervention Additional Information ............................. P. 33
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
ON
U.S. DEPARTMENT OF THE TREASURY
Part 1: General Guidance
This section provides an orientation on recipients' compliance responsibilities and Treasury's
expectations and recommended best practices where appropriate under the SLFRF program.
Recipients under the SLFRF program are the eligible entities identified in sections 602 and
603 of the Social Security Act as added by section 9901 of the American Rescue Plan Act of
2021 (the "SLFRF statute") that receive a SLFRF award. Subrecipients under the SLFRF
program are entities that receive a subaward from a recipient to carry out the purposes
(program or project) of the SLFRF award on behalf of the recipient.
Recipients are accountable to Treasury for oversight of their subrecipients, including ensuring
their subrecipients comply with the SLFRF statute, SLFRF Award Terms and Conditions,
Treasury's Interim Final Rule, and reporting requirements, as applicable.
A. Key Principles
There are several guiding principles for developing your own effective compliance regimes
• Recipients and subrecipients are the first line of defense, and responsible for ensuring the
SLFRF award funds are not used for ineligible purposes, and there is no fraud, waste, and
abuse associated with their SLFRF award;
• Many SLFRF-funded projects respond to the COVID-19 public health emergency and
meet urgent community needs. Swift and effective implementation is vital, and recipients
must balance facilitating simple and rapid program access widely across the community
and maintaining a robust documentation and compliance regime;
• SLFRF-funded projects should advance shared interests and promote equitable delivery
of government benefits and opportunities to underserved communities, as outlined in
Executive Order 13985, On Advancing Racial Equity and Support for Underserved
Communities Through the Federal Government; and
• Transparency and public accountability for SLFRF award funds and use of such funds are
critical to upholding program integrity and trust in all levels of government, and SLFRF
award funds should be managed consistent with Administration guidance per
Memorandum M-21-20 and Memorandum M-20-21.
B. Statutory Eligible Uses
As a recipient of an SLFRF award, your organization has substantial discretion to use the
award funds in the ways that best suit the needs of your constituents — as long as such use
fits into one of the following four statutory categories:
1. To respond to the COVID-19 public health emergency or its negative economic impacts;
2. To respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to such eligible workers of the recipient, or by
providing grants to eligible employers that have eligible workers who performed essential
work;
3. For the provision of government services, to the extent of the reduction in revenue of such
recipient due to the COVID-19 public health emergency, relative to revenues collected in
the most recent full fiscal year of the recipient prior to the emergency; and
4. To make necessary investments in water, sewer, or broadband infrastructure.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
-� U.S. DEPARTMENT OF THE TREASURY
Treasury adopted an Interim Final Rule to implement these eligible use categories and other
restrictions on the use of funds under the SLFRF program.' It is the recipient's responsibility
to ensure all SLFRF award funds are used in compliance with these requirements. In addition,
recipients should be mindful of any additional compliance obligations that may apply — for
example, additional restrictions imposed upon other sources of funds used in conjunction with
SLFRF award funds, or statutes and regulations that may independently apply to water,
broadband, and sewer infrastructure projects. Recipients should ensure they maintain proper
documentation supporting determinations of costs and applicable compliance requirements,
and how they have been satisfied as part of their award management, internal controls, and
subrecipient oversight and management.
C. Treasury's Rule
Treasury's Interim Final Rule details recipients' compliance responsibilities and provides
additional information on eligible and restricted uses of SLFRF award funds and reporting
requirements. Your organization should review and comply with the information contained in
Treasury's Interim Final Rule, and any subsequent final rule when building appropriate
controls for SLFRF award funds.
1. Eligible and Restricted Uses of SLFRF Funds. As described in the SLFRF statute and
summarized above, there are four enumerated eligible uses of SLFRF award funds. As a
recipient of an award under the SLFRF program, your organization is responsible for
complying with requirements for the use of funds. In addition to determining a given
project's eligibility, recipients are also responsible for determining subrecipient's or
beneficiaries' eligibility and must monitor use of SLFRF award funds.
To help recipients build a greater understanding of eligible uses, Treasury's Interim Final
Rule establishes a framework for determining whether a specific project would be eligible
under the SLFRF program, including some helpful definitions. For example, Treasury's
Interim Final Rule establishes:
• A framework for determining whether a project "responds to" a "negative economic
impact" caused by the COVID-19 public health emergency;
• Definitions of "eligible employers", "essential work," "eligible workers", and "premium
pay" for cases where premium pay is an eligible use;
• A definition of "general revenue" and a formula for calculating revenue lost due to the
COVID-19 public health emergency;
• A framework for eligible water and sewer infrastructure projects that aligns eligible uses
with projects that are eligible under the Environmental Protection Agency's Drinking
Water and Clean Water State Revolving Funds; and
• A framework for eligible broadband projects designed to provide service to unserved
or underserved households, or businesses at speeds sufficient to enable users to
generally meet household needs, including the ability to support the simultaneous use
of work, education, and health applications, and also sufficiently robust to meet
increasing household demands for bandwidth.
Treasury's Interim Final Rule also provides more information on four important restrictions
on use of SLFRF award funds: recipients may not deposit SLFRF funds into a pension
fund; recipients that are States or territories may not use SLFRF funds to offset a reduction
in net tax revenue caused by the recipient's change in law, regulation, or administrative
1 Treasury's Interim Final Rule is effective as of May 17, 2021, and public comments are due July 16,
2021. This guidance may be clarified consistent with the final rule.
httis://www.govinfo.gov/content/pkg/FR-202 1-05-1 7/pdf/202 1-1 0283.pdf
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
4
-� U.S. DEPARTMENT OF THE TREASURY
interpretation; and, recipients may not use SLFRF funds as non -Federal match where
prohibited. In addition, the Interim Final Rule clarifies certain uses of SLFRF funds outside
the scope of eligible uses, including that recipients generally may not use SLFRF funds
directly to service debt, satisfy a judgment or settlement, or contribute to a "rainy day" fund.
Recipients should refer to Treasury's Interim Final Rule for more information on these
restrictions.
2. Eligible Costs Timeframe. Your organization, as a recipient of an SLFRF award, may
use SLFRF funds to cover eligible costs that your organization incurred during the period
that begins on March 3, 2021 and ends on December 31, 2024, as long as the award funds
for the obligations incurred by December 31, 2024 are expended by December 31, 2026.
Costs for projects incurred by the recipient State, territorial, local, or Tribal government
prior to March 3, 2021 are not eligible, as provided for in Treasury's Interim Final Rule.
Recipients may use SLFRF award funds to provide assistance to households,
businesses, and individuals within the eligible use categories described in Treasury's
Interim Final Rule for costs that those households, businesses and individuals incurred
prior to March 3, 2021. For example,
a. Public Health/Negative Economic Impacts: Recipients may use SLFRF award funds
to provide assistance to households — such as rent, mortgage, or utility assistance —
for costs incurred by the household prior to March 3, 2021, provided that the recipient
State, territorial, local or Tribal government did not incur the cost of providing such
assistance prior to March 3, 2021.
b. Premium Pay: Recipients may provide premium pay retrospectively for work
performed at any time since the start of the COVID-19 public health emergency.
Such premium pay must be "in addition to" wages and remuneration already received
and the obligation to provide such pay must not have been incurred by the recipient
prior to March 3, 2021.
c. Revenue Loss: Treasury's Interim Final Rule gives recipients broad latitude to use
funds for the provision of government services to the extent of reduction in revenue.
While calculation of lost revenue begins with the recipient's revenue in the last full
fiscal year prior to the COVID-19 public health emergency and includes the 12 -month
period ending December 31, 2020, use of funds for government services must be
forward looking for costs incurred by the recipient after March 3, 2021.
d. Investments in Water, Sewer, and Broadband: Recipients may use SLFRF award
funds to make necessary investments in water, sewer, and broadband. Recipients
may use SLFRF award funds to cover costs incurred for eligible projects planned or
started prior to March 3, 2021, provided that the project costs covered by the SLFRF
award funds were incurred after March 3, 2021.
Any funds not obligated or expended for eligible uses by the timelines above must be
returned to Treasury, including any unobligated or unexpended funds that have been
provided to subrecipients and contractors. For the purposes of determining expenditure
eligibility, Treasury's Interim Final Rule provides that "incurred" has the same meaning
given to "financial obligation" in 2 CFR § 200.1.
3. Reporting. Generally, recipients must submit one initial interim report, quarterly or annual
Project and Expenditure reports which include subaward reporting, and in some cases
annual Recovery Plan reports. Treasury's Interim Final Rule and Part 2 of this guidance
provide more detail around SLFRF reporting requirements.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
U.S. DEPARTMENT OF THE TREASURY
Assistance Listing
The Assistance Listing for the Coronavirus State and Local Fiscal Recovery Funds
(CSLFRF) was published May 28, 2021 on SAM.gov under Assistance Listing Number
("ALN"), formerly known as CFDA Number, 21.027.
The assistance listing includes helpful information including program purpose, statutory
authority, eligibility requirements, and compliance requirements for recipients. The ALN
is the unique 5 -digit number assigned to identify a federal assistance listing, and can be
used to search for federal assistance program information, including funding
opportunities, spending on USASpending.gov, or audit results through the Federal Audit
Clearinghouse.
To expedite payments and meet statutory timelines Treasury issued initial payments
under an existing ALN, 21.019, assigned to the CRF. If you have already received funds
or captured the initial number in your records, please update your systems and reporting
to reflect the new ALN 21.027 for the SLFRF program. Recipients must use ALN
21.027 for all financial accounting, subawards, and associated program reporting
requirements for the SLFRF awards.
D. Uniform Administrative Requirements
The SLFRF awards are generally subject to the requirements set forth in the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, 2
CFR Part 200 (the "Uniform Guidance"). In all instances, your organization should review the
Uniform Guidance requirements applicable to your organization's use of SLFRF funds, and
SLFRF-funded projects. Recipients should consider how and whether certain aspects of the
Uniform Guidance apply.
The following sections provide a general summary of your organization's compliance
responsibilities under applicable statutes and regulations, including the Uniform Guidance, as
described in the 2020 OMB Compliance Supplement Part 3. Compliance Requirements
(issued August 18, 2020). Note that the descriptions below are only general summaries and
all recipients and subrecipients are advised to carefully review the Uniform Guidance
requirements and any additional regulatory and statutory requirements applicable to the
program.
1. Allowable Activities. Each recipient should review program requirements, including
Treasury's Interim Final Rule and the recipient's Award Terms and Conditions, to
determine and record eligible uses of SLFRF funds. Per 2 CFR 200.303, your organization
must develop and implement effective internal controls to ensure that funding decisions
under the SLFRF award constitute eligible uses of funds, and document determinations.
2. Allowable Costs/Cost Principles. As outlined in the Uniform Guidance at 2 CFR Part
200, Subpart E regarding Cost Principles, allowable costs are based on the premise that
a recipient is responsible for the effective administration of Federal awards, application of
sound management practices, and administration of Federal funds in a manner consistent
with the program objectives and terms and conditions of the award. Recipients must
implement robust internal controls and effective monitoring to ensure compliance with the
Cost Principles, which are important for building trust and accountability.
Coronavirus State and Local Fiscal Recovery Funds
Compliance and Reporting Guidance
-� U.S. DEPARTMENT OF THE TREASURY
SLFRF Funds may be, but are not required to be, used along with other funding sources
for a given project. Note that SLFRF Funds may not be used for a non -Federal cost share
or match where prohibited by other Federal programs, e.g., funds may not be used for the
State share for Medicaid.2
Treasury's Interim Final Rule and guidance and the Uniform Guidance outline the types of
costs that are allowable, including certain audit costs. For example, per 2 CFR 200.425,
a reasonably proportionate share of the costs of audits required by the Single Audit Act
Amendments of 1996 are allowable; however, costs for audits that were not performed, or
not in accordance with 2 CFR Part 200, Subpart F are not allowable. Please see 2 CFR
Part 200, Subpart E regarding the Cost Principles for more information.
a. Administrative costs: Recipients may use funds for administering the SLFRF
program, including costs of consultants to support effective management and
oversight, including consultation for ensuring compliance with legal, regulatory, and
other requirements.3 Further, costs must be reasonable and allocable as outlined in 2
CFR 200.404 and 2 CFR 200.405. Pursuant to the SLFRF Award Terms and
Conditions, recipients are permitted to charge both direct and indirect costs to their
SLFRF award as administrative costs. Direct costs are those that are identified
specifically as costs of implementing the SLFRF program objectives, such as
contract support, materials, and supplies for a project. Indirect costs are general
overhead costs of an organization where a portion of such costs are allocable to the
SLFRF award such as the cost of facilities or administrative functions like a director's
office.45 Each category of cost should be treated consistently in like circumstances as
direct or indirect, and recipients may not charge the same administrative costs to
both direct and indirect cost categories, or to other programs. If a recipient has a
current Negotiated Indirect Costs Rate Agreement (NICRA) established with a
Federal cognizant agency responsible for reviewing, negotiating, and approving cost
allocation plans or indirect cost proposals, then the recipient may use its current
NICRA. Alternatively, if the recipient does not have a NICRA, the recipient may elect
to use the de minimis rate of 10 percent of the modified total direct costs pursuant to
2 CFR 200.414(f).
b. Salaries and Expenses: In general, certain employees' wages, salaries, and covered
benefits are an eligible use of SLFRF award funds. Please see Treasury's Interim
Final Rule for details.
3. Cash Management. SLFRF payments made to recipients are not subject to the
requirements of the Cash Management Improvement Act and Treasury's implementing
regulations at 31 CFR part 205 or 2 CFR 200.305(b)(8)-(9).
As such, recipients can place funds in interest -bearing accounts, do not need to remit
interest to Treasury, and are not limited to using that interest for eligible uses under the
SLFRF award.
4. Eligibility. Under this program, recipients are responsible for ensuring funds are used for
eligible purposes. Generally, recipients must develop and implement policies and
procedures, and record retention, to determine and monitor implementation of criteria for
2 See 42 CFR 433.51 and 45 CFR 75.306.
3 Recipients also may use SLFRF funds directly for administrative costs to improve efficacy of
programs that respond to the COVID-19 public health emergency. 31 CFR 35.6(b)(10).
4 2 CFR 200.413 Direct Costs.
5 2 CFR 200.414 Indirect Costs.
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determining the eligibility of beneficiaries and/or subrecipients. Your organization, and if
applicable, the subrecipient(s) administering a program on behalf of your organization, will
need to maintain procedures for obtaining information evidencing a given beneficiary,
subrecipient, or contractor's eligibility including a valid SAM.gov registration. Implementing
risk -based due diligence for eligibility determinations is a best practice to augment your
organization's existing controls.
5. Equipment and Real Property Management. Any purchase of equipment or real
property with SLFRF funds must be consistent with the Uniform Guidance at 2 CFR Part
200, Subpart D. Equipment and real property acquired under this program must be used
for the originally authorized purpose. Consistent with 2 CFR 200.311 and 2 CFR 200.313,
any equipment or real property acquired using SLFRF funds shall vest in the non -Federal
entity. Any acquisition and maintenance of equipment or real property must also be in
compliance with relevant laws and regulations.
6. Matching, Level of Effort, Earmarking. There are no matching, level of effort, or
earmarking compliance responsibilities associated with the SLFRF award. SLFRF funds
may only be used for non -Federal match in other programs where costs are eligible under
both SLFRF and the other program and use of such funds is not prohibited by the other
program.
7. Period of Performance. Your organization should also develop and implement internal
controls related to activities occurring outside the period of performance. For example,
each recipient should articulate each project's policy on allowability of costs incurred prior
to award or start of the period of performance. All funds remain subject to statutory
requirements that they must be used for costs incurred by the recipient during the period
that begins on March 3, 2021, and ends on December 31, 2024, and that award funds for
the financial obligations incurred by December 31, 2024 must be expended by December
31, 2026. Any funds not used must be returned to Treasury.
8. Procurement, Suspension & Debarment. Recipients are responsible for ensuring that
any procurement using SLFRF funds, or payments under procurement contracts using
such funds are consistent with the procurement standards set forth in the Uniform
Guidance at 2 CFR 200.317 through 2 CFR 200.327, as applicable. The Uniform Guidance
establishes in 2 CFR 200.319 that all procurement transactions for property or services
must be conducted in a manner providing full and open competition, consistent with
standards outlined in 2 CFR 200.320, which allows for non-competitive procurements only
in circumstances where at least one of the conditions below is true: the item is below the
micro -purchase threshold; the item is only available from a single source; the public
exigency or emergency will not permit a delay from publicizing a competitive solicitation;
or after solicitation of a number of sources, competition is determined inadequate.6
Recipients must have and use documented procurement procedures that are consistent
with the standards outlined in 2 CFR 200.317 through 2 CFR 200.320. The Uniform
Guidance requires an infrastructure for competitive bidding and contractor oversight,
including maintaining written standards of conduct and prohibitions on dealing with
suspended or debarred parties. Your organization must ensure adherence to all applicable
local, State, and federal procurement laws and regulations.
9. Program Income. Generally, program income includes, but is not limited to, income from
fees for services performed, the use or rental or real or personal property acquired under
Federal awards and principal and interest on loans made with Federal award funds.
Program income does not include interest earned on advances of Federal funds, rebates,
credits, discounts, or interest on rebates, credits, or discounts. Recipients of SLFRF funds
6 2 CFR 200.320(c)(1)-(3) and (5)
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should calculate, document, and record the organization's program income. Additional
controls that your organization should implement include written policies that explicitly
identify appropriate allocation methods, accounting standards and principles, compliance
monitoring checks for program income calculations, and records.
The Uniform Guidance outlines the requirements that pertain to program income at 2 CFR
200.307. Treasury intends to provide additional guidance regarding program income and
the application of 2 CFR 200.307(e)(1), including with respect to lending programs.
10. Reporting. All recipients of federal funds must complete financial, performance, and
compliance reporting as required and outlined in Part 2 of this guidance. Expenditures
may be reported on a cash or accrual basis, as long as the methodology is disclosed and
consistently applied. Reporting must be consistent with the definition of expenditures
pursuant to 2 CFR 200.1. Your organization should appropriately maintain accounting
records for compiling and reporting accurate, compliant financial data, in accordance with
appropriate accounting standards and principles.
In addition, where appropriate, your organization needs to establish controls to ensure
completion and timely submission of all mandatory performance and/or compliance
reporting. See Part 2 of this guidance for a full overview of recipient reporting
responsibilities.
11. Subrecipient Monitoring. SLFRF recipients that are pass -through entities as defined
under 2 CFR 200.1 are required to manage and monitor their subrecipients to ensure
compliance with requirements of the SLFRF award pursuant to 2 CFR 200.332 regarding
requirements for pass -through entities.
First, your organization must clearly identify to the subrecipient: (1) that the award is a
subaward of SLFRF funds; (2) any and all compliance requirements for use of SLFRF
funds; and (3) any and all reporting requirements for expenditures of SLFRF funds.
Next, your organization will need to evaluate each subrecipient's risk of noncompliance
based on a set of common factors. These risk assessments may include factors such as
prior experience in managing Federal funds, previous audits, personnel, and policies or
procedures for award execution and oversight. Ongoing monitoring of any given
subrecipient should reflect its assessed risk and include monitoring, identification of
deficiencies, and follow-up to ensure appropriate remediation.
Accordingly, your organization should develop written policies and procedures for
subrecipient monitoring and risk assessment and maintain records of all award
agreements identifying or otherwise documenting subrecipients' compliance obligations.
12. Special Tests and Provisions. Treasury has set a deadline of July 16, 2021, for receipt
of public comment on its Interim Final Rule and will adopt a final rule responding to these
comments. In addition, Treasury may add clarifications to the implementing guidance.
Across each of the compliance requirements above, Treasury described some best practices
for development of internal controls. The table below provides a brief description and example
of each best practice.
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Table 1: Internal controls best practices
Written policies and
Formal documentation of
Documented procedure for
procedures
recipient policies and
determining worker eligibility
procedures
for premium pay
Written standards of conduct
Formal statement of mission,
Documented code of conduct /
values, principles, and
ethics for subcontractors
professional standards
Risk -based due diligence
Pre -payment validations
Enhanced eligibility review of
conducted according to an
subrecipient with imperfect
assessed level of risk
performance history
Risk -based compliance
Ongoing validations conducted
Higher degree of monitoring for
monitoring
according to an assessed level
projects that have a higher risk
of risk
of fraud, given program
characteristics
Record maintenance and
Creation and storage of
Storage of all subrecipient
retention
financial and non -financial
payment information.
records.
E. Award Terms and Conditions
The Award Terms and Conditions of the SLFRF financial assistance agreement sets forth the
compliance obligations for recipients pursuant to the SLFRF statute, the Uniform Guidance,
and Treasury's Interim Final Rule. Recipients should ensure they remain in compliance with
all Award Terms and Conditions. These obligations include the following items in addition to
those described above:
1. SAM.gov Requirements. All eligible recipients are also required to have an active
registration with the System for Award Management (SAM) (https://www.sam.gov). To
ensure timely receipt of funding, Treasury has stated that Non -entitlement Units of
Government (NEUs) who have not previously registered with SAM.gov may do so after
receipt of the award, but before the submission of mandatory reporting.7
2. Recordkeeping Requirements. Generally, your organization must maintain records and
financial documents for five years after all funds have been expended or returned to
Treasury, as outlined in paragraph 4.c. of the Award Terms and Conditions. Treasury may
request transfer of records of long-term value at the end of such period. Wherever
practicable, such records should be collected, transmitted, and stored in open and
machine-readable formats.
Your organization must agree to provide or make available such records to Treasury upon
request, and to any authorized oversight body, including but not limited to the Government
Accountability Office ("GAO"), Treasury's Office of Inspector General ("OIG"), and the
Pandemic Relief Accountability Committee ("PRAC").
3. Single Audit Requirements. Recipients and subrecipients that expend more than
$750,000 in Federal awards during their fiscal year will be subject to an audit under the
Single Audit Act and its implementing regulation at 2 CFR Part 200, Subpart F regarding
audit requirements.8 Recipients and subrecipients may also refer to the Office of
See flexibility provided in https://www.whitehouse.gov/wp-content/uploads/2021/03/M_21_20.pdf.
8 For-profit entities that receive SLFRF subawards are not subject to Single Audit requirements.
However, they are subject to other audits as deemed necessary by authorized governmental entities,
including Treasury, the GAO, the PRAC and the Treasury's 0IG.
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Management and Budget (OMB) Compliance Supplements for audits of federal funds and
related guidance and the Federal Audit Clearinghouse to see examples and single audit
submissions.
4. Civil Rights Compliance. Recipients of Federal financial assistance from the Treasury
are required to meet legal requirements relating to nondiscrimination and
nondiscriminatory use of Federal funds. Those requirements include ensuring that entities
receiving Federal financial assistance from the Treasury do not deny benefits or services,
or otherwise discriminate on the basis of race, color, national origin (including limited
English proficiency), disability, age, or sex (including sexual orientation and gender
identity), in accordance with the following authorities: Title VI of the Civil Rights Act of 1964
(Title VI) Public Law 88-352, 42 U.S.C. 2000d-1 et seq., and the Department's
implementing regulations, 31 CFR part 22; Section 504 of the Rehabilitation Act of 1973
(Section 504), Public Law 93-112, as amended by Public Law 93-516, 29 U.S.C. 794; Title
IX of the Education Amendments of 1972 (Title IX), 20 U.S.C. 1681 et seq., and the
Department's implementing regulations, 31 CFR part 28; Age Discrimination Act of 1975,
Public Law 94-135, 42 U.S.C. 6101 et seq., and the Department implementing regulations
at 31 CFR part 23.
In order to carry out its enforcement responsibilities under Title VI of the Civil Rights Act,
Treasury will collect and review information from recipients to ascertain their compliance
with the applicable requirements before and after providing financial assistance.
Treasury's implementing regulations, 31 CFR part 22, and the Department of Justice
(DOJ) regulations, Coordination of Non-discrimination in Federally Assisted Programs, 28
CFR part 42, provide for the collection of data and information from recipients (see 28 CFR
42.406). Treasury may request that recipients submit data for post -award compliance
reviews, including information such as a narrative describing their Title VI compliance
status.
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Part 2: Reporting Guidance
There are three types of reporting requirements for the SLFRF program.
Interim Report: Provide initial overview of status and uses of funding. This is a one-time
report. See Section A, page 13.
• Project and Expenditure Report: Report on projects funded, expenditures, and contracts
and subawards over $50,000, and other information. See Section B, page 15.
Recovery Plan Performance Report: The Recovery Plan Performance Report (the
"Recovery Plan") will provide information on the projects that large recipients are
undertaking with program funding and how they plan to ensure program outcomes are
achieved in an effective, efficient, and equitable manner. It will include key performance
indicators identified by the recipient and some mandatory indicators identified by
Treasury. The Recovery Plan will be posted on the website of the recipient as well as
provided to Treasury. See Section C, page 23.
Table 2: Reporting requirements by recipient type
..
States, U.S. territories,
By August 31,
..
By October 31,
-..
By August 31,
metropolitan cities and counties
2021, with
2021, and then
2021, and
with a population that exceeds
expenditures
30 days after the
annually
250,000 residents
by category
end of each
thereafter by
quarter
thereafter9
July 31 10
Metropolitan cities and counties
Not required
with a population below 250,000
residents which received more
than $5 million in SLFRF funding
Tribal Governments
Metropolitan cities and counties
By October 31,
with a population below 250,000
2021, and then
residents which received less than
annually
$5 million in SLFRF funding
thereafter"
NEUs
Not required
The remainder of this document describes these reporting requirements. A users' guide will
be provided with additional information on how and where to submit required reports.
9 Interim Final Rule Page 111
10 Interim Final Rule page 112
11 Interim Final Rule Page 111
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Comparison to reporting for the CRF
This guidance does not change the reporting or compliance requirements pertaining to
the CRF. Reporting and compliance requirements for the SLFRF are separate from
CRF reporting requirements. Changes from CRF to SLFRF include:
Project, Expenditure, and Subaward Reporting: The SLFRF reporting
requirements leverage the existing reporting regime used for CRF to foster
continuity and provide many recipients with a familiar reporting mechanism. The
data elements for the Project and Expenditure Report will largely mirror those used
for CRF, with some minor exceptions noted in this guidance. The users' guide will
describe how reporting for CRF funds will relate to reporting for the SLFRF.
• Timing of Reports: CRF reports were due within 10 days of each calendar
quarter. SLFRF quarterly reporting will be due 30 days from quarter end.
• Program and Performance Reporting: The CRF reporting did not include any
program or performance reporting. To build public awareness and accountability
and allow Treasury to monitor compliance with eligible uses, some program and
performance reporting is required.
A. Interim Report
States, U.S. territories, metropolitan cities, counties, and Tribal governments are required to
submit a one-time interim report with expenditures12 by Expenditure Category from the date
of award to July 31, 2021. The recipient will be required to enter obligations13 and
expenditures and, for each, select the specific expenditure category from the available options.
See Appendix 1 for Expenditure Categories (EC).
1. Required Programmatic Data
Recipients will also be required to provide the following information if they have or plan to have
expenditures in the following Expenditure Categories.
a. Revenue replacement (EC 6.11: Key inputs into the revenue replacement formula in the
Interim Final Rule and estimated revenue loss due to the Covid-19 public health
emergency calculated using the formula in the Interim Final Rule as of December 31,
2020.
• Base year general revenue (e.g., revenue in the last full fiscal year prior to the public
health emergency)
• Fiscal year end date
• Growth adjustment used (either 4.1 percent or average annual general revenue growth
over 3 years prior to pandemic)
• Actual general revenue as of the twelve months ended December 31, 2020
• Estimated revenue loss due to the Covid-19 public health emergency as of December
31, 2020
• An explanation of how revenue replacement funds were allocated to government
services (Note: additional instructions and/or template to be provided in users' guide)
12 For purposes of reporting in the SLFRF portal, an expenditure is the amount that has been incurred
as a liability of the entity (the service has been rendered or the good has been delivered to the entity).
13 For purposes of reporting in the SLFRF portal, an obligation is an order placed for property and
services, contracts and subawards made, and similar transactions that require payment.
14 See Appendix 1 for the full Expenditure Category (EC) list. References to Expenditure Categories
are identified by "EC" followed by numbers from the table in Appendix 1.
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In calculating general revenue and the other items discussed above, recipients should
use audited data if it is available. When audited data is not available, recipients are not
required to obtain audited data if substantially accurate figures can be produced on an
unaudited basis. Recipients should use their own data sources to calculate general
revenue, and do not need to rely on revenue data published by the Census Bureau.
Treasury acknowledges that due to differences in timing, data sources, and definitions,
recipients' self -reported general revenue figures may differ from those published by the
Census Bureau. Recipients 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. Recipients' reporting should
align with their own financial reporting.
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 CRF or SLFRF. To the extent federal funds are
passed through States or other entities or intermingled with other funds, recipients
should attempt to identify and exclude the federal portion of those funds from the
calculation of general revenue on a best-efforts basis.
Consistent with the broad latitude provided to recipients to use funds for government
services to the extent of reduction in revenue, recipients will be required to submit a
description of services provided. This description may be in narrative or in another form,
and recipients are encouraged to report based on their existing budget processes and to
minimize administrative burden. For example, a recipient with $100 in revenue
replacement funds available could indicate that $50 were used for law enforcement
operating expenses and $50 were used for pay -go building of sidewalk infrastructure. As
discussed in the Interim Final Rule, these services can include a broad range of services
but may not be used directly for pension deposits or debt service.
Reporting requirements will not require tracking the indirect effects of Fiscal Recovery
Funds, apart from the restrictions on use of Fiscal Recovery Funds to offset a reduction
in net tax revenue. In addition, recipients must indicate that Fiscal Recovery Funds were
not used to make a deposit in a pension fund.
b. Distributions to NEUs - States and territories only (EC 7.4): Information on SLFRF
distributions to eligible NEUs. Each State and territory will be asked to provide an
update on distributions to individual NEUs, including whether the NEU has (1) received
funding; (2) declined funding and requested a transfer to the State under Section
603(c)(4) of the Act; or (3) not taken action on its funding. States and territories should
be prepared to report on their information, including the following:
• NEU name
• NEU DUNS number
• NEU Taxpayer Identification Number (TIN)
• NEU Recipient Number (a unique identification code for each NEU assigned by the
State to the NEU as part of the request for funding)
• NEU contact information (e.g., address, point of contact name, point of contact email
address, and point of contact phone number)
• NEU authorized representative name and email address
• Initial allocation and, if applicable, subsequent allocation to the NEU (before
application of the 75 percent cap)
• Total NEU reference budget (as submitted by the NEU to the State as part of the
request for funding)
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Amount of the initial and, if applicable, subsequent allocation above 75 percent of the
NEU's reference budget which will be returned to Treasury
Payment amount(s)
Payment date(s)
For each eligible NEU that declined funding and requested a transfer to the State under
Section 603(c)(4), the State must also attach a form signed by the NEU, as detailed in
the Guidance on Distributions of Funds to Non -Entitlement Units of Local Government.
States with "weak" minor civil divisions (i.e., Illinois, Indiana, Kansas, Missouri,
Nebraska, North Dakota, Ohio, and South Dakota) should also list any minor civil
divisions that the State deemed ineligible.
B. Project and Expenditure Report
All recipients are required to submit Project and Expenditure Reports.
1. Quarterly Reporting
The following recipients are required to submit quarterly Project and Expenditure Reports:
• States, U.S. territories, and Tribal governments
• Metropolitan cities and counties that received more than $5 million in SLFRF funding
For these recipients, the initial quarterly Project and Expenditure Report will cover two
calendar quarters from the date of award to September 30, 2021 and must be submitted to
Treasury by October 31, 2021. The subsequent quarterly reports will cover one calendar
quarter and must be submitted to Treasury within 30 calendar days after the end of each
calendar quarter. Quarterly reports are not due concurrently with applicable annual reports.
The table below summarizes the quarterly report timelines:
..
1
2021
2 and 3
..
I Award Date — September 30
�.
October 31, 2021
2
2021
4
October 1 — December 31
January 31, 2022
3
2022
1
January 1 — March 31
April 30, 2022
4
2022
2
April 1 — June 30
Jul 31, 2022
5
2022
3
Jul 1 - September 30
October 31, 2022
6
2022
4
October 1 — December 31
January 31, 2023
7
2023
1
January 1 — March 31
April 30, 2023
8
2023
2
April 1 — June 30
July 31, 2023
9
2023
3
July 1 - September 30
October 31, 2023
10
2023
4
October 1 — December 31
January 31, 2024
11
2024
1
January 1 — March 31
April 30, 2024
12
2024
2
April 1 — June 30
Jul 31, 2024
13
2024
3
Jul 1 - September 30
October 31, 2024
14
2024
4
October 1 — December 31
January 31, 2025
15
2025
1
January 1 — March 31
April 30, 2025
16
2025
2
Aril 1 — June 30
Jul 31, 2025
17
2025
3
Jul 1 — September 30
October 31, 2025
18
2025
4
October 1 — December 31
January 31, 2026
19
2026
1
January 1 — March 31
April 30, 2026
20
2026
2
April 1 — June 30
Jul 31, 2026
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2. Annual Reporting
The following recipients are required to submit annual Project and Expenditure Reports:
• Metropolitan cities and counties that received less than $5 million in SLFRF funding.
• NEUs. To facilitate reporting, each NEU will need a NEU Recipient Number. This is a
unique identification code for each NEU assigned by the State to the NEU as part of its
request for funding.
For these recipients, the initial Project and Expenditure Report will cover from the date of
award to September 30, 2021 and must be submitted to Treasury by October 31, 2021. The
subsequent annual reports will cover one calendar year and must be submitted to Treasury
by October 31. The table below summarizes the report timelines:
ti..
1
..
Award Date — September 30, 2021
..
October 31, 2021
2
October 1, 2021 — September 30, 2022
October 31, 2022
3
October 1, 2022 - September 30, 2023
October 31, 2023
4
October 1, 2023 - September 30, 2024
October 31, 2024
5
October 1, 2024 — September 30, 2025
October 31, 2025
6
October 1, 2025 — September 30, 2026
October 31, 2026
7
October 1, 2026 — December 31, 2026
March 31, 2027
3. Required Information
The following information will be required in Project and Expenditure Reports:
a. Projects: Provide information on all SLFRF funded projects. Projects are new or existing
eligible government services or investments funded in whole or in part by SLFRF funding.
For each project, the recipient will be required to enter the project name, identification
number (created by the recipient), project expenditure category (see Appendix 1),
description, and status of completion. Project descriptions must describe the project in
sufficient detail to provide understanding of the major activities that will occur, and will be
required to be between 50 and 250 words. Projects should be defined to include only
closely related activities directed toward a common purpose. In particular, recipients should
review the Required Programmatic Data described below and define their projects at a
sufficient level of granularity to report these metrics for a reasonably specific activity or set
of activities in each project.
Note: For each project, the recipient will be asked to select the appropriate Expenditure
Category based on the scope of the project (see Appendix 1). Projects should be scoped
to align to a single Expenditure Category. For select Expenditure Categories, the recipient
will also be asked to provide additional programmatic data (described further below).
b. Expenditures: Once a project is entered the recipient will be able to report on the project's
obligations and expenditures. Recipients will be asked to report:
• Current period obligation
• Cumulative obligation
• Current period expenditure
• Cumulative expenditure
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Project Status: Once a project is entered the recipient will be asked to report on project
status each reporting period, in four categories:
• Not Started
• Completed less than 50 percent
• Completed 50 percent or more
• Completed
d. Project Demographic Distribution: Recognizing the disproportionate impact of the
pandemic -related recession on low-income communities, recipients must report whether
certain types of projects15 are targeted to economically disadvantaged communities, as
defined by HUD's Qualified Census Tract.16 Recipients will be asked to identify whether or
not the project is serving an economically disadvantaged community. To minimize the
administrative burden on recipients while ensuring that this important aspect of program
performance is tracked, recipients may assume that the funds for a project count as being
targeted towards economically disadvantaged communities if the project funds are spent
on:
• A program or service is provided at a physical location in a Qualified Census Tract (for
multi -site projects, if a majority of sites are within Qualified Census Tracts);
• A program or service where the primary intended beneficiaries live within a Qualified
Census Tract;
• A program or service for which the eligibility criteria are such that the primary intended
beneficiaries earn less than 60 percent of the median income for the relevant
jurisdiction (e.g., State, county, metropolitan area, or other jurisdiction); or
• A program or service for which the eligibility criteria are such that over 25 percent of
intended beneficiaries are below the federal poverty line.
Recipients may use reasonable estimates to determine if a project meets one of these
criteria, including identifying the intended beneficiaries of a program or service in terms of
income characteristics, geographic location, or otherwise estimating the beneficiaries of a
program based on its eligibility criteria. Recipients do not need to track information on
each individual beneficiary to make the determination of whether or not the project is
serving an economically disadvantaged community. If a recipient is unable to measure
economic characteristics of the primary intended beneficiaries of a program or service
due to data limitations or for other reasons, that program or service may not be counted
as targeted to economically disadvantaged communities. Treasury recognizes that in
some circumstances, recipients may fund eligible programs or services that benefit
economically disadvantaged communities but may lack adequate data to assess
conclusively that such a program or service is targeted to economically disadvantaged
communities based on the criteria described above.
e. Subawards: Each recipient shall also provide detailed obligation and expenditure
information for any contracts and grants awarded, loans issued, transfers made to other
government entities, and direct payments made by the recipient that are greater than or
equal to $50,000.
15 Specifically recipients must report this information for projects in the Expenditure Categories that
are marked with "^" in the expenditure category listing in Appendix 1 of this guidance
16 HUD defines as a 0CT as having "50 percent of households with incomes below 60 percent of the
Area Median Gross Income (AMGI) or have a poverty rate of 25 percent or more." To view median
income area for their jurisdiction, recipients may visit the U.S. Census website on median incomes
and select the geography for their jurisdiction and relevant unit of measurement (household or
individual) for the project.
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Recipients do not also need to submit separate monthly subaward reports to FSRS.gov as
required pursuant to the 2 CFR Part 170, Appendix A award term regarding reporting
subaward and executive compensation, which is included in the SLFRF Award Terms and
Conditions. Treasury will submit this reporting on behalf of recipients using the $50,000
reporting threshold, timing, and data elements discussed in this guidance. If recipients
choose to continue reporting to FSRS.gov in addition to reporting directly to Treasury on
these funds, they may do so and will be asked to notify Treasury as part of their quarterly
submission.
In general, recipients will be asked to provide the following information for each Contract,
Grant, Loan, Transfer, or Direct Payment greater than or equal to $50,000:
• Subrecipient identifying and demographic information (e.g., DUNS number and
location)
• Award number (e.g., Award number, Contract number, Loan number)
• Award date, type, amount, and description
• Award payment method (reimbursable or lump sum payment(s))
• For loans, expiration date (date when loan expected to be paid in full)
• Primary place of performance
• Related project name(s)
• Related project identification number(s) (created by the recipient)
• Period of performance start date
• Period of performance end date
• Quarterly obligation amount
• Quarterly expenditure amount
• Project(s)
• Additional programmatic performance indicators for select Expenditure Categories (see
below)
Aggregate reporting is required for contracts, grants, transfers made to other government
entities, loans, direct payments, and payments to individuals that are below $50,000. This
information will be accounted for by expenditure category at the project level.
As required by the 2 CFR Part 170, Appendix A award term regarding reporting subaward
and executive compensation, recipients must also report the names and total compensation
of their five most highly compensated executives and their subrecipients' executives for the
preceding completed fiscal year if (1) the recipient received 80 percent or more of its annual
gross revenues from Federal procurement contracts (and subcontracts) and Federal
financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and
subawards), and received $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal financial assistance subject to the
Transparency Act (and subawards), and (2) if the information is not otherwise public. In
general, most SLFRF Recipients are governmental entities with executive salaries that are
already disclosed, so no additional information must be reported. The recipient is
responsible for the subrecipients' compliance with registering and maintaining an updated
profile on SAM.gov.
f. Civil Rights Compliance: Treasury will request information on recipients' compliance with
Title VI of the Civil Rights Act of 1964 on an annual basis. This information may include a
narrative describing the recipient's compliance with Title VI, along with other questions and
assurances.
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g. Required Programmatic Data (other than infrastructure projects): For all projects listed
under the following Expenditure Categories (see Appendix 1), the information listed must
be provided in each report.
Payroll for Public Health and Safety Employees (EC 1.9):
• Number of government FTEs responding to COVID-19 supported under this
authority
2. Household Assistance (EC 2.1-2.5):
• Brief description of structure and objectives of assistance program(s) (e.g., nutrition
assistance for low-income households)
• Number of individuals served (by program if recipient establishes multiple separate
household assistance programs)
• Brief description of recipient's approach to ensuring that aid to households
responds to a negative economic impact of Covid-19, as described in the Interim
Final Rule
3. Small Business Economic Assistance (EC 2.9):
• Brief description of the structure and objectives of assistance program(s) (e.g.,
grants for additional costs related to Covid-1 9 mitigation)
• Number of small businesses served (by program if recipient establishes multiple
separate small businesses assistance programs)
• Brief description of recipient's approach to ensuring that aid to small businesses
responds to a negative economic impact of COVID-19, as described in the Interim
Final Rule
4. Aid to Travel, Tourism, and Hospitality or Other Impacted Industries (EC 2.11-2.12):
• If aid is provided to industries other than travel, tourism, and hospitality (EC 2.12),
a description of pandemic impact on the industry and rationale for providing aid to
the industry
• Brief narrative description of how the assistance provided responds to negative
economic impacts of the COVID-19 pandemic
• For each subaward:
o Sector of employer (Note: additional detail, including list of sectors to be
provided in a users' guide)
O Purpose of funds (e.g., payroll support, safety measure implementation)
5. Rehiring Public Sector Staff (EC 2.14):
• Number of FTEs rehired by governments under this authority
6. Education Assistance (EC 3.1-3.5):
The National Center for Education Statistics ("NCES") School ID or NCES District
ID. List the School District if all schools within the school district received some
funds. If not all schools within the school district received funds, list the School ID
of the schools that received funds. These can allow evaluators to link data from the
NCES to look at school -level demographics and, eventually, student
performance."
" For more information on NCES identification numbers see https://nces.ed.gov/ccd/districtsearch/
(districts) and https://nces.ed.gov/ccd/schoolsearch/ (schools).
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7. Premium Pay (both Public Sector EC 4.1 and Private Sector EC 4.2
• List of sectors designated as critical to the health and well-being of residents by
the chief executive of the jurisdiction, if beyond those included in the Interim Final
Rule (Note: a list of sectors will be provided in the forthcoming users' guide).
• Number of workers to be served
• Employer sector for all subawards to third -party employers (i.e., employers other
than the State, local, or Tribal government) (Note: a list of sectors will be provided
in the forthcoming users' guide).
• For groups of workers (e.g., an operating unit, a classification of worker, etc.) or,
to the extent applicable, individual workers, for whom premium pay would
increase total pay above 150 percent of their residing State's average annual
wage, or their residing county's18 average annual wage, whichever is higher, on
an annual basis:
o A brief written narrative justification of how the premium pay or grant is
responsive to workers performing essential work during the public health
emergency. This could include a description of the essential workers' duties,
health or financial risks faced due to COVID-19, and why the recipient
government determined that the premium pay was responsive to workers
performing essential work during the pandemic. This description should not
include personally identifiable information; when addressing individual
workers, recipients should be careful not to include this information.
Recipients may consider describing the workers' occupations and duties in a
general manner as necessary to protect privacy.
8. Revenue replacement (EC 6.1):
Under the Interim Final Rule, recipients calculate revenue loss using data as of four
discrete points during the program: December 31, 2020, December 31, 2021,
December 31, 2022, and December 31, 2023. Revenue loss calculated as of
December 31, 2020 will be reported in the Interim Report, as described above. For
future calculation dates, revenue loss will be reported only in the Quarter 4 reports
due January 31, 2022, January 31, 2023, and January 31, 2024. Reporting on
revenue loss should include:
• General revenue collected over the past 12 months as of the most recent
calculation date, as outlined in the Interim Final Rule (for example, for the
January 31, 2022 report, recipients should provide 12 month general revenue as
of December 31, 2021);
• Calculated revenue loss due to the Covid-19 public health emergency; and
• An explanation of how the revenue replacement funds were allocated to
government services (note: additional instructions and/or template to be provided
in user guide).
In calculating general revenue and the revenue loss due to the COVID-19 public
health emergency, recipients should follow the same guidance as described above
for the Interim Report.
h. Required Programmatic Data for Infrastructure Projects (EC 5): For all projects listed under
the Water, Sewer, and Broadband Expenditure Categories (see Appendix 1), more detailed
project -level information is required. Each project will be required to report expenditure
data as described above, but will also report the following information:
18 County means a county, parish, or other equivalent county division (as defined by the Census
Bureau). See 31 CFR 35.3.
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1. All infrastructure Droiects (EC 51:
• Projected/actual construction start date (month/year)
• Projected/actual initiation of operations date (month/year)
• Location (for broadband, geospatial location data)
• For projects over $10 million:
a. A recipient may provide a certification that, for the relevant project, all laborers
and mechanics employed by contractors and subcontractors in the
performance of such project are paid wages at rates not less than those
prevailing, as determined by the U.S. Secretary of Labor in accordance with
subchapter IV of chapter 31 of title 40, United States Code (commonly known
as the "Davis -Bacon Act"), for the corresponding classes of laborers and
mechanics employed on projects of a character similar to the contract work in
the civil subdivision of the State (or the District of Columbia) in which the work
is to be performed, or by the appropriate State entity pursuant to a corollary
State prevailing -wage -in -construction law (commonly known as "baby Davis -
Bacon Acts"). If such certification is not provided, a recipient must provide a
project employment and local impact report detailing:
■ The number of employees of contractors and sub -contractors working on
the project;
■ The number of employees on the project hired directly and hired through a
third party;
■ The wages and benefits of workers on the project by classification; and
■ Whether those wages are at rates less than those prevailing.19
Recipients must maintain sufficient records to substantiate this information
upon request.
b. A recipient may provide a certification that a project includes a project labor
agreement, meaning a pre -hire collective bargaining agreement consistent with
section 8(f) of the National Labor Relations Act (29 U.S.C. 158(f)). If the
recipient does not provide such certification, the recipient must provide a
project workforce continuity plan, detailing:
• How the recipient will ensure the project has ready access to a sufficient
supply of appropriately skilled and unskilled labor to ensure high -quality
construction throughout the life of the project;
• How the recipient will minimize risks of labor disputes and disruptions that
would jeopardize timeliness and cost-effectiveness of the project; and
• How the recipient will provide a safe and healthy workplace that avoids
delays and costs associated with workplace illnesses, injuries, and
fatalities;
• Whether workers on the project will receive wages and benefits that will
secure an appropriately skilled workforce in the context of the local or
regional labor market; and
• Whether the project has completed a project labor agreement.
c. Whether the project prioritizes local hires.
d. Whether the project has a Community Benefit Agreement, with a description of
any such agreement.
19 As determined by the U.S. Secretary of Labor in accordance with subchapter IV of chapter 31 of
title 40, United States Code (commonly known as the "Davis -Bacon Act"), for the corresponding
classes of laborers and mechanics employed on projects of a character similar to the contract work in
the civil subdivision of the State (or the District of Columbia) in which the work is to be performed.
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2. Water and sewer projects (EC 5.1-5.15):
• National Pollutant Discharge Elimination System (NPDES) Permit Number (if
applicable; for projects aligned with the Clean Water State Revolving Fund)
• Public Water System (PWS) ID number (if applicable; for projects aligned with the
Drinking Water State Revolving Fund)
3. Broadband projects (EC 5.16-5.17):
• Speeds/pricing tiers to be offered, including the speed/pricing of its affordability
offering
• Technology to be deployed
• Miles of fiber
Cost per mile
Cost per passing
Number of households (broken out by households on Tribal lands and those not on
Tribal lands) projected to have increased access to broadband meeting the
minimum speed standards in areas that previously lacked access to service of at
least 25 Mbps download and 3 Mbps upload
o Number of households with access to minimum speed standard of reliable 100
Mbps symmetrical upload and download
o Number of households with access to minimum speed standard of reliable 100
Mbps download and 20 Mbps upload
Number of institutions and businesses (broken out by institutions on Tribal lands
and those not on Tribal lands) projected to have increased access to broadband
meeting the minimum speed standards in areas that previously lacked access to
service of at least 25 Mbps download and 3 Mbps upload, in each of the following
categories: business, small business, elementary school, secondary school, higher
education institution, library, healthcare facility, and public safety organization
o Specify the number of each type of institution with access to the minimum speed
standard of reliable 100 Mbps symmetrical upload and download; and
o Specify the number of each type of institution with access to the minimum speed
standard of reliable 100 Mbps download and 20 Mbps upload
Distributions to NEUs - States and territories only (EC 7.4): Information on SLFRF
distributions to eligible NEUs. Each State and territory will be asked to provide an update
on distributions to individual NEUs, including whether the NEU has (1) received funding;
(2) declined funding and requested a transfer to the State under Section 603(c)(4) of the
Act; or (3) not taken action on its funding. States and territories should be prepared to report
on their information, including the following:
• NEU name
• NEU DUNS number
• NEU Taxpayer Identification Number (TIN)
• NEU Recipient Number (a unique identification code for each NEU assigned by the
State to the NEU as part of the request for funding)
• NEU contact information (e.g., address, point of contact name, point of contact email
address, and point of contact phone number)
• NEU authorized representative name and email address
• Initial allocation and, if applicable, subsequent allocation to the NEU (before
application of the 75 percent cap)
• Total NEU reference budget (as submitted by the NEU to the State as part of the
request for funding)
• Amount of the initial and, if applicable, subsequent allocation above 75 percent of the
NEU's reference budget which will be returned to Treasury
• Payment amount(s)
• Payment date(s)
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For each eligible NEU that declined funding and requested a transfer to the State under
Section 603(c)(4), the State must also attach a form signed by the NEU, as detailed in the
Guidance on Distributions of Funds to Non -Entitlement Units of Local Government.
States with "weak" minor civil divisions (i.e., Illinois, Indiana, Kansas, Missouri, Nebraska,
North Dakota, Ohio, and South Dakota) should also list any minor civil divisions that the
State deemed ineligible.
NEU Documentation (NEUs only): Each NEU will also be asked to provide the following
information with their first report submitted by October 31, 2021:
• Copy of the signed award terms and conditions agreement (which was signed and
submitted to the State as part of the request for funding)
• Copy of the signed assurances of compliance with Title VI of the Civil Rights Act of
1964 (which was signed and submitted to the State as part of the request for funding)
• Copy of actual budget documents validating the top -line budget total provided to the
State as part of the request for funding
C. Recovery Plan Performance Report
States, territories, metropolitan cities, and counties with a population that exceeds 250,000
residents will also be required to publish and submit to Treasury a Recovery Plan performance
report ("Recovery Plan"). Each Recovery Plan must be posted on the public -facing website of
the recipient by the same date the recipient submits the report to Treasury. This reporting
requirement includes uploading a link to the publicly available document report along with
providing data in the Treasury reporting portal.
The Recovery Plan will provide the public and Treasury information on the projects recipients
are undertaking with program funding and how they are planning to ensure program outcomes
are achieved in an effective, efficient, and equitable manner. While this guidance outlines
some minimum requirements for the Recovery Plan, each recipient is encouraged to add
information to the plan they feel is appropriate to provide information to their constituents on
efforts they are taking to respond to the pandemic and promote economic recovery. Each
jurisdiction may determine the general form and content of the Recovery Plan, as long as it
includes the minimum information determined by Treasury. Treasury will provide a
recommended template but recipients may modify this template as appropriate for their
jurisdiction. The Recovery Plan will include key performance indicators identified by the
recipient and some mandatory indicators identified by Treasury.
The initial Recovery Plan will cover the period from the date of award to July 31, 2021 and
must be submitted to Treasury by August 31, 2021. Thereafter, the Recovery Plan will cover
a 12 -month period and recipients will be required to submit the report to Treasury within 30
days after the end of the 12 -month period (by July 31). The table below summarizes the report
timelines:
1 ,
Award Date — Jul
31, 2021 I
August 31, 2021
2
July
1,2021
—June
30, 2022
Jul
31, 2022
3
July
1, 2022
— June
30, 2023
July
31, 2023
4
July
1,2023
—June
30, 2024
Jul
31, 2024
5
July
1,2024
—June
30, 2025
Jul
31, 2025
6
July
1, 2025
— June
30, 2026
July
31, 2026
7
July 1, 2026 — December 31, 2026
March 31, 2027
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The Recovery Plan will include, at a minimum, the following information:
1. Executive Summary
Provide a high-level overview of the jurisdiction's intended and actual uses of funding
including, but not limited to: the jurisdiction's plan for use of funds to promote a response to
the pandemic and economic recovery, key outcome goals, progress to date on those
outcomes, and any noteworthy challenges or opportunities identified during the reporting
period.
2. Uses of Funds
Describe in further detail your jurisdiction's intended and actual uses of the funds, such as
how your jurisdiction's approach would help support a strong and equitable recovery from the
COVID-19 pandemic and economic downturn. Describe any strategies employed to maximize
programmatic impact and effective, efficient, and equitable outcomes. Given the broad eligible
uses of funds and the specific needs of the jurisdiction, please also explain how the funds
would support the communities, populations, or individuals in your jurisdiction. Your
description should address how you are promoting each of the following, to the extent they
apply:
a. Public Health (EC 1): As relevant, describe how funds are being used to respond to
COVID-19 and the broader health impacts of COVID-19 and the COVID-19 public health
emergency.
b. Negative Economic Impacts (EC 2): As relevant, describe how funds are being used to
respond to negative economic impacts of the COVID-19 public health emergency,
including to households and small businesses.
c. Services to Disproportionately Impacted Communities (EC 3): As relevant, describe how
funds are being used to provide services to communities disproportionately impacted by
the COVID-19 public health emergency.
d. Premium Pay (EC 4): As relevant, describe the approach, goals, and sectors or
occupations served in any premium pay program. Describe how your approach prioritizes
low-income workers.
e. Water, sewer, and broadband infrastructure (EC 5): Describe the approach, goals, and
types of projects being pursued, if pursuing.
f. Revenue Replacement (EC 6): Describe the loss in revenue due to the COVID-19 public
health emergency and how funds have been used to provide government services.
Where appropriate, recipients should also include information on your jurisdiction's use (or
planned use) of other federal recovery funds including other programs under the American
Rescue Plan such as the Emergency Rental Assistance, Housing Assistance, and so forth, to
provide broader context on the overall approach for pandemic recovery.
3. Promoting equitable outcomes
Describe efforts to promote equitable outcomes, including how programs were designed with
equity in mind. Please include in your description how your jurisdiction will consider and
measure equity at the various stages of the program, including:
a. Goals: Are there particular historically underserved, marginalized, or adversely affected
groups that you intend to serve within your jurisdiction?
b. Awareness: How equal and practical is the ability for residents or businesses to become
aware of the services funded by the SLFRF?
c. Access and Distribution: Are there differences in levels of access to benefits and services
across groups? Are there administrative requirements that result in disparities in ability to
complete applications or meet eligibility criteria?
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d. Outcomes: Are intended outcomes focused on closing gaps, reaching universal levels of
service, or disaggregating progress by race, ethnicity, and other equity dimensions
where relevant for the policy objective?
Treasury encourages uses of funds that promote strong, equitable growth, including racial
equity. Please describe how your jurisdiction's planned or current use of funds prioritizes
economic and racial equity as a goal, names specific targets intended to produce meaningful
equity results at scale, and articulates the strategies to achieve those targets. In addition,
please explain how your jurisdiction's overall equity strategy translates into the specific
services or programs offered by your jurisdiction in the following Expenditure Categories:
a. Negative Economic Impacts (EC 2): assistance to households, small businesses, and
non -profits to address impacts of the pandemic, which have been most severe among
low-income populations. This includes assistance with food, housing, and other needs;
employment programs for people with barriers to employment who faced negative
economic impacts from the pandemic (such as residents of low-income neighborhoods,
minorities, disconnected youth, the unemployed, formerly incarcerated people, veterans,
and people with disabilities); and other strategies that provide disadvantaged groups with
access to education, jobs, and opportunity.
b. Services to Disproportionately Impacted Communities (EC 3): services to address health
disparities and the social determinants of health, build stronger neighborhoods and
communities (e.g., affordable housing), address educational disparities (e.g., evidence -
based tutoring, community schools, and academic, social -emotional, and mental health
supports for high poverty schools), and promote healthy childhood environments (e.g.,
home visiting, child care).
The initial report must describe efforts to date and intended outcomes to promote equity.
Each annual report thereafter must provide an update, using qualitative and quantitative
data, on how the recipients' approach achieved or promoted equitable outcomes or
progressed against equity goals during the performance period. Please also describe any
constraints or challenges that impacted project success in terms of increasing equity. In
particular, this section must describe the geographic and demographic distribution of
funding, including whether it is targeted toward traditionally marginalized communities.
For the purposes of the SLFRF, equity is defined in the Executive Order 13985 On Advancing
Racial Equity and Support for Underserved Communities Through the Federal Government,
as issued on January 20, 2021.
4. Community Engagement
Please describe how your jurisdiction's planned or current use of funds incorporates written,
oral, and other forms of input that capture diverse feedback from constituents, community -
based organizations, and the communities themselves. Where relevant, this description must
include how funds will build the capacity of community organizations to serve people with
significant barriers to services, including people of color, people with low incomes, limited
English proficient populations, and other traditionally underserved groups.
5. Labor Practices
Describe workforce practices on any infrastructure projects being pursued (EC 5). How are
projects using strong labor standards to promote effective and efficient delivery of high -quality
infrastructure projects while also supporting the economic recovery through strong
employment opportunities for workers? For example, report whether any of the following
practices are being utilized: project labor agreements, community benefits agreements,
prevailing wage requirements, and local hiring.
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6. Use of Evidence
The Recovery Plan should identify whether SLFRF funds are being used for evidence -based
interventions20 and/or if projects are being evaluated through rigorous program evaluations
that are designed to build evidence. Recipients must briefly describe the goals of the project,
and the evidence base for the interventions funded by the project. Recipients must specifically
identify the dollar amount of the total project spending that is allocated towards evidence -
based interventions for each project in the Public Health (EC 1), Negative Economic Impacts
(EC 2), and Services to Disproportionately Impacted Communities (EC 3) Expenditure
Categories.21
Recipients are exempt from reporting on evidence -based interventions in cases where a
program evaluation is being conducted. Recipients are encouraged to use relevant evidence
Clearinghouses, among other sources, to assess the level of evidence for their interventions
and identify evidence -based models that could be applied in their jurisdiction; such evidence
clearinghouses include the U.S. Department of Education's What Works Clearinghouse, the
U.S. Department of Labor's CLEAR, and the Childcare & Early Education Research
Connections and the Home Visiting Evidence of Effectiveness clearinghouses from
Administration for Children and Families, as well as other clearinghouses relevant to particular
projects conducted by the recipient. In such cases where a recipient is conducting a program
evaluation in lieu of reporting the amount of spending on evidence -based interventions, they
must describe the evaluation design including whether it is a randomized or quasi -
experimental design; the key research questions being evaluated; whether the study has
sufficient statistical power to disaggregate outcomes by demographics; and the timeframe for
the completion of the evaluation (including a link to completed evaluation if relevant).22 Once
the evaluation has been completed, recipients must post the evaluation publicly and link to the
completed evaluation in the Recovery Plan. Once an evaluation has been completed (or has
sufficient interim findings to determine the efficacy of the intervention), recipients should
determine whether the spending for the evaluated interventions should be counted towards
the dollar amount categorized as evidence -based for the relevant project.
For all projects, recipients may be selected to participate in a national evaluation, which would
study their project along with similar projects in other jurisdictions that are focused on the same
set of outcomes. In such cases, recipients may be asked to share information and data that is
needed for the national evaluation.
Recipients are encouraged to consider how a Learning Agenda, either narrowly focused on
SLFRF or broadly focused on the recipient's broader policy agenda, could support their
overarching evaluation efforts in order to create an evidence -building strategy for their
jurisdiction. 23
Appendix 2 contains additional information on evidence -based interventions for the purposes
of the Recovery Plan.
20As noted in Appendix 2, evidence -based refers to interventions with strong or moderate levels of
evidence.
21 Of note, recipients are only required to report the amount of the total funds that are allocated to
evidence -based interventions in the areas of Public Health, Negative Economic Impacts, and Services
to Disproportionately Impacted Communities that are marked by an asterisk in Appendix 1:
Expenditure Categories.
22 For more information on the required standards for program evaluation, see OMB M-20-12.
23 For more information on learning agendas, please see OMB M-19-23
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7. Table of Expenses by Expenditure Category
Please include a table listing the amount of funds used in each Expenditure Category (See
Appendix 1). The table should include cumulative expenses to date within each category, and
the additional amount spent within each category since the last annual Recovery Plan.
8. Project Inventory
List the name and provide a brief description of all SLFRF funded projects. Projects are new
or existing eligible government services or investments funded in whole or in part by SLFRF
funding. For each project, include the project name, funding amount, identification number
(created by the recipient and used thereafter in the quarterly Program and Expenditure
Report), project Expenditure Category (see Appendix 1), and a description of the project which
includes an overview of the main activities of the project, the approximate timeline, primary
delivery mechanisms and partners, if applicable, and intended outcomes. Include a link to the
website of the project if available. This information will provide context and additional detail
for the information reported quarterly in the Project and Expenditure Report.
For infrastructure investment projects (EC 5), project -level reporting will be more detailed, as
described for the Project and Expenditure Report above. Projects in this area may be grouped
by Expenditure Category if needed, with further detail (such as the specific project name and
identification number) provided in the Project and Expenditure Report. For infrastructure
projects, descriptions should note how the project contributes to addressing climate change.
9. Performance Report
The Recovery Plan must include key performance indicators for the major SLFRF funded
projects undertaken by the recipient. The recipient has flexibility in terms of how this
information is presented in the Recovery Plan, and may report key performance indicators for
each project, or may group projects with substantially similar goals and the same outcome
measures. In some cases, the recipient may choose to include some indicators for each
individual project as well as crosscutting indicators.
Performance indicators should include both output and outcome measures. Output measures,
such as number of students enrolled in an early learning program, provide valuable information
about the early implementation stages of a project. Outcome measures, such as the percent
of students reading on grade level, provide information about whether a project is achieving
its overall goals. Recipients are encouraged to use logic models24 to identify their output and
outcome measures. While the initial report will focus heavily on early output goals, recipients
must include the related outcome goal for each project and provide updated information on
achieving these outcome goals in annual reports. In cases where recipients are conducting a
program evaluation for a project (as described above), the outcome measures in the
performance report should be aligned with those being evaluated in the program. To support
their performance measurement and program improvement efforts, recipients are permitted to
use funds to make improvements to data or technology infrastructure and data analytics, as
well as program evaluations.
10. Required Performance Indicators and Programmatic Data
While recipients have discretion on the full suite of performance indicators to include, a number
of mandatory performance indicators and programmatic data must be included. These are
necessary to allow Treasury to conduct oversight as well as understand and aggregate
program outcomes across recipients. This section provides an overview of the mandatory
performance indicators and programmatic data. This information may be included in each
recipient's Recovery Plan as they determine most appropriate, including combining with the
24 A logic model is a tool that depicts the intended links between program investments and outcomes,
specifically the relationships among the resources, activities, outputs, outcomes, and impact of a
program.
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section above, but this data will also need to be entered directly into the Treasury reporting
portal. Below is a list of required data for each Expenditure Category:
a. Household Assistance (EC 2.2 & 2.5) and Housing Support (EC 3.10-3.12):
• Number of people or households receiving eviction prevention services (including legal
representation)
• Number of affordable housing units preserved or developed
b. Negative Economic Impacts (EC 2):
• Number of workers enrolled in sectoral job training programs
• Number of workers completing sectoral job training programs
• Number of people participating in summer youth employment programs
c. Education Assistance (EC 3.1-3.5):
• Number of students participating in evidence -based tutoring programs25
d. Healthy Childhood Environments (EC 3.6-3.9):
• Number of children served by childcare and early learning (pre-school/pre-K/ages 3-
5)
• Number of families served by home visiting
The initial report should include the key indicators above. Each annual report thereafter should
include updated data for the performance period as well as prior period data, and a brief
narrative adding any additional context to help the reader interpret the results and understand
the any changes in performance indicators over time. To the extent possible, Treasury also
encourages recipients to provide data disaggregated by race, ethnicity, gender, income, and
other relevant factors.
11. Ineligible Activities: Tax Offset Provision (States and territories only)
The following information is required for Treasury to ensure SLFRF funding is not used for
ineligible activities.
In each reporting year, States and territories will report certain items related to the Tax Offset
Provision 31 CFR 35.8, as detailed below. As indicated in the Interim Final Rule, Treasury is
seeking comment on reporting requirements related to the Tax Offset Provision, including
ways to better rely on information already produced by States and territories and to minimize
burden.
The terms "reporting year," "baseline," "covered change," "net reduction in total spending," and
"tax revenue" are defined in the Interim Final Rule, 31 CFR 35.3. For purposes of calculating
a net reduction in total spending, total spending for the fiscal year ending 2019 should be
reported on an inflation -adjusted basis, consistent with the Interim Final Rule, 31 CFR 35.3.
Similarly, for purposes of calculating baseline, tax revenue for the fiscal year 2019 should be
reported on an inflation -adjusted basis, consistent with the Interim Final Rule, 31 CFR 35.3.
For purposes of reporting actual tax revenue and calculating tax revenue for the fiscal year
ending 2019,26 (a) if available, recipients should report information using audited financials
and (b) recipients may provide data on a cash, accrual, or modified accrual basis, but must be
consistent in their approach across all reporting periods. Similarly, for purposes of calculating
25 For more information on evidence -based tutoring programs, refer to the U.S. Department of
Education's 2021 ED COVID-19 Handbook (Volume 2), which summarizes research on evidence -
based tutoring programs (see the bottom of page 20.
26 Tax revenue for fiscal year ending 2019 is relevant for calculating the recipient's baseline.
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a net reduction in total spending, recipients should report data using audited financials where
available.
a. Revenue -reducing Covered Changes:
For each reporting year, a recipient must report the value of covered changes that the
recipient predicts will have the effect of reducing tax revenue in a given reporting year
(revenue -reducing covered changes), similar to the way it would in the ordinary course of
its budgeting process. The value of these covered changes may be reported based on
estimated values produced by a budget model, incorporating reasonable assumptions,
that aligns with the recipient government's existing approach for measuring the effects of
fiscal policies, and that measures relative to a current law baseline. The covered changes
may also be reported based on actual values using a statistical methodology to isolate the
change in year -over -year revenue attributable to the covered change(s), relative to the
current law baseline prior to the change(s). Estimation approaches should not use
dynamic methodologies that incorporate the projected effects of the policies on
macroeconomic growth. In general and where possible, reported values should be
produced by the agency of the recipient government responsible for estimating the costs
and effects of fiscal policy changes. Recipients must maintain records regarding the
identification and predicted effects of revenue -reducing covered changes.
b. Baseline Revenue:
Baseline has the meaning defined in the Interim Final Rule, 31 CFR 35.3.
Whether the revenue -reducing covered changes are in excess of the de minimis.
Recipients must determine whether the aggregate value of the revenue -reducing covered
changes in the reporting year is less than one percent of baseline revenue.
c. Actual Tax Revenue:
Actual tax revenue means the actual tax revenue received by the recipient government in
the reporting year. Tax revenue has the meaning defined in the Interim Final Rule, 31 CFR
35.3.
d. Reduction in Net Tax Revenue:
The reduction in net tax revenue is equal to baseline revenue minus actual tax revenue in
each reporting year. If this value is zero or negative, there is no reduction in net tax
revenue.
e. Any revenue -increasing covered changes:
A recipient must report the value of covered changes that have had or that the recipient
predicts will have the effect of increasing tax revenue in a given reporting year (revenue -
increasing covered changes), similar to the way it would in the ordinary course of its
budgeting process. The value of these covered changes may be reported based on
estimated values produced by a budget model, incorporating reasonable assumptions,
that aligns with the recipient's existing approach for measuring the effects of fiscal policies,
and that measures relative to a current law baseline. The covered changes may also be
reported based on actual values using a statistical methodology to isolate the change in
year -over -year revenue attributable to the covered change(s), relative to the current law
baseline prior to the change(s). Estimation approaches should not use dynamic
methodologies that incorporate the projected effects of the policies on macroeconomic
growth. In general and where possible, reporting should be produced by the agency of
the recipient responsible for estimating the costs and effects of fiscal policy changes.
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Recipients should maintain records regarding revenue -reducing covered changes and
estimates of such changes.
Net reduction in total spending, and tables of specific spending cuts:
Recipients must report on spending cuts. To calculate the amount of spending cuts that
are available to offset a reduction in tax revenue, the recipient must first consider whether
there has been a reduction in total net spending, excluding Fiscal Recovery Funds (net
reduction in total spending). As in the Interim Final Rule, 35 CFR 35.3, net reduction in
total spending is measured as the recipient government's total spending for a given
reporting year excluding Fiscal Recovery Funds, subtracted from its total spending for its
fiscal year ending in 2019, adjusted for inflation using the Bureau of Economic Analysis's
Implicit Price Deflator for the gross domestic product of the United States. If that
subtraction yields a positive value, there has been a net reduction; if it yields zero or a
negative value, there has not been a net reduction. If there has been no net reduction in
total spending, a recipient will have no spending cuts to offset a reduction in net tax
revenue.
Next, a recipient must determine and aggregate the value of spending cuts in each
"reporting unit," as defined below. For each reporting unit, the recipient must report (1) the
amount of the reduction in spending in the reporting unit relative to its inflation -adjusted
FY 2019 level, (2) the amount of any Fiscal Recovery Funds spent in the reporting unit,
and (3) the amount by which the reduction in spending exceeds the Fiscal Recovery funds
spent in the reporting unit. If a recipient has not spent amounts received from the Fiscal
Recovery Funds in a reporting unit, the full amount of the reduction in spending counts as
a covered spending cut and may be included in aggregate spending cuts. If the recipient
has spent amounts received from the Fiscal Recovery Funds, such amounts generally
would be deemed to have replaced the amount of spending cut, and only reductions in
spending above the amount of Fiscal Recovery Funds spent on the reporting unit would
be eligible to offset a reduction in net tax revenue. Only such amounts above the amount
of Fiscal Recovery Funds spent on the reporting unit should be included in the aggregate
of spending cuts.
To align with existing reporting and accounting, the Interim Final Rule considers the
department, agency, or authority from which spending has been cut and whether the
recipient government has spent amounts received from the Fiscal Recovery Funds on that
same department, agency, or authority. Recipients may also choose to report at a more
granular sub -department level. Recipients are encouraged to define and report spending
in departments, sub -departments (e.g., bureaus), agencies, or authorities (each a
"reporting unit") in a manner consistent with their existing budget process and should, to
the extent possible, report using the same reporting unit in each reporting year. For
example, if a State health department maintains separate budgets for different units (e.g.,
medical and public health units), those units may be reported and considered separately.
Spending cuts must be reported relative to FY 2019 spending levels, adjusted for inflation,
and excluding Fiscal Recovery Funds from reporting year spending levels.
Recipients should maintain records regarding spending cuts. As discussed in the Interim
Final Rule, in order to help ensure governments use Fiscal Recovery Funds in a manner
consistent with the prescribed eligible uses and do not use Fiscal Recovery Funds to
indirectly offset a reduction in net tax revenue resulting from a covered change, Treasury
will monitor changes in spending throughout the covered period. Evasions of the Tax
Offset Provision may be subject to recoupment.
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Appendix 1: Expenditure Categories
The Expenditure Categories (EC) listed below must be used to categorize each project as
noted in Part 2 above. The term "Expenditure Category" refers to the detailed level (e.g., 1.1
COVID-10 Vaccination). When referred to as a category (e.g., EC 1) it includes all Expenditure
Categories within that level.
.
1.1
.
COVID-19 Vaccination A
1.2
COVID-19 Testing A
1.3
COVID-19 Contact Tracing
1.4
Prevention in Congregate Settings (Nursing Homes, Prisons/Jails, Dense Work Sites,
Schools, etc.)*
1.5
Personal Protective Equipment
1.6
Medical Expenses (including Alternative Care Facilities)
1.7
Capital Investments or Physical Plant Changes to Public Facilities that respond to the
COVID-19 public health emergency
1.8
Other COVID-19 Public Health Expenses (including Communications, Enforcement,
Isolation/Quarantine)
1.9
Payroll Costs for Public Health, Safety, and Other Public Sector Staff Responding to
COVID-19
1.10
Mental Health Services*
1.11
Substance Use Services*
1.12
2.1
Other Public Health Services
Household Assistance: Food Programs* ^
2.2
Household Assistance: Rent, Mortgage, and Utility Aid* A
2.3
Household Assistance: Cash Transfers* A
2.4
Household Assistance: Internet Access Programs* A
2.5
Household Assistance: Eviction Prevention* A
2.6
Unemployment Benefits or Cash Assistance to Unemployed Workers*
2.7
Job Training Assistance (e.g., Sectoral job -training, Subsidized Employment,
Employment Supports or Incentives)* A
2.8
Contributions to UI Trust Funds
2.9
Small Business Economic Assistance (General)* A
2.10
Aid to Nonprofit Organizations*
2.11
Aid to Tourism, Travel, or Hospitality
2.12
Aid to Other Impacted Industries
2.13
Other Economic Support* A
2.14
Rehiring Public Sector Staff
3.1
Education Assistance: Early Learning* A
3.2
Education Assistance: Aid to High -Poverty Districts A
3.3
Education Assistance: Academic Services* A
3.4
Education Assistance: Social, Emotional, and Mental Health Services* A
3.5
Education Assistance: Other* A
3.6
Healthy Childhood Environments: Child Care*
3.7
Healthy Childhood Environments: Home Visiting* A
3.8
Healthy Childhood Environments: Services to Foster Youth or Families Involved in
Child Welfare System* A
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3.9
Healthy Childhood Environments: Other* A
3.10
Housing Support: Affordable Housing* A
3.11
Housing Support: Services for Unhoused Persons* A
3.12
Housing Support: Other Housing Assistance* A
3.13
Social Determinants of Health: Other* A
3.14
Social Determinants of Health: Community Health Workers or Benefits Navigators* ^
3.15
Social Determinants of Health: Lead Remediation A
3.16
4.1
Social Determinants of Health: Community Violence Interventions* A
Public Sector Employees
4.2
5.1
Private Sector: Grants to Other Employers
Clean Water: Centralized Wastewater Treatment
5.2
Clean Water: Centralized Wastewater Collection and Conveyance
5.3
Clean Water: Decentralized Wastewater
5.4
Clean Water: Combined Sewer Overflows
5.5
Clean Water: Other Sewer Infrastructure
5.6
Clean Water: Stormwater
5.7
Clean Water: Energy Conservation
5.8
Clean Water: Water Conservation
5.9
Clean Water: Non point Source
5.10
Drinking water: Treatment
5.11
Drinking water: Transmission & Distribution
5.12
Drinking water: Transmission & Distribution: Lead Remediation
5.13
Drinking water: Source
5.14
Drinking water: Storage
5.15
Drinking water: Other water infrastructure
5.16
Broadband: "Last Mile" projects
5.17
6.1
7.1 •
Broadband: Other projects
Provision of Government Services
Administrative Expenses
7.2
Evaluation and Data Analysis
7.3
Transfers to Other Units of Government
7.4
Transfers to Non -entitlement Units (States and territories only)
*Denotes areas where recipients must identify the amount of the total funds that are allocated
to evidence -based interventions (see Use of Evidence section above for details)
ADenotes areas where recipients must report on whether projects are primarily serving
disadvantaged communities (see Project Demographic Distribution section above for details)
27 Definitions for water and sewer Expenditure Categories can be found in the EPA's handbooks. For
"clean water" expenditure category definitions, please see:
https://www.epa.gov/sites/production/files/2018-03/documents/cwdefinitions.pdf. For "drinking water"
expenditure category definitions, please see: https://www.epa.gov/dwsrf/drinking-water-state-
revolving-fund-national-information-management-system-reports.
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Appendix 2: Evidenced -Based Intervention Additional Information
What is evidence -based?
For the purposes of the SLFRF, evidence -based refers to interventions with strong or
moderate evidence as defined below:
Strong evidence means the evidence base that can support causal conclusions for the specific
program proposed by the applicant with the highest level of confidence. This consists of one
or more well -designed and well -implemented experimental studies conducted on the proposed
program with positive findings on one or more intended outcomes.
Moderate evidence means that there is a reasonably developed evidence base that can
support causal conclusions. The evidence base consists of one or more quasi -experimental
studies with positive findings on one or more intended outcomes OR two or more non -
experimental studies with positive findings on one or more intended outcomes. Examples of
research that meet the standards include: well -designed and well -implemented quasi -
experimental studies that compare outcomes between the group receiving the intervention
and a matched comparison group (i.e., a similar population that does not receive the
intervention).
Preliminary evidence means that the evidence base can support conclusions about the
program's contribution to observed outcomes. The evidence base consists of at least one non -
experimental study. A study that demonstrates improvement in program beneficiaries over
time on one or more intended outcomes OR an implementation (process evaluation) study
used to learn and improve program operations would constitute preliminary evidence.
Examples of research that meet the standards include: (1) outcome studies that track program
beneficiaries through a service pipeline and measure beneficiaries' responses at the end of
the program; and (2) pre- and post-test research that determines whether beneficiaries have
improved on an intended outcome.
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Revision Log
1.0
i 11
June 17, 2021
Initial publication
1.1
June 24, 2021
• Pg. 12, removed references to "summary" level with
respect to reporting by Expenditure Categories in the
Interim Report to avoid confusion.
• Pg. 13, revised the coverage period end date for the
Interim Report from June 30, 2021 to July 31, 2021 to
align with the IFR.
• Pg. 13, removed references to "summary" level with
respect to reporting by Expenditure Categories in the
Interim Report to avoid confusion.
• Pg. 31, removed references to "summary level" with
respect to Expenditure Categories in Appendix 1 to
avoid confusion.
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