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The American Rescue Plan Act is here: Are you ready?

May 20, 2021 Article 3 min read
Brian Camiller Manju Patnaik Michelle Watterworth

Governments of all sizes can now take advantage of this new program under ARPA funding. Here’s what you need to know, including highlights from the 134-page Interim Final Rule and instructions for getting started ASAP.

Close-up view of the American flag.On March 11, 2021, President Biden signed into law the American Rescue Plan Act (ARPA). Unlike the previous economic stimulus bill, ARPA provides federal funding to states and local governments of all sizes. The largest of all funding streams, the Coronavirus State and Local Fiscal Recovery Funds (SLRF), represents a $350 billion top-line allocation, of which 57% is allocated to states and 35% to local governments.

Submit your SLRF funding request now

Counties and “metropolitan cities” will receive their allocation directly from the U.S. Department of Treasury, but first, they must submit a request using Treasury’s submission portal. Additionally, all counties and metropolitan cities must have an active registration.

Nonentitlement communities, which would be any other local unit of government not considered a “metropolitan” community, will receive their allocation from their State. Although specific allocations haven’t been released, additional information is available for nonentitlement communities on the U.S. Treasury website.

All governments — counties, metropolitan cities, and nonentitlement communities — must have a valid DUNS number.

SLRF next steps

The U.S. Treasury has released initial guidance on the usage of these funds:

  • For a “crash course” in ARPA eligibility and allowable uses, the U.S. Treasury has released FAQs, a fact sheet, and a quick reference guide.
  • More detailed information can be found in the Interim Final Rule. Clear your schedule and pack a lunch — it’s 134 pages of information.

New information about SLRF

Although the Interim Final Rule is still subject to change, your trusted advisors at Plante Moran have been hard at work studying and interpreting all 134 pages. A few helpful nuggets of information we’ve uncovered so far:

  • It’s been widely discussed that communities have until Dec. 31, 2024, to spend these funds. That’s only partially true. Communities will have until Dec. 31, 2024, to obligate (as defined by Uniform Grant Guidance) these funds, but the period of performance won’t end until Dec. 31, 2026.
  • One of the four broad categories of eligible fund use is replacing lost revenue as a result of the pandemic. Although the calculation will be somewhat complicated, step one is to identify base-year revenue. The “base year” is the municipality’s last completed full fiscal year prior to the public health emergency (i.e., the last full fiscal year before Jan. 27, 2020). The extent of reduction in revenue should be calculated as of four points in time: Dec. 31, 2020; Dec. 31, 2021; Dec. 31, 2022; and Dec. 31, 2023.
  • It’s been widely discussed that one of the expressly stated prohibited uses of the funds is a deposit into a pension trust fund. Treasury interprets the word “deposit” in this context to refer to an extraordinary payment (an “extra” payment) into a pension fund for the purpose of reducing an accrued unfunded liability. If an employee’s wages and salary are an eligible use of Fiscal Recovery Funds, municipalities may treat the employee’s covered benefits as an eligible use. Based on the guidance, consideration should be given to whether normal costs for eligible employees meet the criteria.

There are certain reporting requirements related to the use of the Fiscal Recovery Funds. These reporting requirements reflect the need for transparency and accountability, while recognizing and minimizing the burden for smaller local governments. Given the scale of funding and its potential to catalyze economic rebuilding, it’s important to plan for the appropriate use of these funds. Read our article on How the American Rescue Plan Act might impact your government.

Stay tuned for more SLRF updates

There’s a lot more where this came from. Stay tuned for updates on calculating lost revenue replacement and eligible uses of this once-in-a-lifetime funding opportunity!

Our federal funding experts are closely monitoring the release of these funds, and we’ll continue to provide guidance as more information becomes available. We’re here to help you every step of the way. Contact us to get in touch with one of our experts.

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