The historic American Rescue Plan Act was signed into law on March 12th, delivering $65 billion of direct and flexible aid to America’s cities, towns and villages. The U.S. Department of Treasury is in the process of refining spending guidelines and estimated allocations to for each state, county, and local government in the nation.
ARPA Guidance Documents
Disbursements to Communities
Cities, towns and villages with fewer than 50,000 residents, referred to in the law as nonentitlement units of local government, will receive their money as a pass through from the state. States will receive their money no later than May 10, and then states have 30 days to pass the money through cities, towns and villages with fewer than 50,000 residents. The law contains strong language that should prevent states from withholding funds to cities, towns and villages with less than 50,000 residents.
Municipalities with fewer than 50,000 residents will need to obtain a DUNS number to meet the reporting requirements of the law. A DUNS number is a unique nine-character number used to identify an organization and is issued by Dun & Bradstreet. The federal government uses the DUNS number to track how federal money is allocated. Registering for a DUNS number is free of charge. If an entity does not have a valid DUNS number, please visit https://fedgov.dnb.com/webform/ or call 1-866-705-5711 to begin the registration process.
It is also advised that municipalities with fewer than 50,000 residents gather their financial information to share with the state to ensure a timely transfer of funds. This would include:
- Entity Identification Number (EIN), name, and contact information
- Name and title of an authorized representative of the entity
- Financial institution information (e.g., routing and account number, financial institution name and contact information)
Communities with more than 50,000 residents will receive their funding directly from the U.S. Treasury. Details of necessary preliminary steps and process by which to release the funds are yet to be released by the Treasury Department.
The Single Audit Act requires that all non-federal entities that expend more than $750,000 in federal awards in a year are required to obtain an audit in accordance with the Single Audit Act Amendments of 1996, the U.S. Government’s Office of Management and Budget’s Circular A-133, the U.S. Government’s Office of Management and Budget’s Circular Compliance Supplement and Government Auditing Standards. A single audit is intended to provide a cost-effective audit for non-federal entities, so one audit would be conducted in lieu of multiple audits of individual programs.
It has been suggested that municipalities begin budgeting to hire an auditing firm for a single audit if they believe they will expend more than $750,000 in federal awards in a year.
At this moment, it is unclear whether the funds from the American Rescue Plan Act can be used to pay auditors.
Use of Funds
On Monday, May 10, 2021, the guidance issued by the Treasury seeks to provide substantial flexibility for local governments to meet local needs—including support for households, small businesses, impacted industries, essential workers, and the communities hardest hit by the crisis. These funds can also be used to make necessary investments in water, sewer, and broadband infrastructure.
Funding from the Coronavirus State and Local Fiscal Recovery Funds is subject to the requirements specified in the Interim Final Rule. Recipients may use these funds to:
- Support public health expenditures by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff.
- Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector. This includes:
- Assisting unemployed workers, including services like job training to accelerate rehiring of unemployed workers, may extend to workers unemployed due to the pandemic or the resulting recession, or who were already unemployed when the pandemic began and remained so due to the negative economic impacts of the pandemic.
- Assisting households or populations facing negative economic impacts due to COVID-19 such as food assistance; rent, mortgage, or utility assistance; counseling and legal aid to prevent eviction or homelessness; cash assistance; emergency assistance for burials, home repairs, weatherization, or other needs; internet access or digital literacy assistance; or job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training.
- Help improve the efficacy of programs addressing negative economic impacts, including data analysis, targeted consumer outreach, improvements to data or technology infrastructure, and impact evaluations.
- Assist small businesses to adopt safer operating procedures, weather periods of closure, or mitigate financial hardship resulting from the COVID-19public health emergency.
- Provide funding for payroll, covered benefits, and other costs associated with rehiring public sector staff up to the pre-pandemic staffing level.
- Aid provided to tourism, travel, and hospitality industries should respond to the negative economic impacts of the pandemic on those and similarly impacted industries.
- Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue4 experienced due to the pandemic.
- Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors.
- Invest in water, sewer, and broadband infrastructure, make necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and expand access to broadband internet.
Restrictions of Funds
Furthermore, the Act outlines what the funds may not be used for, which includes:
- No funds can be used by the state to either directly or indirectly offset a reduction in the net tax revenue that results from a change in law, regulation or administrative interpretation during the covered period that reduces any tax.
- No funds can be deposited in a pension fund.