AGENDA
KINGSBURG CITY COUNCIL
WORKSHOP
Council Chamber, 1401 Draper Street, Kingsburg, CA 93631 (559) 897-5821 www.cityofkingsburg-ca.gov
THE COUNCIL CHAMBER IS OPEN TO THE PUBLIC AT 100% CAPACITY.
Wednesday, March 9, 2022 at 6pm
I. Call to order and roll call –
II. Public Comments – Any person may directly address the Council at this time on any item not on the agenda, or on any item that is within the subject matter jurisdiction of the Council. A maximum of five minutes is allowed for each speaker.
III. The American Rescue Plan- Coronavirus State and Local Fiscal Recovery Funds Use Discussion- Presentation by City Manager Alexander Henderson IV. Adjourn the Workshop
Any writings or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at City Hall, in the City Clerk’s office, during normal business hours. In addition, such writings and documents may be posted on the City’s website at www.cityofkingsburg-ca.gov.
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the office of the City Clerk (559) 897-6520. Notification 48 hours prior to a meeting will enable the City to make reasonable arrangements to ensure accessibility to that meeting [28 CFR 35 .102.35.104 ADA Title II].
I hereby certify, under penalty of perjury under the laws of the State of California that the foregoing Agenda was posted at the front entrance of City Hall not less than 72 hours prior to the meeting. Dated this 3rd day of March 2022.
____________________________________
Abigail Palsgaard, City Clerk
City of Kingsburg
1401 Draper Street, Kingsburg, CA 93631-1908
Phone (559)897-5821 Fax (559)897-5568
Mayor Laura North
Mayor Pro Tem Vince Palomar
Council Member Michelle Roman
Council Member Jewel Hurtado
Council Member Brandon Pursell, Jr.
City Manager Alexander J. Henderson
CITY COUNCIL WORKSHOP
REPORT TO: Mayor North & City Council
REPORT FROM: Alexander J. Henderson, ICMA-CM REVIEWED BY: AP AGENDA ITEM: American Rescue Plan Funding Workshop
ACTION REQUESTED: ___Ordinance __ Resolution ____Motion _Receive/File
EXECUTIVE SUMMARY
In addition to funding households, small businesses and schools, the American Rescue Plan Act (ARPA) provides relief funds to state, local, and tribal governments that have been negatively impacted by the coronavirus pandemic. The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. These funds can be used by governments to respond to the public health and economic emergency, provide premium pay to essential workers, replace revenue lost due to the pandemic, and make necessary investments in water, sewer and broadband infrastructure. Kingsburg’s allocation is $2,896,491 (50% received in June 2021).
Council held a workshop on July 28, 2021, to brainstorm ideas for utilization of the funds. Since that time, staff has performed research to determine the eligibility of all projects discussed. More importantly, we have been awaiting the Final Rule from the Dept. of Treasury, which provides the final guidance on how funds can be utilized by the city. The Treasury released the Final Rule on January 6, 2022. The final rule takes effect on April 1, 2022.
Attached is an updated synopsis of the ideas and any comments/notes stemming from our original workshop, including new notes stemming from the final rule.
Final Rule Changes Impacting Kingsburg
1. A new determination for how local government revenue loss is determined. Localities can utilize two potential formulas for calculating revenue loss. The first allows a “standard formula” of up to $10M. - This is particularly important for us because the standard amount is above our total allocation. This makes reporting easier and gives much more flexibility to how funds are allocated. - Any general government service provided is eligible up to this threshold (e.g. purchase of vehicles).
2. Employee Hiring and Recruitment Efforts
- Maintaining current compensation levels to prevent layoffs. - Worker retention incentives, including reasonable increases in compensation.
3. Presumptions for Capital Expenditures
- Capital expenditures subject to same “related and reasonably proportional” standard as other uses. - May need to provide written justification (not pre-approval) for any projects over $1M. Must explain why the project is appropriate. For example, fiber optic infrastructure funded via APRA is eligible as it helps address the existing infrastructure deficiencies that have been exacerbated by increased work from home/school requiring internet.
4. Expansion of eligible uses for water, sewer and broadband projects Meeting Date: 03/09/2022
Agenda Item: III
- Stormwater projects do not necessarily require a water quality component. Existing culvert repair or upsizing would be eligible.
- Identifies eligible broadband projects, including emphasis on build-out of fiber optic.
Non-eligible Uses
1. Contributions to Pensions
- Note: this does not include regular pension obligations through existing employee payroll. It refers to paying down unfunded liabilities (UAL).
2. Cannot use for debt service
3. Cannot use for replenishing rainy day funds (not needed for Kingsburg) The final rule also identifies an updated reporting requirement. Our first report is now due by April 30, 2022 (additional guidance forthcoming).
Staff will provide an update on previous discussions as well as new project options identified. Staff is seeking input on project priorities and funding levels for the upcoming fiscal year. Staff continues to believe that the best approach is to identify immediate need (if any) projects, and then strategize the best use of funding in conjunction with additional details stemming from the Infrastructure Investment Act. We are in a position financially that will allow us to be patient with regards to certain projects, but can act swiftly on programs that we know will not be addressed through other funding sources.
RECOMMENDED ACTION BY CITY COUNCIL
1. Informational only. Council may provide direction on programming and fund amounts during the workshop.
POLICY ALTERNATIVE(S)
1. N/A
STRATEGIC GOAL(S) MET:
1. Improve Community Communication
2. Ensure Financial Stability
FINANCIAL INFORMATION
ATTACHED INFORMATION
1. ARPA Workshop Funding Ideas (Updated)
2. Final Rule Webinar Slides
3. Final Rule Overview
4. Infrastructure Investment Act Info (California)
FISCAL IMPACT:
1. Is There A Fiscal Impact? Yes
2. Is it Currently Budgeted? Varies
3. If Budgeted, Which Line? Varies
American Rescue Plan Allocation Ideas
Original Workshop 7/28/2021
*Updated 03/02/2022
Strategic Goal Project/Idea Total Votes Eligible? Updated with Final Rule Info Additional Info/staff comments Promote Retail Agritourism 2 Yes; under standard allowance All City Hall Remodel 3 Yes; under standard allowance Identified in CDD update of current uses Improve Public Safety City Hall Tech 1 Yes; under standard allowance; should wait on infrastructure bill detailsPublic Safety Cameras/Fiber Optic Infrastructure Promote Retail Dala dollars/Small Business Grants 1 Yes; would need to create program Still needed? All Downtown Strategic Plan Implementation 1 Yes; under standard allowance Could be used for EV charging; currently seeking a COG TOD Grant (wait COVID Related Future COVID Response 2 Yes ‐ could create drawdown fund for COVID related expenses Recommend not allocating full ARPA amount in upcoming year KPD Family Room 2 Remodel completed
Improve Public Safety KPD General Remodel 2 Yes; under standard allowance Utilize Measure E Funds COVID Related Replace Lost Revenue 4 Yes; under standard allowance Recommend not allocating full ARPA amount in upcoming year COVID Related Non‐Profits (KCAPS/Chamber/Train/Historic Park) 4 Yes; would need to create program Identify program guidelines (amounts, eligibility) Provide Rec. Opp. Parks (Athwal, BMX, Memorial Restrooms, Sports Comple 9 Yes Dog Park and Athwal IP; Sports Complex Allocation with DIF (Approx. $1 Improve Public Safety PD Signing Bonus 1 Yes; retention and hiring incentive All Permit/reservation Software 3 Yes; under standard allowance Staff is still examining best options for software COVID Related Premium Pay for City Employees 1 Yes Hazard Pay in 2021 COVID Related Senior Center (Meals, Kitchen Remodel) 5 Yes; currently utilizing some funding now CDBG and FMAAA funding restored; Senior Center Kitchen Upgrades Promote Retail/Development Small Business Grants/Façade & Outdoor Dining 6 Yes; Supplement existing program (could modify matching amounts) Suggest continue existing program and utilize additional funds if deman N/A Solar for Water Wells 1 Space for solar is limited Space limitations Promote Sust. Dev. Sustainable Development‐ Eco‐friendly initiatives 1 Likely, depending upon project COVID Related Utility Debt Forgiveness 2 Utilizing State of CA program (ARPA Funds not needed) ARPA funds not needed Promote Sust. Dev. Water Efficiency/Consumption Reduction Incentives 2 Yes; under standard allowance (would utilize enterprise funds first) Turf Replacement Program (use enterprise funds first) Improve Public Safety Water Security 1 Determine which locations/cost Promote Sust. Dev. Water SGMA; Recharge 3 Yes; under standard allowance (would utilize enterprise and DIF funds f New Dev. Impact Fee pending; will assist Promote Sust. Dev. Water Transmission/Stormwater 1 Yes; under standard allowance No immediate projects Improve Communication Youth Council 2 Yes; under standard allowance Provide Rec. Opp. Youth Sports (lost revenue/registration fees) 3 Would need program to determine amounts ‐ similar to grants for small biz New Projects (3/9/22)Promote Sust. Dev. Fiber Optic Broadband Buildout Yes Working on additional funding sources; watch infrastructure fundingImprove Public Safety Public Safety Cameras Yes Promote Retail/Development Development Incentives (Public/Private Programs) Yes Forgivable Loans Programs (Upper Floor, Safety Improvements) Promote Retail/Development Beautification Efforts Yes Partnership with Chamber and/or BID (new trashcans, downtown lightin All General Plan and NKSP Update Yes Very expensive; GP last updated in early 90s; NKSP 2005 Current ARPA Uses *Indicates staff proposal
Employee Hazard Pay (2021) $ 200,000.00
MOU Impacts (2022‐2024) $ 200,000.00
Senior Meal Program $ 20,000.00 This amount is a placeholder; additional outside funds (CDBG, FMAAA) * Athwal Park Match (Restrooms with Prop 68 funds) 40,000.00 $ * Community Development Dept. Workspace Redesign 55,000.00 $ * Parks Improvements (Sports Complex, Other) $ 500,000.00 Combine with DIF Funds, Grants and Private Funds for Phase 1 Total Proposed 1,015,000.00 $Allocation Amount 2,896,491.00 $Total of Current Uses (including proposed) $ 1,015,000.00 Remaining Amount $ 1,881,491.00
AN INTRODUCTION TO THE
Final Rule: Coronavirus State and
Local Fiscal Recovery Funds
FOR RECIPIENTS AND STAKEHOLDERS
January 2022
2 About this Webinar
The U.S. Department of the Treasury is providing this webinar, the State and Local Fiscal Recovery Funds contact channels, and other resources for informational purposes.
The descriptions provided in this document are non-exhaustive, do not describe all terms and conditions associated with the use of Coronavirus State and Local Fiscal Recovery Funds, and do not describe all requirements that may apply to this funding.
Any award from the Coronavirus State and Local Fiscal Recovery Funds will be subject to the terms and conditions of the agreement entered into by Treasury and the respective jurisdiction, which incorporate the provisions of the Final Rule and guidance that implements this program.
Recipients should note that Treasury does not pre-approve specific projects under the Coronavirus State and Local Fiscal Recovery Funds; each recipient should review the final rule to make its own assessment of whether its intended projects meets the eligibility criteria in the rule.
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds 3 Overview: Key Objectives of This Funding
The Coronavirus State and Local Fiscal Recovery Funds deliver $350 billion for state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and lead a strong, resilient, and equitable recovery.
Key objectives of this funding:
• Fight the pandemic and support families and businesses struggling with its public health and economic impacts
• Maintain vital public services, even amid declines in revenue resulting from the crisis • Build a strong, resilient, and equitable recovery by making investments that support longterm growth and opportunity U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds 4 Overview: Early Program Implementation
The Coronavirus State and Local Fiscal Recovery Funds deliver $350 billion for state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and lead a strong, resilient, and equitable recovery.
Early program implementation:
• Over $245 billion disbursed to state, local, and Tribal governments, with over 99 percent of funds available in 2021 in the hands of governments across the country, as of today • Recipients have used SLFRF funds to meet immediate pandemic needs and make investments in long-term growth and opportunity for their communities, with examples including:
– Supporting the public health response: testing and vaccination clinics, expansion of rapid testing, vaccination incentive programs, distribution of PPE, contact tracing operations & COVID19 mitigation in congregate settings – Strengthening the economic recovery: youth jobs programming, jobs and workforce training for dislocated workers, technical support to small businesses in underserved communities, creation and preservation of affordable housing, rental assistance, expansion of childcare, education programs for disproportionately impacted communities & rehiring government workers – Making longer term investments: expanding high-speed broadband access to unserved and underserved communities
• Treasury has carefully considered feedback from recipients and stakeholders, including over 1,500 comments, and hundreds of meetings and correspondence with recipients and stakeholders U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds 5 Important Note: Projects Already Underway in SLFRF Program • The final rule takes effect on April 1, 2022
• If a use of funds complies with the final rule, Treasury will not take action to enforce the interim final rule, regardless of when the funds were used (e.g., if the IFR would not permit that use of funds); recipients can take advantage of the expanded flexibilities in the final rule now
• Until April 1, the interim final rule remains in effect; funds used consistently with the IFR while it is in effect are in compliance with the SLFRF program U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds For more, please see the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule 6 Reminder: Four Key Eligible Use Categories
The American Rescue Plan provides four major categories of eligible uses to tackle the broad range of public health and economic challenges caused or exacerbated by the COVID-19 emergency. • Providing government services up to the amount of revenue loss due to the pandemic Public Sector
Revenues
• Responding to COVID-19’s public health impact, along with its economic harms
Public Health &
Economic Response
• Offering additional support to workers who bear the greatest health risks because of their service in critical sectors Premium Pay for
Essential Workers
• Providing funding to critical water and sewer projects, along with high-speed broadband infrastructure
Water, Sewer &
Broadband
Infrastructure
1 2
3 4
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Recipients have requested greater flexibility, simplicity & clarity in the final rule to respond to new pandemic needs and make transformative investments 7 Approach to the Final Rule
Treasury’s final rule provides greater flexibility and simplicity for recipients to turn the tide on the pandemic, maintain vital public services amid revenue shortfalls, and build a strong, resilient, and equitable recovery.
KEY NEW FEATURES IN THE FINAL RULE
• Major simplification for thousands of recipients through the $10 million revenue loss standard allowance Public Sector Revenues
• Providing a broader set of eligible uses for impacted and disproportionately impacted populations
• Clarifying that reasonably proportional capital expenditures may be allowable (e.g., affordable housing, hospitals)
Public Health &
Economic Response
• Streamlining options to provide premium pay by broadening the share of essential workers who can receive premium pay without a written justification
Premium Pay for
Essential
Workers
• Expanding water and sewer projects that are eligible
• Broadening eligible broadband investments to allow recipients to address access, affordability & reliability challenges
Water, Sewer &
Broadband
Infrastructure
1 2
3 4
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds 8 ✓ Construction of schools and
hospitals
✓ Road building and maintenance,
and other infrastructure
✓ Health and other services
✓ Environmental remediation
✓ Provision of police, fire, and other
public safety services (including
purchase of fire trucks and police
vehicles)
Replace Public Sector Revenue Loss
Recipients may use these funds to provide government services, up to the amount of revenue loss experienced due to the COVID-19 public health emergency. • Determine revenue loss, using one of two available options:
– Elect “standard allowance” of up to $10 million to spend on government services through the life of the program, which greatly simplifies the program for small localities – Calculate actual revenue loss according to Treasury formula » Calculate revenue loss either on a calendar or fiscal year basis » Must adjust actual revenue totals for the effect of tax cuts and tax increases that are adopted after January 6, 2022, to more accurately reflect revenue loss due to the pandemic
• Spend on government services up to the revenue loss amount – Government services generally include any service traditionally provided by a government unless Treasury has stated otherwise, such as:
1 2
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds A
B
Public Sector
Revenues
1 NEW
NEW
NEW
9 Respond to COVID-19’s Public Health and Economic Impacts Recipients may use these funds to respond to a broad range of public health and economic impacts of the pandemic for households, communities, businesses, and the public sector. • Public health impacts
• Negative economic impacts, including assistance to:
Eligible Use
Categories 1
• To identify eligible uses of funds, recipients should generally:
1. Identify a public health or economic impact to an individual or a class
2. Design a related and reasonably proportional response (e.g., a program, service, or capital expenditure)
• For convenience, Treasury has provided a non-exhaustive list of eligible uses and populations presumed eligible to receive these services
• Recipients may identify additional eligible uses beyond those enumerated by Treasury based on the standards provided in the rule Determining
Eligible Uses 2
✓ Households
✓ Small businesses
✓ Non-profits
✓ Impacted industries
✓ Public sector capacity and
workforce
Public Health and
Economic Response
2 10
Support the Public Health Response
Recipients may use these funds to support their COVID-19 public health response. • A very broad range of services and programming that are needed to contain COVID-19, including vaccination and testing programs and other COVID mitigation tactics
• May include certain capital expenditures, such as medical facilities generally dedicated to COVID-19 treatment & mitigation COVID-19 Mitigation
& Containment 1
• A broad range of prevention, treatment, harm reduction, and recovery services that may be needed to meet mental health, substance use, and other behavioral health needs
• May include certain capital expenditures, such as behavioral health facilities & equipment
Behavioral
Healthcare 3
• Responses to communities that experienced an increase in violence, particularly gun violence
• Includes community violence intervention programs &
enforcement efforts to reduce gun violence
Preventing &
Responding
to Violence
4 • Expenses to households, medical providers, or others that incurred medical costs due to the pandemic
• Includes unreimbursed expenses for COVID-19 testing or treatment & emergency medical response expenses
2 Medical Expenses
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 11
Provide Assistance to Households
Recipients may use these funds to respond to the negative economic impacts of the COVID-19 public health emergency on households and communities.
Impacted households are those that have
experienced an impact from the COVID-19
pandemic.
Treasury presumes that the following households
are impacted:
✓ Low- and- moderate income (LMI) households,
defined as those at or below 300% of FPG or
65% of AMI
✓ Households experiencing unemployment or
food or housing insecurity
✓ Households that qualify for certain federal
programs
Impacted Households Disproportionately Impacted
Households
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 Disproportionately impacted households are those that have experienced a disproportionate impact from the
COVID-19 pandemic.
Treasury presumes that the following households are
disproportionately impacted:
✓ Low income (LI) households, defined as those at or
below 185% of FPG or 40% of AMI
✓ Households located in QCTs
✓ Households receiving services from Tribal govs
✓ Households residing in the U.S. territories or
receiving services from territorial governments
✓ Households that qualify for certain fed programs
Recipients can identify other impacted or disproportionately impacted households, beyond those presumed eligible NEW
NEW
NEW
NEW
12 Provide Assistance to Households
Recipients may use these funds to respond to the negative economic impacts of the COVID-19 public health emergency on households and communities.
All impacted households, including households
presumed impacted by Treasury, are eligible for uses
that respond to the impact.
Over a dozen eligible uses, including:
Impacted Households Disproportionately Impacted
Households
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 All disproportionately impacted households, including households presumed disproportionately impacted by
Treasury, are eligible for uses that respond to the
impact & the disparities that led to the
disproportionate impact.
Many additional eligible uses, including:
✓ Addressing health
disparities: e.g.,
community health
workers, lead
remediation, health
facilities
✓ Investments in
neighborhoods to
promote health outcomes
✓ Addressing educational
disparities: e.g., enhanced
funding to high-poverty
schools & educational
facilities
✓ Improvements to
vacant and abandoned
property NEW
✓ Food assistance
✓ Re-employment and
job training
✓ Rent, mortgage, or
utility assistance &
Internet subsidies
✓ Cash assistance
✓ Health insurance
coverage expansion and
paid sick & family leave
✓ Financial services for
unbanked and
underbanked
✓ Affordable housing
development and
permanent supportive
housing
✓ Childcare, early
learning, and addressing
learning loss for K-12
students NEW
NEW
NEW
NEW
13 Provide Assistance to Small Businesses
Recipients may use these funds to respond to the negative economic impacts of the COVID-19 public health emergency on small businesses.
✓ To assess which small businesses were
impacted, recipients may consider:
✓ Decreased revenue or gross receipts
✓ Financial insecurity
✓ Increased costs
✓ And more
✓ Eligible uses include:
✓ Loans or grants to mitigate financial
hardship, such as by supporting payroll
and benefits
✓ Technical assistance, counseling or
other services to support business
planning
Impacted Small Businesses Disproportionately Impacted
Small Businesses
✓ SB presumed disproportionately impacted:
✓ Operating in QCTs
✓ Operated by Tribal governments or on
Tribal lands
✓ Operating in the U.S. territories
✓ Eligible uses include:
✓ Rehabilitation of commercial properties,
storefront & façade improvements
✓ Technical assistance, business incubators
& grants for start-up or expansions
✓ Support for microbusinesses (e.g.,
childcare, transportation)
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 NEW
NEW
NEW
14 Provide Assistance to Non-Profits
Recipients may use these funds to respond to the negative economic impacts of the COVID-19 public health emergency on non-profits.
✓ To assess which nonprofits were impacted,
recipients may consider:
✓ Decreased revenue (e.g., lower donations
or fees)
✓ Financial insecurity
✓ Increased costs (e.g., uncompensated
increases in service need)
✓ And more
✓ Eligible uses include :
✓ Loans or grants to mitigate financial
hardship
✓ Technical or in-kind assistance or other
services to mitigate negative economic
impact
Impacted Non-Profits Disproportionately Impacted
Non-Profits
✓ Non-profits presumed disproportionately
impacted:
✓ Operating in QCTs
✓ Operated by Tribal governments or on
Tribal lands
✓ Operating in the U.S. territories
✓ Eligible uses include:
✓ Responses that are related and
reasonably proportional to addressing
disparities that led to disproportionate
impacts
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 NEW
NEW
15 • Designating an impacted industry
– If industry is in the travel, tourism, or hospitality sectors (including Tribal development districts), the industry is impacted.
– If industry is outside the sectors above, the industry is impacted if it either:
» Experienced at least 8 percent employment loss from pre-pandemic levels, or » Is experiencing comparable or worse economic impacts as the national travel, tourism, and hospitality sectors as of the date of the Final Rule and the impacts resulted from the COVID-19 public health emergency
• Provide eligible aid to the impacted industry
– Many eligible uses, including:
– Aid limited to entities operating prior to the pandemic and affected by required closures and other efforts to contain the pandemic
Provide Aid to Impacted Industries
Recipients may use these funds to provide aid to impacted industries. ✓ Aid to mitigate financial hardship,
such as supporting payroll costs
✓ COVID-19 mitigation and infection
prevention measures
✓ Technical assistance, counseling or
other services to support business
planning
1 U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 NEW
2 16
• Public safety, public health, and human services staff – Payroll and covered benefits for public safety, public health, health care, human services and similar employees of a recipient government through the period of performance – Limited to the portion of the employee’s time spent responding to COVID-19, though public health and safety staff primarily dedicated to COVID-19 response may be fully covered; recipients can use reasonable estimates to determine share of employee time • Government employment & rehiring public sector staff
• Effective service delivery
✓ Supporting use of evidence, program
evaluation, data, and outreach
✓ Providing administrative expenses for
administration of programs that
respond to COVID-19
✓ Address administrative needs caused or
exacerbated by the pandemic (e.g.,
backlogs from pandemic shutdowns,
adapting government operations to the
pandemic)
Restore and Bolster Public Sector Capacity
Recipients may use these funds to restore and bolster public sector capacity, which supports governments’ ability to deliver critical COVID-19 services. ✓ Restoring employment by hiring up to
7.5% above pre-pandemic baseline
✓ Funding for employees who
experienced pay reductions or were
furloughed
✓ Maintaining current compensation
levels to prevent layoffs
✓ Worker retention incentives, including
reasonable increases in compensation
1 2
3 U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 NEW
NEW
NEW
17 The final rule provides clarity for recipients to use SLFRF funds to invest in capital expenditures as part of their public health or economic response. • Overall eligibility requirements
– Capital expenditures subject to same “related and reasonably proportional” standard as other uses – Recipients other than Tribal governments must complete Written Justification (WJ) for capital expenditures at or over $1 million
» WJ requires recipients to explain why a capital expenditure is appropriate and why the proposed capital expenditure is superior to alternatives
» Depending on project size, recipients may be required to submit WJ with reporting; no pre-approval • Presumptions for capital expenditures
Invest in Capital Expenditures
1 2
Projects presumed eligible, provided the above
requirements are met:
✓ Testing labs and equipment
✓ Emergency operations center & equipment
✓ Affordable housing
✓ Childcare facilities
✓ Schools (for Disproportionately Impacted
communities)
✓ Primary care health clinics and hospitals (for
Disproportionately Impacted communities)
Projects generally presumed to be ineligible:
× Construction of new correctional facilities
as a response to an increase in rate of
crime
× Construction of new congregate facilities
to decrease spread of COVID-19 in facility
× Construction of convention centers,
stadiums or other large capital projects
for general economic development or aid
to impacted industries
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 NEW
18 Recipients may use these funds to invest in eligible uses beyond those specifically listed as eligible by Treasury.
Invest in Eligible Uses Beyond Those Enumerated
Identify COVID-19 public health or
economic impact
Design a response to address the
identified impact
• Can identify impact to a specific
household, business or nonprofit – or to a class (e.g., group) • Can also identify
disproportionate impacts, or
more severe impacts, to a
specific beneficiary or to a class
• Response should be related and
reasonably proportional to the
harm
• Response should also be
reasonably designed to benefit
impacted individual or class
1 2
Step:
Analysis:
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Public Health and
Economic Response
2 19
Provide Premium Pay for Essential Employees
Recipients may use this funding to provide premium pay to eligible workers performing essential work, either in public sector roles or through grants to third-party employers.
Example professions and sectors eligible:
✓ Staff at nursing homes, hospitals,
and home-care settings
✓ Public health, safety, and emergency response
✓ State, local, and Tribal government workforce
✓ Workers at food production facilities, grocery
stores, restaurants, and food delivery services
✓ Janitors and sanitation workers
✓ Truck drivers, transit staff, and warehouse
workers
✓ Public health and safety staff
✓ Childcare workers, educators, and school staff
✓ Social service and human services staff
✓ Additional sectors designated by recipients
• Eligible workers are those in critical
infrastructure sectors
• Essential work involves regular in-person
interactions or physical handling of items
handled by others
• Pay must respond to worker needs:
– Serves workers who:
» Earn at or below 150 percent of
their state or county’s average
annual wage, or
» Are not exempt from Fair Labor
Standards Act overtime rules
– Or recipient provides written
justification of how it meets needs
1 2
3 Pay can be flexibly awarded up to $13 per hour in installments or lump sums to hourly, part time, or salaried/non-hourly workers, and may not exceed $25,000 for any single worker during the program U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Premium Pay for
Essential Workers
3 NEW
20 • Additional projects eligible under Final Rule
include:
Build Water and Sewer Infrastructure
Recipients may use these funds to make a broad range of necessary investments in water and sewer infrastructure.
• Projects eligible under the EPA’s State Revolving
Funds, including:
1 2
✓ Construction of publicly owned treatment works
✓ Decentralized wastewater treatment systems
construction, upgrades & repair
✓ Management & treatment of stormwater or
subsurface drainage water
✓ Water conservation, efficiency, or reuse
measures
✓ Reuse or recycling of wastewater, stormwater, or
subsurface drainage water
✓ New facilities to improve drinking water quality
✓ New sources to replace contaminated drinking
water or increase drought resilience
✓ Green infrastructure
✓ Storage of drinking water
✓ New community water systems
✓ Lead service line replacement
✓ Broad suite of additional lead remediation
activities, including lead testing and lead
service line replacement (including
replacement of faucets, fixtures, and
internal plumbing in schools and childcare
facilities)
✓ Additional stormwater infrastructure,
including culvert repair, resizing and
removal, and replacement of storm sewers
✓ Residential wells
✓ Certain dam and reservoir rehabilitation
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Water, Sewer &
Broadband
Infrastructure
4 Examples of
Clean Water
State
Revolving
Fund Projects
Examples of
Drinking Water
State
Revolving
Fund Projects
NEW
21 • Identify an eligible area for investment
– Recipients are encouraged to invest in locations without reliable wireline service of at least 100/20 Mbps speed, but are broadly able to invest in locations where recipient has identified need for additional investment
– Such need can include lack of access to high speeds, affordability & reliability • Design project to meet high-speed technical standards – Deliver reliable high-speed service of minimum 100 Mbps symmetrical speeds unless impracticable
• Require enrollment in a low-income subsidy program
– Recipients must require service providers for a broadband project that provides service to households to either:
Build Broadband Infrastructure
Recipients may use these funds to make a broad range of necessary investments in broadband infrastructure, in order to meet access, affordability, and other challenges. 1 2
✓ Participate in the FCC’s Affordable
Connectivity Program
✓ Provide access to a broad-based,
low-income affordability program
commensurate to the Affordable
Connectivity Program
3 Flexibility in eligible areas for investment complements IIJA broadband funding; recipients are also able to invest in cybersecurity for broadband infrastructure regardless of service delivery standards U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Water, Sewer &
Broadband
Infrastructure
4 NEW
NEW
22 Restrictions on Use
The final rule maintains the IFR’s restrictions on use with additional clarifications.
Net Reduction in
Tax Revenue 1
Deposits into
Pension Funds 2
Other
Restrictions
on Use
3 For states and territories:
• SLFRF may not be used to directly or indirectly offset a reduction in net tax revenue resulting from a change in state or territory law, as required by the American Rescue Plan
For all recipients except for Tribal governments:
• SLFRF may not be used for deposits into pension funds, as required by the American Rescue Plan
• A “deposit” is defined as an extraordinary contribution to a pension fund for the purpose of reducing an accrued, unfunded liability • Recipients may use funds for routine payroll contributions to pensions of employees whose wages and salaries are an eligible use
For all recipients:
• Funds may not be used for debt service, replenishing rainy day funds/financial reserves, or satisfaction of a settlement or judgment • Uses of funds may not undermine COVID-19 mitigation practices in line with CDC guidance and recommendations
• Uses of funds may not violate Uniform Guidance conflict-of-interest requirements or other applicable laws
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds 23 Non-Federal Match and Cost-Share Requirements
The final rule provides clarity on use of SLFRF funds to meet non-federal match and cost-sharing requirements of other federal programs.
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds • Funds available under the “revenue loss” eligible use category generally may be used to meet the non-federal cost-share or matching requirements of other federal programs – However, note that SLFRF funds may not be used as the non-federal share for purposes of a state’s Medicaid and CHIP programs, even under the “revenue loss” category • SLFRF funds beyond those that are available under the “revenue loss” eligible use category above may not be used to meet the non-federal match or cost-share requirements of other federal programs other than as specifically provided for by statute (e.g., the Infrastructure Investment and Jobs Act for Bureau of Reclamation and certain broadband deployment projects)
24 Note on Reporting
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Recipients Requirements
Quarterly
Reports Due
January 31
Recipients required to submit quarterly reports:
• States and territories
• Metropolitan cities and counties with
population over 250,000
• Metropolitan cities and counties with
population less than 250,000 that received an
award of more than $10 million
• Tribal governments that received an award of
more than $30 million
• Recipients should rely on reporting
guidance and user guide issued by
Treasury
• Portal will reflect certain final rule
changes, including information on
capital expenditures as part of public
health and economic response, fiscal
year revenue loss calculation, standard
allowance election, & expanded
flexibility in premium pay
Quarterly and
Annual
Reports Due
April 30
All recipients above, who are required to submit
quarterly reports, as well as recipients required to
submit annually, which include:
• Metropolitan cities and counties with
population less than 250,000 that received an
award less than $10 million,
• Tribal governments that received an award less
than $30 million
• Nonentitlement units of government
• Treasury will issue additional reporting
guidance ahead of reports due April 30
Recipients should consult Treasury’s reporting guidance and user guide for their reporting. 25 Thank you, and
time for Q&A.
For More Information:
Please visit Treasury’s State & Local website
at www.treasury.gov/SLFRP
To Request Funding:
Please visit www.treasury.gov/funding
For Media Inquiries:
Please contact the U.S. Treasury Press Office
at (202) 622-2960
For General Inquiries:
Please email [email protected]
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds Coronavirus State & Local
Fiscal Recovery Funds:
Overview of the Final Rule
U.S. DEPARTMENT OF THE TREASURY
January 2022
2 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
The Overview of the Final Rule provides a summary of major provisions of the final rule for informational purposes and is intended as a brief, simplified user guide to the final rule provisions.
The descriptions provided in this document summarize key provisions of the final rule but are non-exhaustive, do not describe all terms and conditions associated with the use of SLFRF, and do not describe all requirements that may apply to this funding. Any SLFRF funds received are also subject to the terms and conditions of the agreement entered into by Treasury and the respective jurisdiction, which incorporate the provisions of the final rule and the guidance that implements this program. 3 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Contents
Introduction ..................................................................................................................................................4 Overview of the Program..............................................................................................................................6 Replacing Lost Public Sector Revenue ..........................................................................................................9 Responding to Public Health and Economic Impacts of COVID-19.............................................................12 Responding to the Public Health Emergency..........................................................................................14 Responding to Negative Economic Impacts............................................................................................16 Assistance to Households ...................................................................................................................17 Assistance to Small Businesses...........................................................................................................21 Assistance to Nonprofits.....................................................................................................................23 Aid to Impacted Industries..................................................................................................................24 Public Sector Capacity.............................................................................................................................26 Public Safety, Public Health, and Human Services Staff .....................................................................26 Government Employment and Rehiring Public Sector Staff...............................................................27 Effective Service Delivery....................................................................................................................28 Capital Expenditures...............................................................................................................................30 Framework for Eligible Uses Beyond those Enumerated .......................................................................32 Premium Pay...............................................................................................................................................35 Water & Sewer Infrastructure ....................................................................................................................37 Broadband Infrastructure ...........................................................................................................................39 Restrictions on Use .....................................................................................................................................41 Program Administration .............................................................................................................................43 4 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Introduction
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), a part of the American Rescue Plan, delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. The program ensures that governments have the resources needed to:
• Fight the pandemic and support families and businesses struggling with its public health and economic impacts,
• Maintain vital public services, even amid declines in revenue, and • Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity.
EARLY PROGRAM IMPLEMENTATION
In May 2021, Treasury published the Interim final rule (IFR) describing eligible and ineligible uses of funds (as well as other program provisions), sought feedback from the public on these program rules, and began to distribute funds. The IFR went immediately into effect in May, and since then, governments have used SLFRF funds to meet their immediate pandemic response needs and begin building a strong and equitable recovery, such as through providing vaccine incentives, development of affordable housing, and construction of infrastructure to deliver safe and reliable water.
As governments began to deploy this funding in their communities, Treasury carefully considered the feedback provided through its public comment process and other forums. Treasury received over 1,500 comments, participated in hundreds of meetings, and received correspondence from a wide range of governments and other stakeholders.
KEY CHANGES AND CLARIFICATIONS IN THE FINAL RULE
The final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback in the comment process. Among other clarifications and changes, the final rule provides the features below.
Replacing Lost Public Sector Revenue
The final rule offers a standard allowance for revenue loss of $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation. Recipients that select the standard allowance may use that amount – in many cases their full award – for government services, with streamlined reporting requirements.
Public Health and Economic Impacts
In addition to programs and services, the final rule clarifies that recipients can use funds for capital expenditures that support an eligible COVID-19 public health or economic response. For example, recipients may build certain affordable housing, childcare facilities, schools, hospitals, and other projects consistent with final rule requirements.
5 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
In addition, the final rule provides an expanded set of households and communities that are presumed to be “impacted” and “disproportionately impacted” by the pandemic, thereby allowing recipients to provide responses to a broad set of households and entities without requiring additional analysis.
Further, the final rule provides a broader set of uses available for these communities as part of COVID19 public health and economic response, including making affordable housing, childcare, early learning, and services to address learning loss during the pandemic eligible in all impacted communities and making certain community development and neighborhood revitalization activities eligible for disproportionately impacted communities.
Further, the final rule allows for a broader set of uses to restore and support government employment, including hiring above a recipient’s pre-pandemic baseline, providing funds to employees that experienced pay cuts or furloughs, avoiding layoffs, and providing retention incentives.
Premium Pay
The final rule delivers more streamlined options to provide premium pay, by broadening the share of eligible workers who can receive premium pay without a written justification while maintaining a focus on lower-income and frontline workers performing essential work.
Water, Sewer & Broadband Infrastructure
The final rule significantly broadens eligible broadband infrastructure investments to address challenges with broadband access, affordability, and reliability, and adds additional eligible water and sewer infrastructure investments, including a broader range of lead remediation and stormwater management projects.
FINAL RULE EFFECTIVE DATE
The final rule takes effect on April 1, 2022. Until that time, the interim final rule remains in effect; funds used consistently with the IFR while it is in effect are in compliance with the SLFRF program.
However, recipients can choose to take advantage of the final rule’s flexibilities and simplifications now, even ahead of the effective date. Treasury will not take action to enforce the interim final rule to the extent that a use of funds is consistent with the terms of the final rule, regardless of when the SLFRF funds were used. Recipients may consult the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule, which can be found on Treasury’s website, for more information on compliance with the interim final rule and the final rule. 6 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Overview of the Program
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program provides substantial flexibility for each jurisdiction to meet local needs within the four separate eligible use categories. This Overview of the Final Rule addresses the four eligible use categories ordered from the broadest and most flexible to the most specific.
Recipients may use SLFRF funds to:
• Replace lost public sector revenue, using this funding to provide government services up to the amount of revenue loss due to the pandemic.
• Recipients may determine their revenue loss by choosing between two options:
• A standard allowance of up to $10 million in aggregate, not to exceed their award amount, during the program;
• Calculating their jurisdiction’s specific revenue loss each year using Treasury’s formula, which compares actual revenue to a counterfactual trend. • Recipients may use funds up to the amount of revenue loss for government services; generally, services traditionally provided by recipient governments are government services, unless Treasury has stated otherwise.
• Support the COVID-19 public health and economic response by addressing COVID-19 and its impact on public health as well as addressing economic harms to households, small businesses, nonprofits, impacted industries, and the public sector. • Recipients can use funds for programs, services, or capital expenditures that respond to the public health and negative economic impacts of the pandemic. • To provide simple and clear eligible uses of funds, Treasury provides a list of enumerated uses that recipients can provide to households, populations, or classes (i.e., groups) that experienced pandemic impacts.
• Public health eligible uses include COVID-19 mitigation and prevention, medical expenses, behavioral healthcare, and preventing and responding to violence. • Eligible uses to respond to negative economic impacts are organized by the type of beneficiary: assistance to households, small businesses, and nonprofits. • Each category includes assistance for “impacted” and “disproportionately impacted” classes: impacted classes experienced the general, broad-based impacts of the pandemic, while disproportionately impacted classes faced meaningfully more severe impacts, often due to preexisting disparities. • To simplify administration, the final rule presumes that some populations and groups were impacted or disproportionately impacted and are eligible for responsive services.
7 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
• Eligible uses for assistance to impacted households include aid for reemployment, job training, food, rent, mortgages, utilities, affordable housing development, childcare, early education, addressing learning loss, and many more uses.
• Eligible uses for assistance to impacted small businesses or nonprofits include loans or grants to mitigate financial hardship, technical assistance for small businesses, and many more uses.
• Recipients can also provide assistance to impacted industries like travel, tourism, and hospitality that faced substantial pandemic impacts, or address impacts to the public sector, for example by re-hiring public sector workers cut during the crisis. • Recipients providing funds for enumerated uses to populations and groups that Treasury has presumed eligible are clearly operating consistently with the final rule.
Recipients can also identify (1) other populations or groups, beyond those presumed eligible, that experienced pandemic impacts or disproportionate impacts and (2) other programs, services, or capital expenditures, beyond those enumerated, to respond to those impacts.
• Provide premium pay for eligible workers performing essential work, offering additional support to those who have and will bear the greatest health risks because of their service in critical sectors.
• Recipients may provide premium pay to eligible workers – generally those working inperson in key economic sectors – who are below a wage threshold or non-exempt from the Fair Labor Standards Act overtime provisions, or if the recipient submits justification that the premium pay is responsive to workers performing essential work. • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, to support vital wastewater and stormwater infrastructure, and to expand affordable access to broadband internet. • Recipients may fund a broad range of water and sewer projects, including those eligible under the EPA’s Clean Water State Revolving Fund, EPA’s Drinking Water State Revolving Fund, and certain additional projects, including a wide set of lead remediation, stormwater infrastructure, and aid for private wells and septic units. • Recipients may fund high-speed broadband infrastructure in areas of need that the recipient identifies, such as areas without access to adequate speeds, affordable options, or where connections are inconsistent or unreliable; completed projects must participate in a low-income subsidy program.
While recipients have considerable flexibility to use funds to address the diverse needs of their communities, some restrictions on use apply across all eligible use categories. These include:
• For states and territories: No offsets of a reduction in net tax revenue resulting from a change in state or territory law.
8 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
• For all recipients except for Tribal governments: No extraordinary contributions to a pension fund for the purpose of reducing an accrued, unfunded liability. • For all recipients: No payments for debt service and replenishments of rainy day funds; no satisfaction of settlements and judgments; no uses that contravene or violate the American Rescue Plan Act, Uniform Guidance conflicts of interest requirements, and other federal, state, and local laws and regulations.
Under the SLFRF program, funds must be used for costs incurred on or after March 3, 2021. Further, funds must be obligated by December 31, 2024, and expended by December 31, 2026. This time period, during which recipients can expend SLFRF funds, is the “period of performance.” In addition to SLFRF, the American Rescue Plan includes other sources of funding for state and local governments, including the Coronavirus Capital Projects Fund to fund critical capital investments including broadband infrastructure; the Homeowner Assistance Fund to provide relief for our country’s most vulnerable homeowners; the Emergency Rental Assistance Program to assist households that are unable to pay rent or utilities; and the State Small Business Credit Initiative to fund small business credit expansion initiatives. Eligible recipients are encouraged to visit the Treasury website for more information.
9 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Replacing Lost Public Sector Revenue
The Coronavirus State and Local Fiscal Recovery Funds provide needed fiscal relief for recipients that have experienced revenue loss due to the onset of the COVID-19 public health emergency. Specifically, SLFRF funding may be used to pay for “government services” in an amount equal to the revenue loss experienced by the recipient due to the COVID-19 public health emergency.
Government services generally include any service traditionally provided by a government, including construction of roads and other infrastructure, provision of public safety and other services, and health and educational services. Funds spent under government services are subject to streamlined reporting and compliance requirements.
In order to use funds under government services, recipients should first determine revenue loss. They may, then, spend up to that amount on general government services.
DETERMINING REVENUE LOSS
Recipients have two options for how to determine their amount of revenue loss. Recipients must choose one of the two options and cannot switch between these approaches after an election is made.
1. Recipients may elect a “standard allowance” of $10 million to spend on government services through the period of performance.
Under this option, which is newly offered in the final rule Treasury presumes that up to $10 million in revenue has been lost due to the public health emergency and recipients are permitted to use that amount (not to exceed the award amount) to fund “government services.” The standard allowance provides an estimate of revenue loss that is based on an extensive analysis of average revenue loss across states and localities, and offers a simple, convenient way to determine revenue loss, particularly for SLFRF’s smallest recipients.
All recipients may elect to use this standard allowance instead of calculating lost revenue using the formula below, including those with total allocations of $10 million or less. Electing the standard allowance does not increase or decrease a recipient’s total allocation.
2. Recipients may calculate their actual revenue loss according to the formula articulated in the final rule.
Under this option, recipients calculate revenue loss at four distinct points in time, either at the end of each calendar year (e.g., December 31 for years 2020, 2021, 2022, and 2023) or the end of each fiscal year of the recipient. Under the flexibility provided in the final rule, recipients can choose whether to use calendar or fiscal year dates but must be consistent throughout the period of performance. Treasury has also provided several adjustments to the definition of general revenue in the final rule.
To calculate revenue loss at each of these dates, recipients must follow a four-step process:
10 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
a. Calculate 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.
b. Estimate counterfactual revenue, which is equal to the following formula, where n is the number of months elapsed since the end of the base year to the calculation date:
𝑏𝑎𝑠𝑒 𝑦𝑒𝑎𝑟 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 × (1 + 𝑔𝑟𝑜𝑤𝑡ℎ 𝑎𝑑𝑗𝑢𝑠𝑡𝑚𝑒𝑛𝑡)
𝑛
12 The growth adjustment is the greater of either a standard growth rate—5.2 percent—or the recipient’s average annual revenue growth in the last full three fiscal years prior to the COVID-19 public health emergency.
c. Identify actual revenue, which equals revenues collected over the twelve months immediately preceding the calculation date.
Under the final rule, recipients must adjust actual revenue totals for the effect of tax cuts and tax increases that are adopted after the date of adoption of the final rule (January 6, 2022). Specifically, the estimated fiscal impact of tax cuts and tax increases adopted after January 6, 2022, must be added or subtracted to the calculation of actual revenue for purposes of calculation dates that occur on or after April 1, 2022.
Recipients may subtract from their calculation of actual revenue the effect of tax increases enacted prior to the adoption of the final rule. Note that recipients that elect to remove the effect of tax increases enacted before the adoption of the final rule must also remove the effect of tax decreases enacted before the adoption of the final rule, such that they are accurately removing the effect of tax policy changes on revenue. d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual revenue (adjusted for tax changes) for the twelve-month period. If actual revenue exceeds counterfactual revenue, the loss is set to zero for that twelve-month period.
Revenue loss for the period of performance is the sum of the revenue loss on for each calculation date.
The supplementary information in the final rule provides an example of this calculation, which recipients may find helpful, in the Revenue Loss section. 11 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
SPENDING ON GOVERNMENT SERVICES
Recipients can use SLFRF funds on government services up to the revenue loss amount, whether that be the standard allowance amount or the amount calculated using the above approach. Government services generally include any service traditionally provided by a government, unless Treasury has stated otherwise. Here are some common examples, although this list is not exhaustive:
✓ Construction of schools and hospitals
✓ Road building and maintenance, and
other infrastructure
✓ Health services
✓ General government administration,
staff, and administrative facilities
✓ Environmental remediation
✓ Provision of police, fire, and other public
safety services (including purchase of
fire trucks and police vehicles)
Government services is the most flexible eligible use category under the SLFRF program, and funds are subject to streamlined reporting and compliance requirements. Recipients should be mindful that certain restrictions, which are detailed further in the Restrictions on Use section and apply to all uses of funds, apply to government services as well.
12 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Responding to Public Health and Economic Impacts of COVID-19 The Coronavirus State and Local Fiscal Recovery Funds provide resources for governments to meet the public health and economic needs of those impacted by the pandemic in their communities, as well as address longstanding health and economic disparities, which amplified the impact of the pandemic in disproportionately impacted communities, resulting in more severe pandemic impacts.
The eligible use category to respond to public health and negative economic impacts is organized around the types of assistance a recipient may provide and includes several sub-categories:
• public health,
• assistance to households,
• assistance to small businesses,
• assistance to nonprofits,
• aid to impacted industries, and
• public sector capacity.
In general, to identify eligible uses of funds in this category, recipients should (1) identify a COVID-19 public health or economic impact on an individual or class (i.e., a group) and (2) design a program that responds to that impact. Responses should be related and reasonably proportional to the harm identified and reasonably designed to benefit those impacted.
To provide simple, clear eligible uses of funds that meet this standard, Treasury provides a nonexhaustive list of enumerated uses that respond to pandemic impacts. Treasury also presumes that some populations experienced pandemic impacts and are eligible for responsive services. In other words, recipients providing enumerated uses of funds to populations presumed eligible are clearly operating consistently with the final rule.1
Recipients also have broad flexibility to (1) identify and respond to other pandemic impacts and (2) serve other populations that experienced pandemic impacts, beyond the enumerated uses and presumed eligible populations. Recipients can also identify groups or “classes” of beneficiaries that experienced pandemic impacts and provide services to those classes. 1 However, please note that use of funds for enumerated uses may not be grossly disproportionate to the harm. Further, recipients should consult the Capital Expenditures section for more information about pursuing a capital expenditure; please note that enumerated capital expenditures are not presumed to be reasonably proportional responses to an identified harm except as provided in the Capital Expenditures section. 13 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Step 1. Identify COVID-19 public health or
economic impact
2. Design a response that addresses or
responds to the impact
Analysis
• Can identify impact to a specific
household, business or nonprofit or
to a class of households, businesses,
or nonprofits (i.e., group)
• Can also identify disproportionate
impacts, or more severe impacts, to
a specific beneficiary or to a class
• Types of responses can include a
program, service, or capital
expenditure
• Response should be related and
reasonably proportional to the harm
• Response should also be reasonably
designed to benefit impacted
individual or class
Simplifying
Presumptions
• Final Rule presumes certain
populations and classes are impacted
and disproportionately impacted
• Final Rule provides non-exhaustive
list of enumerated eligible uses that
respond to pandemic impacts and
disproportionate impacts
To assess eligibility of uses of funds, recipients should first determine the sub-category where their use of funds may fit (e.g., public health, assistance to households, assistance to small businesses), based on the entity that experienced the health or economic impact. 2 Then, recipients should refer to the relevant
section for more details on each sub-category.
While the same overall eligibility standard applies to all uses of funds to respond to the public health and negative economic impacts of the pandemic, each sub-category has specific nuances on its application. In addition:
• Recipients interested in using funds for capital expenditures (i.e., investments in property, facilities, or equipment) should review the Capital Expenditures section in addition to the eligible use sub-category.
• Recipients interested in other uses of funds, beyond the enumerated uses, should refer to the section on “Framework for Eligible Uses Beyond Those Enumerated.” 2 For example, a recipient interested in providing aid to unemployed individuals is addressing a negative economic impact experienced by a household and should refer to the section on assistance to households. Recipients should also be aware of the difference between “beneficiaries” and “sub-recipients.” Beneficiaries are households, small businesses, or nonprofits that can receive assistance based on impacts of the pandemic that they experienced. On the other hand, sub-recipients are organizations that carry out eligible uses on behalf of a government, often through grants or contracts. Sub-recipients do not need to have experienced a negative economic impact of the pandemic; rather, they are providing services to beneficiaries that experienced an impact.
14 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
RESPONDING TO THE PUBLIC HEALTH EMERGENCY
While the country has made tremendous progress in the fight against COVID-19, including a historic vaccination campaign, the disease still poses a grave threat to Americans’ health and the economy.
Providing state, local, and Tribal governments the resources needed to fight the COVID-19 pandemic is a core goal of the Coronavirus State and Local Fiscal Recovery Funds, as well as addressing the other ways that the pandemic has impacted public health. Treasury has identified several public health impacts of the pandemic and enumerated uses of funds to respond to impacted populations. • COVID-19 mitigation and prevention. The pandemic has broadly impacted Americans and recipients can provide services to prevent and mitigate COVID-19 to the general public or to small businesses, nonprofits, and impacted industries in general. Enumerated eligible uses include:
✓ Vaccination programs, including vaccine
incentives and vaccine sites
✓ Testing programs, equipment and sites
✓ Monitoring, contact tracing & public
health surveillance (e.g., monitoring for
variants)
✓ Public communication efforts
✓ Public health data systems
✓ COVID-19 prevention and treatment
equipment, such as ventilators and
ambulances
✓ Medical and PPE/protective supplies
✓ Support for isolation or quarantine
✓ Ventilation system installation and
improvement
✓ Technical assistance on mitigation of
COVID-19 threats to public health and
safety
✓ Transportation to reach vaccination or
testing sites, or other prevention and
mitigation services for vulnerable
populations
✓ Support for prevention, mitigation, or
other services in congregate living
facilities, public facilities, and schools
✓ Support for prevention and mitigation
strategies in small businesses, nonprofits,
and impacted industries
✓ Medical facilities generally dedicated to
COVID-19 treatment and mitigation (e.g.,
ICUs, emergency rooms)
✓ Temporary medical facilities and other
measures to increase COVID-19 treatment
capacity
✓ Emergency operations centers &
emergency response equipment (e.g.,
emergency response radio systems)
✓ Public telemedicine capabilities for COVID19 related treatment 15 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
• Medical expenses. Funds may be used for expenses to households, medical providers, or others that incurred medical costs due to the pandemic, including:
✓ Unreimbursed expenses for medical care
for COVID-19 testing or treatment, such
as uncompensated care costs for
medical providers or out-of-pocket costs
for individuals
✓ Paid family and medical leave for public
employees to enable compliance with
COVID-19 public health precautions
✓ Emergency medical response expenses
✓ Treatment of long-term symptoms or effects
of COVID-19
• Behavioral health care, such as mental health treatment, substance use treatment, and other behavioral health services. Treasury recognizes that the pandemic has broadly impacted Americans’ behavioral health and recipients can provide these services to the general public to respond.
Enumerated eligible uses include:
✓ Prevention, outpatient treatment,
inpatient treatment, crisis care,
diversion programs, outreach to
individuals not yet engaged in
treatment, harm reduction & long-term
recovery support
✓ Enhanced behavioral health services in
schools
✓ Services for pregnant women or infants
born with neonatal abstinence
syndrome
✓ Support for equitable access to reduce
disparities in access to high-quality
treatment
✓ Peer support groups, costs for residence in
supportive housing or recovery housing, and
the 988 National Suicide Prevention Lifeline
or other hotline services
✓ Expansion of access to evidence-based
services for opioid use disorder prevention,
treatment, harm reduction, and recovery
✓ Behavioral health facilities & equipment
• Preventing and responding to violence. Recognizing that violence – and especially gun violence – has increased in some communities due to the pandemic, recipients may use funds to respond in these communities through:
✓ Referrals to trauma recovery services for
victims of crime
✓ Community violence intervention
programs, including:
• Evidence-based practices like
focused deterrence, with
wraparound services such as
behavioral therapy, trauma
recovery, job training, education,
housing and relocation services, and
financial assistance
✓ In communities experiencing increased
gun violence due to the pandemic:
• Law enforcement officers focused
on advancing community policing
• Enforcement efforts to reduce gun
violence, including prosecution
• Technology & equipment to support
law enforcement response
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Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
RESPONDING TO NEGATIVE ECONOMIC IMPACTS
The pandemic caused severe economic damage and, while the economy is on track to a strong recovery, much work remains to continue building a robust, resilient, and equitable economy in the wake of the crisis and to ensure that the benefits of this recovery reach all Americans. While the pandemic impacted millions of American households and businesses, some of its most severe impacts fell on low-income and underserved communities, where pre-existing disparities amplified the impact of the pandemic and where the most work remains to reach a full recovery.
The final rule recognizes that the pandemic caused broad-based impacts that affected many communities, households, and small businesses across the country; for example, many workers faced unemployment and many small businesses saw declines in revenue. The final rule describes these as “impacted" households, communities, small businesses, and nonprofits.
At the same time, the pandemic caused disproportionate impacts, or more severe impacts, in certain communities. For example, low-income and underserved communities have faced more severe health and economic outcomes like higher rates of COVID-19 mortality and unemployment, often because preexisting disparities exacerbated the impact of the pandemic. The final rule describes these as “disproportionately impacted” households, communities, small businesses, and nonprofits.
To simplify administration of the program, the final rule presumes that certain populations were “impacted” and “disproportionately impacted” by the pandemic; these populations are presumed to be eligible for services that respond to the impact they experienced. The final rule also enumerates a nonexhaustive list of eligible uses that are recognized as responsive to the impacts or disproportionate impacts of COVID-19. Recipients providing enumerated uses to populations presumed eligible are clearly operating consistently with the final rule.
As discussed further in the section Framework for Eligible Uses Beyond Those Enumerated, recipients can also identify other pandemic impacts, impacted or disproportionately impacted populations or classes, and responses.
17 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Assistance to Households
Impacted Households and Communities
Treasury presumes the following households and communities are impacted by the pandemic:
✓ Low- or-moderate income households or
communities
✓ Households that experienced
unemployment
✓ Households that experienced increased
food or housing insecurity
✓ Households that qualify for the Children’s
Health Insurance Program, Childcare
Subsidies through the Child Care
Development Fund (CCDF) Program, or
Medicaid
✓ When providing affordable housing programs:
households that qualify for the National Housing
Trust Fund and Home Investment Partnerships
Program
✓ When providing services to address lost
instructional time in K-12 schools: any student
that lost access to in-person instruction for a
significant period of time
Low- or moderate-income households and communities are those with (i) income at or below 300 percent of the Federal Poverty Guidelines for the size of the household based on the most recently published poverty guidelines or (ii) income at or below 65 percent of the area median income for the county and size of household based on the most recently published data. For the vast majority of communities, the Federal Poverty Guidelines are higher than the area’s median income and using the Federal Poverty Guidelines would result in more households and communities being presumed eligible.
Treasury has provided an easy-to-use spreadsheet with Federal Poverty Guidelines and area median income levels on its website.
Recipients can measure income for a specific household or the median income for the community, depending on whether the response they plan to provide serves specific households or the general community. The income thresholds vary by household size; recipients should generally use income thresholds for the appropriate household size but can use a default household size of three when easier for administration or when measuring income for a general community.
The income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $65,880 per year.3In other words, recipients can always presume that a household earning below this level, or a community with median income below this level, is impacted by the pandemic and eligible for services to respond. Additionally, by following the steps detailed in the section Framework for Eligible Uses Beyond Those Enumerated, recipients may designate additional households as impacted or disproportionately impacted beyond these presumptions, and may also pursue projects not listed below in response to these impacts consistent with Treasury’s standards. 3 For recipients in Alaska, the income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $82,350 per year. For recipients in Hawaii, the income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $75,780 per year.
18 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Treasury recognizes the enumerated projects below, which have been expanded under the final rule, as eligible to respond to impacts of the pandemic on households and communities:
✓ Food assistance & food banks
✓ Emergency housing assistance: rental
assistance, mortgage assistance, utility
assistance, assistance paying delinquent
property taxes, counseling and legal aid to
prevent eviction and homelessness &
emergency programs or services for homeless
individuals, including temporary residences
for people experiencing homelessness
✓ Health insurance coverage expansion
✓ Benefits for surviving family members of
individuals who have died from COVID-19
✓ Assistance to individuals who want and are
available for work, including job training,
public jobs programs and fairs, support for
childcare and transportation to and from a
jobsite or interview, incentives for newlyemployed workers, subsidized employment, grants to hire underserved workers,
assistance to unemployed individuals to start
small businesses & development of job and
workforce training centers
✓ Financial services for the unbanked and
underbanked
✓ Burials, home repair & home weatherization
✓ Programs, devices & equipment for internet
access and digital literacy, including subsidies
for costs of access
✓ Cash assistance
✓ Paid sick, medical, and family leave programs
✓ Assistance in accessing and applying for
public benefits or services
✓ Childcare and early learning services, home
visiting programs, services for child welfareinvolved families and foster youth & childcare facilities
✓ Assistance to address the impact of learning
loss for K-12 students (e.g., high-quality
tutoring, differentiated instruction)
✓ Programs or services to support long-term
housing security: including development of
affordable housing and permanent
supportive housing
✓ Certain contributions to an Unemployment
Insurance Trust Fund4
4 Recipients may only use SLFRF funds for contributions to unemployment insurance trust funds and repayment of the principal amount due on advances received under Title XII of the Social Security Act up to an amount equal to (i) the difference between the balance in the recipient’s unemployment insurance trust fund as of January 27, 2020 and the balance of such account as of May 17, 2021, plus (ii) the principal amount outstanding as of May 17, 2021 on any advances received under Title XII of the Social Security Act between January 27, 2020 and May 17, 2021. Further, recipients may use SLFRF funds for the payment of any interest due on such Title XII advances. Additionally, a recipient that deposits SLFRF funds into its unemployment insurance trust fund to fully restore the pre-pandemic balance may not draw down that balance and deposit more SLFRF funds, back up to the pre-pandemic balance. Recipients that deposit SLFRF funds into an unemployment insurance trust fund, or use SLFRF funds to repay principal on Title XII advances, may not take action to reduce benefits available to unemployed workers by changing the computation method governing regular unemployment compensation in a way that results in a reduction of average weekly benefit amounts or the number of weeks of benefits payable (i.e., maximum benefit entitlement). 19 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Disproportionately Impacted Households and Communities
Treasury presumes the following households and communities are disproportionately impacted by the pandemic:
✓ Low -income households and communities
✓ Households residing in Qualified Census
Tracts
✓ Households that qualify for certain federal
5 benefits
✓ Households receiving services provided by
Tribal governments
✓ Households residing in the U.S. territories or
receiving services from these governments
Low-income households and communities are those with (i) income at or below 185 percent of the Federal Poverty Guidelines for the size of its household based on the most recently published poverty guidelines or (ii) income at or below 40 percent of area median income for its county and size of household based on the most recently published data. For the vast majority of communities, the Federal Poverty Guidelines level is higher than the area median income level and using this level would result in more households and communities being presumed eligible. Treasury has provided an easy-to-use spreadsheet with Federal Poverty Guidelines and area median income levels on its website.
Recipients can measure income for a specific household or the median income for the community, depending on whether the service they plan to provide serves specific households or the general community. The income thresholds vary by household size; recipients should generally use income thresholds for the appropriate household size but can use a default household size of three when easier for administration or when measuring income for a general community.
The income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $40,626 per year.6In other words, recipients can always presume that a household earning below this level, or a community with median income below this level, is disproportionately impacted by the pandemic and eligible for services to respond.
5 These programs are Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), Free- and Reduced-Price Lunch (NSLP) and/or School Breakfast (SBP) programs, Medicare Part D Low-Income Subsidies, Supplemental Security Income (SSI), Head Start and/or Early Head Start, Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), Section 8 Vouchers, Low-Income Home Energy Assistance Program (LIHEAP), and Pell Grants. For services to address educational disparities, Treasury will recognize Title I eligible schools as disproportionately impacted and responsive services that support the school generally or support the whole school as eligible. 6 For recipients in Alaska, the income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $50,783 per year. For recipients in Hawaii, the income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $46,731 per year
20 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Treasury recognizes the enumerated projects below, which have been expanded under the final rule, as eligible to respond to disproportionate impacts of the pandemic on households and communities:
✓ Pay for community health workers to help
households access health & social services
✓ Remediation of lead paint or other lead
hazards
✓ Primary care clinics, hospitals, integration of
health services into other settings, and other
investments in medical equipment & facilities
designed to address health disparities
✓ Housing vouchers & assistance relocating to
neighborhoods with higher economic
opportunity
✓ Investments in neighborhoods to promote
improved health outcomes
✓ Improvements to vacant and abandoned
properties, including rehabilitation or
maintenance, renovation, removal and
remediation of environmental contaminants,
demolition or deconstruction, greening/vacant lot
cleanup & conversion to affordable housing7
✓ Services to address educational disparities,
including assistance to high-poverty school
districts & educational and evidence-based
services to address student academic, social,
emotional, and mental health needs
✓ Schools and other educational equipment &
facilities
7 Please see the final rule for further details and conditions applicable to this eligible use. This includes Treasury’s presumption that demolition of vacant or abandoned residential properties that results in a net reduction in occupiable housing units for low- and moderate-income individuals in an area where the availability of such housing is lower than the need for such housing is ineligible for support with SLFRF funds.
21 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Assistance to Small Businesses
Small businesses have faced widespread challenges due to the pandemic, including periods of shutdown, declines in revenue, or increased costs. The final rule provides many tools for recipients to respond to the impacts of the pandemic on small businesses, or disproportionate impacts on businesses where pre-existing disparities like lack of access to capital compounded the pandemic’s effects.
Small businesses eligible for assistance are those that experienced negative economic impacts or disproportionate impacts of the pandemic and meet the definition of “small business,” specifically:
1. Have 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. Are a small business concern as defined in section 3 of the Small Business Act8(which includes, among other requirements, that the business is independently owned and operated and is not dominant in its field of operation).
Impacted Small Businesses
Recipients can identify small businesses impacted by the pandemic, and measures to respond, in many ways; for example, recipients could consider:
✓ Decreased revenue or gross receipts
✓ Financial insecurity
✓ Increased costs
✓ Capacity to weather financial hardship
✓ Challenges covering payroll, rent or
mortgage, and other operating costs
Assistance to small businesses that experienced negative economic impacts includes the following enumerated uses:
✓ Loans or grants to mitigate financial
hardship, such as by supporting payroll
and benefits, costs to retain employees,
and mortgage, rent, utility, and other
operating costs
✓ Technical assistance, counseling, or other
services to support business planning
Disproportionately Impacted Small Businesses
Treasury presumes that the following small businesses are disproportionately impacted by the pandemic:
8 15 U.S.C. 632.
22 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
✓ Small businesses operating in Qualified
Census Tracts
✓ Small businesses operated by Tribal
governments or on Tribal lands
✓ Small businesses operating in the U.S.
territories
Assistance to disproportionately impacted small businesses includes the following enumerated uses, which have been expanded under the final rule:
✓ Rehabilitation of commercial properties,
storefront improvements & façade
improvements
✓ Technical assistance, business incubators &
grants for start-up or expansion costs for
small businesses
✓ Support for microbusinesses, including
financial, childcare, and transportation costs
23 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Assistance to Nonprofits
Nonprofits have faced significant challenges due to the pandemic’s increased demand for services and changing operational needs, as well as declines in revenue sources such as donations and fees.
Nonprofits eligible for assistance are those that experienced negative economic impacts or disproportionate impacts of the pandemic and meet the definition of “nonprofit”—specifically those that are 501(c)(3) or 501(c)(19) tax-exempt organizations.
Impacted Nonprofits
Recipients can identify nonprofits impacted by the pandemic, and measures to respond, in many ways; for example, recipients could consider:
✓ Decreased revenue (e.g., from donations
and fees)
✓ Financial insecurity
✓ Increased costs (e.g., uncompensated
increases in service need)
✓ Capacity to weather financial hardship
✓ Challenges covering payroll, rent or
mortgage, and other operating costs
Assistance to nonprofits that experienced negative economic impacts includes the following enumerated uses:
✓ Loans or grants to mitigate financial
hardship
✓ Technical or in-kind assistance or other
services that mitigate negative economic
impacts of the pandemic
Disproportionately Impacted Nonprofits
Treasury presumes that the following nonprofits are disproportionately impacted by the pandemic:
✓ Nonprofits operating in Qualified Census
Tracts
✓ Nonprofits operated by Tribal
governments or on Tribal lands
✓ Nonprofits operating in the U.S. territories
Recipients may identify appropriate responses that are related and reasonably proportional to addressing these disproportionate impacts.
24 U.S. DEPARTMENT OF THE TREASURY
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Aid to Impacted Industries
Recipients may use SLFRF funding to provide aid to industries impacted by the COVID-19 pandemic.
Recipients should first designate an impacted industry and then provide aid to address the impacted industry’s negative economic impact.
This sub-category of eligible uses does not separately identify disproportionate impacts and corresponding responsive services.
1. Designating an impacted industry. There are two main ways an industry can be designated as “impacted.”
1. If the industry is in the travel, tourism, or hospitality sectors (including Tribal development districts), the industry is impacted.
2. If the industry is outside the travel, tourism, or hospitality sectors, the industry is impacted if:
a. The industry experienced at least 8 percent employment loss from pre-pandemic levels,9 or
b. The industry is experiencing comparable or worse economic impacts as the national tourism, travel, and hospitality industries as of the date of the final rule, based on the totality of economic indicators or qualitative data (if quantitative data is unavailable), and if the impacts were generally due to the COVID-19 public health emergency.
Recipients have flexibility to define industries broadly or narrowly, but Treasury encourages recipients to define narrow and discrete industries eligible for aid. State and territory recipients also have flexibility to define the industries with greater geographic precision; for example, a state may identify a particular industry in a certain region of a state as impacted.
2. Providing eligible aid to the impacted industry. Aid may only be provided to support businesses, attractions, and Tribal development districts operating prior to the pandemic and affected by required closures and other efforts to contain the pandemic. Further, aid should be generally broadly available to all businesses within the impacted industry to avoid potential conflicts of interest, and Treasury encourages aid to be first used for operational expenses, such as payroll, before being used on other types of costs.
9 Specifically, a recipient should compare the percent change in the number of employees of the recipient’s identified industry and the national Leisure & Hospitality sector in the three months before the pandemic’s most severe impacts began (a straight three-month average of seasonally-adjusted employment data from December 2019, January 2020, and February 2020) with the latest data as of the final rule (a straight three-month average of seasonally-adjusted employment data from September 2021, October 2021, and November 2021). For parity and simplicity, smaller recipients without employment data that measure industries in their specific jurisdiction may use data available for a broader unit of government for this calculation (e.g., a county may use data from the state in which it is located; a city may use data for the county, if available, or state in which it is located) solely for purposes of determining whether a particular industry is an impacted industry. 25 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Treasury recognizes the enumerated projects below as eligible responses to impacted industries.
✓ Aid to mitigate financial hardship, such
as supporting payroll costs, lost pay and
benefits for returning employees,
support of operations and maintenance
of existing equipment and facilities
✓ Technical assistance, counseling, or
other services to support business
planning
✓ COVID-19 mitigation and infection
prevention measures (see section Public
Health)
As with all eligible uses, recipients may pursue a project not listed above by undergoing the steps outlined in the section Framework for Eligible Uses Beyond Those Enumerated. 26 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
PUBLIC SECTOR CAPACITY
Recipients may use SLFRF funding to restore and bolster public sector capacity, which supports government’s ability to deliver critical COVID-19 services. There are three main categories of eligible uses to bolster public sector capacity and workforce: Public Safety, Public Health, and Human Services Staff; Government Employment and Rehiring Public Sector Staff; and Effective Service Delivery.
Public Safety, Public Health, and Human Services Staff
SLFRF funding may be used for payroll and covered benefits for public safety, public health, health care, human services and similar employees of a recipient government, for the portion of the employee’s time spent responding to COVID-19. Recipients should follow the steps below.
1. Identify eligible public safety, public health, and human services staff. Public safety staff include:
✓ Police officers (including state police
officers)
✓ Sheriffs and deputy sheriffs
✓ Firefighters
✓ Emergency medical responders
✓ Correctional and detention officers
✓ Dispatchers and supervisor personnel
that directly support public safety staff
Public health staff include:
✓ Employees involved in providing medical
and other physical or mental health
services to patients and supervisory
personnel, including medical staff
assigned to schools, prisons, and other
such institutions
✓ Laboratory technicians, medical
examiners, morgue staff, and other
support services essential for patient
care
✓ Employees of public health
departments directly engaged in
public health matters and related
supervisory personnel
Human services staff include:
✓ Employees providing or administering
social services and public benefits
✓ Child welfare services employees
✓ Child, elder, or family care employees
2. Assess portion of time spent on COVID-19 response for eligible staff.
Recipients can use a variety of methods to assess the share of an employees’ time spent responding to COVID-19, including using reasonable estimates—such as estimating the share of time based on discussions with staff and applying that share to all employees in that position.
For administrative convenience, recipients can consider public health and safety employees entirely devoted to responding to COVID-19 (and their payroll and benefits fully covered by SLFRF) if the 27 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
employee, or his or her operating unit or division, is “primarily dedicated” to responding to COVID19. Primarily dedicated means that more than half of the employee, unit, or division’s time is dedicated to responding to COVID-19.
Recipients must periodically reassess their determination and maintain records to support their assessment, although recipients do not need to track staff hours.
3. Use SLFRF funding for payroll and covered benefits for the portion of eligible staff time spent on COVID-19 response. SLFRF funding may be used for payroll and covered benefits for the portion of the employees’ time spent on COVID-19 response, as calculated above, through the period of performance.
Government Employment and Rehiring Public Sector Staff
Under the increased flexibility of the final rule, SLFRF funding may be used to support a broader set of uses to restore and support public sector employment. Eligible uses include hiring up to a pre-pandemic baseline that is adjusted for historic underinvestment in the public sector, providing additional funds for employees who experienced pay cuts or were furloughed, avoiding layoffs, providing worker retention incentives, and paying for ancillary administrative costs related to hiring, support, and retention. • Restoring pre-pandemic employment. Recipients have two options to restore pre-pandemic employment, depending on the recipient’s needs.
• If the recipient simply wants to hire back employees for pre-pandemic positions: Recipients may use SLFRF funds to hire employees for the same positions that existed on January 27, 2020 but that were unfilled or eliminated as of March 3, 2021. Recipients may use SLFRF funds to cover payroll and covered benefits for such positions through the period of performance.
• If the recipient wants to hire above the pre-pandemic baseline and/or would like to have flexibility in positions: Recipients may use SLFRF funds to pay for payroll and covered benefits associated with the recipient increasing its number of budgeted FTEs up to 7.5 percent above its pre-pandemic baseline. Specifically, recipients should undergo the following steps:
a. Identify the recipient’s budgeted FTE level on January 27, 2020. This includes all budgeted positions, filled and unfilled. This is called the pre-pandemic baseline. b. Multiply the pre-pandemic baseline by 1.075. This is called the adjusted prepandemic baseline. c. Identify the recipient’s budgeted FTE level on March 3, 2021, which is the beginning of the period of performance for SLFRF funds. Recipients may, but are not required to, exclude the number of FTEs dedicated to responding to the COVID-19 public health emergency. This is called the actual number of FTEs. d. Subtract the actual number of FTEs from the adjusted pre-pandemic baseline to calculate the number of FTEs that can be covered by SLFRF funds. Recipients do not have to hire for the same roles that existed pre-pandemic. 28 U.S. DEPARTMENT OF THE TREASURY
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Recipients may use SLFRF funds to cover payroll and covered benefits through the period of performance; these employees must have begun their employment on or after March 3, 2021. Recipients may only use SLFRF funds for additional FTEs hired over the March 3, 2021 level (i.e., the actual number of FTEs).
• Supporting and retaining public sector workers. Recipients can also use funds in other ways that support the public sector workforce.10 These include:
o Providing additional funding for employees who experienced pay reductions or were furloughed since the onset of the pandemic, up to the difference in the employee’s pay, taking into account unemployment benefits received.
o Maintaining current compensation levels to prevent layoffs. SLFRF funds may be used to maintain current compensation levels, with adjustments for inflation, in order to prevent layoffs that would otherwise be necessary.
o Providing worker retention incentives, including reasonable increases in compensation to persuade employees to remain with the employer as compared to other employment options. Retention incentives must be entirely additive to an employee’s regular compensation, narrowly tailored to need, and should not exceed incentives traditionally offered by the recipient or compensation that alternative employers may offer to compete for the employees. Treasury presumes that retention incentives that are less than 25 percent of the rate of base pay for an individual employee or 10 percent for a group or category of employees are reasonably proportional to the need to retain employees, as long as other requirements are met. • Covering administrative costs associated with administering the hiring, support, and retention programs above.
Effective Service Delivery
SLFRF funding may be used to improve the efficacy of public health and economic programs through tools like program evaluation, data, and outreach, as well as to address administrative needs caused or exacerbated by the pandemic. Eligible uses include:
• Supporting program evaluation, data, and outreach through:
10 Recipients should be able to substantiate that these uses of funds are substantially due to the public health emergency or its negative economic impacts (e.g., fiscal pressures on state and local budgets) and respond to its impacts. See the final rule for details on these uses.
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✓ Program evaluation and evidence
resources
✓ Data analysis resources to gather,
assess, share, and use data
✓ Technology infrastructure to improve
access to and the user experience of
government IT systems, as well as
technology improvements to increase
public access and delivery of
government programs and services
✓ Community outreach and engagement
activities
✓ Capacity building resources to support
using data and evidence, including
hiring staff, consultants, or technical
assistance support
• Addressing administrative needs, including:
✓ Administrative costs for programs
responding to the public health
emergency and its economic impacts,
including non-SLFRF and non-federally
funded programs
✓ Address administrative needs caused
or exacerbated by the pandemic,
including addressing backlogs caused
by shutdowns, increased repair or
maintenance needs, and technology
infrastructure to adapt government
operations to the pandemic (e.g.,
video-conferencing software, data and
case management systems)
30 U.S. DEPARTMENT OF THE TREASURY
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CAPITAL EXPENDITURES
As described above, the final rule clarifies that recipients may use funds for programs, services, and capital expenditures that respond to the public health and negative economic impacts of the pandemic.
Any use of funds in this category for a capital expenditure must comply with the capital expenditure requirements, in addition to other standards for uses of funds.
Capital expenditures are subject to the same eligibility standard as other eligible uses to respond to the pandemic’s public health and economic impacts; specifically, they must be related and reasonably proportional to the pandemic impact identified and reasonably designed to benefit the impacted population or class.
For ease of administration, the final rule identifies enumerated types of capital expenditures that Treasury has identified as responding to the pandemic’s impacts; these are listed in the applicable subcategory of eligible uses (e.g., public health, assistance to households, etc.). Recipients may also identify other responsive capital expenditures. Similar to other eligible uses in the SLFRF program, no preapproval is required for capital expenditures.
To guide recipients’ analysis of whether a capital expenditure meets the eligibility standard, recipients (with the exception of Tribal governments) must complete and meet the requirements of a written justification for capital expenditures equal to or greater than $1 million. For large-scale capital expenditures, which have high costs and may require an extended length of time to complete, as well as most capital expenditures for non-enumerated uses of funds, Treasury requires recipients to submit their written justification as part of regular reporting. Specifically:
If a project has
total capital
expenditures
of
and the use is enumerated by Treasury
as eligible, then
and the use is beyond those
enumerated by Treasury as eligible,
then
Less than $1
million
No Written Justification required No Written Justification required Greater than or
equal to $1
million, but
less than $10
million
Written Justification required but
recipients are not required to submit as
part of regular reporting to Treasury Written Justification required and recipients must submit as part of regular
reporting to Treasury
$10 million or
more
Written Justification required and
recipients must submit as part of regular
reporting to Treasury
A Written Justification includes:
• Description of the harm or need to be addressed. Recipients should provide a description of the specific harm or need to be addressed and why the harm was exacerbated or caused by the public health emergency. Recipients may provide quantitative information on the extent and the type of harm, such as the number of individuals or entities affected. 31 U.S. DEPARTMENT OF THE TREASURY
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• Explanation of why a capital expenditure is appropriate. For example, recipients should include an explanation of why existing equipment and facilities, or policy changes or additional funding to pertinent programs or services, would be inadequate. • Comparison of proposed capital project against at least two alternative capital expenditures and demonstration of why the proposed capital expenditure is superior. Recipients should consider the effectiveness of the capital expenditure in addressing the harm identified and the expected total cost (including pre-development costs) against at least two alternative capital expenditures.
Where relevant, recipients should consider the alternatives of improving existing capital assets already owned or leasing other capital assets.
Treasury presumes that the following capital projects are generally ineligible:
Construction of new correctional
facilities as a response to an increase in
rate of crime
Construction of new congregate
facilities to decrease spread of COVID-19
in the facility
Construction of convention centers,
stadiums, or other large capital projects
intended for general economic
development or to aid impacted
industries
In undertaking capital expenditures, Treasury encourages recipients to adhere to 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. Treasury also encourages recipients to prioritize in their procurements employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws. 32 U.S. DEPARTMENT OF THE TREASURY
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FRAMEWORK FOR ELIGIBLE USES BEYOND THOSE ENUMERATED
As described above, recipients have broad flexibility to identify and respond to other pandemic impacts and serve other populations that experienced pandemic impacts, beyond the enumerated uses and presumed eligible populations. Recipients should undergo the following steps to decide whether their project is eligible:
Step 1. Identify COVID-19 public health or
economic impact
2. Design a response that addresses or
responds to the impact
Analysis
• Can identify impact to a specific
household, business or nonprofit or to
a class of households, businesses or
nonprofits (i.e., group)
• Can also identify disproportionate
impacts, or more severe impacts, to a
specific beneficiary or to a class
• Types of responses can include a
program, service, or capital
expenditure
• Response should be related and
reasonably proportional to the harm
• Response should also be reasonably
designed to benefit impacted
individual or class
1. Identify a COVID-19 public health or negative economic impact on an individual or a class.
Recipients should identify an individual or class that is “impacted” or “disproportionately impacted” by the COVID-19 public health emergency or its negative economic impacts as well as the specific impact itself.
• “Impacted” entities are those impacted by the disease itself or the harmful consequences of the economic disruptions resulting from or exacerbated by the COVID19 public health emergency. For example, an individual who lost their job or a small business that saw lower revenue during a period of closure would both have experienced impacts of the pandemic.
• “Disproportionately impacted” entities are those that experienced disproportionate public health or economic outcomes from the pandemic; Treasury recognizes that preexisting disparities, in many cases, amplified the impacts of the pandemic, causing more severe impacts in underserved communities. For example, a household living in a neighborhood with limited access to medical care and healthy foods may have faced health disparities before the pandemic, like a higher rate of chronic health conditions, that contributed to more severe health outcomes during the COVID-19 pandemic.
The recipient may choose to identify these impacts at either the individual level or at a class level. If the recipient is identifying impacts at the individual level, they should retain documentation supporting the impact the individual experienced (e.g., documentation of lost revenues from a small business). Such documentation can be streamlined in many cases (e.g., self-attestation that a household requires food assistance).
Recipients also have broad flexibility to identify a “class” – or a group of households, small businesses, or nonprofits – that experienced an impact. In these cases, the recipients should 33 U.S. DEPARTMENT OF THE TREASURY
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first identify the class and the impact that it faced. Then, recipients only need to document that the individuals served fall within that class; recipients do not need to document a specific impact to each individual served. For example, a recipient could identify that restaurants in the downtown area faced substantial declines in revenue due to decreased foot traffic from workers; the recipient could develop a program to respond to the impact on that class and only needs to document that the businesses being served are restaurants in the downtown area.
Recipients should keep the following considerations in mind when designating a class:
• There should be a relationship between the definition of the class and the proposed response. Larger and less-specific classes are less likely to have experienced similar harms, which may make it more difficult to design a response that appropriately responds to those harms.
• Classes may be determined on a population basis or on a geographic basis, and the response should be appropriately matched. For example, a response might be designed to provide childcare to single parents, regardless of which neighborhood they live in, or a response might provide a park to improve the health of a disproportionately impacted neighborhood.
• Recipients may designate classes that experienced disproportionate impact, by assessing the impacts of the pandemic and finding that some populations experienced meaningfully more severe impacts than the general public. To determine these disproportionate impacts, recipients:
o May designate classes based on academic research or government research publications (such as the citations provided in the supplementary information in the final rule), through analysis of their own data, or through analysis of other existing data sources.
o May also consider qualitative research and sources to augment their analysis, or when quantitative data is not readily available. Such sources might include resident interviews or feedback from relevant state and local agencies, such as public health departments or social services departments. o Should consider the quality of the research, data, and applicability of analysis to their determination in all cases.
• Some of the enumerated uses may also be appropriate responses to the impacts experienced by other classes of beneficiaries. It is permissible for recipients to provide these services to other classes, so long as the recipient determines that the response is also appropriate for those groups.
• Recipients may designate a class based on income level, including at levels higher than the final rule definition of "low- and moderate-income." For example, a recipient may identify that households in their community with incomes above the final rule threshold for low-income nevertheless experienced disproportionate impacts from the pandemic and provide responsive services.
2. Design a response that addresses or responds to the impact. Programs, services, and other interventions must be reasonably designed to benefit the individual or class that experienced 34 U.S. DEPARTMENT OF THE TREASURY
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the impact. They must also be related and reasonably proportional to the extent and type of impact experienced. For example, uses that bear no relation or are grossly disproportionate to the type or extent of the impact would not be eligible. “Reasonably proportional” refers to the scale of the response compared to the scale of the harm, as well as the targeting of the response to beneficiaries compared to the amount of harm they experienced; for example, it may not be reasonably proportional for a cash assistance program to provide a very small amount of aid to a group that experienced severe harm and a much larger amount to a group that experienced relatively little harm. Recipients should consider relevant factors about the harm identified and the response to evaluate whether the response is reasonably proportional. For example, recipients may consider the size of the population impacted and the severity, type, and duration of the impact. Recipients may also consider the efficacy, cost, cost-effectiveness, and time to delivery of the response.
For disproportionately impacted communities, recipients may design interventions that address broader pre-existing disparities that contributed to more severe health and economic outcomes during the pandemic, such as disproportionate gaps in access to health care or pre-existing disparities in educational outcomes that have been exacerbated by the pandemic. 35 U.S. DEPARTMENT OF THE TREASURY
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Premium Pay
The Coronavirus State and Local Fiscal Recovery Funds may be used to provide premium pay to eligible workers performing essential work during the pandemic. Premium pay may be awarded to eligible workers up to $13 per hour. Premium pay must be in addition to wages or remuneration (i.e., compensation) the eligible worker otherwise receives. Premium pay may not exceed $25,000 for any single worker during the program.
Recipients should undergo the following steps to provide premium pay to eligible workers.
1. Identify an “eligible” worker. Eligible workers include workers “needed to maintain continuity of operations of essential critical infrastructure sectors.” These sectors and occupations are eligible:
✓ Health care
✓ Emergency response
✓ Sanitation, disinfection & cleaning
✓ Maintenance
✓ Grocery stores, restaurants, food
production, and food delivery
✓ Pharmacy
✓ Biomedical research
✓ Behavioral health
✓ Medical testing and diagnostics
✓ Home and community-based health care
or assistance with activities of daily living
✓ Family or child care
✓ Social services
✓ Public health
✓ Mortuary
✓ Critical clinical research, development,
and testing necessary for COVID-19
response
✓ State, local, or Tribal government
workforce
✓ Workers providing vital services to
Tribes
✓ Educational, school nutrition, and other
work required to operate a school
facility
✓ Laundry
✓ Elections
✓ Solid waste or hazardous materials
management, response, and cleanup
✓ Work requiring physical interaction with
patients
✓ Dental care
✓ Transportation and warehousing
✓ Hotel and commercial lodging facilities
that are used for COVID-19 mitigation
and containment
Beyond this list, the chief executive (or equivalent) of a recipient government may designate additional non-public sectors as critical so long as doing so is necessary to protecting the health and wellbeing of the residents of such jurisdictions.
2. Verify that the eligible worker performs “essential work,” meaning work that:
• Is not performed while teleworking from a residence; and • Involves either:
a. regular, in-person interactions with patients, the public, or coworkers of the individual that is performing the work; or
b. 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. 36 U.S. DEPARTMENT OF THE TREASURY
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3. Confirm that the premium pay “responds to” workers performing essential work during the COVID-19 public health emergency. Under the final rule, which broadened the share of eligible workers who can receive premium pay without a written justification, recipients may meet this requirement in one of three ways:
• Eligible worker receiving premium pay is earning (with the premium included) at or below 150 percent of their residing state or county’s average annual wage for all occupations, as defined by the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics, whichever is higher, on an annual basis; or
• Eligible worker receiving premium pay is not exempt from the Fair Labor Standards Act overtime provisions; or
• If a worker does not meet either of the above requirements, the recipient must submit written justification to Treasury detailing how the premium pay is otherwise responsive to workers performing essential work during the public health emergency. This may include a description of the essential worker’s duties, health, or financial risks faced due to COVID-19, and why the recipient determined that the premium pay was responsive. Treasury anticipates that recipients will easily be able to satisfy the justification requirement for front-line workers, like nurses and hospital staff.
Premium pay may be awarded in installments or lump sums (e.g., monthly, quarterly, etc.) and may be awarded to hourly, part-time, or salaried or non-hourly workers. Premium pay must be paid in addition to wages already received and may be paid retrospectively. A recipient may not use SLFRF to merely reimburse itself for premium pay or hazard pay already received by the worker, and premium pay may not be paid to volunteers.
37 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Water & Sewer Infrastructure
The Coronavirus State and Local Fiscal Recovery Funds may be used to make necessary investments in water and sewer infrastructure. State, local, and Tribal governments have a tremendous need to address the consequences of deferred maintenance in drinking water systems and removal, management, and treatment of sewage and stormwater, along with additional resiliency measures needed to adapt to climate change.
Recipients may undertake the eligible projects below:
PROJECTS ELIGIBLE UNDER EPA’S CLEAN WATER STATE REVOLVING FUND (CWSRF) Eligible projects under the CWSRF, and the final rule, include:
✓ Construction of publicly owned
treatment works
✓ Projects pursuant to implementation
of a nonpoint source pollution
management program established
under the Clean Water Act (CWA)
✓ Decentralized wastewater treatment
systems that treat municipal
wastewater or domestic sewage
✓ Management and treatment of
stormwater or subsurface drainage
water
✓ Water conservation, efficiency, or
reuse measures
✓ Development and implementation of a
conservation and management plan
under the CWA
✓ Watershed projects meeting the
criteria set forth in the CWA
✓ Energy consumption reduction for
publicly owned treatment works
✓ Reuse or recycling of wastewater,
stormwater, or subsurface drainage
water
✓ Security of publicly owned treatment
works
Treasury encourages recipients to review the EPA handbook for the CWSRF for a full list of eligibilities.
PROJECTS ELIGIBLE UNDER EPA’S DRINKING WATER STATE REVOLVING FUND (DWSRF) Eligible drinking water projects under the DWSRF, and the final rule, include:
✓ Facilities to improve drinking water
quality
✓ Transmission and distribution,
including improvements of water
pressure or prevention of
contamination in infrastructure and
lead service line replacements
✓ New sources to replace contaminated
drinking water or increase drought
resilience, including aquifer storage
and recovery system for water storage
✓ Green infrastructure, including green
roofs, rainwater harvesting collection,
permeable pavement
✓ Storage of drinking water, such as to
prevent contaminants or equalize
water demands
✓ Purchase of water systems and
interconnection of systems
✓ New community water systems
Treasury encourages recipients to review the EPA handbook for the DWSRF for a full list of eligibilities. 38 U.S. DEPARTMENT OF THE TREASURY
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ADDITIONAL ELIGIBLE PROJECTS
With broadened eligibility under the final rule, SLFRF funds may be used to fund additional types of projects— such as additional stormwater infrastructure, residential wells, lead remediation, and certain rehabilitations of dams and reservoirs — beyond the CWSRF and DWSRF, if they are found to be “necessary” according to the definition provided in the final rule and outlined below. ✓ Culvert repair, resizing, and removal,
replacement of storm sewers, and
additional types of stormwater
infrastructure
✓ Infrastructure to improve access to
safe drinking water for individual
served by residential wells, including
testing initiatives, and
treatment/remediation strategies that
address contamination
✓ Dam and reservoir rehabilitation if
primary purpose of dam or reservoir is
for drinking water supply and project
is necessary for provision of drinking
water
✓ Broad set of lead remediation projects
eligible under EPA grant programs
authorized by the Water
Infrastructure Improvements for the
Nation (WIIN) Act, such as lead
testing, installation of corrosion
control treatment, lead service line
replacement, as well as water quality
testing, compliance monitoring, and
remediation activities, including
replacement of internal plumbing and
faucets and fixtures in schools and
childcare facilities
A “necessary” investment in infrastructure must be:
(1) responsive to an identified need to achieve or maintain an adequate minimum level of service, which may include a reasonable projection of increased need, whether due to population growth or otherwise,
(2) a cost-effective means for meeting that need, taking into account available alternatives, and (3) for investments in infrastructure that supply drinking water in order to meet projected population growth, projected to be sustainable over its estimated useful life.
Please note that DWSRF and CWSRF-eligible projects are generally presumed to be necessary investments. Additional eligible projects generally must be responsive to an identified need to achieve or maintain an adequate minimum level of service. Recipients are only required to assess costeffectiveness of projects for the creation of new drinking water systems, dam and reservoir rehabilitation projects, or projects for the extension of drinking water service to meet population growth needs. Recipients should review the supplementary information to the final rule for more details on requirements applicable to each type of investment.
APPLICABLE STANDARDS & REQUIREMENTS
Treasury encourages recipients to adhere to 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. Treasury also encourages recipients to prioritize in their procurements employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws.
39 U.S. DEPARTMENT OF THE TREASURY
Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule U.S. Department of the Treasury
Broadband Infrastructure
The Coronavirus State and Local Fiscal Recovery Funds may be used to make necessary investments in broadband infrastructure, which has been shown to be critical for work, education, healthcare, and civic participation during the public health emergency. The final rule broadens the set of eligible broadband infrastructure investments that recipients may undertake.
Recipients may pursue investments in broadband infrastructure meeting technical standards detailed below, as well as an expanded set of cybersecurity investments.
BROADBAND INFRASTRUCTURE INVESTMENTS
Recipients should adhere to the following requirements when designing a broadband infrastructure project:
1. Identify an eligible area for investment. Recipients are encouraged to prioritize projects that are designed to serve locations without access to reliable wireline 100/20 Mbps broadband service (meaning service that reliably provides 100 Mbps download speed and 20 Mbps upload speed through a wireline connection), but are broadly able to invest in projects designed to provide service to locations with an identified need for additional broadband investment.
Recipients have broad flexibility to define need in their community. Examples of need could include:
✓ Lack of access to a reliable high-speed
broadband connection
✓ Lack of affordable broadband
✓ Lack of reliable service
If recipients are considering deploying broadband to locations where there are existing and enforceable federal or state funding commitments for reliable service of at least 100/20 Mbps, recipients must ensure that SLFRF funds are designed to address an identified need for additional broadband investment that is not met by existing federal or state funding commitments. Recipients must also ensure that SLFRF funds will not be used for costs that will be reimbursed by the other federal or state funding streams.
2. Design project to meet high-speed technical standards. Recipients are required to design projects to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and upload speeds. 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, eligible projects may be designed to reliably meet or exceed 100/20 Mbps and be scalable to a minimum of symmetrical 100 Mbps download and upload speeds.
Treasury encourages recipients to prioritize investments in fiber-optic infrastructure wherever feasible and to focus on projects that will achieve last-mile connections. Further, Treasury encourages recipients to prioritize support for broadband networks owned, operated by, or affiliated with local governments, nonprofits, and co-operatives. 40 U.S. DEPARTMENT OF THE TREASURY
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3. Require enrollment in a low-income subsidy program. Recipients must require the service provider for a broadband project that provides service to households to either:
✓ Participate in the FCC’s Affordable
Connectivity Program (ACP)
✓ Provide access to a broad-based
affordability program to low-income
consumers that provides benefits
commensurate to ACP
Treasury encourages broadband services to also include at least one low-cost option offered without data usage caps at speeds sufficient for a household with multiple users to simultaneously telework and engage in remote learning. Recipients are also encouraged to consult with the community on affordability needs.
CYBERSECURITY INVESTMENTS
SLFRF may be used for modernization of cybersecurity for existing and new broadband infrastructure, regardless of their speed delivery standards. This includes modernization of hardware and software.
APPLICABLE STANDARDS & REQUIREMENTS
Treasury encourages recipients to adhere to 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. Treasury also encourages recipients to prioritize in their procurements employers with high labor standards and to prioritize employers without recent violations of federal and state labor and employment laws.
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Restrictions on Use
While recipients have considerable flexibility to use Coronavirus State and Local Fiscal Recovery Funds to address the diverse needs of their communities, some restrictions on use of funds apply.
OFFSET A REDUCTION IN NET TAX REVENUE
• States and territories may not use this funding to directly or indirectly offset a reduction in net tax revenue resulting from a change in law, regulation, or administrative interpretation beginning on March 3, 2021, through the last day of the fiscal year in which the funds provided have been spent. If a state or territory cuts taxes during this period, it must demonstrate how it paid for the tax cuts from sources other than SLFRF, such as by enacting policies to raise other sources of revenue, by cutting spending, or through higher revenue due to economic growth. If the funds provided have been used to offset tax cuts, the amount used for this purpose must be repaid to the Treasury.
DEPOSITS INTO PENSION FUNDS
• No recipients except Tribal governments may use this funding to make a deposit to a pension fund. Treasury defines a “deposit” as an extraordinary contribution to a pension fund for the purpose of reducing an accrued, unfunded liability. While pension deposits are prohibited, recipients may use funds for routine payroll contributions connected to an eligible use of funds (e.g., for public health and safety staff). Examples of extraordinary payments include ones that:
Reduce a liability incurred prior to the
start of the COVID-19 public health
emergency and occur outside the
recipient's regular timing for making the
payment
Occur at the regular time for pension
contributions but is larger than a regular
payment would have been
ADDITIONAL RESTRICTIONS AND REQUIREMENTS
Additional restrictions and requirements that apply across all eligible use categories include:
• No debt service or replenishing financial reserves. Since SLFRF funds are intended to be used prospectively, recipients may not use SLFRF funds for debt service or replenishing financial reserves (e.g., rainy day funds).
• No satisfaction of settlements and judgments. 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 is itself not an eligible use.
However, if a settlement requires the recipient to provide services or incur other costs that are an eligible use of SLFRF funds, SLFRF may be used for those costs. • Additional general restrictions. SLFRF funds may not be used for a project that conflicts with or contravenes the purpose of the American Rescue Plan Act statute (e.g., uses of funds that 42 U.S. DEPARTMENT OF THE TREASURY
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undermine COVID-19 mitigation practices in line with CDC guidance and recommendations) and may not be used in violation of the Award Terms and Conditions or conflict of interest requirements under the Uniform Guidance. Other applicable laws and regulations, outside of SLFRF program requirements, may also apply (e.g., laws around procurement, contracting, conflicts-of-interest, environmental standards, or civil rights). 43 U.S. DEPARTMENT OF THE TREASURY
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Program Administration
The Coronavirus State and Local Fiscal Recovery Funds final rule details a number of administrative processes and requirements, including on distribution of funds, timeline for use of funds, transfer of funds, treatment of loans, use of funds to meet non-federal match or cost-share requirements, administrative expenses, reporting on use of funds, and remediation and recoupment of funds used for ineligible purposes. This section provides a summary for the most frequently asked questions.
TIMELINE FOR USE OF FUNDS
Under the SLFRF, funds must be used for costs incurred on or after March 3, 2021. Further, costs must be obligated by December 31, 2024, and expended by December 31, 2026.
TRANSFERS
Recipients may undertake projects on their own or through subrecipients, which carry out eligible uses on behalf of a recipient, including pooling funds with other recipients or blending and braiding SLFRF funds with other sources of funds. Localities may also transfer their funds to the state through section 603(c)(4), which will decrease the locality’s award and increase the state award amounts.
LOANS
Recipients may generally use SLFRF funds to provide loans for uses that are otherwise eligible, although there are special rules about how recipients should track program income depending on the length of the loan. Recipients should consult the final rule if they seek to utilize these provisions.
NON-FEDERAL MATCH OR COST-SHARE REQUIREMENTS
Funds available under the “revenue loss” eligible use category (sections 602(c)(1)(C) and 603(c)(1)(C) of the Social Security Act) generally may be used to meet the non-federal cost-share or matching requirements of other federal programs. However, note that SLFRF funds may not be used as the nonfederal share for purposes of a state’s Medicaid and CHIP programs because the Office of Management and Budget has approved a waiver as requested by the Centers for Medicare & Medicaid Services pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations.
SLFRF funds beyond those that are available under the revenue loss eligible use category may not be used to meet the non-federal match or cost-share requirements of other federal programs, other than as specifically provided for by statute. As an example, the Infrastructure Investment and Jobs Act provides that SLFRF funds may be used to meet the non-federal match requirements of authorized Bureau of Reclamation projects and certain broadband deployment projects. Recipients should consult the final rule for further details if they seek to utilize SLFRF funds as a match for these projects.
ADMINISTRATIVE EXPENSES
SLFRF funds may be used for direct and indirect administrative expenses involved in administering the program. For details on permissible direct and indirect administrative costs, recipients should refer to Treasury’s Compliance and Reporting Guidance. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. 44 U.S. DEPARTMENT OF THE TREASURY
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REPORTING, COMPLIANCE & RECOUPMENT
Recipients are required to comply with Treasury’s Compliance and Reporting Guidance, which includes submitting mandatory periodic reports to Treasury.
Funds used in violation of the final rule are subject to remediation and recoupment. As outlined in the final rule, Treasury may identify funds used in violation through reporting or other sources. Recipients will be provided with an initial written notice of recoupment with an opportunity to submit a request for reconsideration before Treasury provides a final notice of recoupment. If the recipient receives an initial notice of recoupment and does not submit a request for reconsideration, the initial notice will be deemed the final notice. Treasury may pursue other forms of remediation and monitoring in conjunction with, or as an alternative to, recoupment.
The Infrastructure Investment and Jobs Act will Deliver for California President Biden and Vice President Harris support the Senate’s passage of the Infrastructure Investment and Jobs Act, the largest long-term investment in our infrastructure and competitiveness in nearly a century. The need for action in California is clear and recently released state-level data demonstrates that the Infrastructure Investment and Jobs Act will deliver for California. For decades, infrastructure in California has suffered from a systemic lack of investment. In fact, the American Society of Civil Engineers gave California a C- grade on its infrastructure report card. The historic Infrastructure Investment and Jobs Act will make life better for millions of California residents, create a generation of good-paying union jobs and economic growth, and position the United States to win the 21st century. Specifically, the Infrastructure Investment and Jobs Act will:
• Repair and rebuild our roads and bridges with a focus on climate change mitigation, resilience, equity, and safety for all users, including cyclists and pedestrians. . In California, there are 1,536 bridges and over 14,220 miles of highway in poor condition.
Since 2011, commute times have increased by 14.6% in California and on average, each driver pays $799 per year in costs due to driving on roads in need of repair. The Infrastructure Investment and Jobs Act is the single largest dedicated bridge investment since the construction of the interstate highway system. Based on formula funding alone, California would expect to receive $25.3 billion for federal-aid highway apportioned programs and $4.2 billion for bridge replacement and repairs under the Infrastructure Investment and Jobs Act over five years1. California can also compete for the $12.5 billion Bridge Investment Program for economically significant bridges and nearly $16 billion of national funding in the bill dedicated for major projects that will deliver substantial economic benefits to communities.
• Improve healthy, sustainable transportation options for millions of Americans.
Californians who take public transportation spend an extra 66.6% of their time work commuting and non-White households are 1.6 times more likely to commute via public transportation. 16% of transit vehicles in the state are past useful life. Based on formula funding alone, California would expect to receive $9.45 billion over five years under the Infrastructure Investment and Jobs Act to improve public transportation options across the state2.
• Build a network of EV chargers to facilitate long-distance travel and provide convenient charging options. The U.S. market share of plug-in electric vehicle (EV) sales is only one-third the size of the Chinese EV market. The President believes that must
1 These values are estimates and may change based on updated factor data each fiscal year. 2 Transit formula funding amounts are subject to changes resulting from the 2020 census or from annual transit service data reported to FTA’s National Transit Database. change. The bill invests $7.5 billion to build out the first-ever national network of EV chargers in the United States and is a critical element in the Biden-Harris Administration’s plan to accelerate the adoption of EVs to address the climate crisis and support domestic manufacturing jobs. Under the Infrastructure Investment and Jobs Act, California would expect to receive $384 million over five years to support the expansion of an EV charging network in the state3. California will also have the opportunity to apply for the $2.5 billion in grant funding dedicated to EV charging in the bill.
• Help connect every American to reliable high-speed internet. Broadband internet is necessary for Americans to do their jobs, to participate equally in school learning, health care, and to stay connected. Under the Infrastructure Investment and Jobs Act, California will receive a minimum allocation of $100 million to help provide broadband coverage across the state, including providing access to the at least 545,000 Californians who currently lack it. And, under the Infrastructure Investment and Jobs Act, 10,637,000 or 27% of people in California will be eligible for the Affordability Connectivity Benefit, which will help low-income families afford internet access.
• Prepare more of our infrastructure for the impacts of climate change, cyber attacks, and extreme weather events. From 2010 to 2020, California experienced 16 extreme weather events, costing the state up to $50-100 billion in damages. Under the Infrastructure Investment and Jobs Act, based on historical formula funding levels, California will expect to receive $84 million over five years to protect against wildfires and $40 million to protect against cyberattacks. Californians will also benefit from the bill’s historic $3.5 billion national investment in weatherization which will reduce energy costs for families.
• Deliver clean drinking water to every American and eliminate the nation’s lead service lines and pipes. Currently, up to 10 million American households and 400,000 schools and child care centers lack safe drinking water. Under the Infrastructure Investment and Jobs Act, based on the traditional state revolving fund formula, California will expect to receive $3.5 billion over five years to improve water infrastructure across the state and ensure that clean, safe drinking water is a right in all communities. • Improve our nation’s airports. The United States built modern aviation, but our airports lag far behind our competitors. Under the Infrastructure Investment and Jobs Act,
3 These values are estimates and may change based on updated factor data each fiscal year. airports in California would receive approximately $1.5 billion for infrastructure development for airports over five years4.
Over the coming days and weeks, we will expect to receive additional data on the impact of the Infrastructure Investment and Jobs Act in California.
4 Precise allocations would change each year because the formulas use current passenger boarding and cargo data, and this estimate is based on 2019 data.