U.S. Department of Treasury Releases Additional FAQs on the Coronavirus State and Local Fiscal Recovery Funds

Posted on June 8, 2021 by Dene Westbrook

The League and our partners at the National League of Cities received the following information from US Treasury regarding the posting of 10 additional FAQs on the Coronavirus State and Local Fiscal Recovery Funds that are part of the American Rescue Plan Act. The full FAQ document, which includes FAQs from the original May 10 publication date, the previous May 27 update, and this week’s update, can be found here.

Questions added in the last two updates can be referenced within the FAQ as follows.

  • 5/27/21: 1.5, 1.6, 2.13, 2.14, 2.15, 3.9, 4.5, 4.6,10.3,10.4 (updates are noted with “[5/27]”)
  • 6/8/21: 2.16, 3.10, 3.11, 3.12, 4.7,6.7,8.2, 9.4, 9.5,10.5  (updates are noted with “[6/8]”)

The specific questions added on 6/8/21 include the following:

  • May recipients use funds to establish a public jobs program?
  • In calculating revenue loss, are recipients required to use audited financials?
  • In calculating revenue loss, should recipients use their own data, or Census data?
  • Should recipients calculate revenue loss on a cash basis or an accrual basis?
  • Do restrictions on using Coronavirus State and Local Fiscal Recovery Funds to cover costs incurred beginning on March 3, 2021 apply to costs incurred by the recipient (e.g., a State, local, territorial, or Tribal government) or to costs incurred by households, businesses, and individuals benefiting from assistance provided using Coronavirus State and Local Fiscal Recovery Funds?
  • How do I know if a water, sewer, or broadband project is an eligible use of funds? Do I need pre-approval?
  • May recipients use Fiscal Recovery Funds to fund Other Post-Employment Benefits (OPEB)?
  • Once a recipient has identified a reduction in revenue, how will Treasury track use of funds for the provision of government services?
  • What is the Assistance Listing and Catalog of Federal Domestic Assistance (CFDA) number for the program?
  • May recipients use funds to cover the costs of consultants to assist with managing and administering the funds?

U.S. Treasury intends to update their FAQs periodically to help clarify questions about the Interim Final Rule.  They anticipate another update soon, which is likely to include additional questions recently posed by communities across the country. U.S. Treasury is trying to respond as quickly as possible to these questions.

It is important to note that because the Interim Final Rule is still in the 60-day public comment period, there may be some points raised by stakeholders that cannot be addressed via FAQs and will need to be considered as part of the process for revising the rule. It you have specific questions we strongly encourage you to submit comments for the record to ensure that these perspectives are reflected in the public comments when it comes time to finalize the rule.

Additionally, U.S. Treasury posted an FAQ supplement regarding distribution of funds to non-entitlement units of local government (NEUs).  This FAQ supplement includes several questions answered as part of previous FAQ updates, as well as answers to 12 additional high-priority questions that were received from stakeholders over the course of our engagement since the release of the NEU guidance on May 24.

The new questions added to the NEU FAQ supplement are listed below.

  • Can states impose requirements or conditions on the transfer of funds to NEUs?
  • Can states transfer additional funds to local governments beyond amount allocated to NEUs?
  • May states use funds to pay for the administrative costs of allocating and distributing money to the NEUs?
  • What steps do states and territories need to undertake to receive their NEU payments?
  • What are the specific deadlines for state governments in distributing funds?
  • How long does a state have to wait until an NEU can be treated as “non-responsive” and the state can issue a subsequent distribution based on unclaimed funding?
  • How should a state treat a local government on the list posted on the Treasury website that is no longer in operation and has been dissolved?
  • How should territories allocate and distribute payments to their NEUs?
  • Can states pay entities that are not included in the list of local governments provided by Treasury?
  • Is a Second Tranche payment guaranteed for NEUs, provided that they comply with the terms and conditions of the funding?
  • How should states check to see whether an NEU is excluded or disqualified as outlined in the guidance?
  • Are states required to collect key information from the NEU as outlined in the guidance (e.g., banking information or top-line budget totals) or may states rely on existing information in their systems?
  • Do states have to collect actual budget documents to calculate the “75 percent budget cap,” or can they rely on a budget total?
  • Do states have to monitor NEUs for compliance with use of funds?
  • Is there a requirement to distribute funds to NEUs electronically, or can funds be distributed via check?

The League will continue to update members on the legislature’s activities around this funding as well as forthcoming updated guidance from the US and Michigan Department of Treasury.

Additionally, the MI Department of Treasury has joined with MML to host a webinar on the American Rescue Plan Act.  This webinar is scheduled for June 17th. Stay tuned for agenda information and registration details.

Chris Hackbarth is the League’s director of state & federal affairs. He can be reached at 517-908-0304 and [email protected].

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