American Rescue Plan Supplemental Distribution to Non-Entitlement Cities

November 24, 2021

Non-entitlement cities (NEU), generally those with populations under 50,000, may have been surprised to find an additional deposit of American Rescue Plan Act funds in the city’s bank account on the morning of Nov. 22.

That disbursement represents the NEU’s share of American Rescue Plan Act funds left unclaimed as the date to request funds has passed. Cities should consider passing a resolution accepting any funds at their next council meeting.

How ARPA funds are distributed

The American Rescue Plan Act (ARPA) was signed into law on March 11, 2021 and provides relief to cities to enable them to continue to support the response to the pandemic and lay the foundation for a strong economic recovery. Cities may utilize Local Fiscal Recovery Funds to mitigate the effects of COVID-19, replace lost revenue, support premium pay, and invest in infrastructure, including water, sewer, and broadband.

Non-entitlement cities and towns accessed funds by submitting a request to Minnesota Management and Budget’s COVID-19 Response Accountability Office (MMB) by Oct. 11, 2021. A total of 744 non-entitlement cities submitted requests for funds. Each city was automatically eligible for funding in the amount of $105.81 per capita (capped at 75% of the most recently adopted budget as of Jan. 27, 2020) upon submitting the request. Funds are distributed in two tranches with the first distribution completed and the second round coming in 2022, about 12 months later.

After the deadline passed for local governments to request ARPA funds, nearly $12 million of the $377 million available to Minnesota’s NEUs remained unrequested. As allowed by the US Treasury, the state of Minnesota has redistributed these remaining funds amongst eligible local governments who requested ARPA funds. The per capita redistribution amount is approximately $3.47 however actual allocations may be decreased due to the 75% budget cap. Half was distributed to eligible NEUs on or about Nov. 22, 2021 and the balance will follow in 2022 unless guidance changes. This equates to approximately $1.73 per capita in supplemental distribution in both 2021 and 2022.

This recent disbursement, plus your local government’s initial disbursement, represent the first half of your local government’s total allocation of ARPA funds. The second half of your local government’s allocation will be distributed in 2022, 12 months after the initial payment per guidance from the US Treasury.

For more information