(Updated June 28, 2021)
Q1. How does my city request the funds? (Updated June 28, 2021)
Q2: How much funding will our city receive? (Updated June 3, 2021)
Q3. When will our city receive the funds? (Updated May 19, 2021)
Q22. The Coronavirus Relief Fund (CRF) included as an eligible use: “Payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” What has changed with the Coronavirus State and Local Fiscal Recovery Funds (CSFRF/CLFRF), and what type of documentation is required for these funds? (Added June 3, 2021)
A1. Beginning May 10, 2021, cities eligible to receive American Rescue Plan Act funding directly from the U.S. Department of the Treasury, may submit the required information through the Treasury Submission Portal. This portal is for entitlement units of government, most commonly those more than 50,000 in population.
- Learn more and request funds through the Treasury Submission Portal
- Read more about required information needed before your city can receive funding
Cities under 50,000 in population (non-entitlement jurisdictions) can request funds from Minnesota Management and Budget (MMB). There is not a specific deadline to request funds but cities must be responsive to MMB and are encouraged to apply immediately or notify MMB of your intention to do so later.
A2: Cities under 50,000 in population will have their allocations finalized by MMB in the coming weeks. The allocations for cities over 50,000 in population are available on the U.S. Treasury website.
A3. Entitlement cities (population 50,000+) could receive the first half of their funds as early as May 10, 2021. Non-entitlement cities (population less than 50,000) will received their funds from the state of Minnesota. The state shall distribute payments no later than 30 days after a state received a payment (which will be about June 9, 2021). An extension may be granted to the state due to an extensive administrative burden and could further delay payments.
The second half of distributions will be available starting May 10, 2022.
Cities under 50,000 in population will have to make a certification to Minnesota Management and Budget prior to accepting their allocation of funds. The League is recommending that cities pass a resolution as soon as their next meeting so staff is given the authority to take the steps (not yet outlined) as soon as available. The League has a model resolution cities can consider for this purpose. Please consult your city attorney for specific questions.
A4. The covered period begins March 3, 2021 and the deadline for spending is Dec. 31, 2024.
A5. Eligible uses include:
- Responding to the public health emergency. Expenses may include vaccination programs; medical care; testing; contact tracing; support for isolation or quarantine; supports for vulnerable populations to access medical or public health services; public health surveillance (e.g., monitoring case trends, genomic sequencing for variants); enforcement of public health orders; public communication efforts; enhancement to health care capacity, including through alternative care facilities; purchases of personal protective equipment; support for prevention, mitigation, or other services in congregate living facilities (e.g., nursing homes, incarceration settings, homeless shelters, group living facilities) and other key settings like schools; ventilation improvements in congregate settings, health care settings, or other key locations; enhancement of public health data systems; and other public health responses. Capital investments in public facilities to meet pandemic operational needs are also eligible, such as physical plant improvements to public hospitals and health clinics or adaptations to public buildings to implement COVID-19 mitigation tactics.
- Responding to the negative economic impacts of the pandemic. Eligible uses in this category include assistance to households; small businesses and non-profits; and aid to impacted industries. Assistance to households includes, but is not limited to: food assistance; rent, mortgage, or utility assistance; counseling and legal aid to prevent eviction or homelessness; cash assistance; emergency assistance for burials, home repairs, weatherization, or other needs; internet access or digital literacy assistance; or job training to address negative economic or public health impacts experienced due to a worker’s occupation or level of training. Assistance to small business and non-profits includes, but is not limited to:
- Loans or grants to mitigate financial hardship such as declines in revenues or impacts of periods of business closure, for example by supporting payroll and benefits costs, costs to retain employees, mortgage, rent, or utilities costs, and other operating costs.
- Loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactics, such as physical plant changes to enable social distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19 vaccination, testing, or contact tracing programs; and
- Technical assistance, counseling, or other services to assist with business planning needs
- Premium pay for essential workers.
- An amount up to $13 per hour that is paid to an eligible worker in addition to wages the worker otherwise received, for all work performed by the eligible worker during the COVID-19 public health emergency. Such amount may not exceed $25,000 per eligible worker.
- Essential workers are those in critical infrastructure sectors who regularly perform in-person work, interact with others at work, or physically handle items handled by others.
- Critical infrastructure sectors include healthcare, education and childcare, transportation, sanitation, grocery and food production, and public health and safety, among others, as provided in the Treasury guidance. Governments receiving Fiscal Recovery Funds have the discretion to add additional sectors to this list, so long as the sectors are considered critical to protect the health and well-being of residents.
- The Treasury guidance emphasizes the need for recipients to prioritize premium pay for lower income workers. Premium pay that would increase a worker’s total pay above 150% of the greater of the state or county average annual wage requires specific justification for how it responds to the needs of these workers.
- Treasury encourages recipients to consider providing premium pay retroactively for work performed during the pandemic, recognizing that many essential workers have not yet received additional compensation for their service during the pandemic.
- Revenue replacement for the provision of government services to the extent the reduction in revenue is due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency (see additional questions below for definitions and calculations).
- General revenue includes revenue from taxes, current charges, and miscellaneous general revenue. It excludes refunds and other correcting transactions, proceeds from issuance of debt or the sale of investments, agency or private trust transactions, and revenue generated by utilities and insurance trusts. General revenue also includes intergovernmental transfers between state and local governments, but excludes intergovernmental transfers from the Federal government, including Federal transfers made via a state to a locality pursuant to the Coronavirus Relief Funds (CRF) or the Fiscal Recovery Funds.
- Cities should calculate revenue on an entity-wide basis. This approach minimizes the administrative burden for cities, provides for greater consistency across all recipients, and presents a more accurate representation of the net impact of the COVID-19 public health emergency on a city’s revenue, rather than relying on financial reporting prepared by each city, which vary in methodology used and which generally aggregates revenue by purpose rather than by source.
- Cities are permitted to calculate the extent of reduction in revenue as of four points in time: Dec. 31, 2020; Dec. 31, 2021; Dec. 31, 2022; and Dec. 31, 2023. This approach recognizes that some recipients may experience lagged effects of the pandemic on revenues. Upon receiving Fiscal Recovery Fund payments, recipients may immediately calculate revenue loss for the period ending Dec. 31, 2020.
- The Treasury has released FAQs about Fiscal Recovery Funds, and they include a formula for calculating revenue loss. Read the Coronavirus State and Local Fiscal Recovery Funds FAQs (pdf).
- Please note: Treasury is disallowing the use of projections to ensure consistency and comparability across recipients and to streamline verification. However, in estimating the revenue shortfall using the formula above, recipients may incorporate their average annual revenue growth rate in the three full fiscal years prior to the public health emergency. (Treasury FAQ 5/10/21)
- Investments in water, sewer, and broadband infrastructure.
- Under the Drinking Water State Revolving Fund (DWSRF), categories of eligible projects include: treatment, transmission, and distribution (including lead service line replacement), source rehabilitation and decontamination, storage, consolidation, and new systems development. See a list of eligible projects from the Environmental Protection Agency (EPA).
- Under the Environmental Protection Agency’s Clean Water State Revolving Fund (CWSRF), categories of eligible projects include: construction of publicly owned treatment works, nonpoint source pollution management, national estuary program projects, decentralized wastewater treatment systems, stormwater systems, water conservation, efficiency, and reuse measures, watershed pilot projects, energy efficiency measures for publicly-owned treatment works, water reuse projects, security measures at publicly-owned treatment works, and technical assistance to ensure compliance with the Clean Water Act. See a list of eligible projects from the EPA.
- As mentioned in the Treasury guidance, eligible projects under the DWSRF and CWSRF support efforts to address climate change, as well as to meet cybersecurity needs to protect water and sewer infrastructure. Given the lifelong impacts of lead exposure for children, and the widespread nature of lead service lines, Treasury also encourages recipients to consider projects to replace lead service lines.
- Costs for construction on eligible water, sewer, or broadband infrastructure projects must be obligated by Dec. 31, 2024. The period of performance will run until Dec. 31, 2026, which will provide recipients a reasonable amount of time to complete projects funded with Fiscal Recovery Funds.
- Broadband improvements require eligible projects to reliably deliver minimum speeds of 100 Mbps download and 100 Mbps upload. In cases where it is impracticable due to geography, topography, or financial cost to meet those standards, projects must reliably deliver at least 100 Mbps download speed, at least 20 Mbps upload speed, and be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed. Projects must also be designed to serve unserved or underserved households and businesses, defined as those that are not currently served by a wireline connection that reliably delivers at least 25 Mbps download speed and 3 Mbps of upload speed.
The items listed are not exclusive. Other expenses may be eligible.
A6. Funds cannot be used to directly or indirectly offset tax reductions or delay a tax/tax increase, nor can funds be deposited into any pension fund.
Treasury interprets “deposit” in this context to refer to an extraordinary payment into a pension fund for the purpose of reducing an accrued, unfunded liability. More specifically, it does not permit this assistance to be used to make a payment into a pension fund if both: (1) the payment reduces a liability incurred prior to the start of the COVID-19 public health emergency, and (2) the payment occurs outside the city’s regular timing for making such payments.
A7. Yes, transfers are allowed to nonprofit organizations, public benefit corporations involved in transporting passengers or cargo, special purpose unit of government, and states when used for the same allowable purposes as cities.
A10. Recipients may use funds to cover the portion of payroll and benefits of employees corresponding to time spent on administrative work necessary due to the COVID-19 public health emergency and its negative economic impacts. This includes, but is not limited to, costs related to disbursing payments of Fiscal Recovery Funds and managing new grant programs established using Fiscal Recovery Funds. (Treasury FAQ 5/10/21)
A11. Generally not. Recipients must demonstrate that funding uses directly address a negative economic impact of the COVID-19 public health emergency, including funds used for economic or workforce development. For example, job training for unemployed workers may be used to address negative economic impacts of the public health emergency and be eligible. (Treasury FAQ 5/10/21)
A12. Aid provided to tourism, travel, and hospitality industries should respond to the negative economic impacts of the pandemic. For example, a recipient may provide aid to support safe reopening of businesses in the tourism, travel and hospitality industries and to districts that were closed during the COVID-19 public health emergency, as well as aid a planned expansion or upgrade of tourism, travel and hospitality facilities delayed due to the pandemic. (Treasury FAQ 5/10/21)
A13. Yes. Cities should maintain records to support their assessment of how businesses or business districts receiving assistance were affected by the negative economic impacts of the pandemic and how the aid provided responds to these impacts. (Treasury FAQ 5/10/21)
Q14. How does the Treasury guidance help address the disparate impact of COVID-19 on certain populations and geographies?
A14. In recognition of the disproportionate impacts of the COVID-19 virus on health and economic outcomes in low-income and Native American communities, the Treasury guidance identifies a broader range of services and programs that are considered to be in response to the public health emergency when provided in these communities. Specifically, Treasury will presume that certain types of services are eligible uses when provided in a Qualified Census Tract (QCT), to families living in QCTs, or when these services are provided by Tribal governments.
Recipients may also provide these services to other populations, households, or geographic areas disproportionately impacted by the pandemic. In identifying these disproportionately impacted communities, recipients should be able to support their determination for how the pandemic disproportionately impacted the populations, households, or geographic areas to be served.
Eligible services include:
- Addressing health disparities and the social determinants of health, including community health workers, public benefits navigators, remediation of lead paint or other lead hazards, and community violence intervention programs.
- Building stronger neighborhoods and communities, including: supportive housing and other services for individuals experiencing homelessness, development of affordable housing, and housing vouchers and assistance relocating to neighborhoods with higher levels of economic opportunity.
- Addressing educational disparities exacerbated by COVID-19, including: early learning services, increasing resources for high-poverty school districts, educational services like tutoring or afterschool programs, and supports for students’ social, emotional, and mental health needs.
- Promoting healthy childhood environments, including: child care, home visiting programs for families with young children, and enhanced services for child welfare-involved families and foster youth.
(Treasury FAQ 5/10/21)
Q15. Do cities need to demonstrate that reduction in revenue is due to the COVID-19 public health emergency?
A15. No. In the Treasury guidance, any diminution in actual revenue calculated using the formula in the FAQ would be presumed to have been “due to” the COVID-19 public health emergency. This presumption is made for administrative ease and in recognition of the broad-based economic damage that the pandemic has wrought. (Treasury FAQ 5/10/21)
A16. No. Funds made available to respond to the public health emergency and its negative economic impacts are intended to help meet pandemic response needs and provide immediate stabilization for households and businesses. Contributions to rainy day funds and similar reserves funds would not address these needs or respond to the COVID-19 public health emergency, but would rather be savings for future spending needs. (Treasury FAQ 5/10/21)
Q17. For broadband investments, may cities use funds for related programs such as cybersecurity or digital literacy training?
A17. Yes. Cities may use funds to provide assistance to households facing negative economic impacts due to COVID-19, including digital literacy training and other programs that promote access to the internet. Cities may also use funds for modernization of cybersecurity, including hardware, software, and protection of critical infrastructure, as part of provision of government services up to the amount of revenue lost due to the public health emergency. (Treasury FAQ 5/10/21)
Q18. What is the definition of “budget” for the purpose of the 75% cap on non-entitlement cities payments, and who is responsible for enforcing this cap?
A18. States are responsible for enforcing the “75% cap” on city payments, which is a statutory requirement that distributions to cities not exceed 75% of the city’s most recent budget. Treasury interprets the most recent budget as the city’s most recent annual total operating budget, including its general fund and other funds, as of Jan. 27, 2020. States may rely for this determination on a certified top-line budget total from the city. Funding amounts in excess of such cap must be returned to Treasury. (Treasury FAQ 5/10/21)
A19. Financial records and supporting documents related to the award must be retained for a period of five years after all funds have been expended or returned to Treasury, whichever is later. This includes those which demonstrate the award funds were used for eligible purposes in accordance with the ARPA, Treasury’s regulations implementing those sections, and Treasury’s guidance on eligible uses of funds. (Treasury FAQ 5/10/21)
A20. Recipients will be required to submit an interim report, quarterly project and expenditure reports, and annual recovery plan performance reports as specified below, regarding their utilization of Coronavirus State and Local Fiscal Recovery Funds.
- Interim reports: States (defined to include the District of Columbia), territories, metropolitan cities, counties, and Tribal governments will be required to submit one interim report. The interim report will include a recipient’s expenditures by category at the summary level and for states, information related to distributions to non-entitlement units of local government must also be included in the interim report. The interim report will cover activity from the date of award to July 31, 2021 and must be submitted to Treasury by Aug. 31, 2021. Non-entitlement units of local government are not required to submit an interim report.
- Quarterly Project and Expenditure reports: State (defined to include the District of Columbia), territorial, metropolitan city, county, and Tribal governments will be required to submit quarterly project and expenditure reports. This report will include financial data, information on contracts and subawards over $50,000, types of projects funded, and other information regarding a recipient’s utilization of award funds. Reports will be required quarterly with the exception of non-entitlement units, which will report annually. An interim report is due on Aug. 31, 2021. The reports will include the same general data as those submitted by recipients of the Coronavirus Relief Fund, with some modifications to expenditure categories and the addition of data elements related to specific eligible uses. The initial quarterly Project and Expenditure report will cover two calendar quarters from the date of award to Sept. 30, 2021, and must be submitted to Treasury by Oct. 31, 2021. The subsequent quarterly reports will cover one calendar quarter and must be submitted to Treasury within 30 days after the end of each calendar quarter.
- Non-entitlement units of local government will be required to submit the project and expenditure report annually. The initial annual Project and Expenditure report for non-entitlement units of local government will cover activity from the date of award to Sept. 30, 2021, and must be submitted to Treasury by Oct. 31, 2021. The subsequent annual reports must be submitted to Treasury by Oct. 31 each year.
- Recovery Plan Performance reports: States (defined to include the District of Columbia), territories, metropolitan cities, and counties with a population that exceeds 250,000 residents will also be required to submit an annual recovery plan performance report to Treasury. This report will include descriptions of the projects funded and information on the performance indicators and objectives of each award, helping local residents understand how their governments are using the substantial resources provided by Coronavirus State and Local Fiscal Recovery Funds program. The initial recovery plan performance report will cover activity from date of award to July 31, 2021, and must be submitted to Treasury by Aug. 31, 2021. Thereafter, the recovery plan performance reports will cover a 12-month period and recipients will be required to submit the report to Treasury within 30 days after the end of the 12-month period. The second Recovery Plan Performance report will cover the period from July 1, 2021 to June 30, 2022 and must be submitted to Treasury by July 31, 2022. Each annual recovery plan performance report must be posted on the public-facing website of the recipient. Local governments with fewer than 250,000 residents, Tribal governments, and non-entitlement units of local government are not required to develop a Recovery Plan Performance report.
Treasury will provide further guidance and instructions on the reporting requirements for programs at a later date. (Treasury FAQ 5/10/21)
A21. Yes. A single audit is required by the federal government for any non-federal entity that spends $750,000 or more in federal funds in one year. It is intended to show that the entity has adequate internal controls and is generally in compliance with program requirements.
The city is responsible for the cost of the single audit and can contract with an auditing firm or the Minnesota Office of the State Auditor to perform it.
Q22. The Coronavirus Relief Fund (CRF) included as an eligible use: “Payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” What has changed with the Coronavirus State and Local Fiscal Recovery Funds (CSFRF/CLFRF), and what type of documentation is required for these funds?
A22. Many of the expenses authorized under the Coronavirus Relief Fund are also eligible uses under the CSFRF/CLFRF. However, in the case of payroll expenses for public safety, public health, health care, human services, and similar employees (hereafter, public health and safety staff), the CSFRF/CLFRF does differ from the CRF. This change reflects the differences between the ARPA and CARES Act and recognizes that the response to the COVID-19 public health emergency has changed and will continue to change over time. In particular, funds may be used for payroll and covered benefits expenses for public safety, public health, health care, human services, and similar employees, including first responders, to the extent that the employee’s time that is dedicated to responding to the COVID-19 public health emergency.
For administrative convenience, the recipient may consider a public health and safety employee to be entirely devoted to mitigating or responding to the COVID-19 public health emergency, and therefore fully covered, if the employee, or his or her operating unit or division, is primarily dedicated (e.g., more than half of the employee’s time is dedicated) to responding to the COVID-19 public health emergency.
Recipients may use presumptions for assessing whether an employee, division, or operating unit is primarily dedicated to COVID-19 response. The recipient should maintain records to support its assessment, such as payroll records, attestations from supervisors or staff, or regular work product or correspondence demonstrating work on the COVID-19 response. Recipients need not routinely track staff hours. Recipients should periodically reassess their determinations. (Treasury Guidance May 27, 2021)
For more information
The League hosted a webinar with more details about the ARPA Coronavirus Local Fiscal Recovery Fund on May 18.