The US Treasury has released the Final Rule for the ARPA Coronavirus State and Local Fiscal Recovery Funds. The Final Rule will be effective April 1, 2022. This is a link to the press release: https://home.treasury.gov/news/press-releases/jy0550. The press release makes the following statement:
First, Treasury has expanded the non-exhaustive list of uses that recipients can use to respond to COVID-19 and its economic impacts – ensuring states and localities can adapt quickly and nimbly to changing public health and economic needs. This includes clarifying that recipients can use funds for certain capital expenditures to respond to public health and economic impacts and making services like childcare, early education, addressing learning loss, and affordable housing development available to all communities impacted by the pandemic.
- Second, Treasury has expanded support for public sector hiring and capacity, which is critical for the economic recovery and in maintaining vital public services for communities.
- Third, Treasury has streamlined options to provide premium pay for essential workers, who bear the greatest health risks because of their service in critical sectors.
- Fourth, Treasury has broadened eligible water, sewer, and broadband infrastructure projects – understanding the unique challenges facing each state and locality in delivering clean water and high-speed broadband to their communities.
- In addition to these expansions, Treasury has greatly simplified the program for small localities – many of whom have received a historic federal investment in their communities through this program – including through the option to elect a standard allowance for revenue loss rather than calculating revenue loss through the full formula.
CCAO and NACO are starting to analyze the rule. A major new development is a $10 million allowance for revenue loss. Recipients do not have to use the complicated revenue loss formula in order spend up to $10 million for eligible governmental services. It appears that federal Uniform Guidance still applies.
A summary of the rule is available at the following address: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule-Overview.pdf
The summary states the following with regard to revenue loss (p. 9):
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.
The explanatory text of the rule itself (400+ pages) is available here: https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf
CCAO will continue to analyze the rule and provide more information as it becomes available.