Coronavirus State and Local Fiscal Recovery Funds Final Rule: Frequently Asked Questions (April 10, 2023)
Summary
Treasury's Coronavirus State and Local Fiscal Recovery Funds Final Rule: Frequently Asked Questions, as of April 10, 2023, answering questions on the SLFRF final rule that became effective on April 1, 2022. A categorization table lists version 1.0 of April 27, 2022, version 2.0 of July 27, 2022, and version 2.1 of April 10, 2023, which adds new FAQ #4.11. The answers cover eligibility and allocations, including the $20 billion reserved for Tribal governments, of which $1 billion was allocated evenly, and state that nonprofit or private organizations should seek funds from SLFRF recipients rather than from Treasury. Other answers address eligible uses such as cash transfers to households, which must be reasonably proportional to the negative economic impact, and the meaning of obligation under 31 CFR 35.3.
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AS OF APRIL 10, 2023
Coronavirus State and Local Fiscal Recovery Funds
Final Rule: Frequently Asked Questions
This document contains answers to frequently asked questions regarding the Final Rule of the
Coronavirus State and Local Fiscal Recovery Funds (SLFRF, or Fiscal Recovery Funds). The
final rule became effective on April 1, 2022. Treasury intends to update this document
periodically in response to questions received from stakeholders. Recipients and stakeholders
should consult the final rule for additional information, as this document does not describe all
relevant requirements that apply to the SLFRF program. Recipients also may find helpful the
Overview of the Final Rule, which provides a summary of major provisions of the final rule for
informational purposes.
• For overall information about the program, including information on requesting funding,
please see https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-
and-tribal-governments
• For general questions about SLFRF, please email SLFRF@treasury.gov.
Answers to frequently asked questions on distribution of funds to non-entitlement units of local
government (NEUs) can be found in this FAQ supplement.
Answers to frequently asked questions on the taxability and reporting of payments from SLFRF
can be found in this FAQ issued by the IRS.
The FAQs in this document are applicable to the final rule, although readers will notice that many
have been incorporated from the FAQs that were available in connection with the interim final rule,
because they remain applicable. Answers to frequently asked questions that are unique to the
interim final rule remain available at Interim Final Rule: Frequently Asked Questions. A
categorization is provided on the following page to assist in identifying the FAQs that remain
largely the same as in the FAQ document associated with the interim final rule and the FAQs that
are new or have been updated in conformity with the final rule.
Throughout these FAQs, Treasury may refer readers to relevant sections of the Overview of the
Final Rule. 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 the Overview summarize key provisions of the final rule
but are non-exhaustive, do not describe all terms and conditions associated with the use of SLFRF
funds, 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.
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AS OF APRIL 10, 2023
FAQ Categorization
Version Date Category FAQ #
1.0 April 27, 2022 FAQs retained with #1.1 – #1.2, #1.4 – 1.7, #2.10, #2.12
slight modifications – #2.13, #3.8 – #3.13, #4.3, #4.5,
from the Interim Final #6.10 – #6.11, #6.14, #8.1, #8.3,
Rule: Frequently #10.1 – #10.2, #11.1 – 11.3, #11.6 –
Asked Questions 11.12, #12.1 – 12.2
document (please note
that FAQ numbering
has changed between
the two documents)
1.0 April 27, 2022 New or Substantially #1.3, #1.8, #2.1 – #2.9, #2.11, #2.14
Updated FAQs – #2.24, #3.1 – 3.7, #3.14, #4.1 –
#4.2, #4.4, #4.6, #4.7 – #4.10, #5.1 –
#5.4, #6.1 – #6.9, #6.12 – #6.13,
#6.15 – #6.16, #8.2, #11.4 – #11.5,
Section 13
2.0 July 27, 2022 Updated FAQs #2.14, #3.1, #4.9
2.0 July 27, 2022 New FAQs #6.17 - #6.20, #13.13 - #13.17
2.1 April 10, 2023 New FAQ #4.11
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1. Eligibility and Allocations
1.1. Which governments are eligible for funds?
The following governments are eligible:
• States and the District of Columbia
• Territories
• Tribal governments
• Counties
• Metropolitan cities
• Non-entitlement units, or smaller local governments
1.2. Which governments receive funds directly from Treasury?
Treasury distributes funds directly to each eligible state, territory, metropolitan city,
county, or Tribal government. Smaller local governments that are classified as non-
entitlement units receive funds through their applicable state government.
1.3. Are special-purpose units of government eligible to receive funds?
Special-purpose units of local government are not eligible to receive an award as a
recipient under the SLFRF program; however, a state, territory, local, or Tribal
government may transfer funds to a special-purpose unit of government to carry out a
program or project on its behalf as a subrecipient. Special-purpose districts perform
specific functions in the community, such as fire, water, sewer or mosquito abatement
districts. A recipient can also provide funds to an entity that is special-purpose government
for the purpose of directly benefitting the entity as a result of the entity experiencing a
public health impact or negative economic impact of the pandemic.
1.4. How are funds being allocated to Tribal governments, and how will Tribal
governments find out their allocation amounts?
$20 billion of Fiscal Recovery Funds was reserved for Tribal governments. The American
Rescue Plan Act specified that $1 billion would be allocated evenly to all eligible Tribal
governments. The remaining $19 billion was to be distributed using an allocation
methodology determined by Treasury, which was based on enrollment and employment.
There were two payments to Tribal governments. Each Tribal government’s first payment
included (i) an amount in respect of the $1 billion allocation that was to be divided equally
among eligible Tribal governments and (ii) each Tribal government’s pro rata share of the
Enrollment Allocation. Tribal governments were notified of their allocation amount and
delivery of payment 4-5 days after completing request for funds in the Treasury
Submission Portal. The deadline to make the initial request for funds was June 21, 2021.
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The second payment included a Tribal government’s pro rata share of the Employment
Allocation. There was a $1,000,000 minimum employment allocation for Tribal
governments. In late June 2021, Tribal governments received an email notification to re-
enter the Treasury Submission Portal to confirm or amend their 2019 employment numbers
that were submitted to Treasury for the CARES Act’s Coronavirus Relief Fund. To receive
an Employment Allocation, including the minimum employment allocation, Tribal
governments must have confirmed employment numbers by July 23, 2021. Treasury
calculated employment allocations for those Tribal governments that confirmed or
submitted amended employment numbers by the deadline. In August, Treasury
communicated to Tribal governments the amount of their portion of the Employment
Allocation and the anticipated date for the second payment.
1.5. My county is a unit of general local government with population under 50,000.
Will my county receive funds directly from Treasury?
Yes. All counties that are units of general local government receive funds directly from
Treasury and should apply via the online portal. The list of county allocations is available
here.
1.6. My local government expected to be classified as a non-entitlement unit. Instead,
it was classified as a metropolitan city. Why?
The American Rescue Plan Act (ARPA) defines, for purposes of the Coronavirus Local
Fiscal Recovery Fund (CLFRF), metropolitan cities to include those that are currently
metropolitan cities under the Community Development Block Grant (CDBG) program but
also those cities that relinquish or defer their status as a metropolitan city for purposes of
the CDBG program. This would include, by way of example, cities that are principal cities
of their metropolitan statistical area, even if their population is less than 50,000. In other
words, a city that is eligible to be a metropolitan city under the CDBG program is eligible
as a metropolitan city under the CLFRF, regardless of how that city has elected to
participate in the CDBG program.
Unofficial allocation estimates produced by other organizations may have classified certain
local governments as non-entitlement units of local government. However, based on the
statutory definitions, some of these local governments should have been classified as
metropolitan cities.
1.7. In order to receive and use funds, must a recipient government maintain a
declaration of emergency relating to COVID-19?
No. Neither the statute establishing the SLFRF nor the final rule requires recipients to
maintain a local declaration of emergency relating to COVID-19.
1.8. Can nonprofit or private organizations receive funds? If so, how?
Yes. Under section 602(c)(3) of the Social Security Act, a State, territory, or Tribal
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government may transfer funds to a “private nonprofit organization . . . , a Tribal
organization . . . , a public benefit corporation involved in the transportation of passengers
or cargo, or a special-purpose unit of State or local government.” Similarly, section
603(c)(3) authorizes a local government to transfer funds to the same entities (other than
Tribal organizations). The interim final rule clarified that the lists of transferees in sections
602(c)(3) and 603(c)(3) are not exclusive, and the final rule clarified that recipients may
transfer funds to any entity to carry out, as a subrecipient, an eligible activity on behalf of
the SLFRF recipient (transferor), as long as they comply with the SLFRF Award Terms
and Conditions and other applicable requirements. A transferee receiving a transfer from a
recipient under sections 602(c)(3) and 603(c)(3) will be considered a subrecipient and will
be expected to comply with all subrecipient reporting requirements.
Additionally, a recipient can provide funds to an entity, including a nonprofit organization,
for the purpose of directly benefitting the entity as a result of the entity experiencing a
public health impact or negative economic impact of the pandemic. In this instance, these
entities will be considered beneficiaries, not subrecipients, and will not be expected to
comply with subrecipient reporting requirements. Beneficiary reporting requirements will
apply.
The ARPA does not authorize Treasury to provide SLFRF funds directly to nonprofit or
private organizations. Thus, a nonprofit or private organization should seek funds from
SLFRF recipient(s) in their jurisdiction (e.g., a State, local, territorial, or Tribal
government).
2. Eligible Uses – Responding to the Public Health Emergency /
Negative Economic Impacts
2.1. If a use of funds is not explicitly permitted in the final rule as a response to the
public health emergency and its negative economic impacts, does that mean it is
prohibited?
No. The final rule provides a non-exhaustive list of enumerated uses that respond to
pandemic impacts. The final rule also presumes that some populations experienced
pandemic impacts and are eligible for responsive services. 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.
2.2. What types of services are eligible as responses to the negative economic
impacts of the pandemic?
Eligible uses to respond to the negative economic impacts of the pandemic include
assistance to households and communities; assistance to small businesses and nonprofits;
aid to impacted industries; and uses to support public sector capacity and workforce. For
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an overview of the eligible uses within each of these subcategories, please see pages 12-
13 and 16-34 of the Overview of the Final Rule. The eligible uses within this category
include programs and services to respond to impacts of the pandemic on households and
communities, such as:
• Cash assistance
• Food assistance (e.g., child nutrition programs, including school meals) & food
banks
• Childcare and early learning services, home visiting programs, services for child
welfare-involved families and foster youth & childcare facilities
• Programs or services to support long-term housing security, including
development of affordable housing and permanent supportive housing
They also include uses to bolster public sector capacity and workforce, such as:
• 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.
• Payroll and covered benefits for additional public sector workers 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.
These tools can allow recipients not only to bring back laid-off workers, but to address
critical shortages of teachers, instructional aides, transportation workers, behavioral
health workers, and other key government personnel, by funding positions at competitive
wages and improving job quality in these sectors (see FAQs #2.15, #2.16, #2.17).
Recipients also have broad flexibility to identify and respond to other pandemic impacts
and serve other populations that experienced pandemic impacts, beyond the enumerated
uses. For more information on identifying eligible uses beyond those enumerated, please
see pages 32-34 of the Overview of the Final Rule.
2.3. What types of COVID-19 response, mitigation, and prevention activities
are eligible?
Please see pages 12-14 of the Overview of the Final Rule for a non-exhaustive list of
enumerated eligible uses relating to COVID-19 mitigation and prevention, as well as
information about how to design other responses that are not included in the list.
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2.4. May recipients use funds to respond to the public health emergency and its
negative economic impacts by providing direct cash transfers to households?
Yes. Cash transfers, like all eligible uses in the public health and negative economic
impacts category, must respond to the negative economic impacts of the pandemic on a
household or class of households. Recipients may presume that low- and moderate-
income households (as defined in the final rule), as well as households that experienced
unemployment, food insecurity, or housing insecurity, experienced a negative economic
impact due to the pandemic. Recipients may also identify other households or classes of
households that experienced a negative economic impact of the pandemic and provide
cash assistance that is reasonably proportional to, and not grossly in excess of, the
amount needed to address the negative economic impact. For example, in the ARPA,
Congress authorized Economic Impact Payments to households at certain income levels,
identifying and responding to a negative economic impact of the pandemic on these
households.
Treasury has reiterated in the final rule that responses to negative economic impacts
should be reasonably proportional to the impact that they are intended to address. Uses
that bear no relation or are grossly disproportionate to the type or extent of harm
experienced would not be eligible uses. Reasonably proportional refers to the scale of the
response compared to the scale of the harm. It also refers to 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 assistance in a
very small amount to a group that experienced severe harm and in a much larger amount
to a group that experienced relatively little harm. Please also see questions 7-10 from the
IRS-issued FAQ on SLFRF relating to the taxability of cash transfers.
2.5. May recipients use funds to respond to the public health emergency and its
negative economic impacts by replenishing unemployment funds?
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. Through December
31, 2024, 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
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payable (i.e., maximum benefit entitlement).
2.6. May funds be used to reimburse recipients for costs incurred by state, local
and Tribal governments in responding to the public health emergency and its
negative economic impacts prior to passage of the American Rescue Plan?
Use of SLFRF is generally forward looking. The final rule permits funds to be used to
cover costs incurred beginning on March 3, 2021.
2.7. May recipients use funds for general economic development?
Generally, no. General economic development – activities that do not respond to negative
economic impacts of the pandemic but rather seek to more generally enhance the
jurisdiction’s business climate – would generally not be eligible under this eligible use
category.
To identify an eligible use of funds under the public health and negative economic
impacts category, a recipient must identify a beneficiary or class of beneficiaries that
experienced a harm or impact due to the pandemic, and eligible uses of funds must be
reasonably designed to respond to the harm, benefit the beneficiaries that experienced it,
and be related and reasonably proportional to that harm or impact. For example, job
training and other supports – like childcare, transportation, and subsidized employment –
for unemployed workers may be used to address negative economic impacts of the public
health emergency and be eligible.
2.8. How can recipients use funds to assist the travel, tourism, and hospitality
industries? May recipients use funds to assist impacted industries other than
travel, tourism, and hospitality?
Please see pages 24-25 of the Overview of the Final Rule.
2.9. How does the final rule help address the disparate impact of COVID-19 on
certain populations and geographies?
In recognition of the long-standing disparities in health and economic outcomes in
underserved communities that have amplified and exacerbated the impacts of the
pandemic, the final rule identifies certain populations as “disproportionately impacted” by
the pandemic and enumerates a broad range of services and programs to address health
disparities, to build stronger communities through investments in neighborhoods, to
address educational disparities, to provide rental assistance vouchers or assistance
relocating to areas of greater economic opportunity, and other eligible uses to respond to
negative economic impacts in disproportionately impacted communities.
Specifically, Treasury will presume that certain populations were disproportionately
impacted by the pandemic and therefore automatically eligible to receive responsive
services. See page 19 of the Overview of the Final Rule for a full list of the
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populations presumed disproportionately impacted by the pandemic.
Recipients may also provide responsive 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.
Treasury has provided a non-exhaustive list of eligible responses to serve
disproportionately impacted communities on page 20 of the Overview of the Final
Rule. Note that these are an enhanced set of responses available in addition to
responses available to respond to impacts of the pandemic on households and
communities (including those listed on page 18 of the Overview).
2.10. May recipients use funds to pay for vaccine incentive programs (e.g., cash or
in-kind transfers, lottery programs, or other incentives for individuals who get
vaccinated)?
Yes. Under the final rule, recipients may use SLFRF funds to respond to the COVID-19
public health emergency, including expenses related to COVID-19 vaccination
programs.
Programs that provide incentives reasonably expected to increase the number of people
who choose to get vaccinated, or that motivate people to get vaccinated sooner than they
otherwise would have, are an allowable use of funds so long as such costs are reasonably
proportional to the expected public health benefit.
2.11. How can recipients use funds to support workers returning to work?
Under the final rule, recipients may use SLFRF funds under the public health and
negative economic impacts eligible use category to provide 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, cash and
other incentives for newly employed workers, subsidized employment, grants to hire
underserved workers, assistance to unemployed individuals to start small businesses, and
development of job and workforce training centers.
2.12. What staff are included in “public safety, public health, health care, human
services, and similar employees”? Would this include, for example, 911 operators,
morgue staff, medical examiner staff, or EMS staff?
As discussed in the final rule, funds may be used for payroll and covered benefits
expenses for public safety, public health, health care, human services, and similar
employees, for the portion of the employee’s time that is dedicated to responding to the
COVID-19 public health emergency.
Public safety employees would include police officers (including state police officers),
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sheriffs and deputy sheriffs, firefighters, emergency medical responders, correctional and
detention officers, and those who directly support such employees such as dispatchers
and supervisory personnel. Public health employees would include employees involved in
providing medical and other health services to patients and supervisory personnel,
including medical staff assigned to schools, prisons, and other such institutions, and other
support services essential for patient care (e.g., laboratory technicians, medical examiner
or morgue staff) as well as employees of public health departments directly engaged in
matters related to public health and related supervisory personnel. Note that this category
encompasses both public health and health care employees; both are treated as public
health employees for the purposes of this eligible use category. Human services staff
include employees providing or administering social services; public benefits; child
welfare services; and child, elder, or family care, as well as others.
2.13. May recipients use funds to establish a public jobs program?
Yes. Under the public health and negative economic impacts eligible use category, the
final rule permits a broad range of services to unemployed or underemployed workers and
other individuals that suffered negative economic impacts from the pandemic. That can
include public jobs programs, subsidized employment, combined education and on-the-
job training programs, or job training to accelerate rehiring or address negative economic
or public health impacts experienced due to a worker’s occupation or level of training.
The broad range of permitted services can also include other employment supports, such
as childcare assistance or assistance with transportation to and from a jobsite or interview.
2.14. Can funds be used for investments in affordable housing?
Yes. Under the final rule, “Development, repair, and operation of affordable housing and
services or programs to increase long-term housing security” is an enumerated eligible use
to respond to impacts of the pandemic on households and communities. Treasury continues
to strongly encourage the use of SLFRF for affordable housing and has updated this FAQ
to promote clarity and administrability in the use of these funds.
Affordable housing projects must be responsive and proportional to the harm identified.
This standard may be met by affordable housing development projects—which may
involve large expenditures and capital investments—if the developments increase the
supply of long-term affordable housing for households that experienced associated
pandemic impacts under the final rule.
Presumptively Eligible Uses
For purposes of this standard, if a project fits within either of the below presumptions,
Treasury will presume that a project is eligible. As discussed more below, Treasury will
presume that the following affordable housing investments are eligible uses of SLFRF
funds as responses to the negative economic impacts of the pandemic: (1) projects that
would be eligible for funding under an expanded list of federal housing programs and (2)
projects for the development, repair, or operation of affordable rental housing with certain
income and affordability requirements. Recipients’ affordable housing projects may use
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either of these presumptions to qualify as a presumptively eligible use. If a recipient uses
one presumption for an affordable housing project, the recipient may still use a different
presumption for another affordable housing project.
Presumption 1: Treasury will presume that any project that is eligible to be funded under
any of the following federal housing programs is an eligible use of SLFRF funds as a
response to the negative economic impacts of the pandemic:
• The National Housing Trust Fund (HTF, administered by HUD);
• The Home Investment Partnerships Program (HOME, administered by HUD);
• The Low-Income Housing Tax Credit (administered by Treasury);
• The Public Housing Capital Fund (administered by HUD);
• Section 202 Supportive Housing for the Elderly Program and Section 811
Supportive Housing for Persons with Disabilities Program (administered by
HUD);
• Project-Based Rental Assistance (PBRA) (administered by HUD); and
• Multifamily Preservation & Revitalization program (administered by USDA).
In previous guidance, presumptive eligibility for affordable housing projects was limited to
HOME and HTF. Treasury has updated this list by adding additional programs in an effort
to increase administrability and clarity in the use of SLFRF funds for affordable housing
purposes. This update is also expected to decrease the transaction costs associated with
layering SLFRF funds with existing projects. Note that these programs use different
income limits than the definitions of low- and moderate-income adopted by Treasury.
Given the severity of the affordable housing shortage, and the ways in which the pandemic
has exacerbated the need for affordable, high-quality dwelling units, Treasury has
determined that the households served by these federal housing programs have been
impacted by the pandemic and its negative economic impacts and that development of
affordable housing consistent with these programs is a related and reasonably proportional
response to those impacts. Additionally, affordable housing projects provided by a Tribal
government are eligible uses of SLFRF funds if they would be eligible for funding under
the Indian Housing Block Grant program, the Indian Community Development Block
Grant program, or the Bureau of Indian Affairs Housing Improvement Program.
To the extent that a recipient chooses to use SLFRF funds to invest in affordable housing
projects in alignment with these federal housing programs, the investment agreement must
require the covered project or units to adhere to all applicable local codes, and comply, at a
minimum, with the applicable federal housing program’s requirements related to:
• Resident income restrictions;
• The period of affordability and related covenant requirements for assisted units;
• Tenant protections; and
• Housing quality standards.
Presumption 2: Treasury will presume that an investment in the development, repair, or
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operation of any affordable rental housing unit is an eligible use of SLFRF funds to
respond to the negative economic impacts of the pandemic if the unit has a limited
maximum income of 65% area median income (AMI), as imposed through a covenant,
land use restriction agreement, or other enforceable legal requirement for a period of at
least 20 years. A jurisdiction may establish a longer period of affordability at its
discretion. This presumption is available even if the project does not align with the federal
housing programs specified in Presumption 1.
Under this presumption, recipients may use SLFRF funds as part of the financing for a
mixed-income housing project if the total financing made up of SLFRF funds does not
exceed the total development costs attributable to affordable housing units limited to
households at or below 65% AMI for the affordability period. For example, if 25% of a
project’s units are reserved for families at or below 65% AMI for the affordability period,
and 20% of the total development costs of the project are attributable to such reserved
units, then SLFRF funds may be used to pay for up to 20% of the total development costs.
The income limit and 20-year affordability covenant does not need to apply to specific
units, but rather it may specify a number of units within the development, in which case
the covenant should also specify the bedroom size mix.
Using 65% AMI as the income limit aligns to the AMI component of Treasury’s definition
of moderate-income households, which is one population that Treasury presumes impacted
by the pandemic or its negative economic impacts. Because of the highly localized nature
of housing costs and the broad use of AMI in affordable housing development, repair, and
operation, Presumption 2 requires funded units to be at or below 65% AMI but does not
incorporate the 300% FPL level that is also used to define moderate-income households
under the final rule.
Recipients are strongly encouraged to prioritize SLFRF investments for affordable housing
in close proximity to, or with strong transit linkages to, centers of employment and/or
institutions that provide high quality education or childcare, health care, services and
healthy foods.
Additional Eligible Uses:
Note that other affordable housing projects, beyond those eligible under the presumptions
described above, may also be eligible uses of SLFRF funds under the final rule if they are
related and are reasonably proportional to addressing the negative economic impacts of the
pandemic and otherwise meet the final rule’s requirements. As an example, in certain
rental markets, data indicates that there are gaps in financing for units serving households
between 50% and 80% AMI and/or significantly higher than average housing costs relative
to AMI that have led communities in this income threshold to be impacted by the
pandemic. In such cases, it may be reasonably proportional to address the negative
economic impacts of the pandemic by funding units (e.g., up to 80% AMI) that do not fall
into the presumptively eligible categories listed above.
To further support sustainable and durable homeownership, recipients may consider
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offering down payment assistance, such as through contributions to a homeowner’s equity
at origination or that establish a post-closing mortgage reserve account on behalf of the
borrower that may be utilized to make a missed or partial mortgage payment at any point
during the life of the loan (e.g., if the borrower faces financial stress). Homeownership
assistance that would be eligible under the Community Development Block Grant (at 24
CFR 507.201(n)) is also an eligible use of SLFRF funds.
2.15. Can I use funds to raise public sector wages and hire public sector workers?
Yes. 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, including reasonable increases in compensation, and paying for ancillary
administrative costs related to hiring, support, and retention.
Under the set of eligible uses for public-sector rehiring, recipients may fill vacancies and
add additional employees using SLFRF funds (see pages 4385-4387 of the final rule and
pages 27-28 of the Overview of the Final Rule). Recipients have two options to restore
pre-pandemic employment, depending on the recipient’s needs. First, 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.
Second, 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. Filling these roles may require recipients to
increase wages and improve benefits above and beyond what they currently offer,
especially in roles with historically low wages and acute staffing needs. This compensation
would be an eligible use of SLFRF funds.
SLFRF funds also may be used to provide 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.
2.16. How can funds be used to improve job quality and address labor supply
challenges in the education and childcare sectors?
13
SLFRF funds can pay for the full salary and benefits of many school and childcare staff,
including increased wages needed to recruit and retain excellent staff, and to fund premium
pay, bonuses, training, and other worker supports. Some examples of potential uses of
funds related to supporting the education and childcare sectors are provided below:
• Under the public health and negative economic impacts eligible use category,
SLFRF funds can be used broadly for re-hiring public sector staff, such as school
staff, to restore the public sector, including payroll and covered benefits for new
or re-hired public employees (see FAQ #2.15)
o Even where the recipient, such as the municipality, does not have
budgetary authority over a school district, it may choose to sub-award
SLFRF funds to districts and other government entities for these purposes
(see FAQ #2.17).
• SLFRF can fund premium pay for essential workers, including school personnel
and childcare providers working in person in both the public and private sector, to
compensate them for their service during the pandemic (see pages 35-36 of the
Overview of the Final Rule and section 5 of the FAQs).
• Under the public health and negative economic impacts eligible use category,
SLFRF can fund supports for unemployed and underemployed workers, including
hiring bonuses, training, and other labor supports, regardless of sector (see FAQ
#2.11).
o Under this provision, recipients can help childcare providers and school
districts by strengthening pipelines into these sectors, including by using
SLFRF funds to train potential workers to fill in-demand roles in childcare
and education, including as school bus drivers, school nutrition staff,
paraprofessionals, and other staff.
• Childcare subsidies and other supports for childcare programs – public or private
– that serve low- and moderate-income families, are broadly eligible uses of
SLFRF funding under the public health and negative economic impacts eligible
use category (see FAQ #2.25). These subsidies can support improvements to
wages and job quality that make childcare employment an attractive career.
• Recipients can also provide assistance to small businesses under the public health
and negative economic impacts eligible use category – which many state and local
governments can use to help childcare small businesses expand their business,
raise wages for workers, and complete training and other technical assistance to
support high-quality care, given the impacts these businesses have faced over the
course of the pandemic (see pages 21-22 of the Overview).
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2.17. How can recipients use funds to invest in their public sector workforce when the
recipient government is not the direct employer, as is the case with some transit
agencies and local educational agencies?
Under the increased flexibility of the final rule, SLFRF funds may be used to support a
broader set of uses to restore and support public sector employment as a response to the
pandemic and its negative economic impacts (see FAQ #2.15).
Treasury acknowledges that funding models for public sector workers vary drastically
across jurisdictions, and the direct employer of a public sector worker may be an entity
separate from the SLFRF recipient government, like an independent transit agency or local
educational agency (LEA), rather than the recipient government itself. Recipients may still
use SLFRF funds to hire workers in these sectors under such circumstances.
Using the calculation detailed on page 4386 of the final rule and pages 27-28 of the
Overview of the Final Rule, a recipient may calculate at an entity level the actual number
of FTEs for the entity and the adjusted pre-pandemic baseline for the entity. The
difference between the actual number of FTEs and the adjusted pre-pandemic baseline
represents the number of FTEs that can be hired using SLFRF funds.
A recipient may then transfer funds to the entity, which would act as a subrecipient and
cover payroll, covered benefits, and other costs associated with hiring up to this number
of FTEs. A recipient may, in addition, “transfer” the FTEs it may hire based on its own
calculation to the entity. A recipient may not, however, perform the calculation on the
behalf of an entity, and then “transfer” to itself, or to any other entity, any of the FTEs
able to be hired by the entity.
As an illustrative example, consider a recipient county government that would like to
fund the salary and benefits costs for hiring teachers in a school district.
The school district has 2000 budgeted FTEs on January 27, 2020. The school district’s
pre-pandemic baseline is 2000 FTEs; its adjusted pre-pandemic baseline is 2000 * 1.075
= 2150 FTEs. The county’s pre-pandemic baseline is 1000 FTEs; its adjusted pre-
pandemic baseline is 1000 * 1.075 = 1075 FTEs. Now, assume that on March 3, 2021, the
school district had 1800 budgeted FTEs in total, and the county had 1000 budgeted FTEs.
The county would be able to transfer funds to the school district to hire up to 350 FTEs
with SLFRF funds (that is, 2150 - 1800 = 350 FTEs), and additionally, “transfer” up to 75
FTEs to the school district (that is, 1075 - 1000 = 75 FTEs). If the county decided to
“transfer” all of its 75 FTEs to the school district, then the school district could hire up to
350 + 75 = 425 FTEs using funds from the county. However, the county may not directly
hire any more than 75 FTEs under this public sector hiring provision, and may not use
any of the funds for the 350 FTEs able to be hired by the school district to fund any of the
county’s FTE positions.
15
This public sector rehiring provision is a powerful tool for addressing staffing needs and
shortages across government.
2.18. Can I use SLFRF funds to provide childcare to households?
Yes. Childcare and early learning services, home visiting programs, services for child
welfare involved families and foster youth are an enumerated use eligible to respond to
impacts of the pandemic on households and communities. These eligible uses can include
new or expanded services, increasing access to services, efforts to bolster, support, or
preserve existing providers and services, and similar activities. Further, improvements to
or new construction of childcare, daycare, and early learning facilities are eligible capital
expenditures, subject to the other eligibility standards for capital expenditures.
2.19. How can funds be used for “installation and improvement of ventilation systems
in congregate settings, health care settings, or other public facilities” like commercial
buildings, office buildings, schools, nursing homes, multi-family residential buildings,
and restaurants?
As a general matter, ventilation improvements, including updates to HVAC systems,
improved air filtration, and increased outdoor air flow, can help reduce the concentration
and risk of exposure to aerosols, and thus infection with COVID-19. 1 The National
COVID-19 Preparedness Plan specifies that improving ventilation and air filtration is a key
component of keeping schools and businesses safely open. Although improvements to
ventilation and air cleaning cannot on their own eliminate the risk of airborne transmission
of the SARS-CoV-2 virus, the Environmental Protection Agency (EPA) has recommended
taking steps to improve indoor air quality (IAQ ) including optimizing fresh air ventilation,
enhancing air filtration and cleaning, and managing the way air flows as components of a
larger approach that may include individual actions and layered prevention strategies.
Under the SLFRF program, funds for installation and improvement of ventilation systems
can be used for projects that respond to the pandemic’s public health impacts and provide
longer-term benefits, including the inspection, testing, commissioning, maintenance,
repair, replacement, and upgrading of HVAC systems to improve indoor air quality in
facilities. Projects can include assessing current HVAC systems, updating HVAC systems,
updating air filters, installing functional windows for improved ventilation, repairing
windows and doors, installing in-room air cleaning devices, and other projects for
improving indoor air quality. For a more extensive guide of how to effectively use funds
for ventilation improvements, Treasury recommends reviewing EPA’s Clean Air in
Buildings Challenge, a call to action and a set of guiding principles and best practices to
assist building owners and operators with improving IAQ in buildings, as well as EPA’s
resource page on “Ventilation and Coronavirus (COVID-19).” For a guide on federal
programs and resources to support school infrastructure, including ventilation
improvements, Treasury recommends consulting the “White House Toolkit: Federal
1
https://www.cdc.gov/coronavirus/2019-ncov/community/ventilation.html;
https://www.epa.gov/coronavirus/indoor-air-and-coronavirus-covid-19.
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Resources for Addressing School Infrastructure Needs.” Further, Treasury recommends
that recipients engage with public health and infection prevention professionals to develop
and support an effective COVID-19 mitigation strategy. Finally, Treasury recommends
that recipients ensure that the inspection, testing, commissioning, maintenance, repair,
replacement, and upgrading of ventilation systems is performed by a skilled, trained, and
certified workforce.
Recipients that undertake ventilation system investments under the public health and
negative economic impacts eligible use category should review capital expenditure
requirements in the final rule and note that capital expenditures must be related and
reasonably proportional to the pandemic impact identified.
2.20. In what types of buildings can recipients use funds to install and improve of
ventilation systems?
In addition to directly installing and improving ventilation systems in congregate settings,
health care settings, or other public facilities, recipients may grant or loan funds to
businesses, non-profits, and other entities that may benefit from COVID-19 mitigation
measures.
In making these investments, Treasury recommends that recipients consult with public
health and infection prevention professionals and that recipients ensure work is performed
by a workforce that is skilled, trained, and certified in ventilation systems work. Many
buildings would benefit from ventilation improvements, including settings where risk of
infection is higher, such as when people are indoors for prolonged periods of time, are in
crowded environments, or are performing activities that increase emission of respiratory
fluids (such as speaking loudly, singing, or exercising). 2 This includes commercial
buildings, office buildings, dense worksites, schools, nursing homes and other long-term
care facilities, multi-family residential buildings, restaurants, correctional facilities,
transportation hubs, and public transit vehicles, among other locations. Recipients are
encouraged to consider congregate settings and other key locations as priorities for
installation and improvement of ventilation systems. Please note that use of funds is not
limited to government-owned public facilities and funds may be distributed by recipients
to private businesses, non-profits, and others for COVID-19 mitigation and prevention, as
the final rule clarifies that recipients may identify the general public as the impacted
population for COVID-19 prevention and mitigation services. Recipients should review
capital expenditure requirements for the public health and negative economic impacts
eligible use category in the final rule before undertaking investments in ventilation
systems.
For more information on ventilation system upgrades for school settings, Treasury
recommends consulting:
• Creating Healthy Indoor Air Quality in Schools: https://www.epa.gov/iaq-schools
• Efficient and Healthy Schools campaign: https://efficienthealthyschools.lbl.gov/
2
https://www.epa.gov/coronavirus/indoor-air-and-coronavirus-covid-19.
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• Efficient and Healthy Schools website:
https://www.energy.gov/eere/buildings/efficient-and-healthy-schools
For more information on ventilation system upgrades for office and other commercial
building settings, Treasury recommends consulting:
• Enhancing Health with Indoor Air: https://sftool.gov/learn/about/626/enhancing-
health-indoor-air
• Sustainable Response to COVID-19:
https://sftool.gov/learn/about/625/sustainable-response-covid-19
• Better Buildings Resource Center: Building Operations during COVID-19
https://betterbuildingssolutioncenter.energy.gov/covid19
For more information on ventilation system upgrades for residential settings, Treasury
recommends consulting:
• Improving Ventilation in Your Home: https://www.cdc.gov/coronavirus/2019-
ncov/prevent-getting-sick/Improving-Ventilation-Home.html
• Ventilation in Buildings: https://www.cdc.gov/coronavirus/2019-
ncov/community/ventilation.html
2.21. Can SLFRF funds be used to support public school facility improvements,
upgrades, and new construction – such as those that make buildings more energy
efficient, increase their use of renewable energy, address capacity constraints, and
respond to health and safety concerns?
Yes. There are numerous ways in which SLFRF funds may be used to support public
school facility improvements and upgrades.
First, as part of the public health and negative economic impacts (PH-NEI) eligible use
category, SLFRF funds may be used address educational disparities in disproportionately
impacted communities, 3 which may include funding improvements or new construction of
schools and other educational facilities or equipment. Recipients may consider energy
efficiency improvements as part of their facility investments, and may also use funds for
pre-project development costs, such as assessment of building conditions, energy audits,
feasibility studies, HVAC commissioning and testing, and lead testing, that are tied to or
reasonably expected to lead to an eligible investment in school facilities to address
educational disparities in disproportionately impacted communities. Recipients should
review and comply with the requirements applicable to capital expenditures under the
public health and negative economic impacts eligible use category as outlined in the final
rule. 4
3
Please see FAQ 2.9 for more on disproportionately impacted communities, and the Overview of the Final Rule
(p.19) for a list of presumed disproportionately impacted communities. 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.
4
Please see the Overview of the Final Rule (p. 30-31) for a summary of capital expenditure requirements for the
public health and negative economic impacts eligible use category.
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Second, as part of the PH-NEI eligible use category, recipients may use funds for
adaptations to schools for the purpose of mitigating the spread of COVID-19, including for
ventilation improvements. Similar to the above, recipients should ensure compliance with
the capital expenditure requirements for the eligible use category.
Third, as part of the water and sewer infrastructure eligible use category, recipients may
invest in certain projects to support lead remediation, including replacement of internal
plumbing and faucets and fixtures in schools and childcare facilities. Recipients can also
invest in certain green water infrastructure projects. Eligible water and sewer projects are
generally aligned with those allowable under the EPA’s Drinking Water and Clean Water
State Revolving Funds, and Treasury has added additional eligible projects as part of the
final rule. Recipients should review and comply with the specific requirements provided
for in the water and sewer infrastructure eligible use category as outlined in the final rule.
Fourth, as part of the revenue loss eligible use category, which is the broadest eligible use
category that is capped by either the $10 million standard allowance (up to a recipient’s
award size) or a recipient’s calculated revenue loss, recipients may use SLFRF funds on
government services. These government services include any service traditionally provided
by a government unless Treasury has stated otherwise. Eligible government services that
may be covered under the revenue loss eligible use category include maintenance,
improvement, or new construction of public school facilities, including those that address
over-crowding and capacity constraints, support energy efficiency, and respond to health
and safety concerns, among other purposes.
Under the SLFRF program, recipients must obligate all funds by December 31, 2024 and
expend funds by December 31, 2026. Recipients may transfer funds to other entities,
including local educational agencies, to carry out as a subrecipient an eligible use of funds
by the recipient, as long as they comply with program requirements. Recipients should
note that the Davis-Bacon Act requirements (prevailing wage rates) do not apply to
projects funded solely with award funds from the SLFRF program, except for certain
SLFRF-funded construction projects undertaken by the District of Columbia. The National
Environmental Policy Act (NEPA) does not apply to Treasury’s administration of the
SLFRF program, although projects supported with SLFRF funds may still be subject to
NEPA review if they are also funded by other federal financial assistance programs.
2.22. Would investments in improving outdoor spaces (e.g., parks) be an eligible
use of funds as a response to the public health emergency and/or its negative
economic impacts?
There are multiple ways that investments in improving outdoor spaces could qualify as
eligible uses; several are highlighted below, though there may be other ways that a
specific investment in outdoor spaces would meet eligible use criteria.
First, in recognition of the disproportionate negative economic impacts on certain
communities and populations, the final rule includes enumerated eligible uses in
disproportionately impacted communities for developing neighborhood features that
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promote improved health and safety outcomes, such as parks, green spaces, recreational
facilities, sidewalks, pedestrian safety features like crosswalks, projects that increase
access to healthy foods, streetlights, neighborhood cleanup, and other projects to
revitalize public spaces.
Second, recipients may provide assistance to disproportionately impacted small
businesses. The final rule included rehabilitation of commercial properties, storefront
improvements, and façade improvements as enumerated eligible assistance to these
small businesses.
Third, recipients can assist small businesses, nonprofits, or other entities to create or
enhance outdoor spaces to mitigate the spread of COVID-19 (e.g., restaurant patios).
Recipients pursuing many of these uses should also note the eligibility standards for capital
expenditures in the final rule, which are summarized on pages 30-31 of the Overview of
the Final Rule.
2.23. Would expenses to address a COVID-related backlog in court cases be an
eligibleuse of funds as a response to the public health emergency?
Yes. The final rule maintains that SLFRF funds may be used to address administrative
needs of recipient governments that were caused or exacerbated by the pandemic. Please
see pages 4388-4389 of the final rule. During the COVID-19 public health emergency,
many courts were unable to operate safely during the pandemic and, as a result, now face
significant backlogs. Court backlogs resulting from the inability of courts to safely
operate during the COVID-19 pandemic decreased the government’s ability to administer
services. Therefore, steps to reduce these backlogs, such as implementing COVID-19
safety measures to facilitate court operations, hiring additional court staff or attorneys to
increase speed of case resolution, and other expenses to expedite case resolution are
eligible uses.
2.24. Can funds be used for eviction prevention efforts or housing stability
services?
Yes. Treasury provided a non-exhaustive list of eligible services in the final rule: Rent,
rental arrears, utility costs or arrears (e.g., electricity, gas, water and sewer, trash removal,
and energy costs, such as fuel oil), reasonable accrued late fees (if not included in rental
or utility arrears), mortgage payment assistance, financial assistance to allow a
homeowner to reinstate a mortgage or to pay other housing-related costs related to a
period of forbearance, delinquency, or default, mortgage principal reduction, facilitating
mortgage interest rate reductions, counseling to prevent foreclosure or displacement,
relocation expenses following eviction or foreclosure (e.g., rental security deposits,
application or screening fees).
Treasury also clarified that assistance to households for delinquent property taxes, for
example to prevent tax foreclosures on homes, was permissible under the interim final
20
rule and continues to be so under the final rule. In addition, Treasury also clarified that
recipients may administer utility assistance or address arrears on behalf of households
through direct or bulk payments to utility providers to facilitate utility assistance to
multiple consumers at once, so long as the payments offset customer balances and
therefore provide assistance to households. The public health and negative economic
impacts eligible use category also includes emergency assistance for individuals
experiencing homelessness, either individual-level assistance (e.g., rapid rehousing
services) or assistance for groups of individuals (e.g., master leases of hotels, motels, or
similar facilities to expand available shelter). Please see page 4360 of the final rule for
further relevant clarifications.
3. Eligible Uses – Revenue Loss
3.1. Does a recipient need to calculate or provide proof of its revenue loss to use funds
for government services?
Recipients may elect a “standard allowance” of up to $10 million to spend on government
services through the period of performance. The standard allowance is available to all
recipients and offers a simple, convenient way to determine revenue loss, instead of using
the full formula specified in the final rule. Recipients must make a one-time, irrevocable
election to either take the standard allowance or calculate revenue loss. Recipients were
able to indicate this choice in their Project and Expenditure Reports due April 30, 2022,
and recipients may update their revenue loss election, as appropriate, in future reporting
cycles through the April 2023 reporting period. Upon update, any prior revenue loss
election will be superseded. For example, if a recipient previously elected to calculate
revenue loss in their Project and Expenditure Report due April 30, 2022 and this recipient
would like to update their election, Treasury’s reporting portal will allow the recipient to
supersede their prior election in future reporting cycles and instead take the standard
allowance. Similarly, recipients who previously elected the standard allowance and would
like to supersede their prior election and instead calculate revenue loss may also update
their revenue loss election in future reporting cycles. Recipients continue to be required to
employ a consistent methodology across the period of performance (i.e., choose either the
standard allowance or the full formula) and may not elect one approach for certain
reporting years and the other approach for different reporting years. Recipients who elect
the standard allowance do not have to produce any further demonstration or calculation of
revenue loss.
Electing the standard allowance does not increase or decrease a recipient’s total allocation.
For example, a recipient with an allocation of $6 million would be allowed to claim no
more than $6 million as revenue loss to use for government services, and a recipient with
an allocation of $12 million would be allowed to claim the full $10 million standard
allowance and use the remaining allocation towards other eligible use categories.
Recipients who elect to calculate revenue loss by formula must do so as articulated in the
final rule and described in the Overview of the Final Rule and FAQ #3.6.
3.2. Can revenue loss funds be used for a purpose that is not explicitly listed as an
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example of a government service in the Overview of the Final Rule or Final Rule?
Yes. Government services generally include any service traditionally provided by a
government, unless Treasury has stated otherwise. Common examples are listed on page
11 of the Overview of the Final Rule and page 4408 of the final rule, but these lists are not
exhaustive. In addition to the common examples described in the final rule, many
recipients and stakeholders have asked if using funds for activities like payroll for specific
public sector staff, renovations to particular government facilities, and equipment to
facilitate and improve government services such as health services, waste disposal, road
building and maintenance, and water and sewer services would be eligible as government
services. Treasury is clarifying here that under the final rule, payroll for government
employees, contracts, grants, supplies and equipment, rent, and the many other costs that
governments typically bear to provide services are costs that could comprise the costs of
government services, and are eligible uses of funds.
Revenue loss 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 in the Overview of the Final Rule and Final Rule and apply to all eligible use
categories, apply to government services as well. Note also that every use that is eligible
under other eligible use categories is also eligible under revenue loss, because those
eligible uses are also services provided by recipient governments, and Treasury encourages
recipients to use their funds for investments that serve the needs of their communities and
build a stronger and more equitable recovery.
3.3. Can revenue loss funds be used for a project eligible under other eligible use
categories, such as addressing the public health and negative economic impacts of the
pandemic, providing premium pay, or investing in water, sewer, or broadband
infrastructure?
Yes. The revenue loss eligible use category allows recipients to expend funds with
flexibility and streamlined reporting requirements, including on expenditures that would
not be eligible under other eligible use categories, like general infrastructure repairs.
Recipients may also use revenue loss funds to carry out investments that would be eligible
under other eligible use categories, because those eligible uses are also services provided
by recipient governments. Treasury encourages the use of government services funds on
uses enumerated in these categories, including but not limited to affordable housing,
childcare investments, supporting public sector workers, job training and workforce
development, and investments in public health.
3.4. How is revenue defined for the purpose of the revenue loss calculation formula?
The final rule adopts a definition of “General Revenue” that is based on, but not identical,
to the Census Bureau’s concept of “General Revenue from Own Sources” in the Annual
Survey of State and Local Government Finances.
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General Revenue means money that is received from tax revenue, current charges, and
miscellaneous general revenue, excluding refunds and other correcting transactions and
proceeds from issuance of debt or the sale of investments, agency or private trust
transactions, and intergovernmental transfers from the Federal Government, including
transfers made pursuant to section 9901 of the American Rescue Plan Act. General
Revenue also includes revenue from liquor stores that are owned and operated by state and
local governments. General Revenue does not include revenues from utilities, except
recipients may choose to include revenue from utilities that are part of their own
government as General Revenue provided the recipient does so consistently over the
remainder of the period of performance. Revenue from Tribal business enterprises must be
included in General Revenue.
Please see the appendix for a diagram of the final rule’s definition of General Revenue
within the Census Bureau’s revenue classification structure.
3.5. Will revenue be calculated on an entity-wide basis or on a source-by-source basis
(e.g. property tax, income tax, sales tax, etc.)?
Recipients should calculate revenue on an entity-wide basis. This approach minimizes
the administrative burden for recipients, provides for greater consistency across
recipients, and presents a more accurate representation of the net impact of the
COVID-19 public health emergency on a recipient’s revenue, rather than relying on
financial reporting prepared by each recipient, which vary in methodology used and
which generally aggregate revenue by purpose rather than by source.
Recipients should classify revenue sources as they would if responding to the U.S.
Census Bureau’s Annual Survey of State and Local Government Finances. According to
the Census Bureau’s Government Finance and Employment Classification manual, the
following is an example of current charges that would be included in a state or local
government’s General Revenue from own sources: “Gross revenue of facilities operated
by a government (swimming pools, recreational marinas and piers, golf courses, skating
rinks, museums, zoos, etc.); auxiliary facilities in public recreation areas (camping areas,
refreshment stands, gift shops, etc.); lease or use fees from stadiums, auditoriums, and
community and convention centers; and rentals from concessions at such facilities.”
Please refer to the appendix for further details on the definition of General Revenue.
3.6. For recipients not electing the $10 million standard allowance, what is the
formula for calculating the reduction in revenue?
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. To calculate revenue loss at each of these dates, recipients must
follow a four-step process:
23
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:
𝑏𝑏𝑏𝑏𝑏𝑏𝑏𝑏 𝑦𝑦𝑦𝑦𝑦𝑦𝑦𝑦 𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 × (1 + 𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔𝑔ℎ 𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎𝑎) 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 general 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 to
or subtracted from 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 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. Recipients should see
the final rule for the full description of the requirements to reflect the effect of tax cuts
and tax increases on actual revenue.
3.7. Are recipients expected to demonstrate that reduction in revenue is due to
the COVID-19 public health emergency?
Under the final rule, any diminution in actual revenue calculated using the formula above
would be presumed to have been “due to” the COVID-19 public health emergency, in the
case of both the standard allowance and the formula, which, as discussed above adjusts
for certain tax policy changes.
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3.8. May recipients use pre-pandemic projections as a basis to estimate the
reduction in revenue?
No. 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.
3.9. In calculating revenue loss, are recipients required to use audited financials?
Where audited data is not available, recipients are not required to obtain audited data.
Treasury expects all information submitted to be complete and accurate.
3.10. In calculating revenue loss, should recipients use their own data, or Census
data?
Recipients should use their own data sources to calculate General Revenue, and do not
need to rely on published revenue data from the Census Bureau. Treasury acknowledges
that due to differences in timing, data sources, and definitions, recipients’ self-reported
General Revenue figures may differ somewhat from those published by the Census
Bureau.
3.11. Should recipients calculate revenue loss on a cash basis or an accrual basis?
Recipients may calculate revenue loss on a cash, accrual, or modified accrual basis,
provided that recipients are consistent in their choice of methodology for all inputs of
the revenue loss calculation throughout the period of performance and until reporting is
no longer required.
3.12. In identifying intergovernmental revenue for the purpose of calculating
General Revenue, should recipients exclude all federal funding, or just federal
funding related to the COVID-19 response? How should local governments treat
federal funds that are passed through states or other entities, or federal funds
that are intermingled with other funds?
In calculating General Revenue, recipients should exclude all intergovernmental transfers
from the federal government. This includes, but is not limited to, federal transfers made
via a state to a locality pursuant to the Coronavirus Relief Fund or Fiscal Recovery
Funds. To the extent federal funds are passed through states or other entities or
intermingled with other funds, recipients should attempt to identify and exclude the
federal portion of those funds from the calculation of General Revenue on a best-efforts
basis.
3.13. What entities constitute a government for the purpose of calculating revenue
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loss?
In determining whether a particular entity is part of a recipient’s government for purposes
of measuring a recipient’s General Revenue, recipients should identify all the entities
included in their government and the General Revenue attributable to these entities on a
best-efforts basis. Recipients are encouraged to consider how their administrative
structure is organized under state and local statutes. In cases in which the autonomy of
certain authorities, commissions, boards, districts, or other entities is not readily
distinguishable from the recipient’s government, recipients may adopt the Census
Bureau’s criteria for judging whether an entity is independent from, or a constituent of, a
given government. Recipients may not include independent entities in calculating General
Revenue. For an entity to be independent, it generally meets all four of the following
conditions:
• The entity is an organized entity and possesses corporate powers, such as
perpetual succession, the right to sue and be sued, having a name, the ability to
make contracts, and the ability to acquire and dispose of property.
• The entity has governmental character, meaning that it provides public services,or
wields authority through a popularly elected governing body or officers appointed
by public officials. A high degree of responsibility to the public, demonstrated by
public reporting requirements or by accessibility of records forpublic inspection,
also evidences governmental character.
• The entity has substantial fiscal independence, meaning it can determine its
budget without review and modification by other governments. For instance, the
entity can determine its own taxes, charges, and debt issuance without another
government’s supervision.
• The entity has substantial administrative independence, meaning it has a
popularly elected governing body, or has a governing body representing two or
more governments, or, in the event its governing body is appointed by another
government, the entity performs functions that are essentially different from those
of, and are not subject to specification by, its creating government.
If an entity does not meet all four of these conditions, a recipient may classify the entity
as part of the recipient’s government and include the portion of General Revenue that
corresponds to the entity.
To further assist recipients in applying the foregoing criteria, recipients may refer to the
Census Bureau’s Individual State Descriptions: 2017 Census of Governments
publication, which lists specific entities and classes of entities classified as either
independent (defined by Census as “special purpose governments”) or constituent
(defined by Census as “dependent agencies”) on a state-by-state basis. Recipients should
note that the Census Bureau’s lists are not exhaustive and that Census classifications are
based on an analysis of state and local statutes as of 2017 and subject to the Census
26
Bureau’s judgment. Though not included in the Census Bureau’s publication, state
colleges and universities are generally classified as dependent agencies of state
governments by the Census Bureau.
If an entity is determined to be part of the recipient’s government, the recipient must also
determine whether the entity’s revenue is covered by the final rule’s definition of General
Revenue. For example, some cash flows may be outside the definition of General
Revenue. In addition, note that the definition of general revenue includes Tribal
enterprises in the case of Tribal governments. Refer to FAQ #3.4 and the Appendix for
the components included in General Revenue.
3.14. How should recipients that receive multiple allocations (e.g., a city and a county
consolidated government) calculate their revenue loss?
If a government entity receives a combined award (e.g., in its capacity both as an NEU and
as a Unit of General Local Government (UGLG) within a non-UGLG county), it must
determine its revenue loss only once as the combined entity. The government entity may
not, for example, elect the standard allowance once as an NEU and once as an UGLG (i.e.,
it would only be able to claim up to a total of $10 million standard allowance against all of
its awards). Similarly, if the government entity elects to calculate its revenue according to
the formula set out in the final rule, it must do so on a combined basis.
In the case of an award to an UGLG within a non-UGLG county under section
603(b)(3)(B)(ii) of the Social Security Act, the UGLG is considered the prime recipient of
this award. Therefore, the prime recipient in this circumstance may treat these transferred
funds as its own award for purposes of the revenue loss determination.
For example, if an NEU receives $2 million in its NEU distribution, and then receives an
additional $13 million as an UGLG within a non-UGLG county, and the NEU elects the
standard allowance of $10 million in revenue loss, the NEU would be able to spend up to a
total of $10 million on government services under revenue loss against its awards, and
would be able to spend the remaining $5 million in other expenditure categories.
4. Eligible Uses – General
4.1. How do I know if a specific use is eligible?
The best way to begin evaluation of whether a specific use is an eligible use of SLFRF
funds is to consider which of the four eligible use categories the use may fall into.
As a reminder, there are four eligible use categories, ordered below from the broadest and
most flexible to the most specific. The Overview of the Final Rule serves as a summary of
the major provisions of each category.
• Replace lost public sector revenue, using this funding to provide government
services up to the amount of revenue loss due to the pandemic. (pages 9-11 of the
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Overview)
• 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. (pages 12-34 of the Overview)
• 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. (pages 35-36 of the Overview)
• 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. (pages 37-40 of the Overview)
The SLFRF program provides substantial flexibility for each jurisdiction to meet local
needs within these eligible use categories. In general, recipients should think about what
services they are trying to provide, and for which groups or populations, and assess
whether this use of funds would fit within the parameters of the eligible use category as
outlined in the Overview and the final rule. Recipients also should be mindful that various
forms of assistance have been made available during the pandemic (e.g., Economic Injury
Disaster Loans through the U.S. Small Business Administration), and certain restrictions
on duplications of benefits may apply.
Revenue loss eligible use category
If a use does not appear to be eligible under the water, sewer, and broadband infrastructure,
premium pay, or public health and negative economic impacts eligible use categories, then
recipients should consider using funds under the revenue loss eligible use category. The
revenue loss eligible use category provides recipients broad latitude to use funds for the
provision of government services to the extent of reduction in revenue due to the
pandemic.
All recipients may elect a “standard allowance” of up to $10 million to spend on
government services through the period of performance (see FAQ #3.1), or elect to
calculate their revenue loss under the formula provided in the final rule. Under this eligible
use category, government services generally include any service traditionally provided by a
government, unless Treasury has stated otherwise (see FAQ #3.2). While recipients can
refer to common examples on page 11 of the Overview of the Final Rule and page 4408 of
the final rule, these lists are not exhaustive. Every use that is eligible under other eligible
use categories is also eligible under revenue loss.
Public health and negative economic impacts eligible use category
To assess the eligibility of a use under the public health and negative economic impacts
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eligible use category, recipients may refer initially to the non-exhaustive lists of
enumerated uses that respond to pandemic impacts, and the lists of populations presumed
to have experienced pandemic impacts and be eligible for responsive services. These lists
appear in the Overview and the final rule organized by sub-categories around the types of
assistance a recipient may provide. 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.
Then, recipients should refer to the relevant section for more details on each sub-category
of eligible responses.
If a recipient intends to provide enumerated uses of funds to populations presumed
eligible, then the use of funds is clearly consistent with the final rule. However, if the
intended expenditure does not match an enumerated use serving a presumed eligible
population, that does not necessarily mean it is ineligible. Recipients can consider using
the broad flexibility available in this eligible use category 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.
Premium pay eligible use category
To assess whether a use falls under the premium pay eligible use category, recipients can
follow the steps outlined on p. 35-36 of the Overview, and refer to the FAQs in section 5.
Water, sewer, and broadband infrastructure eligible use category
To assess whether a use falls under the water, sewer, and broadband infrastructure
category, recipients can consult p. 37-40 of the Overview, and refer to the FAQs in section
6.
Recipients should also note the restrictions on use, which are applicable across all eligible
use categories, and summarized on p. 41-42 of the Overview.
When assessing whether a specific use is eligible, recipients are not required to submit
planned expenditures for prior approval by Treasury, and Treasury is not pre-approving
proposed expenditures or calculations of revenue loss. Recipients should review the final
rule and the Overview of the Final Rule, and consult with counsel as needed, to evaluate
whether a particular expenditure is an eligible use of funds.
4.2. May recipients use funds to invest in traditional infrastructure projects other
than water, sewer, and broadband projects (e.g. roads, bridges)?
As discussed in FAQ #3.2, recipients have broad flexibility to use revenue loss funds to
provide government services, which generally include any service traditionally provided
by a government. These services may include, but are not limited to, maintenance of
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infrastructure or pay-go spending for building of new infrastructure, including roads.
Under the public health and negative economic impacts eligible use category, a general
infrastructure project typically would not be considered an eligible response unless the
project responds to a specific pandemic-related public health need (e.g., investments in
facilities for the delivery of vaccines) or a specific negative economic impact of the
pandemic (e.g., affordable housing).
4.3. May recipients use funds to pay interest or principal on outstanding debt?
No. The final rule maintains the restriction on the use of funds for debt service for the
reasons described on page 4430 of the final rule and clarifies that this restriction applies
to all eligible use categories.
This applies to paying interest or principal on any outstanding debt instrument, including,
for example, short-term revenue or tax anticipation notes, or paying fees or issuance costs
associated with the issuance of new debt.
4.4. Are governments required to submit proposed expenditures to
Treasury for approval?
No. Recipients are not required to submit planned expenditures for prior approval by
Treasury. Recipients are subject to the requirements and guidelines for eligible uses
contained in the final rule. For more information on compliance and reporting, please see
the SLFRF Compliance and Reporting Guidance.
4.5. Do restrictions on using 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 funds?
The final rule permits funds to be used to cover costs incurred beginning on March 3,
2021. This limitation applies to costs incurred by the recipient (i.e., the state, local,
territorial, or Tribal government receiving funds). Recipients may use SLFRF funds to
provide assistance to households, businesses, and individuals within the eligible use
categories described in the final rule for economic harms experienced by those
households, businesses, and individuals prior to March 3, 2021. For example,
• Public Health/Negative Economic Impacts – Recipients may use SLFRF funds to
provide assistance to households – such as rent, mortgage, or utility assistance –
for economic harms experienced or costs incurred by the household prior to
March 3, 2021 (e.g., rental arrears from preceding months), provided that the cost
of providing assistance to the household was not incurred by the recipient prior to
March 3, 2021.
30
• Premium Pay – As discussed further in FAQ #5.2, recipients may provide
premium pay retrospectively for work performed at any time since the start of the
COVID-19 public health emergency. Such premium pay must be “in addition to”
wages and remuneration already received and the obligation to provide such pay
must not have been incurred by the recipient prior to March 3, 2021. Employers
may not simply reimburse themselves for pay already received by the employee.
• Revenue Loss – The final rule gives recipients broad latitude to use funds for the
provision of government services to the extent of reduction in revenue due to the
pandemic. If the recipient has elected to calculate lost revenue, the calculation
begins with the recipient’s revenue in the last full fiscal year prior to the COVID-
19 public health emergency. However, use of funds for government services must
be forward looking for costs incurred by the recipient after March 3, 2021.
• Investments in Water, Sewer, and Broadband – Recipients may use SLFRF funds
to make necessary investments in water, sewer, and broadband. See FAQ Section
6. Recipients may use funds to cover costs incurred for eligible projects planned
or started prior to March 3, 2021, provided that the project costs covered by the
funds were incurredafter March 3, 2021.
4.6. May recipients use funds to satisfy non-federal matching requirements?
Generally, yes, if using funds available under the revenue loss eligible use category, and
no, if using funds under any other eligible use category, except as discussed further below.
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 non-federal share for purposes of a state’s Medicaid and
Children’s Health Insurance Programs (CHIP) 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.
If a recipient seeks to use SLFRF funds to satisfy match or cost-share requirements for a
federal grant program, it should first confirm with the relevant awarding agency that no
waiver has been granted for that program, that no other circumstances enumerated under 2
CFR 200.306(b) would limit the use of SLFRF funds to meet the match or cost-share
requirement, and that there is no other statutory or regulatory impediment to using the
SLFRF funds for the match or cost-share requirement.
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
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details if they seek to utilize SLFRF funds as a match for these projects.
4.7. May recipients pool funds for regional projects?
Yes, provided that the project is itself an eligible use of SLFRF funds for each recipient
that is contributing to the pool of funds and that recipients are able to track the use of funds
in line with the reporting and compliance requirements of the SLFRF. In general, when
pooling funds for regional projects, recipients may expend funds directly on the project or
transfer funds to another government or other entity that is undertaking the project on
behalf of multiple recipients. To the extent recipients undertake regional projects via
transfer to another organization or government, recipients would need to comply with the
rules on transfers specified in the final rule supplementary information. A recipient may
transfer funds to a government outside its boundaries (e.g., county transfers to a
neighboring county, or an NEU transferring its funds to a County), provided that the
transferor can document that the transfer constitutes an eligible expense of the transferor
government and that its jurisdiction receives a benefit proportionate to the amount
transferred.
4.8. May recipients fund a project with both ARPA funds and other sources of
funding (e.g., blending, braiding, or other pairing funding sources), including in
conjunction with financing provided through a debt issuance?
Generally, yes, provided that the costs are eligible costs under each source program and are
compliant with all other related statutory and regulatory requirements and policies,
including restrictions on use of funds.
The recipient must comply with applicable reporting requirements for all sources of funds
supporting the SLFRF projects.
Recipients may source funding for a project in multiple ways, including, but not limited to,
the following:
• Using funds available under the revenue loss eligible use category for non-federal
match (see FAQ #4.6)
• Pooling funds for a joint project with another SLFRF recipient (see FAQ #4.7)
• Transferring funds to a subrecipient to finance a project that also uses other
sources of funding
• Blending or braiding SLFRF funds with other sources of government funding,
including debt issuance, to pursue a project
Localities may also transfer their funds to the state through section 603(c)(4) of the Social
Security Act, which will decrease the locality’s award and increase the state award
amounts.
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Note that using a recipient blending and braiding funds in conjunction with other sources
of funding is distinct from using funds for non-federal match. In the case of non-federal
match, the recipient would be using SLFRF funds to satisfy cost-sharing or matching
requirements in order to qualify for another source of federal funding, while blending and
braiding refers to using multiple sources of funding for complementary purposes.
If the entirety of a project is funded with SLFRF funds, then the entire project must be an
eligible use. The use of funds would be subject to the deadline on obligating funds no later
than December 31, 2024 and expending funds no later than December 31, 2026. If a
project is only partially funded with SLFRF funds, then the portion of the project funded
must be an eligible use and the SLFRF funds must also be obligated by December 31, 2024
and expended by December 31, 2026. In either case, recipients must be able to, at a
minimum, determine and report to Treasury on the amount of SLFRF funds obligated and
expended and when such funds were obligated and expended.
SLFRF funds may not be used to fund the entirety of a project that is partially, although
not entirely, an eligible use under Treasury’s final rule. However, SLFRF funds may be
used for a smaller component project that does constitute an eligible use, while using
other funds for the remaining portions of the larger planned project that does not constitute
an eligible use. In this case, the ‘‘project’’ for SLFRF purposes under this program would
be only the eligible use component of the larger project. For example, a recipient
government may use SLFRF funds to subsidize the production of affordable housing units
as a response to the pandemic and its negative economic impacts and use other funds to
build other parts of a larger development that contains these affordable units.
4.9. May funds be used to make loans or other extensions of credit (“loans”) to
support an eligible use?
Yes. SLFRF funds may be used to make loans, provided that the loan supports an activity
that is an eligible use of funds, the SLFRF funds used to make the loan are obligated by
December 31, 2024 and expended by December 31, 2026, and the cost of the loan is
tracked and reported in accordance with the points below. For example, a recipient may,
consistent with the requirements of the interim final rule and final rule, use funds to
finance the construction of affordable housing, or to finance a necessary investment in
water, sewer or broadband.
Funds must be used to cover “costs incurred” by the recipient between March 3, 2021, and
December 31, 2024, and funds must be expended by December 31, 2026. Accordingly,
recipients must be able to determine the amount of funds used to make a loan.
• For loans that mature or are forgiven on or before December 31, 2026, the
recipient must account for the use of funds on a cash flow basis, consistent with
the approach to loans taken in the Coronavirus Relief Fund.
o Recipients may use SLFRF funds to fund the principal of the loan and in that
33
case must track repayment of principal and interest (i.e., “program income,”
as defined under 2 CFR 200).
o When the loan is made, recipients must report the principal of the loan as an
expense.
o Repayment of principal may be re-used only for eligible uses and subject to
restrictions on timing of use of funds. Interest payments received prior to the
end of the period of performance will be considered an addition to the total
award and may be used for any purpose that is an eligible use of funds.
Recipients are not subject to restrictions under 2 CFR 200.307(e)(1) with
respect to such payments.
• For loans with maturities longer than December 31, 2026, the recipient may use
funds for only the projected cost of the loan.
o Recipients can project the cost of the loan by estimating the subsidy cost. The
subsidy cost is the estimated present value of the cash flows from the recipient
(excluding administrative expenses) less the estimated present value of the
cash flows to the recipient resulting from a loan, discounted at the recipient’s
cost of funding and discounted to the time when the loan is disbursed. The
cash flows are the contractual cash flows adjusted for expected deviations
from the contract terms (delinquencies, defaults, prepayments, and other
factors). A recipient’s cost of funding can be determined based on the interest
rates of securities with a similar maturity to the cash flow being discounted
that were either (i) recently issued by the recipient or (ii) recently issued by a
unit of state, local, or Tribal government similar to the recipient.
o Alternatively, recipients may treat the cost of the loan as equal to the expected
credit losses over the life of the loan based on the Current Expected Credit
Loss (CECL) standard. Recipients may measure projected losses either once,
at the time the loan is extended, or annually over the period of performance.
o Under either approach for measuring the amount of funds used to make loans
with maturities longer than December 31, 2026, recipients would not be
subject to restrictions under 2 CFR 200.307(e)(1) and need not separately
track repayment of principal or interest.
o Additionally, recipients may use funds for eligible administrative expenses
incurred in the period of performance, which include the reasonable
administrative expenses associated with a loan made in whole, or in part, with
funds. See section IV.E of the final rule.
• Contributions to Revolving Loan Funds. A recipient may contribute funds to a
revolving loan fund if the loaned SLFRF funds are restricted to financing eligible
34
uses under the public health emergency/negative economic impacts, premium
pay, and necessary water, sewer and broadband categories (or under the
government services category if the contribution to the revolving fund is made
using revenue loss funds). The funds contributed using SLFRF funds must be
limited to the projected cost of loans made over the life of the revolving loan
fund, following the approach described above for loans with maturities longer
than December 31, 2026.
• Loans funded with SLFRF funds under the revenue loss eligible use category.
Notwithstanding the above, if a recipient uses revenue loss funds to fund a loan,
whether or not the maturity of the loan is after December 31, 2026, the loaned
funds may be considered to be expended at the point of disbursement to the
borrower, and repayments on such loans are not subject to program income rules.
Similarly, any contribution of revenue loss funds to a revolving loan fund may
also follow the approach of loans funded under the revenue loss eligible use
category.
• Loans to fund investments in affordable housing projects. Notwithstanding the
above requirements for loans with maturities beyond December 31, 2026,
Treasury has determined that SLFRF funds may be used to finance certain loans
that finance affordable housing investments, as it is typical for state and local
governments to finance such investments through loans and because the features
of these loans significantly mitigate concerns about funds being deployed for
purposes of recycling funds, potentially for ineligible uses, following the SLFRF
program’s expenditure deadline. Specifically, under the “public health and
negative economic impacts” eligible use category, recipients may use SLFRF
funds to make loans to finance affordable housing projects, funding the full
principal amount of the loan, if the loan and project meet the following
requirements:
o The loan has a term of not less than 20 years;
o The affordable housing project being financed has an affordability period of
not less than 20 years after the project or assisted units are available for
occupancy after having received the SLFRF investment; and
o For loans to finance projects expected to be eligible for the low-income
housing credit (LIHTC) under section 42 of the Internal Revenue Code of
1986 (the Code),
the project owner must agree, as a condition for accepting such a loan,
to waive any right to request a qualified contract (as defined in section
42(h)(6)(F) of the Code); and
the project owner must agree to repay any loaned funds to the entity
that originated the loan at the time the project becomes non-compliant,
including if such project ceases to satisfy the requirements to be a
qualified low-income housing project (as defined in section 42(g) of
the Code) or a qualified residential rental project (as defined in section
142(d) of the Code), or if such project fails to comply with any of the
requirements of the extended low-income housing commitment that
35
are described in section 42(h)(6)(B)(i)-(iv) of the Code.
Loans that fund investments in affordable housing projects under the public health
and negative economic impacts eligible use category and meet the above criteria
may be considered to be expended at the point of disbursement to the borrower,
and repayments on such loans are not subject to program income rules. Loan
modifications are permitted if the modifications do not result in repayment of all
or substantially all funds to the lender prior to the end of the affordability period.
To reduce administrative complexity, the start date of the 20-year affordability
covenant may conform to the start date of other covenants on the same project or
units that are required by another source of federal or state funding associated
with the project or units.
4.10. May funds be used for outreach to increase uptake of federal assistance
like the Child Tax Credit or federal programs like SNAP?
Yes. Eligible uses to address negative economic impacts include “assistance
accessing or applying for public benefits or services.” This can include benefits
navigators or marketing efforts to increase consumer uptake of federal tax credits,
benefits, or assistance programs that respond to negative economic impacts of the
pandemic.” Of note, per the final rule, allowable uses of funds for evaluations may
also include other types of program evaluations focused on program improvement
and evidence building.
4.11 How does the end of the COVID-19 National Emergency, declared by the
President in 2020, have an impact on the SLFRF program?
On March 29, 2023, Congress voted to terminate the National Emergency concerning
COVID-19 that President Trump had declared in 2020 pursuant to the National
Emergencies Act. This termination is effective as of April 10, 2023. The SLFRF final rule
defines “COVID-19 public health emergency” by including reference to this National
Emergency declaration, providing that the COVID-19 public health emergency is the
“period beginning on January 27, 2020 and lasting until the termination of the national
emergency concerning the COVID-19 outbreak declared pursuant to the National
Emergencies Act (50 U.S.C. 1601 et seq.).” 5
Following the termination of the National Emergency, recipients generally will be able to
continue to make investments using their SLFRF funds without changes, with the exception
of projects in the premium pay eligible use category, as discussed below. Specifically:
• Premium Pay: The SLFRF statute and final rule provide that recipients can use
SLFRF funds to provide premium pay to eligible workers performing essential
work during the COVID-19 public health emergency, as defined in the final rule
as the period ending when the COVID-19 National Emergency ends (i.e., until
termination of the National Emergency described above). Accordingly, recipients
5
31 CFR 35.3.
36
may not use SLFRF funds to provide premium pay to essential workers for work
conducted after the end of the National Emergency, which ended on April 10,
2023. Recipients may continue to use SLFRF funds to provide premium pay to
essential workers for work conducted before the termination of the National
Emergency. Recipients also may continue to use SLFRF funds to support
workers through the public health and negative economic impacts eligible use
category, discussed below.
• Public Health and Negative Economic Impacts: SLFRF recipients may continue
to use funds to respond to the public health impacts or negative economic impacts
of the COVID-19 pandemic. This eligible use does not require recipients’
responses to be provided during the National Emergency. Under this eligible use
category, recipients may continue to use SLFRF funds to support and expand the
workforce, including by helping impacted workers enter in-demand careers, such
as in health care and child care. Recipients may also use SLFRF funds to build
public sector capacity, including hiring public sector workers and providing
retention incentives.
• Revenue Loss: The end of the National Emergency does not impact how
recipients calculate revenue loss according to the formula articulated in the final
rule. The end of the National Emergency also does not have an impact on how
recipients claim up to $10 million in revenue loss under the standard allowance.
• Water/Sewer/Broadband: The end of the National Emergency does not have an
impact on how recipients may use SLFRF funds under the water, sewer, and
broadband infrastructure eligible use category.
In addition, the Biden-Harris Administration has stated that it intends to end the COVID-19
Public Health Emergency declared by the Secretary of the Department of Health and
Human Services (HHS) pursuant to the Public Health Service Act (42 U.S.C. 247d) on
May 11, 2023. The end of this HHS COVID-19 Public Health Emergency declaration by
the HHS Secretary will not have an impact on recipients’ ability to spend funds under the
SLFRF program.
5. Eligible Uses – Premium Pay
5.1. What criteria should recipients use in identifying workers to receive
premium pay?
SLFRF may be used to provide premium pay to eligible workers performing essential
work during the pandemic or to provide grants to eligible employers that have eligible
workers who perform essential work. 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.
Premium pay must be responsive to eligible workers performing essential work during the
pandemic, and like the interim final rule, the final rule emphasizes the need for recipients
to prioritize premium pay for lower-income workers. Premium pay that would go to a
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worker whose total pay is above 150% of the greater of the state or county average annual
wage for all occupations (with or without the premium) requires specific justification for
how it responds to the needs of these workers unless that worker is not exempt from the
Fair Labor Standards Act overtime provisions.
For a detailed description of what constitutes an eligible worker and essential work as
well other premium pay requirements, please see pages 35-36 of the Overview of the
Final Rule.
5.2. May recipients provide premium pay retroactively for work already performed?
Yes. 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. SLFRF funds
may not be used to reimburse a recipient or eligible employer grantee for premium pay or
hazard pay already received by the employee. To make retroactive premium payments
funded with SLFRF funds, a recipient or eligible employer grantee must make a new cash
outlay for the premium payments and the payments must be in addition to any wages or
remuneration the eligible worker already received.
5.3. Can SLFRF be used to pay for benefits and taxes associated with premium pay
wages?
Premium pay is taxable as wage income, and therefore, employers are encouraged to treat
the premium pay earned by the employee just as they would other wage income and
withhold from the additional pay any required taxes. For further guidance, please see the
FAQ published by the IRS on SLFRF.
5.4. Does non-base compensation, such as overtime, count toward the 150% pay
threshold? Is the 150% threshold calculated based off of income only from the
awarding employer or from an employee’s total yearly compensation?
Yes, non-base compensation, including overtime and bonuses, counts toward the 150%
pay threshold; however, the 150% pay threshold does not take into account other sources
of income earned by an employee (e.g., income from a second job). For an hourly
employee, or an employee that does not have a year’s worth of earnings, an employer
should extrapolate the hourly wage at an annual rate by multiplying the hourly rate by forty
hours per week and then by fifty-two weeks per year.
6. Eligible Uses – Water, Sewer, and Broadband Infrastructure
6.1. What types of water and sewer projects are eligible uses of funds?
Eligible water and sewer projects are outlined on pages 37-38 of the Overview of the Final
Rule. Under the interim final rule, SLFRF funds could be used to fund projects that would
be eligible under EPA’s Clean Water State Revolving Fund or Drinking Water State
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Revolving Fund. With broadened eligibility under the final rule, SLFRF funds may also 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 on page 38 of the Overview.
6.2. May recipients use funds as a non-federal match for the Clean Water State
Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF)?
Per FAQ #4.6, SLFRF funds available for the provision of government services, up to the
amount of the recipient’s reduction in revenue due to the public health emergency (the
revenue loss eligible use category), may be used to meet the non-federal cost-share or
matching requirements of other federal programs, including the CWSRF and DWSRF
programs administered by the EPA. Per FAQ #4.9, loans funded under the revenue loss
eligible use category may be deemed expended at the point of disbursement. Thus,
recipients using SLFRF funds available under revenue loss for non-federal matching
requirements for the DWSRF or CWSRF may consider funds expended at the point the
recipient makes the deposit into the State Revolving Funds. Recipients using SLFRF funds
available under revenue loss should log projects under expenditure category 6.2.
As further noted in FAQ #4.6, 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. Recipients using funds under the eligible use category for water and sewer
infrastructure may not use funds as a state match for the CWSRF and DWSRF.
6.3. Does the National Environmental Policy Act (NEPA) apply to projects funded with
SLFRF funds?
NEPA does not apply to Treasury’s administration of the funds, including funds expended
under the revenue loss, public health and negative economic impacts, and water, sewer,
and broadband infrastructure eligible use categories. Projects supported with payments
from the funds may still be subject to NEPA review if they are also funded by other federal
financial assistance programs or have certain federal licensing or registration requirements.
6.4. What types of broadband projects are eligible uses of funds?
Recipients are required to design projects that, upon completion, reliably meet or exceed
symmetrical 100 Mbps download and upload speeds where practicable. More details on
eligible broadband projects, including eligible areas for investment and the affordability
requirement, are outlined on pages 39-40 of the Overview of the Final Rule.
6.5. For broadband investments, may recipients use funds for related programs such
as cybersecurity or digital literacy training?
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Yes. In the final rule, Treasury maintained the enumerated eligible use for assistance to
households for internet access and digital literacy programs. Recipients may use funds to
provide assistance to households facing negative economic impacts due to the pandemic,
including digital literacy training and other programs that promote access to the Internet.
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. Under the final rule, recipients may also invest in general
cybersecurity upgrades, unrelated to broadband infrastructure, under the revenue loss
eligible use category.
6.6. Do I need pre-approval for my water, sewer, or broadband project?
See FAQ #4.4. Generally, recipients are not required to submit planned expenditures for
prior approval by Treasury and recipients are subject to the requirements and guidelines for
eligible uses contained in the final rule.
While recipients must ensure that water and sewer infrastructure projects pursued are
eligible under the final rule, recipients are not required to obtain project pre-approval from
Treasury or any other federal agency when using SLFRF funds for necessary water and
sewer infrastructure projects unless otherwise required by federal law. For projects that are
being pursued under the eligibility categories provided through the DWSRF or CWSRF
programs, project eligibilities are based on federal project categories and definitions for the
programs and not on each state’s eligibility or definitions. While reference in the final rule
to the DWSRF, CWSRF, or other federal water programs is provided to assist recipients in
understanding the types of water and sewer infrastructure projects eligible to be funded
with SLFRF, recipients do not need to apply for funding from the applicable state
programs or through any federal water program. Similarly, besides eligible project
categories, the final rule does not incorporate other program requirements or guidance that
attach to the DWSRF, CWSRF, or other federal water programs. However, as noted above,
recipients should be aware of other federal or state laws or regulations that may apply to
construction projects or water and sewer projects, independent of SLFRF funding
conditions, and that may require preapproval from another federal or state agency.
6.7. For broadband infrastructure investments, what are eligible areas of investment?
Recipients are encouraged to prioritize projects that are designed to serve locations without
access to reliable wireline 100/20 Mbps broadband service, but are broadly able to invest
in projects designed to provide service to locations with an identified need for additional
broadband investment. For more details, see page 39 of the Overview of the Final Rule.
6.8. May recipients use payments from the SLFRF for “middle mile” broadband
projects?
Yes. Under the final rule, recipients may use payments from the SLFRF for “middle-mile
projects,” but Treasury encourages recipients to focus on projects that will achieve last-
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mile connections—whether by focusing on funding last-mile projects or by ensuring that
funded middle-mile projects have potential or partnered last-mile networks that could or
would leverage the middle-mile network.
6.9. For broadband infrastructure investments, what does the requirement to
“reliably” meet or exceed a broadband speed threshold mean?
See page 39 of the Overview of the Final Rule, as well as pages 4419-4420 of the final
rule.
6.10. May recipients use funds for pre-project development for eligible water, sewer,
and broadband projects?
Yes. To determine whether funds can be used on pre-project development for an eligible
water or sewer project, recipients should consult whether the pre-project development use
or cost is eligible under the Drinking Water and Clean Water State Revolving Funds
(DWSRF and CWSRF, respectively). Generally, the CWSRF and DWSRF often allow for
pre-project development costs that are tied to an eligible project, as well as those that are
reasonably expected to lead to a project. For example, the DWSRF allows for planning and
evaluations uses, as well as numerous pre-project development costs, including costs
associated with obtaining project authorization, planning and design, and project start-up
like training and warranty for equipment. Likewise, the CWSRF allows for broad pre-
project development, including planning and assessment activities, such as cost and
effectiveness analyses, water/energy audits and conservation plans, and capital
improvement plans.
Similarly, pre-project development uses and costs for broadband projects should be tied to
an eligible broadband project or reasonably expected to lead to such a project. For
example, pre-project costs associated with planning and engineering for an eligible
broadband infrastructure build-out is considered an eligible use of funds, as well as
technical assistance and evaluations that would reasonably be expected to lead to
commencement of an eligible project (e.g., broadband mapping for the purposes of finding
an eligible area for investment).
All funds must be obligated by recipients within the statutory period between March 3,
2021 and December 31, 2024, and expended to cover such obligations by December 31,
2026.
6.11. May funds be used to support energy or electrification infrastructure that would
be used to power new water treatmentplants and wastewater systems?
The EPA’s Overview of Clean Water State Revolving Fund Eligibilities describes eligible
energy-related projects. This includes a “[p]ro rata share of capital costs of offsite clean
energy facilities that provide power to a treatment works.” Thus, SLFRF funds may be
used to finance the generation and delivery of clean power to a wastewater system or a
water treatment plant on a pro-rata basis. If the wastewater system or water treatment plant
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is the sole user of the clean energy, the full cost would be considered an eligible use of
funds. If the clean energy provider provides power to other entities, only the proportionate
share used by the water treatment plant or wastewater system would be an eligible use of
funds.
6.12. How should states and local governments assess whether a stormwater
management project, such as a culvert replacement, is an eligible project?
Pages 37-38 of the Overview of the Final Rule describe the overall approach that recipients
must take to evaluate the eligibility of water or sewer projects. With broadened eligibility
under the final rule, a wide range of culvert repair, resizing, and removal, replacement of
storm sewers, and additional types of stormwater infrastructure are eligible projects, as
outlined further in the final rule.
6.13. May recipients use funds for road repairs and upgrades that occur in connection
with an eligible water or sewer project?
Yes, recipients may use SLFRF funds for road repairs and upgrades directly related to an
eligible water or sewer project. For example, a recipient could use funds to repair or re-
pave a road following eligible sewer repair work beneath it. However, use of funds for
general infrastructure projects is subject to the limitations described in FAQ #8.1. Water
and sewer infrastructure projects are often a single component of a broader transportation
infrastructure project, for example, the implementation of stormwater infrastructure to
meet Clean Water Act established water quality standards. In this example, the components
of the infrastructure project that interact directly with the stormwater infrastructure project
may be funded by SLFRF funds.
6.14. May funds be used to build or upgrade broadband connections to schools or
libraries?
As outlined in the final rule, recipients may use SLFRF funds to invest in broadband
infrastructure that, where practicable, is designed to deliver service that reliably meets or
exceeds symmetrical upload and download speeds of 100 Mbps to households or
businesses with an identified need for additional broadband investment. “Businesses” in
this context refers broadly to include non-residential users of broadband, including private
businesses and institutions that serve the public, such as schools, libraries, healthcare
facilities, and public safety organizations.
6.15. Are eligible water, sewer, and broadband infrastructure projects, eligible
capital expenditures under the public health and negative economic impacts eligible
use category, and eligible projects under the revenue loss eligible use category subject
to the Davis-Bacon Act?
The Davis-Bacon Act requirements (prevailing wage rates) do not apply to projects funded
solely with award funds from the SLFRF program, except for SLFRF-funded construction
projects undertaken by the District of Columbia. The Davis-Bacon Act specifically applies
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to the District of Columbia when it uses federal funds (SLFRF funds or otherwise) to enter
into contracts over $2,000 for the construction, alteration, or repair (including painting and
decorating) of public buildings or public works. Recipients may be otherwise subject to the
requirements of the Davis-Bacon Act when SLFRF award funds are used on a construction
project in conjunction with funds from another federal program that requires enforcement
of the Davis-Bacon Act. Additionally, corollary state prevailing-wage-in-construction laws
(commonly known as “baby Davis-Bacon Acts”) may apply to projects. Please refer to
FAQ #4.8 concerning projects funded with both SLFRF funds and other sources of
funding.
Treasury has indicated in its final rule that it is important that capital expenditure projects
and necessary investments in water, sewer, or broadband infrastructure be carried out in
ways that produce high-quality results, avert disruptive and costly delays, and promote
efficiency. Treasury encourages recipients to ensure that capital expenditure projects and
water, sewer, and broadband projects use 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, not only to promote effective and efficient delivery
of high-quality projects, but also to support the economic recovery through strong
employment opportunities for workers. Using these practices in projects may help to
ensure a reliable supply of skilled labor that would minimize disruptions, such as those
associated with labor disputes or workplace injuries.
Treasury has also indicated in its reporting guidance that recipients will need to provide
documentation of wages and labor standards for capital expenditure projects and
infrastructure projects over $10 million, and that that these requirements can be met with
certifications that the project is in compliance with the Davis-Bacon Act (or related state
laws, commonly known as “baby Davis-Bacon Acts”) and subject to a project labor
agreement. Please refer to the Reporting and Compliance Guidance for more detailed
information on the reporting requirement.
6.16. What is the difference between using funds for eligible water and sewer projects
and using funds under revenue loss for non-federal match for the Clean Water State
Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF)?
As noted in FAQ #6.1 and the Overview of the Final Rule, eligible projects that a recipient
may fund under the water and sewer infrastructure eligible use category of SLFRF include
eligible projects under EPA’s CWSRF and EPA’s DWSRF. Recipients may also fund
certain additional projects, including a wide set of lead remediation, stormwater
infrastructure, and aid for private wells and septic units. Per FAQ #6.6, recipients spending
SLFRF funds under the water and sewer eligible use category are not required to obtain
project pre-approval from Treasury or any other federal agency unless otherwise required
by federal law.
Projects that recipients undertake with SLFRF funds under the water and sewer eligible use
category are separate and distinct from projects that a recipient manages through their
CWSRF and DWSRF. As noted in FAQ #4.6 and FAQ #6.2, recipients may use funds
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under the revenue loss eligible use category for non-federal matching requirements,
including for EPA’s Clean Water State Revolving Fund and EPA’s Drinking Water State
Revolving Fund. By contrast, funds spent under the water and sewer infrastructure eligible
use category may not be used to meet non-federal matching requirements.
6.17. Can SLFRF funds be used to pay for the replacement or placement of utility
poles under the water, sewer, and broadband infrastructure eligible use category?
Under the water, sewer, and broadband infrastructure eligible use category, the
replacement or placement of utility poles is eligible when it is directly related to or part of
an eligible SLFRF infrastructure project, such as an eligible SLFRF broadband
infrastructure project that is consistent with Treasury’s final rule. The use of SLFRF funds
to fund a project for which the only purpose is to pay for the replacement or placement of
utility poles is not an eligible use under the water, sewer, broadband infrastructure eligible
use category.
6.18. Do the Buy America Preference requirements for infrastructure projects apply
to awards made under the SLFRF program?
Awards made under the SLFRF program are not subject to the Buy America Preference
requirements set forth in section 70914 of the Build America, Buy America Act included
in the Infrastructure Investment and Jobs Act, Pub. L. 117-58.
6.19. Do the Buy America Preference requirements for infrastructure projects apply
to SLFRF-funded projects if they are supplemented with funding from other federal
financial assistance programs?
Infrastructure projects funded solely with SLFRF award funds are not subject to the Buy
America Preference requirements set forth in section 70914 of the Build America, Buy
America Act included in the Infrastructure Investment and Jobs Act, Pub. L. 117-58.
SLFRF recipients may be otherwise subject to the Buy America Preference requirements
when SLFRF award funds are used on an infrastructure project in conjunction with funds
from other federal programs that require compliance with the Buy America Preference
requirements. Recipients are advised to consult with the other federal agencies
administering federal financial assistance that is being blended or braided with SLFRF
funds regarding the applicability of the Buy America Preference requirements.
6.20. Does Section 106 of the National Historic Preservation Act (NHPA) apply to
projects funded with SLFRF funds?
Section 106 of the NHPA does not apply to Treasury’s administration of SLFRF funds,
including funds expended under the revenue loss, public health and negative economic
impacts, and water, sewer, and broadband infrastructure eligible use categories. Projects
supported with payments from the funds may still be subject to Section 106 of the NHPA
if they involve participation from other federal agencies, including funding from other
federal financial assistance programs, or are subject to receipt of approvals from other
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federal agencies.
7. Non-Entitlement Units (NEUs)
Answers to frequently asked questions on distribution of funds to NEUs can be found in
this FAQ supplement.
8. Ineligible Uses
8.1. May recipients use funds to replenish a budget stabilization fund, rainy day
fund, or similar reserve account?
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 reserve funds would not address these needs or respond to the COVID-19
public health emergency, but would rather be savings for future spending needs.
Similarly, funds made available for the provision of governmental services (to the extent
of reduction in revenue) are intended to support direct provision of services to citizens.
Contributions to rainy day funds are not considered provision of government services,
since such expenses do not directly relate to the provision of government services.
8.2. What is meant by a pension “deposit”? Can governments use funds for routine
pension contributions for employees whose payroll and covered benefits are eligible
expenses?
In the context of the restriction on deposits into pension funds, “deposit” means an
extraordinary payment of an accrued, unfunded liability. The term deposit does not refer
to routine contributions made by an employer to pension funds as part of the employer’s
obligations related to payroll, such as either a pension contribution consisting of a normal
cost component related to current employees or a component addressing the amortization
of unfunded liabilities calculated by reference to the employer’s payroll costs.
In general, if an employee’s wages and salaries are an eligible use of SLFRF funds,
recipients may treat the employee’s covered benefits as an eligible use of funds.
8.3. May recipients use Fiscal Recovery Funds to fund Other Post-Employment
Benefits (OPEB)?
OPEB refers to benefits other than pensions (see, e.g., Governmental Accounting
Standards Board, “Other Post-Employment Benefits”). Treasury has determined that
Sections 602(c)(2)(B) and 603(c)(2) of the Social Security Act, which refer only to
deposits to pensions funds, do not prohibit SLFRF recipients from funding OPEB.
Recipients may use funds for eligible uses, and a recipient seeking to use SLFRF funds
45
for OPEB contributions would need to justify those contributions under one of the four
eligible use categories.
9. Reporting
Recipients should consult the Recipient Compliance and Reporting Responsibilities page
on Treasury’s website to access the latest Compliance and Reporting Guidance. Recipients
should consult this guidance for additional detail and clarification on recipients’
compliance and reporting responsibilities. User guides, which also contain FAQs
pertaining to reporting, are provided for additional information.
10. Miscellaneous
10.1. Are recipients required to remit interest earned on SLFRF payments made by
Treasury?
No. SLFRF payments made by Treasury to states, territories, and the District of
Columbia are not subject to the requirement of the Cash Management Improvement Act
and Treasury’s implementing regulations at 31 CFR Part 205 to remit interest to
Treasury. SLFRF payments made by Treasury to local governments and Tribes are not
subject to the requirements of 2 CFR 200.305(b)(8) and(9) to maintain SLFRF award
funds in an interest-bearing account and remit interest earned above $500 on such
payments to Treasury. Moreover, interest earned on SLFRF award funds is not subject to
program restrictions. Finally, states may retain interest on payments made by Treasury to
the state for distribution to NEUs that is earned before funds are distributed to NEUs,
provided that the state adheres to the statutory requirements and Treasury’s guidance
regarding the distribution of funds to NEUs. Such interest is also not subject to program
restrictions.
Among other things, states and other recipients may use earned income to defray the
administrative expenses of the program, including with respect to NEUs.
10.2. May recipients use funds to cover the costs of consultants to assist with
managing and administering the funds?
Yes. Recipients may use funds for administering the SLFRF program, including costs of
consultants to support effective management and oversight, including consultation for
ensuring compliance with legal, regulatory, and other requirements.
11. Operations
11.1. How do I know if my entity is eligible?
The American Rescue Plan Act of 2021 set forth the jurisdictions eligible to receive funds
under the SLFRF program, which are:
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• States and the District of Columbia
• Territories
• Tribal governments
• Counties
• Metropolitan cities (typically, but not always, those with populations over 50,000)
• Non-entitlement units of local government, or smaller local governments
(typically, but not always, those with populations under 50,000)
11.2. How does an eligible entity request payment?
Eligible entities (other than non-entitlement units) must submit their information to the
Treasury Submission Portal. Please visit the Coronavirus State and Local Fiscal Recovery
Fund website for more information on the submission process.
11.3. I cannot log into the Treasury Submission Portal or am having trouble
navigating it. Who can help me?
If you have questions about the Treasury Submission Portal or for technical support,
please email covidreliefitsupport@treasury.gov.
11.4. What do I need to do to receive my payment?
All eligible payees are required to have a Unique Entity ID (UEI) as part of registration in
addition to maintaining an active registration in the System for Award Management
(SAM) (https://www.sam.gov).
Eligible payees must have a bank account enabled for Automated Clearing House (ACH)
direct deposit. Payees with a Wire account are encouraged to provide that information as
well.
More information on these and all program pre-submission requirements can be found on
the SLFRF website.
11.5. Why is Treasury employing ID.me for the Treasury Submission Portal?
ID.me is only required for submitting applications for funding in the Treasury Portal.
ID.me is not required for users accessing the Treasury portal to complete reporting.
ID.me provides secure digital identity verification to those government agencies and
healthcare providers to validate the individual entity – and block fraudulent attempts to
access online services. All personally identifiable information provided to ID.me is
encrypted and disclosed only with the express consent of the user. Please refer to ID.me
Contact Support for assistance with your ID.me account. Their support website is
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https://help.id.me.
11.6. Why is an entity not on the list of eligible entities in the Treasury Submission
Portal?
The ARPA lays out which governments are eligible for payments. The list of entities
within the Treasury Submission Portal includes entities eligible to receive a direct
payment of funds from Treasury, which include states (defined to include the District of
Columbia), territories, Tribal governments, counties, and metropolitan cities.
Eligible non-entitlement units of local government will receive a distribution of funds
from their respective state government and should not submit information to the Treasury
Submission Portal.
If you believe an entity has been mistakenly left off the eligible entity list, please email
SLFRF@treasury.gov.
11.7. What is an Authorized Representative?
An Authorized Representative is an individual with legal authority to bind the
government entity (e.g., the Chief Executive Officer of the government entity). An
Authorized Representative must sign the Acceptance of Award terms for it to be valid.
11.8. How do I know the status of my request for funds (submission)?
Entities can check the status of their submission at any time by logging into the
Treasury Submission Portal.
11.9. My Treasury Submission Portal submission requires additional
information/correction. What is the process for that?
If your Authorized Representative has not yet signed the award terms, you can edit your
submission within the Treasury Submission Portal. If your Authorized Representative has
signed the award terms, please email SLFRF@treasury.gov to request assistance with
updating your information.
11.10. My request for funds was denied. How do I find out why it was denied or
appeal the decision?
Please check to ensure that no one else from your entity has applied, causing a duplicate
submission. Please also review the list of all eligible entities on the Coronavirus State and
Local Fiscal Recovery Fund website.
If you still have questions regarding your submission, please email
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SLFRF@treasury.gov.
11.11. When will entities get their money?
Before Treasury is able to execute a payment, a representative of an eligible government
must submit the government’s information for verification through the Treasury
Submission Portal. The verification process takes approximately four business days. If
any errors are identified, the designated point of contact for the government will be
contacted via email to correct the information before the payment can proceed. Once
verification is complete, the designated point of contact of the eligible government will
receive an email notifying them that their submission has been verified. Payments are
generally scheduled for the next business day after this verification email, though funds
may not be available immediately due to processing time of their financial institution.
11.12. How does a local government entity provide Treasury with a notice of
transfer of funds to its State?
For more information on how to provide Treasury with notice of transfer to a state, please
email SLRedirectFunds@treasury.gov.
12. Tribal Governments
12.1. Do Treasury’s pandemic recovery program awards terms and conditions
impose civil rights laws on Tribes?
The award terms and conditions for Treasury’s pandemic recovery programs, including
SLFRF, do not impose antidiscrimination requirements on Tribal governments beyond
what would otherwise apply under federal law. Treasury has amended its reporting
requirements with respect to the SLFRF, Treasury’s Emergency Rental Assistance
Program, and Homeowner Assistance Fund to reflect this clarification.
12.2. How does a Tribal government determine its allocation?
Tribal governments received information about their allocation when their submission to
the Treasury Submission Portal was confirmed to be complete and accurate.
13. Uniform Guidance
13.1. What provisions of the Uniform Guidance for grants apply to these funds?
Will the Single Audit requirements apply?
Most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to this program,
including the Cost Principles and Single Audit Act requirements. Recipients should refer
to the Assistance Listing for detail on the specific provisions of the Uniform Guidance
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that do not apply to this program. The Assistance Listing will be available at
https://sam.gov/fal/7cecfdef62dc42729a3fdcd449bd62b8/view.
For information related to Single Audit requirements specifically, please refer to the
Compliance Supplement materials released by the Office of Management and Budget.
13.2. Do federal procurement requirements apply to SLFRF?
Yes. The procurement standards for federal financial assistance are located in the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal
Awards at 2 CFR 200.317 through 2 CFR 200.327 and apply to procurements using
SLFRF funds. Pursuant to 2 CFR 200.317, recipients that are non-state entities, such as,
metropolitan cities, counties, non-entitlement units of local government, and Tribes must
comply with the procurement standards set forth in 2 CFR 200.318, through 2 CFR
200.327, when using their SLFRF award funds to procure goods and services to carry out
the objectives of their SLFRF award. States, the District of Columbia, and U.S. Territories
must follow their own procurement policies pursuant to 2 CFR 200.317, as well as comply
with the procurement standards set forth at 2 CFR 200.321 through 2 CFR 200.323, and 2
CFR 200.327 when using their SLFRF award funds to procure goods and services to carry
out the objectives of their SLFRF award. See also SLFRF Award Terms and Conditions.
Recipients are prohibited from using SLFRF funds to enter into subawards and contracts
with parties that are debarred, suspended, or otherwise excluded from or ineligible for
participation in Federal assistance programs. See 2 CFR 200.214.
Moreover, a contract made under emergency circumstances under the Coronavirus Relief
Fund (CRF) cannot automatically be transferred over to SLFRF. These programs are
subject to different treatment under the Uniform Guidance. Under the CRF program,
recipients are permitted to use their own procurement policies to acquire goods and
services to implement the objectives of the CRF award. Under the SLFRF program,
recipients are required to follow the procurement standards set out in 2 CFR Part 200
(Uniform Guidance) pursuant to the SLFRF Award Terms and Conditions executed by the
recipients in connection with their SLFRF awards.
13.3. What is the threshold for competitive bidding for my government?
As stated above, recipients are required to comply with the procurement standards set forth
in 2 CFR 200.317 through 2 CFR 200.327 of the Uniform Administrative Requirements,
Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance).
Pursuant to 2 CFR 200.317, States, the District of Columbia, and U.S. Territories should
refer to the competitive bidding thresholds described in their own procurement policies and
procedures. Other non-federal entities, such as metropolitan cities, counties, non-
entitlement units of local government, and Tribes must adhere to the competitive bidding
thresholds set forth in 2 CFR 200.320 for the relevant procurement methods.
2 CFR 200.320 describes methods of procurement based on two procurement thresholds.
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There are two thresholds that recipients should keep in mind related to procurement
requirements: the Micro purchase threshold (MPT) and the Simplified Acquisition
Threshold (SAT).
Micro-purchase threshold (MPT) - 2 CFR 200.320(a)(1): Purchase of supplies and services
for a price below the MPT, currently set at $10,000, are not required to be solicited
competitively. However, there are circumstances when a recipient may have a MPT that is
greater than $10,000. For example, all non-Federal entities may increase their MPT up to
$50,000 if they follow the protocols described in 200.320(a)(1)(iv). Additionally, non-
federal entities such as metropolitan cities, counties, non-entitlement units of local
government, and Tribes may use their own MPT if they follow the protocols described in
200.320(a)(1)(iv).
Simplified Acquisition Threshold (SAT) - 2 CFR 200.320(a)(2): Purchases of property and
services at a price above the recipient’s MPT and below the SAT, currently set at
$250,000, may be made following the small purchase procedures described in the
definition of SAT in 2 CFR 200.1 and 2 CFR 200.320(a)(2). Procurement of property and
services at a price above the SAT must follow the formal procurement methods outlined in
2 CFR 200.320(b).
13.4. Can a recipient prequalify firms for projects funded with SLFRF?
The Uniform Guidance permits recipients to use prequalified lists of persons, firms, or
products so long as a list is current and includes enough qualified sources to ensure
maximum open and free competition. The Uniform Guidance does not specifically define
the term “current” for purposes of 2 CFR 200.319(e), and Treasury has not adopted
additional guidance regarding this requirement as it applies to the SLFRF. As such,
recipients must determine when a prequalified list would be sufficiently current, and a
recipient must not preclude potential bidders from qualifying during the solicitation period.
See 2 CFR 200.319(e). Furthermore, recipients may not utilize this provision to evade
conducting their procurement transactions in a manner that provides for full and open
competition.
Recipients should be mindful that other provisions of the Uniform Guidance inform the
procurement requirements. For example, metropolitan cities, counties, non-entitlement
units of local government, and Tribes must have and use documented procurement
procedures, consistent with binding State, local, and Tribal laws and regulations. See 2
CFR 200.318(a).
13.5. Where can one find the most current information on assuring minority-
owned businesses are included in the awards process?
The most up-to-date information on assuring that minority-owned businesses are included
in the procurement process is located in 2 CFR 200.321, Contracting with small and
minority businesses, women's business enterprises, and labor surplus area firms.
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13.6. Is there certain language that needs to be included in a bidding package?
Treasury does not require that there be specific language included in bidding packages, but
SLFRF recipients must ensure all contracts made with SLFRF award funds contain the
applicable contract provisions listed in 2 CFR Part 200, Appendix II.
13.7. Are recipients allowed to leverage existing contracts?
Recipients may leverage existing contracts for SLFRF activities if the existing contracts
conform to the procurement standards in the Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal Awards in 2 CFR Part 200 (Uniform
Guidance). States, the District of Columbia, and U.S. Territories must follow their own
procurement policies pursuant to 2 CFR 200.317 as well as comply with the procurement
standards set forth at 2 CFR 200.321 through 2 CFR 200.323, and 2 CFR 200.327. All
other recipients must follow 2 CFR 200.318, General procurement standards, through
200.327, Contract provisions.
13.8. Would an interlocal agreement—an agreement entered into between
governments to effectuate an eligible use of the funds—or a cooperative
purchase agreement need to be bid out?
States, the District of Columbia, and U.S. Territories must follow their own procurement
policies pursuant to 2 CFR 200.317 as well as comply with the procurement standards set
forth at 2 CFR 200.321 through 2 CFR 200.323, and 2 CFR 200.327. All other recipients
must follow 2 CFR 200.318, General procurement standards, through 200.327, Contract
provisions.
Recipients should consult the applicable procurement standards or policies to determine
whether a cooperative purchase agreement must be bid out. Information on when
competition is required and when exceptions to competition are permitted are located in 2
CFR 200.319, Competition, and 2 CFR 200.320, Methods of procurement to be followed.
It is permissible for recipients to use interlocal agreements but procurement standards set
forth in the Uniform Guidance may still apply.
13.9. How is a “contract” different than a “subaward?
The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for
Federal Awards in 2 CFR Part 200 (Uniform Guidance) provides definitions for “contract”
and “subaward.” A contract is a legal instrument by which a recipient or subrecipient
purchases property or services needed to carry out the project or program under a federal
award. A subaward is distinct from a contract in that a subaward is an award provided by a
recipient of a federal award to a subrecipient to carry out part of a federal award on behalf
of the recipient. Recipients may make subawards through any form of legal agreement,
including an agreement that the recipient considers a contract. See 2 CFR 200.331 for
more information on the differences between contracts and subawards.
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13.10. What other background laws must recipients comply with?
SLFRF recipients must comply with all laws outlined in the SLFRF Award Terms and
Conditions that the recipients accepted in connection with their SLFRF award and all other
applicable executive orders, federal statutes, and regulations in carrying out their SLFRF
award. Recipients must also provide for such compliance by other parties in any
agreements it enters into with other parties relating to the award. The award terms listed
specific statutes and regulations that apply to the award, but the award terms made clear
that these lists were not exclusive. Particularly in the case of the SLFRF, it’s not possible
to enumerate the full list of federal statutes, regulations and executive orders that may be
applicable to the award given that the range of eligible uses of funds is so broad, including
the provision of government services.
13.11. How does Treasury treat program income?
Per 2 CFR 200.307, Treasury is specifying here that recipients may add program income to
the Federal award. Any program income generated from SLFRF funds must be used for the
purposes and under the conditions of the Federal award.
Program income includes but is not limited to income from fees for services performed, the
use or rental of real or personal property acquired under federal awards, the sale of
commodities or items fabricated under a federal award, license fees and royalties on
patents and copyrights, and principal and interest on loans made with federal award funds.
Interest earned on advances of federal funds is not program income. For more information
on what constitutes “Program Income” please see 2 CFR 200.1.
13.12. Does COVID-19 and the national emergency qualify as "exigency" as a special
circumstance under 2 CRF 200.320 (c) in which a noncompetitive procurement can
be used? If so, may a contract utilizing this special circumstance have a term that
extends beyond the national emergency? For example, may the County execute a
contract (without going through a competitive solicitation) immediately with a
contractor to provide services with a term through the end of 2024, relying upon this
special circumstance?
The COVID-19 public health emergency does not itself qualify as a “public exigency or
emergency” under 2 CFR 200.320 (c). In other words, a recipient may not justify a
noncompetitive procurement simply on the basis that the procurement is conducted during
the public health emergency or that the project is in response to the public health
emergency.
Instead, the recipient must make its own assessment as to whether in the case of a
particular project there is a public exigency or emergency that “will not permit a delay
resulting from publicizing a competitive solicitation.”
13.13. What compliance and reporting requirements apply to subrecipients and
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beneficiaries?
As detailed in Treasury’s Compliance and Reporting Guidance (pg. 11), subrecipients are
required to comply with all of the restrictions applicable to recipients, including audit
requirements under the Single Audit Act, whereas beneficiaries are not subject to these
requirements. The distinction between subrecipients and beneficiaries is addressed in the
supplemental information to Treasury’s final rule. 6 For example, when recipients of
SLFRF funds provide award funds to individuals or entities as a result of experiencing a
public health or negative economic impact of the pandemic, those receiving such funding
are beneficiaries of the funds. In contrast, when recipients provide award funds to an entity
to carry out a program in response to the public health emergency or its negative economic
impacts, the entities receiving such funding are subrecipients.
Treasury requires recipients to report detailed information in the Treasury reporting portal
as part of the Project and Expenditure Report regarding subrecipients that receive
subawards of $50,000 or more and certain beneficiaries that receive direct payments of
$50,000 or more in SLFRF funds. Requirements for this reporting can be found in the
Compliance and Reporting Guidance (pg. 21).
Recipients are not required to separately identify payments to specific individuals
receiving funds as beneficiaries in the Project and Expenditure Report. Those funds must
be reported in the aggregate as part of the “Payments to Individuals” section.
As in the case of reporting under the Coronavirus Relief Fund, information on both
beneficiaries and subrecipients will be collected in a single form in the Project and
Expenditure Report.
13.14. Do recipients need to report subrecipient information for the revenue loss
eligible use category?
No. Treasury is not collecting subaward data for projects categorized under Expenditure
Category Group 6 “Revenue Replacement.” Treasury has determined that there are no
subawards under this eligible use category. The definition of subrecipient in the Uniform
Guidance provides that a subaward is provided for the purpose of “carrying out” a portion
of a federal award. Recipients’ use of revenue loss funds does not give rise to subrecipient
relationships given that there is no federal program or purpose to carry out in the case of
the revenue loss portion of the award.
13.15. Which requirements of the Uniform Guidance apply to revenue loss funds?
Under the statute and the final rule, recipients may use SLFRF funds for the provision of
government services up to the amount of their revenue loss due to the pandemic. Under the
final rule, recipients may either calculate their revenue loss amount using a formula
provided in the rule or elect up to a $10 million “standard allowance” of revenue loss over
6
Coronavirus State and Local Fiscal Recovery Funds, 87 FR 4338, 4394.
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the life of the program. Recipients have considerable flexibility to use SLFRF revenue loss
funds on activities to address the diverse needs of their communities, as discussed in FAQ
3.2, but may not use the funds for the following ineligible uses:
• Offset a reduction in net tax revenue (applicable to states and territories)
• Make a deposit into a pension fund (applicable to all recipients except Tribes)
• Service debt or replenish financial reserves (e.g., “rainy day funds”) (applicable
to all recipients)
• Satisfy settlements and judgments (applicable to all recipients)
• Fund programs, services, or capital expenditures that include a term or
condition that undermines efforts to stop the spread of COVID-19 (applicable
to all recipients)
In-depth descriptions of the ineligible uses can be found in the “Restrictions on Use”
section of the Coronavirus State and Local Fiscal Recovery Funds: Overview of the Final
Rule.
The SLFRF award terms and conditions provide that the requirements of the Uniform
Guidance, 2 C.F.R. Part 200, apply to SLFRF awards other than such provisions as
Treasury may determine are inapplicable to the award and subject to such exceptions as
may be otherwise provided. The 2022 Compliance Supplement also provided that the
requirements of 2 C.F.R. Part 200 are applicable unless stated otherwise. As such,
recipients are required to follow Subparts A, B, C, and F of the Uniform Guidance for
expenses categorized under Expenditure Category 6 “Revenue Replacement.” However,
given the purpose and very broad scope of eligible uses of the revenue replacement
funds, only a subset of the requirements in Subparts D and E of the Uniform Guidance
apply to recipients’ use of such funds. The applicable requirements are listed below. In
general, these requirements provide that recipients should not deviate from their
established practices and policies regarding the incurrence of costs, and that they should
expend and account for the funds in accordance with laws and procedures for expending
and accounting for the recipient’s own funds. 7 Recipients’ use of revenue replacement
funds remains subject to the other applicable requirements of the SLFRF program,
including among other things the deadlines for obligations and expenditures and the
application of federal antidiscrimination requirements.
Uniform Guidance Subpart D and E Requirements Applicable to Revenue Loss Funds
Used for the Provision of Government Services
Subpart D Post Federal Award Requirements
• 200.300 Statutory and national policy requirements.
• 200.302 Financial management.
• 200.303 Internal controls.
• 200.328 Financial reporting.
• 200.329 Monitoring and reporting program performance.
7
Cf. 2 CFR 200.302(a), 2 CFR 200.404(e).
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• Record Retention and Access (2 C.F.R. 200.334 – 200.338)
o 200.334 Retention requirements for records.
o 200.335 Requests for transfer of records.
o 200.336 Methods for collection, transmission, and storage of information.
o 200.337 Access to records.
o 200.338 Restrictions on public access to records.
• Remedies for Noncompliance (2 C.F.R. 200.339 – 200.343)
Note: These sections will apply to Treasury’s administration of the funds. Because
the revenue loss eligible use category does not give rise to subawards, as
discussed in FAQ 13.14, recipients will not be in a position to apply these
provisions with respect to subrecipient relationships.
o 200.339 Remedies for noncompliance.
o 200.340 Termination.
o 200.341 Notification of termination requirement.
o 200.342 Opportunities to object, hearings, and appeals.
o 200.343 Effects of suspension and termination.
• 200.344 Closeout.
Note: This section will apply to Treasury’s administration of the funds. Because
the revenue loss eligible use category does not give rise to subawards, as
discussed in FAQ 13.14, recipients will not be in a position to apply this provision
with respect to subrecipient relationships.
• 200.345 Post-closeout adjustments and continuing responsibilities.
Note: This section will apply to Treasury’s administration of the funds. Because
the revenue loss eligible use category does not give rise to subawards, as
discussed in FAQ 13.14, recipients will not be in a position to apply this provision
with respect to subrecipient relationships.
• 200.346 Collection of amounts due.
The program income requirements of 2 CFR 200.307 do not apply under revenue loss
eligible use category. As such, recipients may maintain program income, which will not
be considered an addition to the federal award.
Consistent with the Uniform Guidance, if SLFRF is to be used to cover a cost incurred by
a recipient, the cost must be one that is allowable. In determining whether a cost is
allowable for purposes of funds used under the revenue loss eligible use category, only
the following factors and requirements apply:
Subpart E – Cost Principles
• 200.400(a) - (c), and (e) Policy guide.
• 200.403(a), (c), (d), (g), and (h) Factors affecting allowability of costs.
• 200.404(e) Reasonable costs.
13.16. What are the use and disposition requirements for assets purchased with
SLFRF funds?
SLFRF funds may be used to acquire real and personal property, supplies, and equipment.
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For example, a recipient may use SLFRF funds to, among other things, construct or
renovate affordable housing, childcare facilities, schools, and hospitals under the eligible
use category for responding to the public health emergency or its negative economic
impacts pursuant to Treasury’s implementing Final Rule, 31 CFR 35.6(b), and to make
investments in water, sewer, and broadband infrastructure pursuant to Final Rule, 31 CFR
35.6(e).
Except for property, supplies, or equipment acquired using revenue loss funds, recipients
must follow the applicable provisions of the Uniform Guidance regarding property
standards (2 CFR 200.310-316), subject to the requirements set out in this FAQ.
During the period of performance, a recipient may use property, supplies, or equipment
purchased or improved with SLFRF funds for a purpose other than the purpose for which it
was purchased or improved if such other purpose is also consistent with the eligible use
requirements. If a recipient changes the use of an asset to an ineligible use or sells the asset
prior to the end of the period of performance, then the recipient must follow the disposition
procedures in the Uniform Guidance. See 2 CFR 200.311, 200.313, 200.314, and 200.315.
After the period of performance, the property, supplies, or equipment must be used
consistent with the purpose for which it was purchased or improved or for any other
eligible purpose in the same category as the purpose reported to Treasury as of the final
reporting period, as set forth in the table below.
Category Use Requirements
Public Health and Property, supplies, or equipment last reported as being used to
Assistance to respond to the public health impacts of the public health
Households and emergency, as outlined in 31 CFR 35.6(b)(3)(i), or being used for
Individuals the provision of services to households provided in 31 CFR
35.6(b)(3)(ii)(A), are authorized to fulfill any eligible use of funds
provided in these subparagraphs of the Final Rule.
Assistance to Small Property, supplies, or equipment last reported as being used for the
Businesses, provision of services to small businesses, nonprofits, and impacted
Nonprofits, and industries outlined in 31 CFR 35.6(b)(3)(ii)(B)-(D) are authorized
Impacted Industries to fulfill any eligible use of funds outlined in the public health and
negative economic impacts eligible use category.
Water, Sewer, or Property, supplies, or equipment last reported as being used to
Broadband make investments in water, sewer, or broadband infrastructure
Infrastructure pursuant to 31 CFR 35.6(e) are authorized to fulfill any eligible use
of funds outlined in the water, sewer, and broadband infrastructure
eligible use category.
Government Property, supplies, or equipment acquired with revenue loss funds
Services/Revenue are exempt from the use and disposition requirements of the
Loss Uniform Guidance, regardless of award size.
Premium Pay N/A
If an asset’s use shifts within the parameters of the eligible purpose according to this table
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after the period of performance, no repayment would be required. For example, converting
a hospital to a behavioral health facility would qualify as being used for the eligible
purpose because both expenditures respond to the public health impacts of the public
health emergency, as outlined in 31 CFR 35.6(b)(3)(i), so reimbursement to Treasury
would be unnecessary.
If an asset’s use shifts outside the parameters of the eligible purpose according to this table
after the period of performance, then the recipient or subrecipient must follow the
disposition procedures in the Uniform Guidance. See 2 CFR 200.311, 200.313, 200.314,
and 200.315.
Recipients are responsible for being able to substantiate their determinations on whether
the use of an asset is authorized and maintain a record of that determination in accordance
with the requirements set forth in the financial assistance agreement accepted in connection
with their award. Recipients are not required to seek or obtain the approval of Treasury
prior to changing the use within the parameters of the authorized purpose.
13.17. In the definition of “obligation” in the final rule, what does Treasury mean by
“similar transactions that require payment?”
As stated in the final rule, obligation means “an order placed for property and services and
entering into contracts, subawards, and similar transactions that require payment.” See 31
CFR 35.3.
As contemplated by this definition, Treasury recognizes that recipients may obligate funds
through means other than contracts or subawards, for example in the case of payroll costs.
In these circumstances, recipients must follow state or local law and their own established
practices and policies regarding when they are considered to have incurred an obligation
and how those obligations are documented. For example, a recipient may have incurred an
obligation even though the recipient and its employee may not have entered into an
employment contract.
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Appendix
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