State and Local Fiscal Recovery Funds: New Obligation FAQs, Tribal Webinar (May 2024)
Summary
Slides from a May 2024 Treasury webinar for Tribal governments on the new Section 17, Obligation, of the State and Local Fiscal Recovery Funds (SLFRF) frequently asked questions. A disclaimer states that the presentation is for educational purposes and is not legal advice or binding policy guidance. It notes that Treasury convened a Tribal consultation on November 29, 2023 on the Obligation Interim Final Rule and lists the primary themes raised, before walking through the new obligation FAQs.
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State and Local Fiscal Recovery Funds:
New Obligation FAQs Tribal Webinar
May 2024
Disclaimer
This presentation is designed to give an overview for Tribal governments on the State
and Local Fiscal Recovery Funds (SLFRF) new Section 17: Obligation within the
Frequently Asked Questions. This presentation is for educational purposes. It should
not be construed as legal advice or a statement of binding policy guidance from
Treasury.
For more information about the SLFRF program, please see
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-
and-tribal-governments/state-and-local-fiscal-recovery-funds.
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Tribal Consultation
• Treasury held a Tribal consultation on November 29, 2023 on the
Obligation Interim Final Rule. Some of the primary themes were:
o How to to cover payroll costs in FY25 and FY26
o Whether interagency agreements or MOUs between
departments and Tribal enterprises counted as an obligation
o Flexibility to cover contract cost increases
o Clarification on program income earned after the obligation
deadline
• Treasury released the newly added Section 17 in the SLFRF FAQs
to provide additional clarifications.
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Today’s Agenda
• Background on the new obligation FAQs, in Section 17 of the SLFRF
FAQs
• Overview of how to meet the obligation deadline of 12/31/2024,
including clarifications of pathways in the new FAQs
• Overview of how a Tribe may use funds to cover personnel costs for an
employee through December 31, 2026
• Overview of how certain interagency agreements within a Tribe can be
considered to be an obligation
• Overview of certain contract cost increases that may be covered after the
obligation deadline
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About the New FAQs
• The new FAQs contain three important clarifications:
1. Treasury considers an interagency agreement to constitute an obligation
if the agreement meets certain conditions
2. Treasury considers a recipient to have an incurred an obligation for
personnel costs for an employee if the employee is serving in a position
that was established and filled prior to the obligation deadline
(12/31/2024).
3. Treasury is clarifying how recipients may cover cost increases for
contracts that were entered into prior to the obligation deadline, but
have cost increases after the obligation deadline has passed.
• Treasury has also extended the deadline for recipients to report their cost
estimates for certain legal and administrative requirements to 7/31/2024 for
quarterly reporters and 4/30/2025 for annual reporters and clarified that the
estimate is not mandatory.
• There are no changes to the obligation or expenditure deadlines.
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Timeline for Use of SLFRF Funds
Funds may be used for costs incurred:
1. from March 3, 2021 onward for the eligible uses
described in the 2022 Final Rule; and
2. from December 29, 2022 onward for the eligible Funds for all other eligible
uses described in the 2023 Interim Final Rule uses must be expended by
December 31, 2026
We
are
here
Funds for Title I projects and
Funds must be Surface Transportation projects
obligated by must be expended by
December 31, 2024 September 30, 2026
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Section 1: Obligation Definition
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What is an obligation?
• Treasury implemented the statutory requirement that SLFRF
funds may only be used to cover costs incurred by December 31,
2024, by providing that a cost is considered incurred if a
recipient has incurred an obligation by December 31, 2024.
• Treasury defined “obligation” as “an order placed for property
and services and entering into contracts, subawards, and similar
transactions that require payment.”
• The Obligation IFR amended the definition of “obligation” and
provided additional guidance.
• In Section 17 of the SLFRF FAQs, Treasury has provided further
guidance and clarification about what constitutes an obligation.
• Similar transactions that require payment include certain interagency
agreements (17.6) and payroll expenses (17.7)
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What is an obligation?
An obligation is:
1. An order placed for property and services and entry into contracts,
subawards, and similar transactions that require payment, which may
include:
o An order placed for property or services
o Contract
o Subaward
o Similar transactions that require payment, which may include
▪ Certain interagency agreements (including MOUs) (see FAQs
17.6 and 17.23)
▪ Under certain circumstances, payroll expenses for recipients’
employees (see FAQ 17.7)
2. A requirement under federal law or regulation or a provision of the
SLFRF award terms and conditions to which the recipient becomes
subject as a result of receiving or expending SLFRF funds.
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An obligation is NOT:
• A Tribal resolution, adopted budget or budget amendment
• An appropriation of SLFRF funds
• An executive order
• A written or oral intention to enter into a contract
• A grant of legal authority to enter into a contract
• Claiming funds under the revenue loss category
• Moving SLFRF funds to a general fund as revenue loss but not
further establishing an obligation with those funds by
12/31/2024
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Case Study #1: Are budgets or resolution an obligation?
Case example: A Tribal council passed an SLFRF project plan budget
via resolution, which outlines exactly how SLFRF funds are to be
used.
Question: Has the Tribe obligated its SLFRF funds?
Response: No. A resolution, budget and/or appropriation authority
for SLFRF funds is not considered an obligation. The Tribe will need to
obligate its funds through at least one of the following mechanisms
and report the project(s) in their Project and Expenditure report due
Definition January 31, 2025 (quarterly reporters) or April 30, 2025 (annual
of reporters):
Obligation → An order placed for property or services
→ Contract
→ Subaward
→ Transactions similar to contracts and subawards that require
payment, such as:
→ Interagency agreements (see FAQ 17.6)
→ Personnel costs (see FAQ 17.7)
→ Compliance with certain administrative and legal
requirements of the SLFRF program (see FAQ 17.10)
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Do subrecipients have an obligation deadline?
• No. See FAQ 17.18.
• The obligation deadline applies to the recipient of SLFRF funds. A cost is
considered to have been incurred once a recipient enters into a subaward
that obligates the recipient to cover that cost.
• Subrecipients are not subject to the December 31, 2024, obligation
deadline.
• Beneficiaries are not subject to the obligation deadline, either.
• Subrecipients and contractors do not need to take additional steps to
obligate funds after entering into a subaward or contract with the
recipient.
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Are revenue loss funds automatically obligated?
• No. See FAQ 17.15.
• All SLFRF funds under any eligible use category are subject to the
obligation requirements – including funds used under the revenue loss
category.
• This means that, when a recipient uses funds to provide government
services, those funds must be obligated via one of the pathways
discussed on slide 9.
• If a recipient is utilizing revenue loss to pay for government services,
the recipient must report the use as project(s) under expenditure
category 6.1.
• Recipients must enter a project description for any project entered
under 6.1. Revenue loss project descriptions must summarize the
project in sufficient detail to provide an understanding of the major
activities that will occur. Descriptions should establish what the project
seeks to accomplish and should include enough information to make
clear how the recipient determined the project’s eligibility.
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Section 2: Payroll Expenses
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Personnel Costs in 2025 and 2026
• Treasury will consider a recipient to have incurred an obligation to use
funds to cover personnel costs for an employee through December 31,
2026, if the employee is serving in a position that was established and
filled prior to December 31, 2024.
• Personnel costs must be expended in connection with an eligible use of
SLFRF. Examples:
• Tribal government employees carrying out an Elder Nutrition Program
• Tribal government employees developing broadband projects
• Housing Authority employees overseeing contracts to build affordable
housing
• Eligible personnel costs include:
• All salaries and wages
• Covered benefits (including leave, insurance, and retirement expenses)
• Payroll taxes
• See FAQ: 17.7 for more information.
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Can a recipient replace or rearrange personnel after the
obligation deadline?
• Yes. If the position was established and filled by December 31, 2024, a
recipient may replace the employee in that position. The replacement
does not need to be immediate.
• Recipients may also reorganize positions within the scope of an eligible
SLFRF project after December 31, 2024.
o Example: if an eligible project employs ten job training specialists on
December 31, 2024, it is permissible for the Tribe to use funds to cover
payroll for one of those training specialists who is promoted to be a
supervisor, so long as there are no more than ten positions covered through
SLFRF funds in total.
• Recipients may not use funds to cover any new positions created after
December 31, 2024.
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Case Study #2: Payroll costs increase after obligation deadline
→ Case example: A Tribe submitted a report to Treasury
estimating $100,000 in SLFRF payroll costs in 2025 and 2026.
However, in 2025, due to an increase in the cost of living, Tribal
council feels it is necessary to raise wages and staff costs have
unexpectedly increased. The Tribe would like to consider an
additional $50,000 in SLFRF funds obligated for payroll costs.
→ Question: Can the Tribe increase its estimated payroll
obligation to $150,000? If so, how?
Payroll → Response: Yes. Eligible personnel costs for employees in
Increase positions created and filled by December 31, 2024, are
considered obligated, and that amount may be adjusted based
on compensation in effect at the time of payment. A Tribe may
raise the salaries of employees in those positions. However, a
Tribe may not create new positions for the project after the
obligation deadline. Treasury will update the Compliance and
Reporting Guidance with additional information about how to
report these funds.
→ Relevant FAQs: 17.7 and 17.8
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Case Study #3: Payroll costs are lower than estimated
→ Case example: A Tribe submitted a report to Treasury
estimating $200,000 in SLFRF payroll costs in 2025 and 2026.
However, due to the completion of the food distribution
project ahead of schedule, only $150,000 is needed for payroll
expenses in those years.
→ Question: Can the Tribe use the unexpended $50,000
attributable to the estimate for another project?
Over-
→ Response: Yes. The Tribe may expend the $50,000 for another
estimating
eligible use of SLFRF funds. That eligible use must meet all the
Costs requirements of SLFRF, including the requirement to incur an
obligation for that project by December 31, 2024. For
example, the Tribe could apply those funds to a project for
which the Tribe entered into a contract by December 31, 2024
and for which it used the Tribe’s general fund.
→ Relevant FAQs: 17.8 and 17.19
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Section 3: Estimated Expenses
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When would a recipient submit cost estimate(s) to Treasury?
• There are three separate kinds of estimates, which are for:
o payroll costs to be expended in 2025 and 2026.
o certain administrative and legal costs to be expended in 2025 and 2026 (or for
award closeout).
o costs to cover contract change order and contingencies.
• Recipients are not required to report an estimate of these expenses. But
they may benefit from doing so if:
o They plan to use SLFRF funds for such costs, and want to ensure that those
funds are not returned to Treasury as unobligated, AND
o Those funds are not reported to Treasury as obligated through another project
(such as a contract or interagency agreement).
• Estimates submitted to Treasury prior to the obligation deadline will
ensure that those funds are treated as obligated. Therefore, the recipient
will be able to spend SLFRF funds on the relevant expenses in 2025 and
2026.
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What legal and administrative costs are eligible for purposes of this
provision?
• As explained in the Obligation IFR and our previous webinar, certain legal and
administrative costs are considered obligated as a result of receiving or
expending SLFRF funds.
• These include:
• Reporting and compliance requirements, including subrecipient monitoring
• Single Audit costs;
• Record retention and internal control requirements;
• Property standards; and
• Environmental requirements.
• If these costs are not reported as obligated through another project, recipients
can submit to Treasury an estimate of those anticipated costs to ensure that
the funds can be retained after the obligation deadline and used for those
purposes in 2025 and 2026.
• See FAQs 17.10 through 17.13 for more information.
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Summary of Estimate Options
Personnel Cost Estimate Admin & Legal Cost Estimate
BOTH: Not mandatory. Option is available to ensure funds are treated as obligated.
Submission Deadline: Submission Deadline:
• 1/31/2025 (Tribes with awards over • 7/31/2024 (Tribes with awards over
$30 million - quarterly reporters) $30 million - quarterly reporters)
• 4/30/2025 (Tribes with awards under • 4/30/2025 (Tribes with awards under
$30 million - annual reporters) $30 million - annual reporters)
(extension from previous deadline)
BOTH: Requires reasonable justification for estimate(s) and report to Treasury.
BOTH: No penalty for inaccurate estimate(s) if the initial estimate(s) were reasonable.
• If actual expenses are greater than amount estimated, the recipient can reclassify
funds from other SLFRF projects, use program income, or use non-SLFRF sources, to
pay for those expenses.
• If actual expenses are lower than the amount estimated, recipients can reclassify
funds to other eligible uses of SLFRF funds obligated before December 31, 2024.
Explanation: FAQs 17.7 and 17.8 Explanation: FAQs 17.11, 17.12 and 17.13
Note: See FAQ 17.6 for explanation of estimates for costs to cover contract change orders and contingencies.
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Case Study #4: Estimating certain legal and administrative costs
→ Case example: A Tribe plans to hire an auditor to conduct a
Single Audit that will include SLFRF funds. The Single Audit
will be conducted in 2025 and the Tribe has not yet selected
an auditor.
→ Question: Can the Tribe use SLFRF funds to pay this auditor?
→ Response: Yes. Tribes and other recipients that expend more
than $750,000 in federal funds in a fiscal year are subject to
Legal & the Single Audit requirements(2 CFR Part 200, Subpart F). The
Admin Cost Tribe should (1) determine the amount of SLFRF funds
Estimate estimated for these expenses, (2) document a reasonable
justification for this estimate, (3) report that amount to
Treasury with an explanation of how the amount was
determined, and (4) report at award closeout the final
amount expended for these costs.
→ See FAQs: 17.10 through 17.13
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Section 4: Interagency Agreements
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Does an interagency agreement (IAA) count as an obligation?
• Yes, if it meets certain conditions.
• An interagency agreement finalized by 12/31/2024 can be used to obligate funds
that a government agency will expend in 2025 and 2026.
• Eligible interagency agreements include memoranda of understanding (MOU) or
agreement (MOA). The interagency agreement must meet these conditions:
ONE requirement from Column A: ALL requirements from Column B:
Imposes conditions on the use of funds by Has specific requirements (e.g., scope of
recipient agency, department, or part of work)
government
Governs provision of funds from one agency, Is signed by the parties or evidences assent of
department, or part of government to another parties
Governs the procurement of goods or services Does not disclaim binding effect or state that
it doesn’t create rights or obligations
• See FAQs 17.6 and 17.23 for more information.
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Case Study #5: Who can an interagency agreement be between?
→ Case example: The Tribal council has made SLFRF funds
available to the social services department to cover the
operational costs of an elder care program through December
31, 2026. The Tribal council has entered into an agreement
with the social services department under which the social
services department agrees to perform and complete in a
satisfactory and proper manner the scope of work specified in
Parties to accordance with the SLFRF award terms and conditions.
Interagency → Question: Would this interagency agreement constitute an
Agreement obligation?
→ Response: Yes, if the interagency agreement meets the
conditions outlined in FAQ 17.6.
→ Relevant FAQ: 17.6
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Are agreements specifically between units of a Tribal
government considered an obligation for purposes of SLFRF?
• Yes, if it meets certain conditions. For purposes of SLFRF, Treasury
considers an interagency agreement between a Tribal government’s units
(including the Tribal Council), departments, agencies, or other
instrumentalities of a Tribe to constitute an obligation if it meets the
conditions set forth in FAQ 17.6.
• A unit of a Tribal government includes:
o Department, agency, Housing Authority, or other instrumentality of the Tribe
o Enterprise organized under Tribal law if the Tribe treats the enterprise as a unit,
department, agency, or other instrumentality of the Tribe
o Section 17 Corporation
o Section 3 Corporation
• See FAQ: 17.23
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Do federal procurement requirements apply to interagency
agreements between units of the Tribal government?
• No. For purposes of the SLFRF program, the procurement
standards of 2 CFR Part 200 (the Uniform Guidance) do not apply
to an agreement between units, departments, agencies, or
other instrumentalities of a Tribe.
• The procurement requirements of the Uniform Guidance would
need to be followed by the Tribal unit, department, agency, or
other instrumentality of a Tribe with respect to the procurement
of material, equipment, and supplies from outside vendors.
• See FAQ: 17.23
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Case Study #6: Can a Tribe execute an interagency agreement with an
enterprise?
Case example: The Tribe is building low-income housing to
address housing shortages on the reservation. The Tribe has a
tribally-chartered construction company that can both carry-out
the project and create jobs for Tribal citizens. The Tribal council
has entered into an agreement with the construction company to
perform and complete in a satisfactory and proper manner the
scope of work specified in accordance with the SLFRF award
Parties to terms and conditions.
Interagency Question: Would this agreement constitute an obligation?
Agreement Response: Yes, if the agreement meets the conditions outlined in
FAQ 17.6 and the construction company is a unit of a Tribal
government as described in FAQ 17.23.
See FAQs: 17.6 and 17.23
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Section 5: Modifying Contracts
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What Flexibilities Exist for Contracts after the Obligation
Deadline has Passed?
Change orders for an existing contract
• Tribes can fund change orders—including cost adjustments—if the contract or
agreement includes a provision allowing for the change order in question. A
Tribe can also fund a cost increase with SLFRF if the cost increase is permitted
under a contingency clause in the contract or agreement.
o See FAQ: 17.16.
Amend an existing contract
• Tribes may amend existing contracts after the obligation deadline, so long as
the amended contract is within substantially the same scope and for
substantially the same purpose as the original contract. If those requirements
are met, SLFRF funds may be used to cover cost increases contained in the
amended contract.
o See FAQ: 17.16.
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What Flexibilities Exist for Contracts after the Obligation
Deadline has Passed?
Replace an existing contract
• As explained in the obligation IFR, Tribes may replace a contract after the obligation
deadline under one of three circumstances:
1) Contract terminated due to business default, closure, or inability to perform
2) Mutual agreement to terminate
3) Recipient termination for convenience when contract was not properly awarded
• The replacement contract must be within substantially the same scope and for
substantially the same purpose as the original contract. In that case, recipients may
use SLFRF funds to cover increased costs of the replacement contract or subaward.
o See FAQ 17.17
• Tribes may reclassify funds from another SLFRF project to pay for any such
modifications. See FAQ 17.19. Tribes will also be able to submit an estimated cost for
change orders before the obligation deadline is met. Additional information on
submitting estimates will be provided in future webinars and reporting guidance.
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Case Study #7: Can SLFRF fund change orders?
→ Case Example: A Tribe is investing $1 million in SLFRF funds
for a broadband infrastructure project that will continue to be
constructed in 2025 and 2026. However, in 2025 its
discovered that the project needs to be updated via change
order and the total cost is now $1.5 million.
→ Question: Can the Tribe use SLFRF funds to cover the cost of
the change order?
Change → Response: Change orders and contingencies are allowed if the
Orders contract entered into by December 31, 2024 expressly
provides for change orders or contract contingencies.
→ See FAQ: 17.16
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Case Study #8: Contractor Issue
→ Case Example: A Tribe awarded a contract for a surface
transportation project. In March 2025, the contractor goes
out of business unexpectedly. The project is only 50%
completed. The Tribe must enter into a new contract with a
different contractor in order to complete the project.
→ Question: Can the Tribe enter into a new contract after the
obligation deadline with a new contractor to complete this
Replacement project?
of Contracts → Response: Yes, so long as the new contract is within
or Subawards substantially the same scope and for substantially the same
purpose as the original contract.
→ See FAQ: 17.17
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Section 6: Other Relevant FAQs for
Tribal Governments
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Other FAQs of Importance to Tribal Governments
• Indirect Cost Rate
o See FAQ: 17.10
o Recipients may continue to charge their current negotiated indirect cost rate
agreement established with their federal cognizant agency or the de minimis rate
of 10 percent of modified total direct costs pursuant to 2 CFR 200.414(f), after
December 31, 2024, through December 31, 2026.
• Program Income
o See FAQ: 17.21
o Program income earned after 12/31/2024 can be expended in four ways:
1) Cover the cost of eligible uses of SLFRF for which the Tribe incurred an
obligation by 12/31/2024
2) Pay for permissible upward cost adjustments in contracts or subawards,
including replacement contracts and subawards
3) Cover expenses necessary to meet certain legal and administrative
requirements
4) Cover personnel costs obligated by 12/31/2024
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Q&A
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For More Information about SLFRF:
Please visit Treasury’s State & Local website
at www.treasury.gov/SLFRF
Thank you. For Media Inquiries:
Please contact the U.S. Treasury Press Office
at (202) 622-2960
For General Inquiries:
Please email SLFRF@treasury.gov
U.S. Department of the Treasury, Coronavirus State & Local Fiscal Recovery Funds
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