New Information from Federal Agencies on Stimulus Funds
(updated August 13)
The Office of Management and Budget (OMB) released a set of frequently asked questions (FAQ) to help clarify the recipient reporting requirements issued by the agency on June 22, 2009. Of particular significance is question 5 under the heading “Recovering State Administrative Costs.” In responding to this question, the OMB explains that counties and local governments directly receiving American Recovery and Reinvestment Act (ARRA) funds can use the same methodologies for reimbursement that states do. These are set forth in the OMB memorandum “Payments to State Grantees for Administrative Costs of Recovery Act Activities.” Accordingly, the FAQs note that counties and local governments can include budgeted or estimated costs related to the administration of the AARA in thier cost allocation plan (prepared in accordance with OMB Circular A-87, Cost Principles for State, Local, and Indian Tribal Governments) to recoup these costs on a more timely basis. The budgeted or estimated cost amount should not be in excess of 0.5 percent of total AARA funds received directly by the county or local government (excluding pass-through Recovery Act funds received from the state). The local governments should prepare their proposals and keep them on file, unless their cognizant agency specifically requests submission of the proposal.
The OMB also issued an updated the recipient reporting data model 3.0, which sets forth specific data elements to be reported on. Finally, OMB published a final version of the Supplement 1, which is a list of ARRA-funded programs that are subject to the recipient reporting requirements in Section 1512 of the act.
(updated July 24, 2009)
Energy—The Department of Energy has extended the deadline for applications for the Energy Efficiency and Conservation Block Grant until August 10, 2009, at 8 p.m. EDT. This extension will not delay the processing of applications that were submitted by the initial deadline of June 25.
Transportation—The Department of Transportation recently announced guidelines for $1.5 billion in competitive grants (Grants for Transportation Investment Generating Economic Recovery) for state and local governments. The grants are for projects with significant long-term impact on the nation, metropolitan area, or region.
Eligible projects include highways, bridges, public transportation, passenger and freight rail, and ports. The grants may be used for up to 100 percent of project costs, but priority will be given to projects for which federal funding is required to complete an overall financing package that includes nonfederal sources of funding. Applications are due September 15, 2009.
Broadband—The Commerce Department announced the availability of $4 billion in American Recovery and Reinvestment Act (ARRA) loans and grants to help bring broadband service to unserved and underserved communities across America. This is the first round of ARRA funding aimed at expanding broadband access and creating jobs by building out Internet infrastructure. The Department of Commerce’s National Telecommunications and Information Administration and the Department of Agriculture’s Rural Utilities Service will be accepting applications for loans, grants, and loan/grant combinations to be awarded by each agency under a single application form.
Applications will be accepted beginning July 14, 2009, through 5 p.m. EDT on August 14, 2009.
(updated June 12, 2009)
The House of Representatives approved a bill (H.R. 2182) on May 19, 2009, which would allow state and local governments to use funds from the American Recovery and Reinvestment Act (ARRA) to cover the administrative costs associated with the enhanced accountability and transparency requirements of Act. More specifically, the legislation would amend the ARRA to allow state and local governments to allocate .5 percent of their federal funds allocation to track how the funds are spent. The Senate Committee on Homeland Security and Government Affairs approved companion legislation, S.1064, on May 20.
The Office of Management and Budget (OMB) issued a memorandum in response to concerns expressed by states regarding the unavailability of funds for administrative costs under the ARRA. The memorandum sets forth the various ways states can use existing flexibilities to recover administrative expenses incurred by carrying out ARRA activities.
OMB posted the Circular A-133 Compliance Supplement. Appendix VII of the supplement discusses the impact of the ARRA on audits under OMB Circular A-133 as well as the single audit process.
The Office of the Inspector General for the U.S. Department of Health & Human Services issued its review of the calculations of the temporary increases in the federal medical assistance percentages (FMAP) under the ARRA.
The Department of Homeland Security has released grant guidance for three grant programs under the ARRA: fire station construction, transit security, and port security.
The Environmental Protection Agency issued two waivers to the “Buy America” provision of the ARRA for Clean Water and Drinking Water State Revolving Fund projects. The first waiver is for projects that solicited bids between October 1, 2008, and February 17, 2009, with specific anticipation of ARRA funding or any other source of timely funding. The waiver permits the use of non-domestic iron, steel and manufactured goods in such projects funded by ARRA. The second waiver allows the use of non-domestic iron, steel, and manufactured goods when they occur in “de minimus incidental components” (where such components comprise no more than 5 percent of the total cost of the materials used in a project funded by ARRA).
In early June, Norm Eisen, special counsel to the president for ethics and government reform, issued an announcement titled “Update on Recovery Act Lobbying Rules: New Limits on Special Interest Influence.” In this announcement, Eisen states that the prohibitions on lobbying set forth in the president’s March 20, 2009, memo to department/agency heads (titled “Ensuring Responsible Spending of Recovery Act Funds”) have been made “even tougher on special interests and more focused on merits-based decision making.” According to the new announcement, the administration has now 1) expanded the restriction on oral communications to cover all persons, not just federally registered lobbyists; 2) focused the restriction on oral communications to the period after competitive grant applications are submitted and before awards are made; and 3) continued to require immediate Internet disclosure of all other communications with registered lobbyists.
(updated May 22, 2009)
The House Oversight and Government Reform Committee approved a bill (H.R. 2182) on May 6, 2009, that would allow state and local governments to use funds from the American Recovery and Reinvestment Act (ARRA) to cover the administrative costs associated with the act’s enhanced accountability and transparency requirements. The legislation would amend the ARRA to allow state and local governments to allocate .5 percent of their federal funds allocation to track how the funds are spent.
The Department of Housing and Urban Development (HUD) released application guidance for the Community Development Block Grant (CDBG) program under the ARRA. Cities must submit an application to their HUD field office by June 5, 2009. State applications are due by June 29, 2009. City and state CDBG allocations can be found online.
HUD also issued notices of funding availability for three programs under the ARRA. These are the Tax Credit Assistance Program (TCAP); the Neighborhood Stabilization Program; and the Neighborhood Stabilization Program Technical Assistance.
The U.S. Department of Agriculture announced that it was accepting applications for grants to bring broadband service to rural communities. Local governments are eligible to apply for grants from $50,000 to $1 million—awarded on a competitive basis—through the agency’s Community Connect Grant Program. Grant applicants must match 15 percent of the grant, either in cash or in kind. Applications are due June 19, 2009.
(updated May 8, 2009)
The Office of Management and Budget (OMB) issued government-wide guidance and standard award terms for agencies to include in financial assistance awards (namely, grants, cooperative agreements, and loans) in implementating sections 1512, 1605, and 1606 of the American Recovery and Reinvestment Act (ARRA). This guidance, issued April 23, 2009, provides funding recipients with information about what is expected when receiving recovery act funds as well as responsibilities related to tracking, accounting and reporting transactions, and preparing audit documentation and reports. The OMB is requesting comment on this document no later than June 22, 2009.
Congress continues to hold hearings on ARRA implementation. Representatives of state and local government associations recently testified before Senate Homeland Security and Governmental Affairs Committee on the use of the stimulus funds provided to states and localities, and issues related to accountability.
During the same hearing, the Government Accountability Office (GAO) released the first in a series of ARRA Implementation reports. The ARRA requires the GAO to issue bimonthly reviews of the use of funds by selected states and localities.
(updated April 21, 2009)
The Department of Energy has determined the allocation formulas for distributing the $2.7 billion in energy efficiency block grants that were made available to local, state, and tribal governments as part of the American Recovery and Reinvestment Act (ARRA). Twenty-eight percent of these funds will be available for state governments, while counties and cities will each receive 34 percent. The remaining 4 percent will be split between Indian tribes and use for competitive grants. Further information about the formulas and allocations.
The Department of Transportation unveiled its strategy for creating a nationwide high-speed rail network. The strategy is funded by $8 billion in the ARRA and the possibility of an additional $5 billion, which was included in President Obama’s FY 2010 budget proposal, and aims to create a national high speed rail network for cities that are 100 to 600 miles apart.
The Environmental Protection Agency announced the release of $600 million in economic stimulus funds for the cleanup of 50 superfund sites. List of sites receiving funds.
(updated April 10, 2009)
IRS/Treasury Release Guidance on New Bond Programs Included in Stimulus Package
The IRS and Treasury have released interim guidance on various tax-credit bond programs that were included in the American Recovery and Reinvestment Act of 2009.
Build America Bonds (BABs) and Recovery Zone Economic Development Bonds (RZEDs)—Notice 2009-26. These bonds allow state and local governments to issue taxable governmental purpose bonds in 2009 and 2010. When issuing BABs, an issuer may elect to either receive a federal reimbursement for 35 percent of the borrowing costs, or pass along the 35 percent tax credit to the investor, and not take the reimbursement payment. The IRS Notice provides procedures for making the choice, for how to report the information, and for receiving the direct subsidy payments. It also provides examples of the types of capital expenditures intended to be used for this program including public buildings, courthouses, schools, roads, transportation infrastructure, governmental hospitals, public safety facilities and equipment, water and sewer projects, environmental projects, energy projects, governmental housing projects, and public utilities.
RZEDs have the same type of reimbursement to the issuer with a refundable credit equal to 45 percent of interest costs. However, an issuer may only receive the reimbursement itself; there is no election allowing an issuer to choose to give the tax credit to the investor. RZEBs may be issued to promote economic development in a defined “recovery zone.”
The IRS considers these payments to state and local governments as “overpayments of tax,” and issuers may apply for the credit using Form 8038-G. The guidance also asks for public comment on the direct pay procedures to state and local governments.
Qualified Energy Conservation Bonds (QECBs)—Notice 2009-29. QECBs are tax credit bonds (the tax credit is provided solely to the investor) that may be used for specific “qualified conservation purposes” as outlined in the guidance. This Notice provides the amounts allocated to each state and large local government and gives interim guidance to be used until formal guidance is prepared by the IRS.
Qualified Zone Academy Bonds (QZABs)—Notice 2009-30. QZABs are tax credit bonds (the tax credit is provided solely to the investor) and may be issued for school renovation projects. The IRS published interim guidance that includes each state’s allocation of QZABs and details how the maximum maturity and credit rates are set.
Clean Renewable Energy Bonds (CREBs)—Notice 2009-33. CREBs are tax credit bonds (the tax credit is provided solely to the investor) where authority to issue the bonds is given to an applicant through an approval process at the Treasury Department, rather than providing allocating authority directly to states and localities. Congress has allocated $2.4 billion for the program, subdivided into thirds: one-third for state, local, and tribal governments; one-third for qualifying projects of public power providers; and one-third for qualifying projects of electric cooperatives. The IRS announced that applications are now being accepted for CREBs projects and must be filed by August 4, 2009.
Qualified School Construction Bonds (QSCBs)—Notice 2009-35. QSCBs are tax credit bonds (the tax credit is provided solely to the investor) that may be used for the construction, rehabilitation, or repair of public school facilities or for acquiring land for the facility. This interim guidance provides the amounts of QSCBs allocated to each state and large local government and interim guidance for issuers to use until formal guidance is prepared.
Additional Guidance on Economic Recovery Funds
The Department of Justice released funds for competitive grants under the Community Oriented Policing Services (COPS) program. State and localities have until April 14, 2009, to request consideration for funding. The COPS program is a competitive grant program that provides funding directly to state and local law enforcement agencies to create and preserve jobs and to increase their community policing capacity and crime-prevention activities. Information on how to apply.
The Department of Energy released detailed guidance for the Energy Efficiency and Conservation Block Grant (EECBG) Program. Applications for states and localities are due June 25, 2009. Eligible states and localities may use funds to spur economic growth, create and retain jobs, decrease energy consumption, and improve energy efficiency. For information on funding allocations, program guidance, and application package, see the EECBG Web site.
The Department of Education also announced the availability of $44 billion for states and school districts under the American Recovery and Reinvestment Act (ARRA). See the DOE Web site for additional guidance, applications, and fact sheets.
On April 3, 2009, the Office of Management and Budget issued updated guidance to federal agencies for carrying out programs and activities enacted by the ARRA. The guidance, while directed at federal agencies charged with distributing the funding to recipients, contains significant information for recipients themselves, including state and local governments. For example, there is considerable discussion concerning what recipients of federal funding must report (section 2.10 of the guidance), as well as what tools federal agencies should employ to audit the use of the federal awards distributed to states and localities (section 5.6 of the guidance). In addition, the Office of Management and Budget is soliciting comments from both federal agencies and funding recipients, including states and localities, on the standard data elements under consideration for use in complying with the reporting requirements of the ARRA. Comments are due May 1, 2009.