Treasury Issues Final Rule for ARPA State and Local Fiscal Recovery Funds Program

Earlier this month, the United States Treasury released the much-anticipated final rule governing spending guidelines for the American Rescue Plan Fiscal Recovery Funds Program (SLFRF). GFOA has been working closely with Treasury officials to help clarify changes that would increase flexibility and create the most impact for communities across the country. The final rule reflects many of our requests and provides some significant expanded use of funds. State, territorial, local, and Tribal governments must comply with the final rule beginning on April 1, 2022, when the final rule takes effect.

Prior to April 1, 2022, recipients may take actions and use funds in a manner consistent with the final rule, and Treasury will not take action to enforce the Interim final rule if a use of funds is consistent with the terms of the final rule, regardless of when the SLFRF funds were used. Please see the Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule for more information.

Key Changes from the Interim Final Rule to the Final Rule:

  • Treasury has expanded the non-exhaustive list of uses that recipients can use to respond to COVID-19 and its economic impacts. This includes clarifying that recipients can use funds for certain capital expenditures to respond to public health and economic impacts and making services like childcare, early education, addressing learning loss, and affordable housing development available to all communities impacted by the pandemic.
  • Treasury has expanded support for public sector hiring and capacity.
  • Treasury has streamlined options to provide premium pay for essential workers.
  • Treasury has broadened eligible water, sewer, and broadband infrastructure projects – understanding the unique challenges facing each state and locality in delivering clean water and high-speed broadband to their communities.
  • Treasury has simplified the program for small localities seeking revenue recapture through the option to elect a standard allowance of $10 million for revenue loss rather than calculating revenue loss through the full formula.