Final Rule Issued for the State and Local Fiscal Recovery Funds (SLFRF) Program

January 12, 2022

Final Rule Issued for the State and Local Fiscal Recovery Funds (SLFRF) Program

The Department of the Treasury has issued the final rule for the State and Local Fiscal Recovery Funds (SLFRF) Program, created under the American Rescue Plan. Links to the guidance and the summary of changes are included below. The final guidance provides state and local governments greater flexibility and simplicity to maximize the impacts of the funding received.

Some key changes within the final rule include:

  • A major simplification of the lost revenue calculation with the introduction of a $10 million lost revenue standard allowance.
  • An expanding of the non-exhaustive list of allowable expenditures that can be used 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. It also addresses the allowability of services like childcare, early education, addressing learning loss, and affordable housing development available to all communities impacted by the pandemic.
  • An expanding of the support for public sector hiring and capacity as well as streamlined options related to premium pay to essential workers.
  • A broadened guidance related to eligible water, sewer, and broadband infrastructure projects. The goal is to allow greater flexibility in allowable projects.

While there are many important changes to the guidance, the introduction of a $10 million lost revenue standard allowance will be significant to non-entitlement units as defined by the SLFRF Program (populations under 50,000.) Under the SLFRF Program, the recipient can spend funding on government services up to the revenue loss amount. Government services generally include any service traditionally provided by a government, unless Treasury has stated otherwise. Allowable expenditures include road building and maintenance, governmental administration staff and facilities, provision of police, fire, and other public safety services (including capital purchases) and any other services normally provided. Funds spent under government services are also subject to streamlined reporting and compliance requirements.

The first project and expenditure reporting by non-entitlement units is due April 30, 2022 for the period of award commencement through March 31, 2022. The Department of Treasury has indicated that the user guide for the reporting is still forthcoming.

Summary of Final Rule:

Full text of Final Rule:

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Article prepared by Chris Turtell, learn more about Chris here.