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What you need to know now about the recent ARPA Coronavirus State and Local Fiscal Recovery Funds ruling

March 18, 2022

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program, a part of the American Rescue Plan, delivers $350 billion to state, local, and Tribal governments across the country to support their response to and recovery from the COVID-19 public health emergency. Funding from the Coronavirus State and Local Fiscal Recovery Funds is subject to the requirements specified in the Final Rule released by the Treasury on January 27, 2022. The Treasury released an Overview of the Final Rule, which provides a summary of major rule provisions to assist recipients and stakeholders.

The Final Rule takes effect on April 1, 2022, but you can choose to take advantage of its flexibilities and simplifications now. SLFRF funds can be used the following ways:

  • Replace lost public sector revenue
  • Support the COVID-19 public health and economic response
  • Provide premium pay for eligible workers performing essential work
  • Invest in water, sewer, and broadband infrastructure

The option that allows the most flexibility is using it for the replacement of lost public sector revenue. This money can be spent on government services, this includes any service traditionally provided by a government. Some examples would include, but not limited to:

  • Road building and maintenance and other infrastructure
  • Health services
  • General government administration, staff, and administrative facilities
  • Environmental remediation
  • Provision of police, fire, and other public safety services (including purchase of fire trucks and police vehicles

The costs must be incurred on or after March 3, 2021, obligated by December 31, 2024, and expended by December 31, 2026.

If the city uses less than $10 million (in aggregate) as lost revenue, there is no need to calculate the revenue that was lost. If the city would want to use more than $10 million then they would need to calculate using the Treasury’s formula, which compares actual revenue to a trend. The city must report whether they are electing the standard allowance in their April 30, 2022, Project and Expenditure Report. The choice indicated on that report cannot be changed later.

The city will still need to track how it spends money. The amount spent each year will be included on the schedule of federal awards. Below are the restrictions on use of funds if the city elects to use the standard allowance:

  • Offset a reduction in net tax revenue – If taxes are cut during this period, the city must demonstrate how it paid for the tax cuts from sources other than SLFRF
  • Deposit into a pension fund
  • No debt service payments
  • No replenishing or building up fund balance
  • No satisfaction of settlements and judgments

The first Project and Expenditure Report is due on April 30, 2022. This report will be found on the US Treasury Portal. We recommend starting the process of logging into that system as soon as possible, as many people are running into issues and are needing assistance from the Treasury. Someone at the city should have received an email from to get started.

Things to consider

  • If the city spends more than $750,000 of federal money during a calendar year, a single audit will be required
  • The city could be strategic about which years they spend the money as to not exceed the $750,000 threshold in any one year. For example, if the city receives $2,000,000 in ARPA funding they may want to consider managing the expenses over the four-year eligibility periods so that no one year would have more than $750,000 of federal expenses. Keep in mind that if there are other federal expenses, those should also be considered.
  • If the city will have to have a single audit, consider spending most of the money during that one year so the city can avoid having single audits in multiple years. For example, if the city receives $2,000,000 in ARPA funding they may want to spend it all in one year.
  • The city does have the option to spend the full ARPA allocation for 2021, even though the second half of the money will not be received until 2022.

For questions or for more information on compliance with the Interim Final Rule and the Final Rule, please be sure to reach out to Erin Enstad, Senior Manager at Abdo Financial Solutions, at



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