Webinar on ARPA/SLFRF Final Rule for NEUs

Thursday, January 27, 2022 - 2:00pm to 3:00pm

Webinar on ARPA/SLFRF Final Rule for NEUs

2:00 pm - 3:00 pm
Thursday, January 27, 2022

Final Rule Impact on NEUs Quick Take:

Treasury released the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) Final Rule on January 6th, 2022,1 replacing the Interim Final Rule, which had been in effect since May 2021.2 GOFERR and its consultant Guidehouse are issuing this memo as an update and precursor to a forthcoming webinar concerning the Final Rule and reporting guidance.

Many NEUs are already in the planning stages of using their federal allocations. However, the Final Rule provides additional flexibilities and new reporting standards that may be worth serious consideration by all NEUs.

Webinar Details:
Topic: ARPA SLFRF Final Rule Update for NEUs and Others That Received Direct ARPA SLFRF Allocations
Date: January 27, 2022
Time: 2:00 P.M. – 3:00 P.M.
Link: Registration URL
Webinar ID:  524-720-363

For instance, the Final Rule provides the ability to place all money received by New Hampshire NEUs in the “Revenue Replacement” category.

Choosing this method means:
• NEUs would no longer need to calculate revenue loss,
• All New Hampshire NEU LFRF funds can be spent on the provision of any normal government service, and
• Reporting requirements would be simpler.
Important Additional Information

Calculating Revenue Loss

Under the Interim Final Rule, NEUs needed to calculate lost revenue comparing 2019 to 2020. The growth-adjusted difference was your allowed “revenue replacement” funding amount. The Final Rule removes the need for NEUs to do this calculation, and allows New Hampshire NEUs to place all LFRF money received by the NEU into the “revenue replacement” category.

Eligible Expenses Under “Revenue Replacement” Category

Treasury specifically cites the following activities as eligible under the “Revenue replacement” category:

• Construction of schools and hospitals
• School or educational services (including teacher, facility, and administration salaries, textbooks/school supplies, etc.)
• Road and other infrastructure construction and maintenance
• Health services
• General government administration, staff, and administrative facilities (including payroll for all government employees)
• Environmental remediation, including wastewater/culvert construction/reconstruction
• Provision of police, fire, and other public safety or services (including purchase of fire trucks and police vehicles, upgrades to fire/police facilities)
• Modernization of cybersecurity (including hardware, software, and protection of critical infrastructure)

This list is non-exhaustive. Treasury has noted that, in general, “government services” include most services provided by NEUs. If it is a normal cost of operating your village/town/city, it is likely in the category of “government services” and you can pay the cost with your LFRF funds.

Prohibited Uses of LFRF

However, there are limitations. Although most costs faced by your NEU are eligible uses of your LFRF funds under Treasury’s new Final Rule, there exist a few unallowable uses of LFRF money.

These limitations are:
• NEUs may not fund capital projects funded with borrowed money. All capital projects funded with LFRF money must be paid with “cash-on-hand”
• NEUs may not pay down debt or pay interest on debt (i.e. bonds) with LFRF money
• NEUs may not deposit LFRF money into pension funds
• NEUs may not use LFRF money to offset a reduction in net tax revenue resulting from a change in law, regulation, or administrative interpretation
• NEUs may not use LFRF money to undermine COVID-19 mitigation practices in line with CDC guidance and recommendations
• NEUs may not use LFRF money for any settlements and judgments
• NEUs may not use LFRF money in violation of the Award Terms and Conditions or conflict of interest requirements under the Uniform Guidance

Reporting Requirements

The required reporting for providing government services is far more streamlined than reporting for other allowable uses. In its Project and Expenditure User Guide,3 Treasury indicates that NEUs will choose this method by checking a box to indicate that they are using their allocation for revenue replacement. After selecting this option, NEUs will only need to certify that LFRF money has not been used to fund any of the prohibited uses (outlined above) and provide a brief narrative of the LFRF funded project(s).

1 US Department of Treasury State and Local Fiscal Recovery Funds Final Rule. https://home.treasury.gov/system/files/136/SLFRF-Final-Rule.pdf
2 US Department of Treasury State and Local Fiscal Recovery Funds Interim Final Rule. https://www.govinfo.gov/content/pkg/FR-2021-05-17/pdf/2021-10283.pdf
3 US Department of Treasury SLFRF Project and Expenditure Report User Guide. https://home.treasury.gov/system/files/136/Project-and-Expenditure-Report-User-Guide.pdf