American Rescue Funds FAQ

This document contains answers to frequently asked questions regarding the American Rescue Plan Act. Answers are based on the most current guidance from the U.S. Department of the Treasury as of July 19th, 2021.

INELIGIBLE USES

There are two specific prohibitions outlined by the U.S. Department of the Treasury:

  • Pension funds: Recipients are not allowed to make an extraordinary deposit to a pension fund. However, recipients may use funds for routine payroll contributions to pensions of employees whose wages and salaries are an eligible use.
  • Reduce net tax revenue (states and territories): States and territories are not allowed to use funding to reduce net tax revenue due to a change in law from March 3, 2021, through the last day of the fiscal year in which the funds provided have been spent.

Other Prohibitions include:

  • Deposits into rainy day funds and reserves
  • General infrastructure spending outside of water, sewer, and broadband investments or above the amount allocated under the revenue loss provision
  • Legal settlements or judgements
  • Funding debt services
  • Using funds for non-federal match including Medicaid

ELIGIBLE USES

WHAT ARE THE AREAS THAT COUNTIES CAN SPEND RECOVERY FUNDS?

There are five primary ways that Recovery Funds can be spent:

  1. Support public health response by funding:
    • COVID-19 mitigation efforts
    • Medical expenses
    • Behavioral healthcare and
    • Certain public health and safety staff
  2. Address negative economic impacts:
    • Respond to economic harms to:
      • Workers
      • Families
      • Small businesses
      • Nonprofits
      • Or impacted industries and
    • Re-hiring of public sector workers
  3. Replace public sector revenue loss:
    • Use funds to provide government services to the extent of the reduction in revenue experienced due to the pandemic
  4. Premium pay for essential workers:
    • Offer additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure. Funds can be used retroactively back to January 27, 2020.
  5. Water, sewer and broadband infrastructure:
    • Make necessary investments to improve access to clean drinking water
    • Invest in wastewater and stormwater infrastructure and
    • Provide unserved or underserved locations with new or expanded broadband access

HOW DO I KNOW IF A SPECIFIC USE IS ELIGIBLE?

Fiscal Recovery Funds must be used in one of the four eligible use categories specified in the American Rescue Plan Act:

  1. To respond to the public health emergency or its negative economic impacts, including:
    • assistance to households, small businesses, and nonprofits, or
    • aid to impacted industries such as tourism, travel, and hospitality;
  2. To respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers;
  3. For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency; and
  4. To make necessary investments in water, sewer, or broadband infrastructure

CAN COUNTIES USE RECOVERY FUNDS TO PAY "BACK TO WORK INCENTIVES"?

Yes. This assistance can include job training or other efforts to accelerate rehiring and thus reduce unemployment.

Examples:

  • childcare assistance
  • assistance with transportation to and from a jobsite or interview, and
  • incentives for newly employed workers.

CAN FUNDS BE USED TOWARDS GENERAL INFRASTRUCTURE PROJECTS, SUCH AS ROADS AND BRIDGES?

No, counties are NOT allowed to use funds for general infrastructure spending

  • except for water, sewer, and broadband investments or
  • above the amount allocated under the revenue loss provision.

HOW FLEXIBLE ARE CATEGORIES 1 AND 2 – PUBLIC HEALTH RESPONSE AND NEGATIVE ECONOMIC IMPACTS – WHEN IT COMES TO ELIGIBLE USES?

Counties have broad flexibility so long as they can demonstrate that

  • these activities support the public health response or
  • those recipients of the Recovery Funds have experienced economic harm from the pandemic.

MAY COUNTIES USE FUNDS TO ESTABLISH A PUBLIC JOBS PROGRAM?

Yes. The Department of the Treasury permits a broad range of services to unemployed or underemployed workers and other individuals that suffered negative economic impacts from the pandemic.

That can include:

  • public jobs programs,
  • subsidized employment
  • combined education and on-the-job training programs, or
  • job training to accelerate rehiring or address negative economic or public health impacts experienced due to a worker’s occupation or level of training.

Can also include other employment supports, such as:

  • childcare assistance or
  • assistance with transportation to and from a jobsite or interview.

MAY THE COUNTY USE THESE FUNDS TO PREVENT AND RESPOND TO CRIME, AND SUPPORT PUBLIC SAFETY IN THE COMMUNITY?

It depends. Below are some examples of how Fiscal Recovery Funds can be used to address public safety:

  • In all communities, recipients may use resources to rehire police officers and other public servants to restore law enforcement and courts to their pre-pandemic levels.
  • In communities where an increase in violence or increased difficulty in accessing or providing services to respond to or mitigate the effects of violence, is a result of the pandemic they may use funds to address that harm.
  • Eligible public health services include mental health and other behavioral health services, which are a critical component of a holistic public safety approach
  • Recognizing the disproportionate impact of the pandemic on certain communities, these eligible uses aim to address the pandemic’s exacerbation of public health and economic disparities and include services to address health and educational disparities, support neighborhoods and affordable housing, and promote healthy childhood environments.

TO QUALIFY FOR ASSISTANCE OR AID, DO I OR MY BUSINESS HAVE TO SHOW THAT COVID HAS HAD A NEGATIVE ECONOMIC IMPACT?

Not necessarily.

  • The Department of the Treasury allows the County to demonstrate a negative economic impact on a population or group and to provide assistance to households or businesses that fall within that population or group.
  • In such cases, the County needs only to demonstrate that the household or business is within the population or group that experienced a negative economic impact. This includes assistance to households and small businesses as well as all individuals living within a Qualified Census Tract (QCT)*.

*Qualified Census Tract (QCT) is any census tract (or equivalent geographic area defined by the Census Bureau) in which at least 50% of households have an income less than 60% of the Area Median Gross Income (AMGI).

WOULD INVESTMENTS IN IMPROVING OUTDOOR SPACES (E.G. PARKS) BE AN ELIGIBLE USE OF FUNDS AS A RESPONSE TO THE PUBLIC HEALTH EMERGENCY AND/OR ITS NEGATIVE ECONOMIC IMPACTS?

There are multiple ways that investments in improving outdoor spaces could qualify as eligible uses:

  • Services provided to Qualified Census Tracts (QCTs)* such as investments in parks, public plazas, and other public outdoor recreation spaces that may be responsive to the needs of disproportionately impacted communities by promoting healthier living environments and outdoor recreation and socialization to mitigate the spread of COVID-19.
  • Recipients may provide assistance to small businesses in all communities. Assistance to small businesses could include support to enhance outdoor spaces for COVID-19 mitigation (e.g., restaurant patios)

*Qualified Census Tract (QCT) is any census tract (or equivalent geographic area defined by the Census Bureau) in which at least 50% of households have an income less than 60% of the Area Median Gross Income (AMGI).

CAN FUNDS BE USED TO ASSIST SMALL BUSINESS STARTUPS AS A RESPONSE TO THE NEGATIVE ECONOMIC IMPACT OF COVID-19?

According to the Department of the Treasury, the County may provide assistance to small businesses that responds to the negative economic impacts of COVID-19. Treasury acknowledges a range including for small businesses and individuals seeking to start small businesses after the start of the COVID-19 public health emergency. For example:

  • A recipient could assist small business startups with additional costs associated with COVID-19 mitigation tactics (e.g., barriers or partitions; enhanced cleaning; or physical plant changes to enable greater use of outdoor space).
  • A recipient could identify and respond to a negative economic impact of COVID19 on new small business startups; for example, if it could be shown that small business startups in a locality were facing greater difficult accessing credit than prior to the pandemic, faced increased costs to starting the business due to the pandemic, or that the small business had lost expected startup capital due to the pandemic.
  • The Department of the Treasury also discusses eligible uses that provide support for individuals who have experienced a negative economic impact from the COVID19 public health emergency, including uses that provide job training for unemployed individuals.

WHO IS ELIGIBLE FOR PREMIUM PAY?

Workers that are eligible for premium pay include:

  • Any work performed by an employee of the state, local or tribal government
  • Staff at nursing homes, hospitals, and home care settings
  • Workers at farms, food production facilities, grocery stores, and restaurants
  • Janitors and sanitation workers
  • Truck drivers, transit staff and warehouse workers
  • Public health and safety staff
  • Childcare workers, educators and other school staff
  • Social service and human services staff

HOW IS ESSENTIAL WORK DEFINED?

Essential work is work involving:

  • regular in-person interactions or
  • regular physical handling of items that are also handled by others.

An individual who teleworked from a residence may not receive premium pay.

CAN COUNTIES PROVIDE GRANTS TO THIRD-PARTY EMPLOYERS?

Yes. Third-party employers of essential workers are eligible. Third-party contractors who employ essential workers are also eligible for grants to provide premium pay.

CAN PREMIUM PAY BE MADE RETROACTIVELY?

Yes. Premium pay may be provided retroactively for work performed at any time since the start of the covid-19 public health emergency (January 27, 2020), where those workers have yet to be compensated adequately for work previously performed.

WHAT ARE ELIGIBLE WATER AND SEWER PROJECTS?

The Department of the Treasury aligns eligible water and sewer projects with those that are eligible to receive financial assistance from the Environmental Protection Agency’s (EPA) Clean Water State Revolving Fund and Drinking Water State Revolving Fund.

The types of projects eligible for CWSRF include:

  • Projects to construct, improve, and repair wastewater treatment plants
  • Control non-point sources of pollution
  • Improve resilience of infrastructure to severe weather events
  • Create green infrastructure, and
  • Protect waterbodies from pollution.

WHAT TYPE OF BROADBAND PROJECTS ARE ELIGIBLE?

Eligible projects are expected to meet or exceed symmetrical upload and download speeds of 100 Mbps.

However, in instances where required speeds cannot be achieved (due of the geography, topography, or excessive costs), the affected project would be expected to meet or exceed 100 Mbps download with a minimum of 20 Mbps upload with scalability to a symmetrical minimum of 100 Mbps.

FOR BROADBAND INFRASTRUCTURE TO PROVIDE SERVICE TO “UNSERVED OR UNDERSERVED HOUSEHOLDS OR BUSINESSES,” MUST EVERY HOUSE OR BUSINESS IN THE SERVICE AREA BE UNSERVED OR UNDERSERVED?

No. It suffices that an objective of the project is to provide service to unserved or underserved households or businesses.

Unserved or underserved households or businesses need not be the only households or businesses in the service area receiving funds.

MAY COUNTIES USE PAYMENTS FROM THE FUNDS FOR “MIDDLE MILE” BROADBAND PROJECTS?

Yes. According to the Department of the Treasury, counties may use payments from the Funds for “middle-mile projects,” but Treasury encourages counties to focus on projects that will achieve last-mile connections