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American Rescue Plan Act of 2021

April 23, 2021


In March, Congress passed Bill H.R.1319 – 117th Congress—also known as the American Rescue Plan Act (ARPA)—to address the current public health crisis from the spread of Covid-19. The Covid-19 pandemic and the resulting emergency measures implemented resulted in an economic crisis that affected millions of Americans from big cities to small towns. It is estimated more than 9.5 million workers lost their jobs in the wake of the pandemic, with 4 million of those being out of work for 6 months or longer. The $1.9 trillion in mandatory Covid-19 funding provided through this legislation is aimed at curbing the economic effects of the pandemic.

The American Rescue Plan Act (ARPA) is intended to deliver immediate and direct relief to families and workers impacted by the Covid-19 crisis through direct stimulus payments, extended unemployment benefits, and housing assistance relief.

This Bill also provides significant funding for state and local governments to offset the increased expenditures and the decrease in revenues associated with the Covid-19 pandemic and efforts to mitigate the economic effects for years to come. While many state and local officials see this funding as a means to not only survive the pandemic, but also be in a stable financial position once the conditions improve, they also are apprehensive on how to manage the grant and its compliance due to lack of guidance. While compliance requirements are expected to be similar to those of the programs funded through the CARES Act, staying informed of the changes or updates to these compliance requirements can be challenging.

What do we know about the purpose of this Bill?

This Bill provides additional relief to address the continued impact of the Covid-19 pandemic on the economy, public health, state and local governments, individuals, and businesses. The Bill will provide funding to several existing grants (e.g., SNAP, the Supplemental Nutrition Assistance Program formerly known as the food stamp program). Funding will also be provided support to schools and institutions of higher education, emergency rental and homeowner assistances, small business support and many other items including payments to state, local, tribal, and territorial governments for economic relief. The ARPA provides $350 billion in emergency funding for state, local, territorial, and tribal governments to remedy this mismatch between rising costs and falling revenues.

What is the guidance for state, local, tribal, and territorial governments on allowable cost/activities under ARPA funding?

At the time this article was written, there were no specific answers for what is allowable; however, we have broad guidance on the allowable activities that are listed below:

  1. Assistance to households, small business, and nonprofits or aid to impacted industries such as tourism and travel.
  2. Premium pay to eligible workers of the state, territory, or tribal government who are performing essential work, or by providing grants to eligible employers that have eligible workers who perform essential work.
  3. Revenue replacement for governmental entities from loss in revenues collected in the most recent full fiscal year compared to years prior.
  4. To make necessary investments in water, sewer, and broadband infrastructure.

In addition to the direct use noted above, the U.S. Department of Treasury had indicated state and local governments cannot use ARPA funding to offset revenues lost due to tax cuts enacted by such governments since March 3, 2021, nor can any ARPA funding be used to fund pension obligations. ARPA funding can be transferred to private nonprofit organizations, transit authorities, and special-purpose entities of state and local governments to provide essential public services during the pandemic.

The deadline for expending funds provided through the ARPA is December 31, 2024.

What needs to be done now?

While the U.S. Department of Treasury has not started to fund the state and local recovery programs under the ARPA, it has recommended entities eligible to receive direct payments (states, counties, metropolitan cities, territories, and tribal governments) take preliminary steps to ensure timely receipt of funding once distributions do begin. These entities can:

1) Ensure the entity has a valid DUNS number issued by Dun & Bradstreet

2) Ensure the entity has an active registration in SAM, the official government-wide database

3) Gather payment information for the entity, including EIN, name, and title of authorized entity representative, and financial institution information (routing number, account number, and financial institution contact information)

Every entity, not just those that are receiving direct payments, must have a valid DUNS number to receive funding under the ARPA program.

What yet is to come?

Additional guidance on the specific requirements of the grant in the upcoming months and possible change in restrictions on use of funding as the U.S. Department of Treasury draft up the rules/guidance for the various programs, including reporting requirements.

Congress is also working on another $2 trillion proposal for infrastructure bill that is likely to be discussed in detail over the next few months. If you would like to stay up to date on all these rules or have any questions about unique situations or solutions to your specific local government, please reach out to us.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.


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