Coronavirus State and Local Fiscal Recovery Funds for Non-entitlement Units of Local Government

The Coronavirus Local Fiscal Recovery Fund will provide $19.53 billion to support tens of thousands of non-entitlement units of local government, which are local governments typically serving a population under 50,000.

The Coronavirus Local Fiscal Recovery Fund will provide a critical source of relief for these smaller local governments, many of which have not received direct fiscal assistance from the federal government since the onset of the COVID-19 pandemic.

Funding for Non-Entitlement Units of local government

Non-entitlement units of local government (NEUs), defined in section 603(g)(5) of the Social Security Act, as added by section 9901 of the American Rescue Plan Act of 2021, are local governments typically serving populations of less than 50,000. NEUs include cities, villages, towns, townships, or other types of local governments. 

NEUs should expect to receive Coronavirus Local Fiscal Recovery Fund payments through their state governments. State governments will receive a specific allocation of these funds from Treasury for this purpose and are responsible for distributing these funds to NEUs within their state. Award amounts are based on the population of the NEU.

Allocation Information

Aggregate allocations to states for distribution to NEUs may be found here. The status of payments to states for distribution to NEUs may be found here.

Treasury’s guidance on NEUs provides further information on eligibility and a step-by-step guide for states to allocate and distribute funds to their NEUs. States should follow the guidance and calculate allocations based on the list of local governments and their respective populations. The statute requires that all allocations to eligible governments be based on population. Treasury expects to make payments to states for distribution to NEUs in two equal tranches approximately twelve months apart.

For 42 states, the list of local governments on the Treasury website details all the local governments that are eligible for a distribution as an NEU. For the remaining eight states with minor civil divisions that typically perform less of a governmental role (Illinois, Indiana, Kansas, Missouri, Nebraska, North Dakota, Ohio, and South Dakota), in order to determine eligibility of their minor civil divisions, each state should undertake a facts-and-circumstances test to determine whether the minor civil division has the legal and operational capacity to accept ARPA funds and provides a broad range of services that would constitute eligible uses under ARPA. 

Local governments that are not included on the lists of local governments should review the Allocation for Metropolitan Cities table to determine if they have instead received a metropolitan city allocation. Treasury has also published a definitional and data methodology for the lists of local governments. 

Information for Non-Entitlement Units of Local Government

NEUs with further questions should review Treasury’s Interim Final Rule and FAQs or, for questions on allocations and funding distribution, contact their respective state governments. Local governments that are NEUs are not eligible to receive this funding directly from Treasury and should not request funding through the Treasury Submission Portal.

While each state has its own process and requirements, Treasury has provided a pre-submission checklist with basic information that every NEU should expect to provide when requesting funding from their respective state.

Information for States

State governments that have made a request for their own funds in the Treasury Submission Portal will be considered by Treasury to have requested funding for their NEUs as well, and should expect to receive their first tranche of payments for distribution to their NEUs within a few days of submission. No further action is required on the state’s part to receive these payments from Treasury. State governments that have not submitted a request are encouraged to do so at their earliest convenience.

Following receipt of this funding from Treasury, ARPA requires each state to distribute these funds to its NEUs within 30 days unless granted an extension by Treasury. To request an extension form, states should email SLFRP@treasury.gov with the subject line “NEU Distribution - Extension Form".

Treasury has issued guidance for states on distributions to NEUs, along with a list of local governments as referenced in the guidance. Treasury’s definitional and data methodology for the list can be found here. A brief overview of the guidance can be found in this webinar deck for state governments. Answers to frequently asked questions on distribution of funds to NEUs can be found in this FAQ supplement, which is regularly updated.

States can find required documents to distribute to NEUs, in accordance with the guidance, here:

 

RECIPIENT COMPLIANCE AND REPORTING

Each non-entitlement unit of local government (NEU) is required to meet compliance and reporting responsibilities, as defined in the Interim Final Rule and further described in the Compliance and Reporting Guidance. The Reporting Guidance requires program and performance reporting to build public awareness, increase accountability, and monitor compliance of eligible uses.

Each NEU must submit a Project Expenditure Report by October 31, 2021 and then annually thereafter.   

Treasury will begin to accept reports in October 2021 and will issue a User Guide and other reference materials before that date.  Please check back regularly for updates.

Additional information on Compliance and Reporting
 

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