This article addresses some of the general information related to the American Rescue Plan Act, but it is not meant to provide a town all the necessary information on how to apply and use its funds. If the town would like more information on how to apply or use the funds, please go to https://mntownships.org/arpa-information.
On March 11th, 2021, President Biden signed the American Rescue Plan Act (ARPA) into law. ARPA provides stimulus to individuals, businesses, and government entities to assist in their respective COVID-19 responses. ARPA interests townships both as a government entity and an employer. Minnesota towns will receive a portion of $350 Million provided to all Minnesotan towns and cities with a population under 50,000.
Contents of the following article:
- Checklist for Requesting Initial Payment
- Local Government Relief (and U.S. Treasury Information)
- Responses to the Public Health Emergency and its Negative Economic Impacts
- Premium Pay for Essential Employees
- Replacement of Reduced Revenue
- Infrastructure Investments
- Transfer to Other Entities
- Reporting Expenditures
- Families First Coronavirus Response Act
- Firefighter Grants
- Single Audit Requirements
Checklist for Requesting Initial Payment:
Before towns may receive their ARPA funds, there are several steps they must take. The town should take the following steps:
Local Government Relief:
The most comprehensive portion of towns’ stimulus will give $19.5 Billion to local municipalities throughout the U.S. The total will be split evenly between all “nonentitlement units of local government.” A nonetitlement unit of local government is a local government classified as a municipality by the United States Census Bureau, that is not a metropolitan city. All Minnesota townships and most cities are nonentitlement units of goverment. Out of this $19.5 Billion pot, Minnesota specifically $350 Million will be provided to “nonentitlement units.”
The distribution of funding for nonentitlement units will be managed by the state. Each township is eligible to receive a share of the fund in proportion to their share of the total population of all nonentitlement units’ in the state, but no more than 75% of the town’s 2019 budget. ARPA uses the term “budget” for this factor but we believe the state will use the town’s levy as the basis for setting the 75% limit. The maximum total amounts towns are eligible for can be found here (Please Note: the allocations on the spreadsheet are out of $1,000,000, meaning if your township’s allocation amount is 0.1, then the spreadsheet is indicating that the town can receive a maximum amount of $100,000).
There are several places where towns can gather additional information regarding local government relief from ARPA:
To receive ARPA funds, towns must receive a DUNS number and register it into the Federal Government’s System for Award Management (SAM), however, this article, demonstrates everything that the township needs to complete before receiving funds and this article provides a step-by-step video guide on these processes. These are the same systems used by the Federal Government when providing FEMA aid, as well as what was used during the CARES Act, so towns may already be registered. If the town has not been registered or is unsure about whether it has been, please review this article.
ARPA distributions will be split into two rounds. The first half will be sent around May 2021, if possible. The State will distribute funding 30 days after the reception. States may extend the distribution up to 120 days, with the second half sent out 12 months after the first.
Under ARPA, funds have more eligible uses than what the CARES Act provided. Towns can use the funds for any eligible costs incurred between March 3rd, 2021, and December 31st, 2024. Specific eligible expenses from the federal level are as follows, each of these specific provisions will be discussed further:
- Responses to the public health emergency and its negative economic impacts:
- Assistance to households, small businesses, and non-profits in response to the COVID-19 pandemic are among negative economic impacts:
- Premium pay for essential workers:
- Limits include $13 per hour and a $25k cap to essential workers:
- Replacement of reduced revenue:
- Currently thought to be calculated as the gap between 2019 and 2020 revenue:
- Some infrastructure investments, like:
- Transfers to other entities like:
- Public benefit corporations involved in transporting people or cargo:
- Special purpose governments, such as joint powers:
- Tribal organizations:
The American Rescue Plan Act also clarifies which expenditures are specifically ineligible, including:
- Directly or indirectly offset tax reductions or increases: and
Responses to the Public Health Emergency and its Negative Economic Impacts:
ARPA funds may be used to pay the costs of responses to the COVID-19 pandemic if the town finds: (1) the expenditure is needed because of or arises from a negative impact from COVID-19; and (2) the expenditure addresses the need or negative impact. For example, costs incurred to communicate about the pandemic and enhance safety measures such as personal protective equipment or ventilation within buildings owned by the town could qualify. The town may also provide grants to households, businesses, and non-profits that demonstrate a need based on the negative impacts of the COVID-19 pandemic.
If a town does want to provide grants, the town should create a grant program with the help of the township attorney. The Treasury’s Rules provide some guiding principles for the grant application such as:
- Demonstrate the extent to which there has been an economic harm, which may include the loss of revenue or earnings directly related to or made worse by the COVID-19 pandemic; and
- Detail how the grant recipient and funding will address those harms.
Premium Pay to Essential Employees:
Essential employees may receive premium pay. Most of ARPA is “forward-looking” meaning that only costs incurred after March 2021 can be relieved by ARPA. However, premium pay to essential workers may be retroactive to the start of the COVID-19 Pandemic. The Treasury Rules list essential workers, however, the rules clearly state the list is not exclusive and there may be additional workers considered essential by the township board.
Replacement of Reduced Revenue:
The Treasury rules provide a detailed algorithm to define what is the “reduced revenue” of the town, which is a complicated formula. Further clarification from the federal government on this issue may come.
Townships may use ARPA funds to aid in certain infrastructure issues, including sewer, water, and broadband. If the town would like to use ARPA funds on sewer and water, certain federal guidelines must be followed. If the town would like to use funds on broadband infrastructure, they must implement broadband with 100 Mbps download speed and 100 Mbps upload speed. These requirements are in place to ensure any broadband infrastructure supported by ARPA funding is capable of supporting telework or remote schooling. If the minimum speed requirements are impracticable, they may be lessened to 100 Mbps download speed and 20 Mbps upload speed, with the ability to scale up to the 100/100 Mbps standard. The town may also assist in providing broadband to individual households that have broadband service that provides less than 25 Mbps download speed and 3Mbps upload speed.
Transfer to Other Entities:
Local governments may transfer funds to other local governments, like other towns, cities, or school districts. Notably different than the CARES Act, towns may provide ARPA funds to non-profit entities.
Like under the CARES Act, there will be a reporting requirement to the Federal Treasury Secretary. The town will report yearly, starting on September 30th, 2021, and due October 31st, 2021, with additional reports required each year from October 31st, until 2026. However, the exact requirements of reporting are not yet known, and it is possible that the reporting will look similar to reporting under the CARES Act.
During the CARES Act distribution, many fire departments and rural fire associations requested townships pay for, contribute to, or give funding to the fire department. The CARES Act did not provide any funding directly to fire departments and many townships provided such funding to their fire department. The American Rescue Plan Act provides $300 million for assistance to fire departments in grants. So, any costs that fire departments are likely to bear in response to the COVID-19 pandemic should be covered by this $300 million. MAT recommends townships do not provide ARPA funding to fire departments at this time, for several reasons. First, fire departments should be able to pursue ARPA funding designated for fire departments before seeking other funding. Second, municipal-owned fire departments should benefit from ARPA funding provided directly to their municipality. Third, many departments received CARES Act funding that may have addressed some of their COVID-19 related expenses.
Employers (including towns) are provided a temporary COBRA premium subsidy, allowing eligible individuals to obtain COBRA continuation coverage without paying the COBRA premiums. The additional COBRA funds will cover costs from April 1st through September 30th, 2021.
Single Audit Requirements:
Any local government that receives more than $750,000 or more in a year from federal awards is required to obtain a single audit or program-specific audit, which includes both ARPA and CARES Act funds. A single audit must be performed by an independent auditor under generally accepted government auditing standards. Please review this article for more information.