Children's Funding Project Search

Back

Publication

American Rescue Plan Frequently Asked Questions

These FAQs provide answers about using money received from the American Rescue Plan’s State and Local Fiscal Recovery Fund.

American Rescue Plan Frequently Asked Questions

The American Rescue Plan is the federal government’s $1.9 trillion relief package designed to help the nation recover from the economic impacts of the COVID-19 pandemic. The package includes more than $160 billion designated for education and child care as well as over $350 billion more that states and localities can flexibly spend on children.

This FAQ page provides answers about allocations, eligible uses, and reporting and compliance requirements for money received from the American Rescue Plan’s State and Local Fiscal Recovery Fund.

Filed under:

Infants and Toddlers, Early Childhood, Middle Childhood, Youth, Young Adults, Advocates/Intermediaries, Policymakers/Agency Leaders, Publication, American Rescue Plan

Allocation Information

The American Rescue Plan provides $350 billion through the State and Local Fiscal Recovery Fund program. States received $195.3 billion, counties $65.1 billion, and cities $45.6 billion. Native nation governments, U.S. territories, and nonentitlement units of local government that serve populations with fewer than 50,000 people also will receive funds. The U.S. Department of the Treasury’s Coronavirus State and Local Fiscal Recovery Funds webpage offers additional information, including specific allocations for individual states, counties, and cities.

The Treasury Department will distribute State and Local Fiscal Recovery Fund dollars in two tranches. Recipients became eligible to apply for funds beginning in May 2021 but will receive allocations only after they submit a request for funds through the Treasury Department’s ID.me portal. The U.S. Department of the Treasury’s Request Funding webpage is the best place to learn more about this process. The Treasury Department will release the second tranche funds one year after the first disbursement. Refer to the Treasury Department’s document Coronavirus State Fiscal Recovery Fund Split Payments to State Governments for more information about the tranching of funds.

Recipients must obligate their State and Local Fiscal Recovery Fund dollars by December 31, 2024, and expend them by December 31, 2026; however, recipients should monitor the Treasury Department’s State and Local Fiscal Recovery Fund website for updates.

Obligated funds refer to the legal contracting of funds for a specific use by the government to spend on a later day. Expended funds refer to the actual spending of dollars.

Both the American Rescue Plan and the CARES Act are intended to aid state and local governments in their work of supporting their communities through pandemic recovery. Primary differences between the plans include limitations around using recovery funds to cover payroll expenses for public health and public safety employees and using recovery funds for the nonfederal match requirement. USAFacts published a helpful article comparing the spending-related focus areas between these two funding streams.¹

Eligible Uses

The Treasury Department’s final rule outlines all provisions related to the State and Local Fiscal Recovery Fund program. According to the final rule, recipients can use their State and Local Fiscal Recovery Fund allocations to support programs and services that fall into one of the following categories: 

  1. public health response;
    – Address negative economic impacts of the pandemic such as assistance to households, small businesses, nonprofit organizations, and impacted industries; public sector capacity building; and capital expenditures;
  2. replace lost revenue;
  3. provide premium pay;
  4. water and sewer; or
  5. broadband infrastructure.

You may refer to the final rule and the department’s Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions for more information on eligible uses. Note that the examples provided in both documents are a noninclusive list of programs and services and that recipients have a lot of flexibility in determining how to spend their State and Local Fiscal Recovery Fund allocations.

Yes. Nonprofits are federal tax-exempt organizations described in section 501(c)(3) of the Internal Revenue Code. Although the Treasury Department cannot provide State and Local Fiscal Recovery Fund funds directly to nonprofit or private organizations, state and local governments can.² Nonprofits receiving funds from recipients will be considered subrecipients and are responsible for complying with all subrecipient reporting requirements. Refer to the Treasury Department’s Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds for more information.

Yes. Recipients are authorized to offer services in the form of assistance to households to address the negative economic impacts of the pandemic. Assistance to households includes, but is not limited to, food assistance, housing or utility assistance, cash assistance, or job training. The Treasury Department’s Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions includes a noninclusive list of eligible household assistance programs.

Yes. The Treasury Department allows counties to build and/or upgrade publicly owned facilities as capital improvement projects as responses to negative economic impacts of the pandemic³ or as revenue replacements.⁴ The use of State and Local Fiscal Recovery Fund funds focuses on equitable recovery, so projects need to benefit those who were disproportionately affected by the pandemic.⁵ The Center for Law and Social Policy (CLASP) has additional information about using federal relief funds to improve child care facilities.⁶

Yes. Guidance from the Treasury Department indicates that recipients may not use funds for general economic or workforce development unless the sector in question has experienced negative economic impacts as a result of the pandemic.⁷ Because the child care sector was among the most impacted industries in the country, it can receive funds to expand the workforce. For example, State and Local Fiscal Recovery Fund could support public jobs programs so long as services target unemployed and/or underemployed workers.⁸ Recipients also should explore the use of Child Care Stabilization Grant (CCSG), Higher Education Emergency Relief Fund III (HEERF III), and Elementary and Secondary School Emergency Relief Fund (ESSER III) dollars to expand the child care sector workforce.

Yes. Recipients may use funds to support outreach initiatives aiming to increase the uptake of federal assistance services and programs such as the Child Tax Credit and Supplemental Nutrition Assistance Program (SNAP).⁹

Yes. Mental and behavioral health services are allowable uses of the State and Local Fiscal Recovery Fund and can be implemented in school and community-based settings.¹⁰

Check out our interactive online database and web resources to explore creative ways that states and localities are using their American Rescue Plan funds.

Reporting and compliance

The best place to access State and Local Fiscal Recovery Fund reporting information is on the Recipient Compliance and Reporting Responsibilities page of the Treasury website. Recipients will find numerous resources including Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, in-depth user reporting guides, and report templates. 

As outlined in Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, Treasury has three types of reports for the State and Local Fiscal Recovery Fund program:

  1. Interim Report: Highlights initial intended uses of funds. Fund recipients should submit this only once.¹¹
  2. Recovery Plan Performance Report: Highlights information on projects funded by large recipients and includes performance tracking requirements.¹²
  3. Project and Expenditure Report: Highlights projects receiving funding, financial data, and information on subawards greater than $50,000. Recipients must submit these reports on either a quarterly or annual basis depending on recipient type.¹³

Reporting requirements vary according to a recipient’s population size and award amount. It is recommended to refer to the Treasury Department’s Compliance and Reporting Guidance to identify reporting deadlines and which reports your administration needs to submit.

The boxes here outline which reports different types of recipients need to submit. Note that states and U.S. territories are responsible for providing updates on fund distribution to eligible nonentitlement units of government in interim and project and expenditure reports.¹⁴ For information regarding reporting requirements, refer to the Treasury Department’s Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds.¹⁵

Recipients are required to select staff to serve in the following capacities: account administrator, point of contact for reporting, and authorized representative for reporting.¹⁶ Refer to the Treasury’s Portal for Recipient Reporting for role descriptions and criteria for designating staff members to these positions.

Recipients will be responsible for submitting their reports through the Treasury Department’s submission portal. User Guide: Treasury’s Portal for Recipient Reporting provides a step-by-step explanation for navigating the portal and uploading all mandatory documents.

The answer to this question depends on the type of report: 

  • Recovery Plan: Recipients can submit changes to the Treasury Department any time.¹⁷
  • Project and Expenditure Reports: Recipients can report changes when they submit a new report. This can be done on a quarterly basis.¹⁸
  • Interim Reports: Recipients cannot make changes to this report once submitted. Any significant updates should be highlighted in Project and Expenditure Reports.¹⁹

Expenditure categories operate as a coding system and organize projects undertaken by recipients. The 66 categories align with the allowable uses outlined in Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions and are key for tracking purposes. Recipients may be required to submit additional data depending on the expenditure category under which their project falls.²⁰

Yes. All data and information submitted by recipients will be publicly available. The Treasury Department recommends that recipients make their data accessible on their public-facing websites. 

Eligible uses of funds targeting Qualified Census Tracts are outlined in Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions in question 2.11. Reporting and compliance guidelines pertaining to project demographic distribution and Qualified Census Tract status is available in Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds in section 3d.

Endnotes
  1. USAFacts, “How Does the Original $1.9 Trillion American Rescue Plan Act Compare to the $2.2 Trillion Cares Act?,” USAFacts, May 17, 2021, https://usafacts.org/articles/2021-american-rescue-plan-act-spending-breakdown-cares-act/.
  2. U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds Frequently Asked Questions (Washington, DC: U.S. Department of the Treasury, 2021). See question 1.8, page 3. https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.
  3. Ibid. See question 2.5, page 5.
  4. Ibid. See question 3.8, page 15
  5. Ibid. See question 2.11, page 7.
  6. Olivia Barrow et al., How States Can Improve Child Care Facilities & Physical Spaces Using Federal Relief Dollars (Washington, DC: National Children’s Facilities Network, Center for Law and Social Policy, National Association for the Education of Young Children, EducationCounsel, and National Association for Family Child Care, 2021) https://www.clasp.org/publications/report/brief/how-states-can-improve-child-care-facilities-physical-spaces-using-federal.
  7. Treasury, Frequently Asked Questions. See question 2.8, page 6.
  8. Ibid. See question 2.16, page 9.
  9. Ibid. See question 4.12, page 26.
  10. Ibid. See question 4.8, page 21-22.
  11. U.S. Department of the Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Washington, DC: U.S. Department of the Treasury, 2021) See Section A, page 13. https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.
  12. Ibid. See Section C, page 23.
  13. Ibid. See Section B, page 15.
  14. U.S. Department of the Treasury, User Guide: Treasury’s Portal for Recipient Reporting (Washington, DC: U.S. Department of the Treasury, 2021) See page 12. https://home.treasury.gov/system/files/136/SLFRF_Treasury-Portal-Recipient-Reporting-User-Guide.pdf.
  15. U.S. Department of the Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Washington, DC: U.S. Department of the Treasury, 2021) See Table 2, page 12. https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.
  16. U.S. Department of the Treasury, User Guide: Treasury’s Portal for Recipient Reporting (Washington, DC: U.S. Department of the Treasury, 2021) See page 2. https://home.treasury.gov/system/files/136/SLFRF_Treasury-Portal-Recipient-Reporting-User-Guide.pdf.
  17. Ibid. See question 1.11, page 29.
  18. Ibid. See question 1.11, page 29.
  19. Ibid. See question 1.11, page 29.
  20. U.S. Department of the Treasury, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds (Washington, DC: U.S. Department of the Treasury, 2021) See Appendix 1, page 31. https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf.