Spending Coronavirus State and Local Fiscal Recovery Funds? Here are some resources for you

The American Rescue Plan Act (ARPA) established the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), assistance listing number of 21.027. CSLFRF provides $65.1 billion directly to counties and another $65.1 billion to cities and other municipalities. These funds represent a substantial infusion of resources to meet pandemic response needs and rebuild a stronger and more equitable economy as the country recovers.

We know that many of our local governments in Washington received this funding. While the State Auditor's Office (SAO) hasn't audited this funding source yet, we've compiled some resources to help you comply with this federal grant program and, hopefully, avoid future audit issues.

Here's the authoritative guidance:

• U.S. Department of the Treasury: Your grantor is the best source of information on your federal grant program. The U.S. Department of the Treasury has numerous documents containing guidance. We suggest you start with the Treasury's frequently asked questions (FAQs), the recently released final rule, and the compliance and reporting guidance document. The Treasury also offers a series of informative webinars, including a recent one on the final rule (a recording of that webinar will be posted soon).
  
  Please note that the Treasury has incorporated a “standard allowance” option into the final rule. Recipients have a one-time choice where they can elect to use the standard allowance for identifying revenue loss, instead of using the more complex revenue-loss formula. The standard allowance is set at $10 million total for the entire period of performance, not to exceed the award allocation. Although this is most helpful to smaller local governments, any recipient can elect to use it.
• Office of Management and Budget (OMB): Each year, the OMB and federal agencies update the annual compliance supplement, which serves as a guide for auditors. The ARPA programs are covered in addenda 1 and 2 to the 2021 compliance supplement. Addendum 1 includes guidance for CSLFRF. Although this document is intended to guide auditors, it contains important compliance information, and it will help you understand more about what an audit might look like.

Here's a roundup of informative resources you might be interested in:

• Government Finance Officers Association (GFOA): GFOA has its own CSLFRF Guidance FAQ. This information is available regardless of your membership status. If you have a GFOA membership, you can access the association's technical advice and use its revenue replacement calculator. GFOA also offers webinars for members managing federal funds.

• Association of Washington Cities (AWC): AWC offers on-demand training for maintaining compliance using ARPA funds. AWC also maintains a resource listing related to ARPA funding and the CSLFRF grant program on its website.

• National League of Cities (NLC): NLC offers its Local Fiscal Recovery Playbook to help local leaders access critical implementation resources from the U.S. Department of the Treasury and NLC, among other things. NLC also has a variety of articles and resources on ARPA and CSLFRF in its resource database. If you're a NLC member, you might be interested in viewing an October 2021 webinar called “How to Implement ARPA Grant Management for small cities and towns.”

• National Association of Counties (NACO): You can find additional resources for CSLFRF on NACO's State and Local Fiscal Recovery Fund Resource Hub here.

• Washington State Department of Enterprise Services Learning Center: The Learning Center is hosting a class on Feb. 8 called “Practical Application of Federal Cost Allocation & Indirect Cost Rates.” If you are considering charging indirect costs to CSLFRF, this class might be beneficial. You can find the Learning Center's available trainings here.

How to reach us for more assistance

If you have technical inquiries for SAO about federal Single Audits, you may submit your questions through our HelpDesk in the client portal. However, if your questions are about eligible uses of CSLFRF funds, we will refer you to your grantor for guidance.

One of the most common questions we receive is when to report federal funds on your Schedule of Expenditure of Federal Awards (SEFA) when calculating lost revenue. Federal funds should be reported on the SEFA when the expenditure is incurred—up to the amount of calculated lost revenue. For example, if you calculate $15,000,000 of lost revenue but spend $500,000 of it during 2021 on eligible expenditures, you would report the $500,000 on your SEFA in 2021.

Stay current and connected with SAO's latest news and trainings by subscribing to our weekly e-newsletter and checking COVID-19 Guidance Toolkit on our website. If you have other questions, comments or suggestions, feel free to email us at Center@sao.wa.gov.