As part of the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) under the American Rescue Plan Act (ARPA) approved March 11, 2021, governments will receive two payments to help make up for the losses caused by the COVID-19 pandemic. We already discussed how governments could use the funds for capital planning, but now that the Final Rule (abbreviated overview here) has been released, we have greater clarification on additional uses — namely, how funds can be used to upgrade software to modernize your government’s budgeting process.
Replacing Lost Revenue: What The Final Rule Says
According to the US Department of Treasury, “The final rule offers a standard allowance for revenue loss of up to $10 million, allowing recipients to select between a standard amount of revenue loss or complete a full revenue loss calculation.” State and local governments do not have to use the Treasury revenue loss formula to prove loss — every government is eligible for the $10MM.
1. Take up to $10 million standard allowance for revenue loss, OR
2. Calculate revenue loss with the Treasury formula, with a new 5.2% default growth rate (increased from 4.1%)
It is advisable to do the full revenue loss calculation to see which option is more favorable.
The Final Rule is effective April 1, 2022, but state and local governments can take advantage of new provisions prior to the effective date.
What Lost Revenue Can Be Used For: General Government Services
There are several expansions on the use of ARPA funds from the Interim Final Rule published in May 2021. Specifically, the final rule states that the funding can be used on “general government services,” which includes general government administration, staff, and administrative facilities.
The Treasury’s explanation of using funds on general government services is as follows:
“Recipients can use SLFRF funds on government services up to the revenue loss amount, whether that be the standard allowance amount or the amount calculated using the above approach. Government services generally include any service traditionally provided by a government, unless Treasury has stated otherwise. Here are some common examples, although this list is not exhaustive:
✓ Construction of schools and hospitals
✓ Road building and maintenance, and other infrastructure
✓ Health services
✓ General government administration, staff, and administrative facilities
✓ Environmental remediation
✓ Provision of police, fire, and other public safety services (including purchase of fire trucks and police vehicles)”
What Lost Revenue Can Be Used For: Effective Service Delivery
For many state and local governments, the explanation for general government services is enough to justify spending ARPA funds on administrative software to help them operate more efficiently and better serve their communities.
But additional clarification can be found under the rules for “Effective Service Delivery.” The Treasury’s explanation for using funds for effective service delivery is as follows:
“SLFRF funding may be used to improve the efficacy of public health and economic programs through tools like program evaluation, data, and outreach, as well as to address administrative needs caused or exacerbated by the pandemic.
Eligible uses include:
Supporting program evaluation, data, and outreach through:
✓ Program evaluation and evidence resources
✓ Data analysis resources to gather, assess, share, and use data
✓ Technology infrastructure to improve access to and the user experience of government IT systems, as well as technology improvements to increase public access and delivery of government programs and services
✓ Community outreach and engagement activities
✓ Capacity building resources to support using data and evidence, including hiring staff, consultants, or technical assistance support
Addressing administrative needs, including:
✓ Administrative costs for programs responding to the public health emergency and its economic impacts, including non-SLFRF and non-federally funded programs
✓ Address administrative needs caused or exacerbated by the pandemic, including addressing backlogs caused by shutdowns, increased repair or maintenance needs, and technology infrastructure to adapt government operations to the pandemic (e.g., video-conferencing software, data and case management systems)”
Interpreting The Final Rule
The ability to use lost revenue funds for general government services opens up many opportunities for governments to infuse their communities with valuable services and programs. Additionally, the Treasury states that, “Funds spent under government services are subject to streamlined reporting and compliance requirements,” giving governments greater autonomy over allocating funds where they’re most needed.
For some, the lost revenue funds will be found money, as governments don’t have to show a loss to be eligible for the funds. For others, it will help refill their coffers; they will be making up for a true loss.
State and local governments are encouraged to read the Final Rule to help them determine which revenue loss option to take and how to best use funds.
ClearGov Government Budgeting Software Modernizes Your Budget Process
ClearGov government budgeting software meets the criteria for using ARPA funds under the general government services or the effective service delivery categories, as it:
- Saves governments time and resources that can be reallocated to other areas
- Allows employees to collaborate remotely in real-time, and
- Improves public access to budget data
If you have found money from your ARPA lost revenue allowance, see how you can modernize your budget cycle processes with ClearGov! Schedule a demo today and start budgeting better.