U.S. Treasury Provides Direction on Distribution to Non-Entitlement Units of Local Government
Yesterday, the U.S. Treasury released additional guidance on the Coronavirus State and Local Fiscal Recovery Fund, specifically for Non-Entitlement Units of Local Government.
The American Rescue Plan Act of 2021 appropriated $19.53 billion for states to disburse to NEUs. An NEU as defined by ARPA is a non-metropolitan city. The newly released guidance provides the steps for states to allocate the funds to NEUs.
Prior to distributing the funds, the states are each required to:
- Request the payment of the Local Fiscal Recovery Funds for distribution to the NEUs
- Identify eligible NEUs, following the guidance provided by the Treasury Department
- Calculate the initial allocations to each NEU based on the proportion of the population in the NEU in relation to the total population of all NEUs within that state
- Establish a process for NEUs to submit requests for payments
- Receive requests for payments from NEUs
- Determine whether the “75 percent cap” applies utilizing a top-line of the NEU’s submitted reference budget and
- Process requests to transfer to the state from NEUs who decline funding
When ARPA was passed, initial estimates of funds were provided by Congress. However, the Treasury Department did not provide such allocations – leaving the determination of final numbers to the states based on the method provided. If a NEU does not see itself on the list, the local government should refer to the list of metropolitan cities that will be receiving their funds directly from the Treasury Department.
When planning the use of the Local Recovery Funds, NEUs should follow the Interim Final Rule released by the Treasury Department on May 10.
Each state will have its own process for distributing the funds to NEUs. However, the Treasury Department did provide a checklist that details information all NEUs should expect to provide, including a valid DUNS number.
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