U.S. Department of the Treasury 

How Emergency Rental Assistance Reallocation Works 

October 4, 2021

This document explains the structure of the Treasury Department’s approach to reallocating 

funds under the first Emergency Rental Assistance Program (ERA1) under the Reallocation 

Guidance (the Guidance) issued by Treasury on October 4, 2021. The Guidance’s central goal is 

to help more people stay in their homes and avoid eviction by speeding up the delivery of 

assistance to tenants and landlords in need. Treasury will carry out the statutory requirement to 

reallocate funds to accomplish this goal in three ways: 1) make more resources available to highperforming grantees based on need, (2) incentivize adoption of best practices among grantees to 

help them streamline and improve their processes, and (3) work to ensure funds do not go unused 

by programs unwilling or unable to assist struggling renters and landlords. 

The Guidance covers the major aspects of how these funds will be reallocated, including the 

following: 

 Grantees that have not obligated at least 65% of their ERA1 funds – a measure that 

captures both spent and committed funds – must submit a program improvement 

plan. Grantees under the 65% obligation threshold must submit a program improvement 

plan by November 15 that identifies how they will accelerate their delivery of assistance 

to eligible tenants and landlords. Treasury will consider whether grantees plan to 

implement the best practices described in Treasury’s guidance, including the use of selfattestations; the use of eviction diversion partnerships; engagement with providers of 

culturally and linguistically relevant housing stability services; and other strategies that 

have accelerated the delivery of rental assistance provided in jurisdictions across the 

country. 

Grantees will be required to submit a report on their progress with their plan within 60 

days of its approval by Treasury. If grantees do not submit an adequate plan or fail to 

submit the required confirmation, 10% of their ERA1 funds will be determined to be 

“excess funds.” Treasury will release forms and instructions for program improvement 

plans in the near future.

 Grantees who have not obligated at least 65% of ERA1 funding who have 

insufficient expenditure ratios—a measure of funds actually spent providing 

assistance to eligible households—will face reallocation. Grantees with expenditure 

ratios below 30% as of September 30, based on the program data they submit to Treasury 

by October 15, will be determined to have “excess funds” subject to potential recapture. 

Specifically, a grantee with an expenditure ratio below 30% will be determined to have 

excess funds equal to the difference between its reported expenditures and the amount of 

expenditure needed to reach the 30% threshold. 
 A Grantee with both inadequate obligations and insufficient expenditures will have 

a variety of ways to mitigate the amount that Treasury would otherwise recapture 

as a result of this first assessment. 

o The grantee can avoid recapture if, by November 15, 2021, it is able to certify to 

Treasury that its expenditure ratio is at least 30%, or that it has obligated at least 

65% of its ERA1 allocation.

o Further, grantees that submit a program improvement plan that is approved by 

Treasury will benefit from a recalculation of the grantee’s excess funds 

determination that will assume a one-time 15% addition to their expenditure ratio 

to help them meet minimum expenditure ratio threshold of 30%. This will afford 

grantees an additional opportunity to accelerate spending before losing funds as 

they put in place new policies.

 After the first assessment, Treasury will assess each grantee’s expenditure ratio 

approximately every two months. The expenditure ratio threshold used to calculate 

excess funds will rise by 5 percentage points every calendar month (for example, the 

threshold as of November 30 will be 40 percent). As of March 31, 2022, any unobligated 

funds may be designated as excess funds and be reallocated, helping to ensure that 

funding does not go unused as a result of the September 30, 2022 statutory deadline for 

obligating ERA1 funds. 

 Treasury expects to distribute recaptured funds about every two months, as 

warranted based on availability and confirmed need. Treasury will soon begin 

collecting requests from grantees for additional funds. These requests will be submitted 

on a standard form provided by Treasury that allows grantees to confirm and describe the 

needs in their communities. As excess funds become available, Treasury will prioritize, 

when feasible, requests from grantees in the same state where the funds were initially 

allocated. The remainder will be available for reallocation nationwide, with priority 

afforded to grantees already on track to expend both their remaining ERA1 and ERA2 

funds. In making all these decisions, Treasury will be guided by its commitment to ensure 

better relief – not less – to those living in jurisdictions that have so far underperformed in 

getting emergency rental relief to eligible members of their communities.