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FACT SHEET: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver 

$350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the 

COVID-19 Emergency and Bring Back Jobs 

May 10, 2021

Aid to state, local, territorial, and Tribal governments will help turn the tide on the pandemic, address its 

economic fallout, and lay the foundation for a strong and equitable recovery

Today, the U.S. Department of the Treasury announced the launch of the Coronavirus State and Local 

Fiscal Recovery Funds, established by the American Rescue Plan Act of 2021, to provide $350 billion in 

emergency funding for eligible state, local, territorial, and Tribal governments. Treasury also released

details on how these funds can be used to respond to acute pandemic response needs, fill revenue 

shortfalls among these governments, and support the communities and populations hardest-hit by the 

COVID-19 crisis. With the launch of the Coronavirus State and Local Fiscal Recovery Funds, eligible

jurisdictions will be able to access this funding in the coming days to address these needs.

State, local, territorial, and Tribal governments have been on the frontlines of responding to the 

immense public health and economic needs created by this crisis – from standing up vaccination sites to 

supporting small businesses – even as these governments confronted revenue shortfalls during the 

downturn. As a result, these governments have endured unprecedented strains, forcing many to make 

untenable choices between laying off educators, firefighters, and other frontline workers or failing to 

provide other services that communities rely on. Faced with these challenges, state and local 

governments have cut over 1 million jobs since the beginning of the crisis. The experience of prior 

economic downturns has shown that budget pressures like these often result in prolonged fiscal 

austerity that can slow an economic recovery.

To support the immediate pandemic response, bring back jobs, and lay the groundwork for a strong and

equitable recovery, the American Rescue Plan Act of 2021 established the Coronavirus State and Local 

Fiscal Recovery Funds, designed to deliver $350 billion to state, local, territorial, and Tribal governments

to bolster their response to the COVID-19 emergency and its economic impacts. Today, Treasury is 

launching this much-needed relief to:

• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring 

the pandemic under control;

• Replace lost public sector revenue to strengthen support for vital public services and help retain 

jobs;

• Support immediate economic stabilization for households and businesses; and,

• Address systemic public health and economic challenges that have contributed to the inequal 

impact of the pandemic on certain populations.

The Coronavirus State and Local Fiscal Recovery Funds provide substantial flexibility for each jurisdiction

to meet local needs—including support for households, small businesses, impacted industries, essential 

workers, and the communities hardest-hit by the crisis. These funds also deliver resources that

recipients can invest in building, maintaining, or upgrading their water, sewer, and broadband 

infrastructure.
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Starting today, eligible state, territorial, metropolitan city, county, and Tribal governments may request 

Coronavirus State and Local Fiscal Recovery Funds through the Treasury Submission Portal. Concurrent

with this program launch, Treasury has published an Interim Final Rule that implements the provisions 

of this program.

FUNDING AMOUNTS

The American Rescue Plan provides a total of $350 billion in Coronavirus State and Local Fiscal Recovery 

Funds to help eligible state, local, territorial, and Tribal governments meet their present needs and build 

the foundation for a strong recovery. Congress has allocated this funding to tens of thousands of 

jurisdictions. These allocations include:

Type

Amount

($ billions)

States & District of Columbia $195.3

Counties $65.1

Metropolitan Cites $45.6

Tribal Governments $20.0

Territories $4.5

Non-Entitlement Units of 

Local Government

$19.5

Treasury expects to distribute these funds directly to each state, territorial, metropolitan city, county, 

and Tribal government. Local governments that are classified as non-entitlement units will receive this 

funding through their applicable state government. Treasury expects to provide further guidance on 

distributions to non-entitlement units next week.

Local governments should expect to receive funds in two tranches, with 50% provided beginning in May 

2021 and the balance delivered 12 months later. States that have experienced a net increase in the 

unemployment rate of more than 2 percentage points from February 2020 to the latest available data as 

of the date of certification will receive their full allocation of funds in a single payment; other states will 

receive funds in two equal tranches. Governments of U.S. territories will receive a single payment. 

Tribal governments will receive two payments, with the first payment available in May and the second 

payment, based on employment data, to be delivered in June 2021.

USES OF FUNDING

Coronavirus State and Local Fiscal Recovery Funds provide eligible state, local, territorial, and Tribal 

governments with a substantial infusion of resources to meet pandemic response needs and rebuild a 

stronger, more equitable economy as the country recovers. Within the categories of eligible uses, 

recipients have broad flexibility to decide how best to use this funding to meet the needs of their 

communities. Recipients may use Coronavirus State and Local Fiscal Recovery Funds to:
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• Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, 

behavioral healthcare, and certain public health and safety staff;

• Address negative economic impacts caused by the public health emergency, including

economic harms to workers, households, small businesses, impacted industries, and the public 

sector;

• Replace lost public sector revenue, using this funding to provide government services to the 

extent of the reduction in revenue experienced due to the pandemic;

• Provide premium pay for essential workers, offering additional support to those who have 

borne and will bear the greatest health risks because of their service in critical infrastructure

sectors; and,

• Invest in water, sewer, and broadband infrastructure, making necessary investments to 

improve access to clean drinking water, support vital wastewater and stormwater

infrastructure, and to expand access to broadband internet.

Within these overall categories, Treasury’s Interim Final Rule provides guidelines and principles for 

determining the types of programs and services that this funding can support, together with examples 

of allowable uses that recipients may consider. As described below, Treasury has also designed these 

provisions to take into consideration the disproportionate impacts of the COVID-19 public health 

emergency on those hardest-hit by the pandemic.

1. Supporting the public health response

Mitigating the impact of COVID-19 continues to require an unprecedented public health response from 

state, local, territorial, and Tribal governments. Coronavirus State and Local Fiscal Recovery Funds

provide resources to meet these needs through the provision of care for those impacted by the virus 

and through services that address disparities in public health that have been exacerbated by the 

pandemic. Recipients may use this funding to address a broad range of public health needs across

COVID-19 mitigation, medical expenses, behavioral healthcare, and public health resources. Among 

other services, these funds can help support:

• Services and programs to contain and mitigate the spread of COVID-19, including:

 Vaccination programs

 Medical expenses

 Testing

 Contact tracing

 Isolation or quarantine

 PPE purchases

 Support for vulnerable populations to 

access medical or public health services

 Public health surveillance (e.g., 

monitoring for variants)

 Enforcement of public health orders

 Public communication efforts

 Enhancement of healthcare capacity, 

including alternative care facilities

 Support for prevention, mitigation, or 

other services in congregate living

facilities and schools

 Enhancement of public health data 

systems

 Capital investments in public facilities to 

meet pandemic operational needs

 Ventilation improvements in key settings 

like healthcare facilities
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• Services to address behavioral healthcare needs exacerbated by the pandemic, including:

 Mental health treatment

 Substance misuse treatment

 Other behavioral health services

 Hotlines or warmlines

 Crisis intervention 

 Services or outreach to promote access 

to health and social services

• Payroll and covered benefits expenses for public health, healthcare, human services, public 

safety and similar employees, to the extent that they work on the COVID-19 response. For 

public health and safety workers, recipients can use these funds to cover the full payroll and 

covered benefits costs for employees or operating units or divisions primarily dedicated to the 

COVID-19 response.

2. Addressing the negative economic impacts caused by the public health emergency

The COVID-19 public health emergency resulted in significant economic hardship for many Americans.

As businesses closed, consumers stayed home, schools shifted to remote education, and travel declined 

precipitously, over 20 million jobs were lost between February and April 2020. Although many have

since returned to work, as of April 2021, the economy remains more than 8 million jobs below its prepandemic peak, and more than 3 million workers have dropped out of the labor market altogether since

February 2020.

To help alleviate the economic hardships caused by the pandemic, Coronavirus State and Local Fiscal 

Recovery Funds enable eligible state, local, territorial, and Tribal governments to provide a wide range 

of assistance to individuals and households, small businesses, and impacted industries, in addition to 

enabling governments to rehire public sector staff and rebuild capacity. Among these uses include:

• Delivering assistance to workers and families, including aid to unemployed workers and job 

training, as well as aid to households facing food, housing, or other financial insecurity. In 

addition, these funds can support survivor’s benefits for family members of COVID-19 victims.

• Supporting small businesses, helping them to address financial challenges caused by the 

pandemic and to make investments in COVID-19 prevention and mitigation tactics, as well as to 

provide technical assistance. To achieve these goals, recipients may employ this funding to 

execute a broad array of loan, grant, in-kind assistance, and counseling programs to enable

small businesses to rebound from the downturn.

• Speeding the recovery of the tourism, travel, and hospitality sectors, supporting industries that

were particularly hard-hit by the COVID-19 emergency and are just now beginning to mend. 

Similarly impacted sectors within a local area are also eligible for support.

• Rebuilding public sector capacity, by rehiring public sector staff and replenishing 

unemployment insurance (UI) trust funds, in each case up to pre-pandemic levels. Recipients

may also use this funding to build their internal capacity to successfully implement economic

relief programs, with investments in data analysis, targeted outreach, technology infrastructure, 

and impact evaluations.
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3. Serving the hardest-hit communities and families

While the pandemic has affected communities across the country, it has disproportionately impacted 

low-income families and communities of color and has exacerbated systemic health and economic 

inequities. Low-income and socially vulnerable communities have experienced the most severe health 

impacts. For example, counties with high poverty rates also have the highest rates of infections and 

deaths, with 223 deaths per 100,000 compared to the U.S. average of 175 deaths per 100,000.

Coronavirus State and Local Fiscal Recovery Funds allow for a broad range of uses to address the 

disproportionate public health and economic impacts of the crisis on the hardest-hit communities, 

populations, and households. Eligible services include:

• Addressing health disparities and the social determinants of health, through funding for 

community health workers, public benefits navigators, remediation of lead hazards, and 

community violence intervention programs; 

• Investments in housing and neighborhoods, such as services to address individuals 

experiencing homelessness, affordable housing development, housing vouchers, and residential 

counseling and housing navigation assistance to facilitate moves to neighborhoods with high 

economic opportunity;

• Addressing educational disparities through new or expanded early learning services, providing 

additional resources to high-poverty school districts, and offering educational services like

tutoring or afterschool programs as well as services to address social, emotional, and mental 

health needs; and,

• Promoting healthy childhood environments, including new or expanded high quality childcare, 

home visiting programs for families with young children, and enhanced services for child 

welfare-involved families and foster youth.

Governments may use Coronavirus State and Local Fiscal Recovery Funds to support these additional 

services if they are provided:

• within a Qualified Census Tract (a low-income area as designated by the Department of Housing 

and Urban Development);

• to families living in Qualified Census Tracts;

• by a Tribal government; or,

• to other populations, households, or geographic areas disproportionately impacted by the 

pandemic.

4. Replacing lost public sector revenue

State, local, territorial, and Tribal governments that are facing budget shortfalls may use Coronavirus 

State and Local Fiscal Recovery Funds to avoid cuts to government services. With these additional 

resources, recipients can continue to provide valuable public services and ensure that fiscal austerity 

measures do not hamper the broader economic recovery. 
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Many state, local, territorial, and Tribal governments have experienced significant budget shortfalls, 

which can yield a devastating impact on their respective communities. Faced with budget shortfalls and 

pandemic-related uncertainty, state and local governments cut staff in all 50 states. These budget 

shortfalls and staff cuts are particularly problematic at present, as these entities are on the front lines of 

battling the COVID-19 pandemic and helping citizens weather the economic downturn.

Recipients may use these funds to replace lost revenue. Treasury’s Interim Final Rule establishes a 

methodology that each recipient can use to calculate its reduction in revenue. Specifically, recipients

will compute the extent of their reduction in revenue by comparing their actual revenue to an 

alternative representing what could have been expected to occur in the absence of the pandemic. 

Analysis of this expected trend begins with the last full fiscal year prior to the public health emergency 

and projects forward at either (a) the recipient’s average annual revenue growth over the three full 

fiscal years prior to the public health emergency or (b) 4.1%, the national average state and local 

revenue growth rate from 2015-18 (the latest available data). 

For administrative convenience, Treasury’s Interim Final Rule allows recipients to presume that any 

diminution in actual revenue relative to the expected trend is due to the COVID-19 public health 

emergency. Upon receiving Coronavirus State and Local Fiscal Recovery Funds, recipients may 

immediately calculate the reduction in revenue that occurred in 2020 and deploy funds to address any 

shortfall. Recipients will have the opportunity to re-calculate revenue loss at several points through the 

program, supporting those entities that experience a lagged impact of the crisis on revenues. 

Importantly, once a shortfall in revenue is identified, recipients will have broad latitude to use this 

funding to support government services, up to this amount of lost revenue. 

5. Providing premium pay for essential workers

Coronavirus State and Local Fiscal Recovery Funds provide resources for eligible state, local, territorial, 

and Tribal governments to recognize the heroic contributions of essential workers. Since the start of the 

public health emergency, essential workers have put their physical well-being at risk to meet the daily 

needs of their communities and to provide care for others. 

Many of these essential workers have not received compensation for the heightened risks they have 

faced and continue to face. Recipients may use this funding to provide premium pay directly, or through 

grants to private employers, to a broad range of essential workers who must be physically present at 

their jobs including, among others:

 Staff at nursing homes, hospitals, 

and home-care settings

 Workers at farms, food production 

facilities, grocery stores, and restaurants

 Janitors and sanitation workers

 Public health and safety staff

 Truck drivers, transit staff, and 

warehouse workers

 Childcare workers, educators, and school 

staff

 Social service and human services staff

Treasury’s Interim Final Rule emphasizes the need for recipients to prioritize premium pay for lower 

income workers. Premium pay that would increase a worker’s total pay above 150% of the greater of 

the state or county average annual wage requires specific justification for how it responds to the needs 

of these workers.
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In addition, employers are both permitted and encouraged to use Coronavirus State and Local Fiscal 

Recovery Funds to offer retrospective premium pay, recognizing that many essential workers have not 

yet received additional compensation for work performed. Staff working for third-party contractors in 

eligible sectors are also eligible for premium pay. 

6. Investing in water and sewer infrastructure

Recipients may use Coronavirus State and Local Fiscal Recovery Funds to invest in necessary

improvements to their water and sewer infrastructures, including projects that address the impacts of 

climate change.

Recipients may use this funding to invest in an array of drinking water infrastructure projects, such as 

building or upgrading facilities and transmission, distribution, and storage systems, including the 

replacement of lead service lines. 

Recipients may also use this funding to invest in wastewater infrastructure projects, including 

constructing publicly-owned treatment infrastructure, managing and treating stormwater or subsurface 

drainage water, facilitating water reuse, and securing publicly-owned treatment works. 

To help jurisdictions expedite their execution of these essential investments, Treasury’s Interim Final 

Rule aligns types of eligible projects with the wide range of projects that can be supported by the 

Environmental Protection Agency’s Clean Water State Revolving Fund and Drinking Water State 

Revolving Fund. Recipients retain substantial flexibility to identify those water and sewer infrastructure 

investments that are of the highest priority for their own communities. 

Treasury’s Interim Final Rule also encourages recipients to ensure that water, sewer, and broadband 

projects use strong labor standards, including project labor agreements and community benefits 

agreements that offer wages at or above the prevailing rate and include local hire provisions. 

7. Investing in broadband infrastructure

The pandemic has underscored the importance of access to universal, high-speed, reliable, and 

affordable broadband coverage. Over the past year, millions of Americans relied on the internet to 

participate in remote school, healthcare, and work. 

Yet, by at least one measure, 30 million Americans live in areas where there is no broadband service or

where existing services do not deliver minimally acceptable speeds. For millions of other Americans, the 

high cost of broadband access may place it out of reach. The American Rescue Plan aims to help remedy 

these shortfalls, providing recipients with flexibility to use Coronavirus State and Local Fiscal Recovery 

Funds to invest in broadband infrastructure.

Recognizing the acute need in certain communities, Treasury’s Interim Final Rule provides that 

investments in broadband be made in areas that are currently unserved or underserved—in other 

words, lacking a wireline connection that reliably delivers minimum speeds of 25 Mbps download and 3 

Mbps upload. Recipients are also encouraged to prioritize projects that achieve last-mile connections to 

households and businesses.

Using these funds, recipients generally should build broadband infrastructure with modern technologies

in mind, specifically those projects that deliver services offering reliable 100 Mbps download and 100 
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Mbps upload speeds, unless impracticable due to topography, geography, or financial cost. In addition, 

recipients are encouraged to pursue fiber optic investments.

In view of the wide disparities in broadband access, assistance to households to support internet access 

or digital literacy is an eligible use to respond to the public health and negative economic impacts of the 

pandemic, as detailed above.

8. Ineligible Uses

Coronavirus State and Local Fiscal Recovery Funds provide substantial resources to help eligible state, 

local, territorial, and Tribal governments manage the public health and economic consequences of 

COVID-19. Recipients have considerable flexibility to use these funds to address the diverse needs of 

their communities. 

To ensure that these funds are used for their intended purposes, the American Rescue Plan Act also 

specifies two ineligible uses of funds:

• States and territories may not use this funding to directly or indirectly offset a reduction in net 

tax revenue due to a change in law from March 3, 2021 through the last day of the fiscal year 

in which the funds provided have been spent. The American Rescue Plan ensures that funds 

needed to provide vital services and support public employees, small businesses, and families 

struggling to make it through the pandemic are not used to fund reductions in net tax revenue. 

Treasury’s Interim Final Rule implements this requirement. If a state or territory cuts taxes, they 

must demonstrate how they paid for the tax cuts from sources other than Coronavirus State 

Fiscal Recovery Funds—by enacting policies to raise other sources of revenue, by cutting 

spending, or through higher revenue due to economic growth. If the funds provided have been 

used to offset tax cuts, the amount used for this purpose must be paid back to the Treasury.

• No recipient may use this funding to make a deposit to a pension fund. Treasury’s Interim 

Final Rule defines a “deposit” as an extraordinary contribution to a pension fund for the purpose 

of reducing an accrued, unfunded liability. While pension deposits are prohibited, recipients 

may use funds for routine payroll contributions for employees whose wages and salaries are an 

eligible use of funds.

Treasury’s Interim Final Rule identifies several other ineligible uses, including funding debt service, legal 

settlements or judgments, and deposits to rainy day funds or financial reserves. Further, general 

infrastructure spending is not covered as an eligible use outside of water, sewer, and broadband 

investments or above the amount allocated under the revenue loss provision. While the program offers 

broad flexibility to recipients to address local conditions, these restrictions will help ensure that funds 

are used to augment existing activities and address pressing needs.