Coronavirus State & Local 

Fiscal Recovery Funds: 

2022 Overview of the Final Rule

U.S. DEPARTMENT OF THE TREASURY

January 2022
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

The Overview of the Final Rule provides a summary of major provisions of the final 

rule for informational purposes and is intended as a brief, simplified user guide to the 

final rule provisions.

The descriptions provided in this document summarize key provisions of the final rule

but are non-exhaustive, do not describe all terms and conditions associated with the use 

of SLFRF, and do not describe all requirements that may apply to this funding. Any SLFRF 

funds received are also subject to the terms and conditions of the agreement entered 

into by Treasury and the respective jurisdiction, which incorporate the provisions of the 

final rule and the guidance that implements this program.

Note: In August 2023, Treasury released an interim final rule that implements the 

new eligible uses added to the SLFRF program by the Consolidated 

Appropriations Act, 2023. Treasury anticipates issuing FAQs for the 2023 interim 

final rule at a later date. Recipients may find helpful the Overview of the 2023 

Interim Final Rule, which provides a summary of major provisions of the 2023 

interim final rule for informational purposes. As noted below, this overview 

document pertains to the 2022 final rule. The Consolidated Appropriations Act, 

2023 did not alter how recipients may use SLFRF funds for the existing eligible 

uses described in the 2022 final rule and summarized in this document. 

Recipients may continue to use SLFRF funds in accordance with the 2022 final 

rule. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Contents

Introduction ..................................................................................................................................................4

Overview of the Program..............................................................................................................................6

Replacing Lost Public Sector Revenue ..........................................................................................................9

Responding to Public Health and Economic Impacts of COVID-19.............................................................12

Responding to the Public Health Emergency..........................................................................................14

Responding to Negative Economic Impacts............................................................................................16

Assistance to Households ...................................................................................................................17

Assistance to Small Businesses...........................................................................................................21

Assistance to Nonprofits.....................................................................................................................23

Aid to Impacted Industries..................................................................................................................24

Public Sector Capacity.............................................................................................................................26

Public Safety, Public Health, and Human Services Staff .....................................................................26

Government Employment and Rehiring Public Sector Staff...............................................................27

Effective Service Delivery....................................................................................................................28

Capital Expenditures...............................................................................................................................30

Framework for Eligible Uses Beyond those Enumerated .......................................................................32

Premium Pay ...............................................................................................................................................35

Water & Sewer Infrastructure ....................................................................................................................37

Broadband Infrastructure ...........................................................................................................................39

Restrictions on Use .....................................................................................................................................41

Program Administration .............................................................................................................................43
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Introduction

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), a part of the American Rescue Plan, 

delivers $350 billion to state, local, and Tribal governments across the country to support their response 

to and recovery from the COVID-19 public health emergency. The program ensures that governments 

have the resources needed to:

• Fight the pandemic and support families and businesses struggling with its public health and 

economic impacts,

• Maintain vital public services, even amid declines in revenue, and

• Build a strong, resilient, and equitable recovery by making investments that support long-term 

growth and opportunity.

EARLY PROGRAM IMPLEMENTATION

In May 2021, Treasury published the Interim final rule (IFR) describing eligible and ineligible uses of 

funds (as well as other program provisions), sought feedback from the public on these program rules,

and began to distribute funds. The IFR went immediately into effect in May, and since then, 

governments have used SLFRF funds to meet their immediate pandemic response needs and begin 

building a strong and equitable recovery, such as through providing vaccine incentives, development of 

affordable housing, and construction of infrastructure to deliver safe and reliable water. 

As governments began to deploy this funding in their communities, Treasury carefully considered the 

feedback provided through its public comment process and other forums. Treasury received over 1,500 

comments, participated in hundreds of meetings, and received correspondence from a wide range of 

governments and other stakeholders.

KEY CHANGES AND CLARIFICATIONS IN THE FINAL RULE

The final rule delivers broader flexibility and greater simplicity in the program, responsive to feedback in 

the comment process. Among other clarifications and changes, the final rule provides the features 

below.

Replacing Lost Public Sector Revenue

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. 

Recipients that select the standard allowance may use that amount – in many cases their full award – for 

government services, with streamlined reporting requirements.

Public Health and Economic Impacts

In addition to programs and services, the final rule clarifies that recipients can use funds for capital 

expenditures that support an eligible COVID-19 public health or economic response. For example, 

recipients may build certain affordable housing, childcare facilities, schools, hospitals, and other projects 

consistent with final rule requirements. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

In addition, the final rule provides an expanded set of households and communities that are presumed 

to be “impacted” and “disproportionately impacted” by the pandemic, thereby allowing recipients to 

provide responses to a broad set of households and entities without requiring additional analysis.

Further, the final rule provides a broader set of uses available for these communities as part of COVID19 public health and economic response, including making affordable housing, childcare, early learning, 

and services to address learning loss during the pandemic eligible in all impacted communities and 

making certain community development and neighborhood revitalization activities eligible for

disproportionately impacted communities. 

Further, the final rule allows for a broader set of uses to restore and support government employment, 

including hiring above a recipient’s pre-pandemic baseline, providing funds to employees that 

experienced pay cuts or furloughs, avoiding layoffs, and providing retention incentives.

Premium Pay

The final rule delivers more streamlined options to provide premium pay, by broadening the share of 

eligible workers who can receive premium pay without a written justification while maintaining a focus 

on lower-income and frontline workers performing essential work. 

Water, Sewer & Broadband Infrastructure

The final rule significantly broadens eligible broadband infrastructure investments to address challenges 

with broadband access, affordability, and reliability, and adds additional eligible water and sewer 

infrastructure investments, including a broader range of lead remediation and stormwater management 

projects.

FINAL RULE EFFECTIVE DATE

The final rule takes effect on April 1, 2022. Until that time, the interim final rule remains in effect; funds 

used consistently with the IFR while it is in effect are in compliance with the SLFRF program. 

However, recipients can choose to take advantage of the final rule’s flexibilities and simplifications now, 

even ahead of the effective date. Treasury will not take action to enforce the interim final rule to the 

extent that a use of funds is consistent with the terms of the final rule, regardless of when the SLFRF 

funds were used. Recipients may consult the Statement Regarding Compliance with the Coronavirus 

State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule, which can be found on Treasury’s 

website, for more information on compliance with the interim final rule and the final rule. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Overview of the Program

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program provides substantial flexibility 

for each jurisdiction to meet local needs within the four separate eligible use categories. This Overview 

of the Final Rule addresses the four eligible use categories ordered from the broadest and most flexible 

to the most specific.

Recipients may use SLFRF funds to:

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

amount of revenue loss due to the pandemic.

• Recipients may determine their revenue loss by choosing between two options:

• A standard allowance of up to $10 million in aggregate, not to exceed their 

award amount, during the program;

• Calculating their jurisdiction’s specific revenue loss each year using Treasury’s 

formula, which compares actual revenue to a counterfactual trend.

• Recipients may use funds up to the amount of revenue loss for government services; 

generally, services traditionally provided by recipient governments are government 

services, unless Treasury has stated otherwise.

• Support the COVID-19 public health and economic response by addressing COVID-19 and its 

impact on public health as well as addressing economic harms to households, small businesses, 

nonprofits, impacted industries, and the public sector.

• Recipients can use funds for programs, services, or capital expenditures that respond to

the public health and negative economic impacts of the pandemic.

• To provide simple and clear eligible uses of funds, Treasury provides a list of

enumerated uses that recipients can provide to households, populations, or classes (i.e.,

groups) that experienced pandemic impacts.

• Public health eligible uses include COVID-19 mitigation and prevention, medical

expenses, behavioral healthcare, and preventing and responding to violence.

• Eligible uses to respond to negative economic impacts are organized by the type of

beneficiary: assistance to households, small businesses, and nonprofits.

• Each category includes assistance for “impacted” and “disproportionately

impacted” classes: impacted classes experienced the general, broad-based

impacts of the pandemic, while disproportionately impacted classes faced

meaningfully more severe impacts, often due to preexisting disparities.

• To simplify administration, the final rule presumes that some populations and

groups were impacted or disproportionately impacted and are eligible for

responsive services.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

• Eligible uses for assistance to impacted households include aid for reemployment, job training, food, rent, mortgages, utilities, affordable housing

development, childcare, early education, addressing learning loss, and many

more uses.

• Eligible uses for assistance to impacted small businesses or nonprofits include

loans or grants to mitigate financial hardship, technical assistance for small

businesses, and many more uses.

• Recipients can also provide assistance to impacted industries like travel, tourism, and

hospitality that faced substantial pandemic impacts, or address impacts to the public

sector, for example by re-hiring public sector workers cut during the crisis.

• Recipients providing funds for enumerated uses to populations and groups that

Treasury has presumed eligible are clearly operating consistently with the final rule.

Recipients can also identify (1) other populations or groups, beyond those presumed

eligible, that experienced pandemic impacts or disproportionate impacts and (2) other

programs, services, or capital expenditures, beyond those enumerated, to respond to

those impacts.

• Provide premium pay for eligible workers performing essential work, offering additional 

support to those who have and will bear the greatest health risks because of their service in 

critical sectors.

• Recipients may provide premium pay to eligible workers – generally those working inperson in key economic sectors – who are below a wage threshold or non-exempt from 

the Fair Labor Standards Act overtime provisions, or if the recipient submits justification 

that the premium pay is responsive to workers performing essential work. 

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

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

infrastructure, and to expand affordable access to broadband internet.

• Recipients may fund a broad range of water and sewer projects, including those eligible 

under the EPA’s Clean Water State Revolving Fund, EPA’s Drinking Water State 

Revolving Fund, and certain additional projects, including a wide set of lead 

remediation, stormwater infrastructure, and aid for private wells and septic units.

• Recipients may fund high-speed broadband infrastructure in areas of need that the 

recipient identifies, such as areas without access to adequate speeds, affordable 

options, or where connections are inconsistent or unreliable; completed projects must 

participate in a low-income subsidy program.

While recipients have considerable flexibility to use funds to address the diverse needs of their 

communities, some restrictions on use apply across all eligible use categories. These include:

• For states and territories: No offsets of a reduction in net tax revenue resulting from a change 

in state or territory law.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

• For all recipients except for Tribal governments: No extraordinary contributions to a pension 

fund for the purpose of reducing an accrued, unfunded liability.

• For all recipients: No payments for debt service and replenishments of rainy day funds; no 

satisfaction of settlements and judgments; no uses that contravene or violate the American 

Rescue Plan Act, Uniform Guidance conflicts of interest requirements, and other federal, state, 

and local laws and regulations.

Under the SLFRF program, funds must be used for costs incurred on or after March 3, 2021. Further, 

funds must be obligated by December 31, 2024, and expended by December 31, 2026. This time period, 

during which recipients can expend SLFRF funds, is the “period of performance.” 

In addition to SLFRF, the American Rescue Plan includes other sources of funding for state and local 

governments, including the Coronavirus Capital Projects Fund to fund critical capital investments 

including broadband infrastructure; the Homeowner Assistance Fund to provide relief for our country’s 

most vulnerable homeowners; the Emergency Rental Assistance Program to assist households that are 

unable to pay rent or utilities; and the State Small Business Credit Initiative to fund small business credit 

expansion initiatives. Eligible recipients are encouraged to visit the Treasury website for more 

information. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Replacing Lost Public Sector Revenue

The Coronavirus State and Local Fiscal Recovery Funds provide needed fiscal relief for recipients that 

have experienced revenue loss due to the onset of the COVID-19 public health emergency. Specifically, 

SLFRF funding may be used to pay for “government services” in an amount equal to the revenue loss 

experienced by the recipient due to the COVID-19 public health emergency. 

Government services generally include any service traditionally provided by a government, including 

construction of roads and other infrastructure, provision of public safety and other services, and health 

and educational services. Funds spent under government services are subject to streamlined reporting 

and compliance requirements.

In order to use funds under government services, recipients should first determine revenue loss. They 

may, then, spend up to that amount on general government services. 

DETERMINING REVENUE LOSS 

Recipients have two options for how to determine their amount of revenue loss. Recipients must choose 

one of the two options and cannot switch between these approaches after an election is made.

1. Recipients may elect a “standard allowance” of $10 million to spend on government services 

through the period of performance.

Under this option, which is newly offered in the final rule Treasury presumes that up to $10 

million in revenue has been lost due to the public health emergency and recipients are 

permitted to use that amount (not to exceed the award amount) to fund “government services.”

The standard allowance provides an estimate of revenue loss that is based on an extensive 

analysis of average revenue loss across states and localities, and offers a simple, convenient way 

to determine revenue loss, particularly for SLFRF’s smallest recipients.

All recipients may elect to use this standard allowance instead of calculating lost revenue using

the formula below, including those with total allocations of $10 million or less. Electing the 

standard allowance does not increase or decrease a recipient’s total allocation.

2. Recipients may calculate their actual revenue loss according to the formula articulated in the 

final rule.

Under this option, recipients calculate revenue loss at four distinct points in time, either at the 

end of each calendar year (e.g., December 31 for years 2020, 2021, 2022, and 2023) or the end 

of each fiscal year of the recipient. Under the flexibility provided in the final rule, recipients can 

choose whether to use calendar or fiscal year dates but must be consistent throughout the 

period of performance. Treasury has also provided several adjustments to the definition of 

general revenue in the final rule.

To calculate revenue loss at each of these dates, recipients must follow a four-step process:
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

a. Calculate revenues collected in the most recent full fiscal year prior to the public health 

emergency (i.e., last full fiscal year before January 27, 2020), called the base year 

revenue.

b. Estimate counterfactual revenue, which is equal to the following formula, where n is the 

number of months elapsed since the end of the base year to the calculation date:

base year revenue × (1 + growth adjustment)

n

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The growth adjustment is the greater of either a standard growth rate—5.2 percent—or 

the recipient’s average annual revenue growth in the last full three fiscal years prior to 

the COVID-19 public health emergency.

c. Identify actual revenue, which equals revenues collected over the twelve months 

immediately preceding the calculation date.

Under the final rule, recipients must adjust actual revenue totals for the effect of tax 

cuts and tax increases that are adopted after the date of adoption of the final rule 

(January 6, 2022). Specifically, the estimated fiscal impact of tax cuts and tax increases 

adopted after January 6, 2022, must be added or subtracted to the calculation of actual 

revenue for purposes of calculation dates that occur on or after April 1, 2022. 

Recipients may subtract from their calculation of actual revenue the effect of tax 

increases enacted prior to the adoption of the final rule. Note that recipients that elect 

to remove the effect of tax increases enacted before the adoption of the final rule must 

also remove the effect of tax decreases enacted before the adoption of the final rule, 

such that they are accurately removing the effect of tax policy changes on revenue.

d. Revenue loss for the calculation date is equal to counterfactual revenue minus actual 

revenue (adjusted for tax changes) for the twelve-month period. If actual revenue 

exceeds counterfactual revenue, the loss is set to zero for that twelve-month period. 

Revenue loss for the period of performance is the sum of the revenue loss on for each 

calculation date.

The supplementary information in the final rule provides an example of this calculation, which 

recipients may find helpful, in the Revenue Loss section.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

SPENDING ON GOVERNMENT SERVICES

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)

Government services is the most flexible eligible use category under the SLFRF program, and funds are 

subject to streamlined reporting and compliance requirements. Recipients should be mindful that 

certain restrictions, which are detailed further in the Restrictions on Use section and apply to all uses of 

funds, apply to government services as well. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Responding to Public Health and Economic Impacts of COVID-19

The Coronavirus State and Local Fiscal Recovery Funds provide resources for governments to meet the 

public health and economic needs of those impacted by the pandemic in their communities, as well as

address longstanding health and economic disparities, which amplified the impact of the pandemic in 

disproportionately impacted communities, resulting in more severe pandemic impacts. 

The eligible use category to respond to public health and negative economic impacts is organized 

around the types of assistance a recipient may provide and includes several sub-categories: 

• public health, 

• assistance to households,

• assistance to small businesses,

• assistance to nonprofits,

• aid to impacted industries, and

• public sector capacity.

In general, to identify eligible uses of funds in this category, recipients should (1) identify a COVID-19 

public health or economic impact on an individual or class (i.e., a group) and (2) design a program that 

responds to that impact. Responses should be related and reasonably proportional to the harm 

identified and reasonably designed to benefit those impacted.

To provide simple, clear eligible uses of funds that meet this standard, Treasury provides a nonexhaustive list of enumerated uses that respond to pandemic impacts. Treasury also presumes that 

some populations experienced pandemic impacts and are eligible for responsive services. In other 

words, recipients providing enumerated uses of funds to populations presumed eligible are clearly 

operating consistently with the final rule.1

Recipients also have broad flexibility to (1) identify and respond to other pandemic impacts and (2) 

serve other populations that experienced pandemic impacts, beyond the enumerated uses and 

presumed eligible populations. Recipients can also identify groups or “classes” of beneficiaries that 

experienced pandemic impacts and provide services to those classes. 

1 However, please note that use of funds for enumerated uses may not be grossly disproportionate to the harm. Further, 

recipients should consult the Capital Expenditures section for more information about pursuing a capital expenditure; please 

note that enumerated capital expenditures are not presumed to be reasonably proportional responses to an identified harm 

except as provided in the Capital Expenditures section.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Step 1. Identify COVID-19 public health or 

economic impact

2. Design a response that addresses or 

responds to the impact

Analysis

• Can identify impact to a specific 

household, business or nonprofit or 

to a class of households, businesses, 

or nonprofits (i.e., group)

• Can also identify disproportionate 

impacts, or more severe impacts, to 

a specific beneficiary or to a class

• Types of responses can include a 

program, service, or capital 

expenditure

• Response should be related and 

reasonably proportional to the harm

• Response should also be reasonably 

designed to benefit impacted 

individual or class

Simplifying 

Presumptions

• Final Rule presumes certain 

populations and classes are impacted 

and disproportionately impacted

• Final Rule provides non-exhaustive 

list of enumerated eligible uses that 

respond to pandemic impacts and 

disproportionate impacts

To assess eligibility of uses of funds, recipients should first determine the sub-category where their use 

of funds may fit (e.g., public health, assistance to households, assistance to small businesses), based on 

the entity that experienced the health or economic impact.

2

Then, recipients should refer to the relevant 

section for more details on each sub-category. 

While the same overall eligibility standard applies to all uses of funds to respond to the public health 

and negative economic impacts of the pandemic, each sub-category has specific nuances on its 

application. In addition:

• Recipients interested in using funds for capital expenditures (i.e., investments in property, 

facilities, or equipment) should review the Capital Expenditures section in addition to the 

eligible use sub-category. 

• Recipients interested in other uses of funds, beyond the enumerated uses, should refer to the 

section on “Framework for Eligible Uses Beyond Those Enumerated.”

2 For example, a recipient interested in providing aid to unemployed individuals is addressing a negative economic impact 

experienced by a household and should refer to the section on assistance to households. Recipients should also be aware of the 

difference between “beneficiaries” and “sub-recipients.” Beneficiaries are households, small businesses, or nonprofits that can 

receive assistance based on impacts of the pandemic that they experienced. On the other hand, sub-recipients are 

organizations that carry out eligible uses on behalf of a government, often through grants or contracts. Sub-recipients do not 

need to have experienced a negative economic impact of the pandemic; rather, they are providing services to beneficiaries that 

experienced an impact. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

RESPONDING TO THE PUBLIC HEALTH EMERGENCY

While the country has made tremendous progress in the fight against COVID-19, including a historic 

vaccination campaign, the disease still poses a grave threat to Americans’ health and the economy. 

Providing state, local, and Tribal governments the resources needed to fight the COVID-19 pandemic is a 

core goal of the Coronavirus State and Local Fiscal Recovery Funds, as well as addressing the other ways 

that the pandemic has impacted public health. Treasury has identified several public health impacts of 

the pandemic and enumerated uses of funds to respond to impacted populations.

• COVID-19 mitigation and prevention. The pandemic has broadly impacted Americans and recipients 

can provide services to prevent and mitigate COVID-19 to the general public or to small businesses, 

nonprofits, and impacted industries in general. Enumerated eligible uses include:

✓ Vaccination programs, including vaccine 

incentives and vaccine sites

✓ Testing programs, equipment and sites

✓ Monitoring, contact tracing & public 

health surveillance (e.g., monitoring for 

variants)

✓ Public communication efforts

✓ Public health data systems

✓ COVID-19 prevention and treatment 

equipment, such as ventilators and 

ambulances

✓ Medical and PPE/protective supplies

✓ Support for isolation or quarantine

✓ Ventilation system installation and 

improvement

✓ Technical assistance on mitigation of 

COVID-19 threats to public health and 

safety

✓ Transportation to reach vaccination or 

testing sites, or other prevention and 

mitigation services for vulnerable 

populations

✓ Support for prevention, mitigation, or 

other services in congregate living 

facilities, public facilities, and schools

✓ Support for prevention and mitigation 

strategies in small businesses, nonprofits, 

and impacted industries 

✓ Medical facilities generally dedicated to 

COVID-19 treatment and mitigation (e.g., 

ICUs, emergency rooms)

✓ Temporary medical facilities and other 

measures to increase COVID-19 treatment 

capacity 

✓ Emergency operations centers & 

emergency response equipment (e.g., 

emergency response radio systems)

✓ Public telemedicine capabilities for COVID19 related treatment
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

• Medical expenses. Funds may be used for expenses to households, medical providers, or others that 

incurred medical costs due to the pandemic, including:

✓ Unreimbursed expenses for medical care 

for COVID-19 testing or treatment, such 

as uncompensated care costs for 

medical providers or out-of-pocket costs 

for individuals

✓ Paid family and medical leave for public 

employees to enable compliance with 

COVID-19 public health precautions

✓ Emergency medical response expenses 

✓ Treatment of long-term symptoms or effects 

of COVID-19

• Behavioral health care, such as mental health treatment, substance use treatment, and other 

behavioral health services. Treasury recognizes that the pandemic has broadly impacted Americans’ 

behavioral health and recipients can provide these services to the general public to respond. 

Enumerated eligible uses include: 

✓ Prevention, outpatient treatment, 

inpatient treatment, crisis care, 

diversion programs, outreach to 

individuals not yet engaged in 

treatment, harm reduction & long-term 

recovery support

✓ Enhanced behavioral health services in 

schools

✓ Services for pregnant women or infants 

born with neonatal abstinence 

syndrome

✓ Support for equitable access to reduce 

disparities in access to high-quality 

treatment

✓ Peer support groups, costs for residence in 

supportive housing or recovery housing, and 

the 988 National Suicide Prevention Lifeline 

or other hotline services

✓ Expansion of access to evidence-based 

services for opioid use disorder prevention, 

treatment, harm reduction, and recovery

✓ Behavioral health facilities & equipment

• Preventing and responding to violence. Recognizing that violence – and especially gun violence –

has increased in some communities due to the pandemic, recipients may use funds to respond in 

these communities through:

✓ Referrals to trauma recovery services for 

victims of crime

✓ Community violence intervention 

programs, including:

• Evidence-based practices like 

focused deterrence, with 

wraparound services such as 

behavioral therapy, trauma 

recovery, job training, education, 

housing and relocation services, and 

financial assistance

✓ In communities experiencing increased 

gun violence due to the pandemic:

• Law enforcement officers focused 

on advancing community policing 

• Enforcement efforts to reduce gun 

violence, including prosecution

• Technology & equipment to support 

law enforcement response
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

RESPONDING TO NEGATIVE ECONOMIC IMPACTS

The pandemic caused severe economic damage and, while the economy is on track to a strong recovery,

much work remains to continue building a robust, resilient, and equitable economy in the wake of the

crisis and to ensure that the benefits of this recovery reach all Americans. While the pandemic impacted

millions of American households and businesses, some of its most severe impacts fell on low-income

and underserved communities, where pre-existing disparities amplified the impact of the pandemic and

where the most work remains to reach a full recovery.

The final rule recognizes that the pandemic caused broad-based impacts that affected many

communities, households, and small businesses across the country; for example, many workers faced

unemployment and many small businesses saw declines in revenue. The final rule describes these as

“impacted" households, communities, small businesses, and nonprofits.

At the same time, the pandemic caused disproportionate impacts, or more severe impacts, in certain

communities. For example, low-income and underserved communities have faced more severe health

and economic outcomes like higher rates of COVID-19 mortality and unemployment, often because preexisting disparities exacerbated the impact of the pandemic. The final rule describes these as

“disproportionately impacted” households, communities, small businesses, and nonprofits.

To simplify administration of the program, the final rule presumes that certain populations were

“impacted” and “disproportionately impacted” by the pandemic; these populations are presumed to be

eligible for services that respond to the impact they experienced. The final rule also enumerates a nonexhaustive list of eligible uses that are recognized as responsive to the impacts or disproportionate

impacts of COVID-19. Recipients providing enumerated uses to populations presumed eligible are clearly

operating consistently with the final rule.

As discussed further in the section Framework for Eligible Uses Beyond Those Enumerated, recipients

can also identify other pandemic impacts, impacted or disproportionately impacted populations or

classes, and responses.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Assistance to Households

Impacted Households and Communities

Treasury presumes the following households and communities are impacted by the pandemic:

✓ Low- or-moderate income households or 

communities

✓ Households that experienced 

unemployment

✓ Households that experienced increased 

food or housing insecurity 

✓ Households that qualify for the Children’s 

Health Insurance Program, Childcare 

Subsidies through the Child Care 

Development Fund (CCDF) Program, or 

Medicaid 

✓ When providing affordable housing programs: 

households that qualify for the National Housing 

Trust Fund and Home Investment Partnerships 

Program

✓ When providing services to address lost 

instructional time in K-12 schools: any student 

that lost access to in-person instruction for a 

significant period of time

Low- or moderate-income households and communities are those with (i) income at or below 300

percent of the Federal Poverty Guidelines for the size of the household based on the most recently

published poverty guidelines or (ii) income at or below 65 percent of the area median income for the

county and size of household based on the most recently published data. For the vast majority of

communities, the Federal Poverty Guidelines are higher than the area’s median income and using the

Federal Poverty Guidelines would result in more households and communities being presumed eligible.

Treasury has provided an easy-to-use spreadsheet with Federal Poverty Guidelines and area median

income levels on its website.

Recipients can measure income for a specific household or the median income for the community,

depending on whether the response they plan to provide serves specific households or the general

community. The income thresholds vary by household size; recipients should generally use income

thresholds for the appropriate household size but can use a default household size of three when easier

for administration or when measuring income for a general community.

The income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $65,880 

per year.3In other words, recipients can always presume that a household earning below this level, or a 

community with median income below this level, is impacted by the pandemic and eligible for services 

to respond. Additionally, by following the steps detailed in the section Framework for Eligible Uses 

Beyond Those Enumerated, recipients may designate additional households as impacted or 

disproportionately impacted beyond these presumptions, and may also pursue projects not listed below 

in response to these impacts consistent with Treasury’s standards. 

3 For recipients in Alaska, the income limit for 300 percent of the Federal Poverty Guidelines for a household of three is $82,350 

per year. For recipients in Hawaii, the income limit for 300 percent of the Federal Poverty Guidelines for a household of three is 

$75,780 per year.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Treasury recognizes the enumerated projects below, which have been expanded under the final rule, as

eligible to respond to impacts of the pandemic on households and communities:

✓ Food assistance (e.g., child nutrition 

programs, including school meals) & food 

banks

✓ Emergency housing assistance: rental 

assistance, mortgage assistance, utility 

assistance, assistance paying delinquent 

property taxes, counseling and legal aid to 

prevent eviction and homelessness & 

emergency programs or services for homeless 

individuals, including temporary residences 

for people experiencing homelessness

✓ Health insurance coverage expansion

✓ Benefits for surviving family members of 

individuals who have died from COVID-19

✓ Assistance to individuals who want and are 

available for work, including job training, 

public jobs programs and fairs, support for 

childcare and transportation to and from a 

jobsite or interview, incentives for newlyemployed workers, subsidized employment, 

grants to hire underserved workers, 

assistance to unemployed individuals to start 

small businesses & development of job and 

workforce training centers

✓ Financial services for the unbanked and 

underbanked

✓ Burials, home repair & home weatherization

✓ Programs, devices & equipment for internet 

access and digital literacy, including subsidies

for costs of access

✓ Cash assistance

✓ Paid sick, medical, and family leave programs

✓ Assistance in accessing and applying for 

public benefits or services

✓ Childcare and early learning services, home 

visiting programs, services for child welfareinvolved families and foster youth & childcare 

facilities

✓ Assistance to address the impact of learning 

loss for K-12 students (e.g., high-quality 

tutoring, differentiated instruction)

✓ Programs or services to support long-term 

housing security: including development of 

affordable housing and permanent 

supportive housing

✓ Certain contributions to an Unemployment 

Insurance Trust Fund4

4 Recipients may only use SLFRF funds for contributions to unemployment insurance trust funds and repayment of the principal 

amount due on advances received under Title XII of the Social Security Act up to an amount equal to (i) the difference between 

the balance in the recipient’s unemployment insurance trust fund as of January 27, 2020 and the balance of such account as of

May 17, 2021, plus (ii) the principal amount outstanding as of May 17, 2021 on any advances received under Title XII of the 

Social Security Act between January 27, 2020 and May 17, 2021. Further, recipients may use SLFRF funds for the payment of 

any interest due on such Title XII advances. Additionally, a recipient that deposits SLFRF funds into its unemployment insurance 

trust fund to fully restore the pre-pandemic balance may not draw down that balance and deposit more SLFRF funds, back up 

to the pre-pandemic balance. Recipients that deposit SLFRF funds into an unemployment insurance trust fund, or use SLFRF 

funds to repay principal on Title XII advances, may not take action to reduce benefits available to unemployed workers by 

changing the computation method governing regular unemployment compensation in a way that results in a reduction of 

average weekly benefit amounts or the number of weeks of benefits payable (i.e., maximum benefit entitlement).
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Disproportionately Impacted Households and Communities

Treasury presumes the following households and communities are disproportionately impacted by the

pandemic:

✓ Low -income households and communities

✓ Households residing in Qualified Census

Tracts

✓ Households that qualify for certain federal

5 benefits

✓ Households receiving services provided by

Tribal governments

✓ Households residing in the U.S. territories or

receiving services from these governments

Low-income households and communities are those with (i) income at or below 185 percent of the

Federal Poverty Guidelines for the size of its household based on the most recently published poverty

guidelines or (ii) income at or below 40 percent of area median income for its county and size of

household based on the most recently published data. For the vast majority of communities, the Federal

Poverty Guidelines level is higher than the area median income level and using this level would result in

more households and communities being presumed eligible. Treasury has provided an easy-to-use

spreadsheet with Federal Poverty Guidelines and area median income levels on its website.

Recipients can measure income for a specific household or the median income for the community,

depending on whether the service they plan to provide serves specific households or the general

community. The income thresholds vary by household size; recipients should generally use income

thresholds for the appropriate household size but can use a default household size of three when easier

for administration or when measuring income for a general community.

The income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $40,626

per year.6In other words, recipients can always presume that a household earning below this level, or a

community with median income below this level, is disproportionately impacted by the pandemic and

eligible for services to respond.

5 These programs are Temporary Assistance for Needy Families (TANF), Supplemental Nutrition Assistance Program (SNAP), 

Free- and Reduced-Price Lunch (NSLP) and/or School Breakfast (SBP) programs, Medicare Part D Low-Income Subsidies, 

Supplemental Security Income (SSI), Head Start and/or Early Head Start, Special Supplemental Nutrition Program for Women, 

Infants, and Children (WIC), Section 8 Vouchers, Low-Income Home Energy Assistance Program (LIHEAP), and Pell Grants. For 

services to address educational disparities, Treasury will recognize Title I eligible schools as disproportionately impacted and 

responsive services that support the school generally or support the whole school as eligible. 

6 For recipients in Alaska, the income limit for 185 percent of the Federal Poverty Guidelines for a household of three is $50,783 

per year. For recipients in Hawaii, the income limit for 185 percent of the Federal Poverty Guidelines for a household of three is 

$46,731 per year
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Treasury recognizes the enumerated projects below, which have been expanded under the final rule, as

eligible to respond to disproportionate impacts of the pandemic on households and communities:

✓ Pay for community health workers to help 

households access health & social services

✓ Remediation of lead paint or other lead 

hazards

✓ Primary care clinics, hospitals, integration of 

health services into other settings, and other 

investments in medical equipment & facilities 

designed to address health disparities

✓ Housing vouchers & assistance relocating to 

neighborhoods with higher economic 

opportunity

✓ Investments in neighborhoods to promote 

improved health outcomes

✓ Improvements to vacant and abandoned 

properties, including rehabilitation or 

maintenance, renovation, removal and 

remediation of environmental contaminants, 

demolition or deconstruction, greening/vacant lot 

cleanup & conversion to affordable housing7

✓ Services to address educational disparities, 

including assistance to high-poverty school 

districts & educational and evidence-based 

services to address student academic, social, 

emotional, and mental health needs 

✓ Schools and other educational equipment & 

facilities 

7 Please see the final rule for further details and conditions applicable to this eligible use. This includes Treasury’s presumption 

that demolition of vacant or abandoned residential properties that results in a net reduction in occupiable housing units for 

low- and moderate-income individuals in an area where the availability of such housing is lower than the need for such housing 

is ineligible for support with SLFRF funds.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Assistance to Small Businesses

Small businesses have faced widespread challenges due to the pandemic, including periods of

shutdown, declines in revenue, or increased costs. The final rule provides many tools for recipients to

respond to the impacts of the pandemic on small businesses, or disproportionate impacts on businesses

where pre-existing disparities like lack of access to capital compounded the pandemic’s effects.

Small businesses eligible for assistance are those that experienced negative economic impacts or

disproportionate impacts of the pandemic and meet the definition of “small business,” specifically:

1. Have no more than 500 employees, or if applicable, the size standard in number of employees 

established by the Administrator of the Small Business Administration for the industry in which 

the business concern or organization operates, and 

2. Are a small business concern as defined in section 3 of the Small Business Act8(which includes, 

among other requirements, that the business is independently owned and operated and is not 

dominant in its field of operation). 

Impacted Small Businesses

Recipients can identify small businesses impacted by the pandemic, and measures to respond, in many 

ways; for example, recipients could consider:

✓ Decreased revenue or gross receipts

✓ Financial insecurity

✓ Increased costs

✓ Capacity to weather financial hardship

✓ Challenges covering payroll, rent or

mortgage, and other operating costs

Assistance to small businesses that experienced negative economic impacts includes the following 

enumerated uses:

✓ Loans or grants to mitigate financial

hardship, such as by supporting payroll

and benefits, costs to retain employees,

and mortgage, rent, utility, and other

operating costs

✓ Technical assistance, counseling, or other

services to support business planning

Disproportionately Impacted Small Businesses

Treasury presumes that the following small businesses are disproportionately impacted by the

pandemic:

8 15 U.S.C. 632.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

✓ Small businesses operating in Qualified

Census Tracts

✓ Small businesses operated by Tribal

governments or on Tribal lands

✓ Small businesses operating in the U.S.

territories

Assistance to disproportionately impacted small businesses includes the following enumerated uses, 

which have been expanded under the final rule:

✓ Rehabilitation of commercial properties,

storefront improvements & façade

improvements

✓ Technical assistance, business incubators &

grants for start-up or expansion costs for

small businesses

✓ Support for microbusinesses, including

financial, childcare, and transportation costs
23

 

U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Assistance to Nonprofits

Nonprofits have faced significant challenges due to the pandemic’s increased demand for services and

changing operational needs, as well as declines in revenue sources such as donations and fees.

Nonprofits eligible for assistance are those that experienced negative economic impacts or

disproportionate impacts of the pandemic and meet the definition of “nonprofit”—specifically those

that are 501(c)(3) or 501(c)(19) tax-exempt organizations.

Impacted Nonprofits

Recipients can identify nonprofits impacted by the pandemic, and measures to respond, in many ways; 

for example, recipients could consider:

✓ Decreased revenue (e.g., from donations 

and fees)

✓ Financial insecurity

✓ Increased costs (e.g., uncompensated 

increases in service need)

✓ Capacity to weather financial hardship

✓ Challenges covering payroll, rent or 

mortgage, and other operating costs

Assistance to nonprofits that experienced negative economic impacts includes the following 

enumerated uses:

✓ Loans or grants to mitigate financial 

hardship 

✓ Technical or in-kind assistance or other 

services that mitigate negative economic 

impacts of the pandemic

Disproportionately Impacted Nonprofits

Treasury presumes that the following nonprofits are disproportionately impacted by the pandemic:

✓ Nonprofits operating in Qualified Census 

Tracts

✓ Nonprofits operated by Tribal 

governments or on Tribal lands

✓ Nonprofits operating in the U.S. territories

Recipients may identify appropriate responses that are related and reasonably proportional to

addressing these disproportionate impacts.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Aid to Impacted Industries

Recipients may use SLFRF funding to provide aid to industries impacted by the COVID-19 pandemic. 

Recipients should first designate an impacted industry and then provide aid to address the impacted

industry’s negative economic impact.

This sub-category of eligible uses does not separately identify disproportionate impacts and

corresponding responsive services.

1. Designating an impacted industry. There are two main ways an industry can be designated as 

“impacted.”

1. If the industry is in the travel, tourism, or hospitality sectors (including Tribal development 

districts), the industry is impacted.

2. If the industry is outside the travel, tourism, or hospitality sectors, the industry is impacted 

if:

a. The industry experienced at least 8 percent employment loss from pre-pandemic 

levels,9 or

b. The industry is experiencing comparable or worse economic impacts as the national 

tourism, travel, and hospitality industries as of the date of the final rule, based on 

the totality of economic indicators or qualitative data (if quantitative data is 

unavailable), and if the impacts were generally due to the COVID-19 public health 

emergency.

Recipients have flexibility to define industries broadly or narrowly, but Treasury encourages 

recipients to define narrow and discrete industries eligible for aid. State and territory recipients 

also have flexibility to define the industries with greater geographic precision; for example, a 

state may identify a particular industry in a certain region of a state as impacted.

2. Providing eligible aid to the impacted industry. Aid may only be provided to support 

businesses, attractions, and Tribal development districts operating prior to the pandemic and 

affected by required closures and other efforts to contain the pandemic. Further, aid should be 

generally broadly available to all businesses within the impacted industry to avoid potential

conflicts of interest, and Treasury encourages aid to be first used for operational expenses, such 

as payroll, before being used on other types of costs.

9 Specifically, a recipient should compare the percent change in the number of employees of the recipient’s identified industry 

and the national Leisure & Hospitality sector in the three months before the pandemic’s most severe impacts began (a straight 

three-month average of seasonally-adjusted employment data from December 2019, January 2020, and February 2020) with 

the latest data as of the final rule (a straight three-month average of seasonally-adjusted employment data from September 

2021, October 2021, and November 2021). For parity and simplicity, smaller recipients without employment data that measure 

industries in their specific jurisdiction may use data available for a broader unit of government for this calculation (e.g., a 

county may use data from the state in which it is located; a city may use data for the county, if available, or state in which it is 

located) solely for purposes of determining whether a particular industry is an impacted industry.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Treasury recognizes the enumerated projects below as eligible responses to impacted 

industries. 

✓ Aid to mitigate financial hardship, such 

as supporting payroll costs, lost pay and 

benefits for returning employees, 

support of operations and maintenance 

of existing equipment and facilities

✓ Technical assistance, counseling, or 

other services to support business 

planning 

✓ COVID-19 mitigation and infection 

prevention measures (see section Public 

Health)

As with all eligible uses, recipients may pursue a project not listed above by undergoing the steps 

outlined in the section Framework for Eligible Uses Beyond Those Enumerated. 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

PUBLIC SECTOR CAPACITY 

Recipients may use SLFRF funding to restore and bolster public sector capacity, which supports 

government’s ability to deliver critical COVID-19 services. There are three main categories of eligible 

uses to bolster public sector capacity and workforce: Public Safety, Public Health, and Human Services 

Staff; Government Employment and Rehiring Public Sector Staff; and Effective Service Delivery.

Public Safety, Public Health, and Human Services Staff

SLFRF funding may be used for payroll and covered benefits for public safety, public health, health care, 

human services and similar employees of a recipient government, for the portion of the employee’s 

time spent responding to COVID-19. Recipients should follow the steps below.

1. Identify eligible public safety, public health, and human services staff. Public safety staff include:

✓ Police officers (including state police 

officers)

✓ Sheriffs and deputy sheriffs

✓ Firefighters

✓ Emergency medical responders

✓ Correctional and detention officers

✓ Dispatchers and supervisor personnel 

that directly support public safety staff 

Public health staff include:

✓ Employees involved in providing medical 

and other physical or mental health 

services to patients and supervisory 

personnel, including medical staff 

assigned to schools, prisons, and other 

such institutions

✓ Laboratory technicians, medical 

examiners, morgue staff, and other 

support services essential for patient 

care 

✓ Employees of public health 

departments directly engaged in 

public health matters and related 

supervisory personnel

Human services staff include:

✓ Employees providing or administering 

social services and public benefits

✓ Child welfare services employees

✓ Child, elder, or family care employees 

2. Assess portion of time spent on COVID-19 response for eligible staff. 

Recipients can use a variety of methods to assess the share of an employees’ time spent responding 

to COVID-19, including using reasonable estimates—such as estimating the share of time based on 

discussions with staff and applying that share to all employees in that position. 

For administrative convenience, recipients can consider public health and safety employees entirely 

devoted to responding to COVID-19 (and their payroll and benefits fully covered by SLFRF) if the 
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

employee, or his or her operating unit or division, is “primarily dedicated” to responding to COVID19. Primarily dedicated means that more than half of the employee, unit, or division’s time is 

dedicated to responding to COVID-19.

Recipients must periodically reassess their determination and maintain records to support their 

assessment, although recipients do not need to track staff hours.

3. Use SLFRF funding for payroll and covered benefits for the portion of eligible staff time spent on 

COVID-19 response. SLFRF funding may be used for payroll and covered benefits for the portion of 

the employees’ time spent on COVID-19 response, as calculated above, through the period of 

performance.

Government Employment and Rehiring Public Sector Staff

Under the increased flexibility of the final rule, SLFRF funding may be used to support a broader set of 

uses to restore and support public sector employment. Eligible uses include hiring up to a pre-pandemic 

baseline that is adjusted for historic underinvestment in the public sector, providing additional funds for 

employees who experienced pay cuts or were furloughed, avoiding layoffs, providing worker retention 

incentives, and paying for ancillary administrative costs related to hiring, support, and retention.

• Restoring pre-pandemic employment. Recipients have two options to restore pre-pandemic 

employment, depending on the recipient’s needs.

• If the recipient simply wants to hire back employees for pre-pandemic positions: Recipients 

may use SLFRF funds to hire employees for the same positions that existed on January 27, 

2020 but that were unfilled or eliminated as of March 3, 2021. Recipients may use SLFRF 

funds to cover payroll and covered benefits for such positions through the period of 

performance.

• If the recipient wants to hire above the pre-pandemic baseline and/or would like to have 

flexibility in positions: Recipients may use SLFRF funds to pay for payroll and covered 

benefits associated with the recipient increasing its number of budgeted FTEs up to 7.5 

percent above its pre-pandemic baseline. Specifically, recipients should undergo the 

following steps:

a. Identify the recipient’s budgeted FTE level on January 27, 2020. This includes all 

budgeted positions, filled and unfilled. This is called the pre-pandemic baseline.

b. Multiply the pre-pandemic baseline by 1.075. This is called the adjusted prepandemic baseline.

c. Identify the recipient’s budgeted FTE level on March 3, 2021, which is the beginning 

of the period of performance for SLFRF funds. Recipients may, but are not required 

to, exclude the number of FTEs dedicated to responding to the COVID-19 public 

health emergency. This is called the actual number of FTEs.

d. Subtract the actual number of FTEs from the adjusted pre-pandemic baseline to 

calculate the number of FTEs that can be covered by SLFRF funds. Recipients do not 

have to hire for the same roles that existed pre-pandemic.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Recipients may use SLFRF funds to cover payroll and covered benefits through the period of 

performance; these employees must have begun their employment on or after March 3, 

2021. Recipients may only use SLFRF funds for additional FTEs hired over the March 3, 2021 

level (i.e., the actual number of FTEs).

• Supporting and retaining public sector workers. Recipients can also use funds in other ways 

that support the public sector workforce.10 These include:

o Providing additional funding for employees who experienced pay reductions or were 

furloughed since the onset of the pandemic, up to the difference in the employee’s pay, 

taking into account unemployment benefits received. 

o Maintaining current compensation levels to prevent layoffs. SLFRF funds may be used 

to maintain current compensation levels, with adjustments for inflation, in order to 

prevent layoffs that would otherwise be necessary. 

o Providing worker retention incentives, including reasonable increases in 

compensation to persuade employees to remain with the employer as compared to 

other employment options. Retention incentives must be entirely additive to an 

employee’s regular compensation, narrowly tailored to need, and should not exceed 

incentives traditionally offered by the recipient or compensation that alternative 

employers may offer to compete for the employees. Treasury presumes that retention 

incentives that are less than 25 percent of the rate of base pay for an individual 

employee or 10 percent for a group or category of employees are reasonably 

proportional to the need to retain employees, as long as other requirements are met.

• Covering administrative costs associated with administering the hiring, support, and retention 

programs above. 

Effective Service Delivery

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:

10 Recipients should be able to substantiate that these uses of funds are substantially due to the public health emergency or its 

negative economic impacts (e.g., fiscal pressures on state and local budgets) and respond to its impacts. See the final rule for 

details on these uses.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

✓ 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)
30

 

U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

CAPITAL EXPENDITURES

As described above, the final rule clarifies that recipients may use funds for programs, services, and 

capital expenditures that respond to the public health and negative economic impacts of the pandemic. 

Any use of funds in this category for a capital expenditure must comply with the capital expenditure 

requirements, in addition to other standards for uses of funds.

Capital expenditures are subject to the same eligibility standard as other eligible uses to respond to the 

pandemic’s public health and economic impacts; specifically, they must be related and reasonably 

proportional to the pandemic impact identified and reasonably designed to benefit the impacted 

population or class.

For ease of administration, the final rule identifies enumerated types of capital expenditures that 

Treasury has identified as responding to the pandemic’s impacts; these are listed in the applicable subcategory of eligible uses (e.g., public health, assistance to households, etc.). Recipients may also identify 

other responsive capital expenditures. Similar to other eligible uses in the SLFRF program, no preapproval is required for capital expenditures.

To guide recipients’ analysis of whether a capital expenditure meets the eligibility standard, recipients

(with the exception of Tribal governments) must complete and meet the requirements of a written 

justification for capital expenditures equal to or greater than $1 million. For large-scale capital 

expenditures, which have high costs and may require an extended length of time to complete, as well as

most capital expenditures for non-enumerated uses of funds, Treasury requires recipients to submit 

their written justification as part of regular reporting. Specifically:

If a project has 

total capital 

expenditures 

of

and the use is enumerated by Treasury 

as eligible, then 

and the use is beyond those 

enumerated by Treasury as eligible, 

then 

Less than $1 

million

No Written Justification required No Written Justification required

Greater than or 

equal to $1 

million, but 

less than $10 

million

Written Justification required but 

recipients are not required to submit as 

part of regular reporting to Treasury Written Justification required and 

recipients must submit as part of regular 

reporting to Treasury

$10 million or 

more

Written Justification required and 

recipients must submit as part of regular 

reporting to Treasury

A Written Justification includes:

• Description of the harm or need to be addressed. Recipients should provide a description of the 

specific harm or need to be addressed and why the harm was exacerbated or caused by the 

public health emergency. Recipients may provide quantitative information on the extent and the 

type of harm, such as the number of individuals or entities affected.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

• Explanation of why a capital expenditure is appropriate. For example, recipients should include 

an explanation of why existing equipment and facilities, or policy changes or additional funding 

to pertinent programs or services, would be inadequate. 

• Comparison of proposed capital project against at least two alternative capital expenditures and 

demonstration of why the proposed capital expenditure is superior. Recipients should consider 

the effectiveness of the capital expenditure in addressing the harm identified and the expected 

total cost (including pre-development costs) against at least two alternative capital 

expenditures.

Where relevant, recipients should consider the alternatives of improving existing capital assets already 

owned or leasing other capital assets. 

Treasury presumes that the following capital projects are generally ineligible: 

 Construction of new correctional 

facilities as a response to an increase in 

rate of crime 

 Construction of new congregate 

facilities to decrease spread of COVID-19 

in the facility 

 Construction of convention centers, 

stadiums, or other large capital projects 

intended for general economic 

development or to aid impacted 

industries 

In undertaking capital expenditures, Treasury encourages recipients to adhere to 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. Treasury also encourages recipients to prioritize in 

their procurements employers with high labor standards and to prioritize employers without recent 

violations of federal and state labor and employment laws.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

FRAMEWORK FOR ELIGIBLE USES BEYOND THOSE ENUMERATED

As described above, recipients have broad flexibility to identify and respond to other pandemic impacts 

and serve other populations that experienced pandemic impacts, beyond the enumerated uses and 

presumed eligible populations. Recipients should undergo the following steps to decide whether their 

project is eligible:

Step 1. Identify COVID-19 public health or 

economic impact

2. Design a response that addresses or 

responds to the impact

Analysis

• Can identify impact to a specific 

household, business or nonprofit or to 

a class of households, businesses or 

nonprofits (i.e., group)

• Can also identify disproportionate 

impacts, or more severe impacts, to a 

specific beneficiary or to a class

• Types of responses can include a 

program, service, or capital 

expenditure

• Response should be related and 

reasonably proportional to the harm

• Response should also be reasonably 

designed to benefit impacted 

individual or class

1. Identify a COVID-19 public health or negative economic impact on an individual or a class. 

Recipients should identify an individual or class that is “impacted” or “disproportionately 

impacted” by the COVID-19 public health emergency or its negative economic impacts as well as 

the specific impact itself. 

• “Impacted” entities are those impacted by the disease itself or the harmful 

consequences of the economic disruptions resulting from or exacerbated by the COVID19 public health emergency. For example, an individual who lost their job or a small 

business that saw lower revenue during a period of closure would both have 

experienced impacts of the pandemic. 

• “Disproportionately impacted” entities are those that experienced disproportionate 

public health or economic outcomes from the pandemic; Treasury recognizes that preexisting disparities, in many cases, amplified the impacts of the pandemic, causing more 

severe impacts in underserved communities. For example, a household living in a 

neighborhood with limited access to medical care and healthy foods may have faced 

health disparities before the pandemic, like a higher rate of chronic health conditions, 

that contributed to more severe health outcomes during the COVID-19 pandemic.

The recipient may choose to identify these impacts at either the individual level or at a class 

level. If the recipient is identifying impacts at the individual level, they should retain 

documentation supporting the impact the individual experienced (e.g., documentation of lost 

revenues from a small business). Such documentation can be streamlined in many cases (e.g.,

self-attestation that a household requires food assistance).

Recipients also have broad flexibility to identify a “class” – or a group of households, small 

businesses, or nonprofits – that experienced an impact. In these cases, the recipients should 
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first identify the class and the impact that it faced. Then, recipients only need to document that 

the individuals served fall within that class; recipients do not need to document a specific impact 

to each individual served. For example, a recipient could identify that restaurants in the 

downtown area faced substantial declines in revenue due to decreased foot traffic from 

workers; the recipient could develop a program to respond to the impact on that class and only 

needs to document that the businesses being served are restaurants in the downtown area.

Recipients should keep the following considerations in mind when designating a class:

• There should be a relationship between the definition of the class and the proposed 

response. Larger and less-specific classes are less likely to have experienced similar 

harms, which may make it more difficult to design a response that appropriately 

responds to those harms. 

• Classes may be determined on a population basis or on a geographic basis, and the 

response should be appropriately matched. For example, a response might be designed 

to provide childcare to single parents, regardless of which neighborhood they live in, or 

a response might provide a park to improve the health of a disproportionately impacted 

neighborhood.

• Recipients may designate classes that experienced disproportionate impact, by 

assessing the impacts of the pandemic and finding that some populations experienced 

meaningfully more severe impacts than the general public. To determine these 

disproportionate impacts, recipients:

o May designate classes based on academic research or government research 

publications (such as the citations provided in the supplementary information in

the final rule), through analysis of their own data, or through analysis of other 

existing data sources. 

o May also consider qualitative research and sources to augment their analysis, or 

when quantitative data is not readily available. Such sources might include 

resident interviews or feedback from relevant state and local agencies, such as 

public health departments or social services departments. 

o Should consider the quality of the research, data, and applicability of analysis to 

their determination in all cases.

• Some of the enumerated uses may also be appropriate responses to the impacts 

experienced by other classes of beneficiaries. It is permissible for recipients to provide 

these services to other classes, so long as the recipient determines that the response is 

also appropriate for those groups. 

• Recipients may designate a class based on income level, including at levels higher than 

the final rule definition of "low- and moderate-income." For example, a recipient may 

identify that households in their community with incomes above the final rule threshold 

for low-income nevertheless experienced disproportionate impacts from the pandemic 

and provide responsive services.

2. Design a response that addresses or responds to the impact. Programs, services, and other 

interventions must be reasonably designed to benefit the individual or class that experienced 
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the impact. They must also be related and reasonably proportional to the extent and type of 

impact experienced. For example, uses that bear no relation or are grossly disproportionate to 

the type or extent of the impact would not be eligible.

“Reasonably proportional” refers to the scale of the response compared to the scale of the 

harm, as well as the targeting of the response to beneficiaries compared to the amount of harm 

they experienced; for example, it may not be reasonably proportional for a cash assistance 

program to provide a very small amount of aid to a group that experienced severe harm and a 

much larger amount to a group that experienced relatively little harm. Recipients should 

consider relevant factors about the harm identified and the response to evaluate whether the 

response is reasonably proportional. For example, recipients may consider the size of the

population impacted and the severity, type, and duration of the impact. Recipients may also 

consider the efficacy, cost, cost-effectiveness, and time to delivery of the response.

For disproportionately impacted communities, recipients may design interventions that address 

broader pre-existing disparities that contributed to more severe health and economic outcomes

during the pandemic, such as disproportionate gaps in access to health care or pre-existing 

disparities in educational outcomes that have been exacerbated by the pandemic.
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Premium Pay

The Coronavirus State and Local Fiscal Recovery Funds may be used to provide premium pay to eligible 

workers performing essential work during the pandemic. Premium pay may be awarded to eligible 

workers up to $13 per hour. Premium pay must be in addition to wages or remuneration (i.e., 

compensation) the eligible worker otherwise receives. Premium pay may not exceed $25,000 for any 

single worker during the program.

Recipients should undergo the following steps to provide premium pay to eligible workers.

1. Identify an “eligible” worker. Eligible workers include workers “needed to maintain continuity 

of operations of essential critical infrastructure sectors.” These sectors and occupations are 

eligible:

✓ Health care

✓ Emergency response

✓ Sanitation, disinfection & cleaning

✓ Maintenance

✓ Grocery stores, restaurants, food 

production, and food delivery

✓ Pharmacy 

✓ Biomedical research

✓ Behavioral health 

✓ Medical testing and diagnostics

✓ Home and community-based health care 

or assistance with activities of daily living

✓ Family or child care 

✓ Social services 

✓ Public health 

✓ Mortuary

✓ Critical clinical research, development, 

and testing necessary for COVID-19 

response 

✓ State, local, or Tribal government 

workforce

✓ Workers providing vital services to 

Tribes

✓ Educational, school nutrition, and other 

work required to operate a school 

facility

✓ Laundry 

✓ Elections

✓ Solid waste or hazardous materials 

management, response, and cleanup

✓ Work requiring physical interaction with 

patients

✓ Dental care

✓ Transportation and warehousing

✓ Hotel and commercial lodging facilities 

that are used for COVID-19 mitigation 

and containment

Beyond this list, the chief executive (or equivalent) of a recipient government may designate 

additional non-public sectors as critical so long as doing so is necessary to protecting the health 

and wellbeing of the residents of such jurisdictions.

2. Verify that the eligible worker performs “essential work,” meaning work that:

• Is not performed while teleworking from a residence; and 

• Involves either:

a. regular, in-person interactions with patients, the public, or coworkers of the 

individual that is performing the work; or 

b. regular physical handling of items that were handled by, or are to be handled by, 

patients, the public, or coworkers of the individual that is performing the work.
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3. Confirm that the premium pay “responds to” workers performing essential work during the 

COVID-19 public health emergency. Under the final rule, which broadened the share of eligible 

workers who can receive premium pay without a written justification, recipients may meet this 

requirement in one of three ways:

• Eligible worker receiving premium pay is earning (with the premium included) at or below 

150 percent of their residing state or county’s average annual wage for all occupations, as 

defined by the Bureau of Labor Statistics’ Occupational Employment and Wage Statistics, 

whichever is higher, on an annual basis; or

• Eligible worker receiving premium pay is not exempt from the Fair Labor Standards Act

overtime provisions; or

• If a worker does not meet either of the above requirements, the recipient must submit 

written justification to Treasury detailing how the premium pay is otherwise responsive to 

workers performing essential work during the public health emergency. This may include a 

description of the essential worker’s duties, health, or financial risks faced due to COVID-19, 

and why the recipient determined that the premium pay was responsive. Treasury 

anticipates that recipients will easily be able to satisfy the justification requirement for 

front-line workers, like nurses and hospital staff.

Premium pay may be awarded in installments or lump sums (e.g., monthly, quarterly, etc.) and may be 

awarded to hourly, part-time, or salaried or non-hourly workers. Premium pay must be paid in addition 

to wages already received and may be paid retrospectively. A recipient may not use SLFRF to merely 

reimburse itself for premium pay or hazard pay already received by the worker, and premium pay may 

not be paid to volunteers.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

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Water & Sewer Infrastructure

The Coronavirus State and Local Fiscal Recovery Funds may be used to make necessary investments in 

water and sewer infrastructure. State, local, and Tribal governments have a tremendous need to 

address the consequences of deferred maintenance in drinking water systems and removal, 

management, and treatment of sewage and stormwater, along with additional resiliency measures 

needed to adapt to climate change. 

Recipients may undertake the eligible projects below:

PROJECTS ELIGIBLE UNDER EPA’S CLEAN WATER STATE REVOLVING FUND (CWSRF)

Eligible projects under the CWSRF, and the final rule, include:

✓ Construction of publicly owned 

treatment works

✓ Projects pursuant to implementation 

of a nonpoint source pollution 

management program established 

under the Clean Water Act (CWA)

✓ Decentralized wastewater treatment 

systems that treat municipal 

wastewater or domestic sewage

✓ Management and treatment of 

stormwater or subsurface drainage 

water

✓ Water conservation, efficiency, or 

reuse measures

✓ Development and implementation of a 

conservation and management plan 

under the CWA

✓ Watershed projects meeting the 

criteria set forth in the CWA

✓ Energy consumption reduction for 

publicly owned treatment works

✓ Reuse or recycling of wastewater, 

stormwater, or subsurface drainage 

water

✓ Security of publicly owned treatment 

works

Treasury encourages recipients to review the EPA handbook for the CWSRF for a full list of eligibilities.

PROJECTS ELIGIBLE UNDER EPA’S DRINKING WATER STATE REVOLVING FUND (DWSRF)

Eligible drinking water projects under the DWSRF, and the final rule, include:

✓ Facilities to improve drinking water 

quality

✓ Transmission and distribution, 

including improvements of water 

pressure or prevention of 

contamination in infrastructure and 

lead service line replacements

✓ New sources to replace contaminated 

drinking water or increase drought 

resilience, including aquifer storage 

and recovery system for water storage 

✓ Green infrastructure, including green 

roofs, rainwater harvesting collection, 

permeable pavement

✓ Storage of drinking water, such as to 

prevent contaminants or equalize 

water demands

✓ Purchase of water systems and 

interconnection of systems

✓ New community water systems 

Treasury encourages recipients to review the EPA handbook for the DWSRF for a full list of eligibilities.
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ADDITIONAL ELIGIBLE PROJECTS 

With broadened eligibility under the final rule, SLFRF funds may be used to fund additional types of 

projects— such as additional stormwater infrastructure, residential wells, lead remediation, and certain 

rehabilitations of dams and reservoirs — beyond the CWSRF and DWSRF, if they are found to be 

“necessary” according to the definition provided in the final rule and outlined below.

✓ Culvert repair, resizing, and removal, 

replacement of storm sewers, and 

additional types of stormwater 

infrastructure

✓ Infrastructure to improve access to 

safe drinking water for individual 

served by residential wells, including 

testing initiatives, and 

treatment/remediation strategies that 

address contamination

✓ Dam and reservoir rehabilitation if 

primary purpose of dam or reservoir is 

for drinking water supply and project 

is necessary for provision of drinking 

water 

✓ Broad set of lead remediation projects 

eligible under EPA grant programs 

authorized by the Water 

Infrastructure Improvements for the 

Nation (WIIN) Act, such as lead 

testing, installation of corrosion 

control treatment, lead service line 

replacement, as well as water quality 

testing, compliance monitoring, and 

remediation activities, including 

replacement of internal plumbing and 

faucets and fixtures in schools and 

childcare facilities

A “necessary” investment in infrastructure must be: 

(1) responsive to an identified need to achieve or maintain an adequate minimum level of service, 

which may include a reasonable projection of increased need, whether due to population 

growth or otherwise,

(2) a cost-effective means for meeting that need, taking into account available alternatives, and

(3) for investments in infrastructure that supply drinking water in order to meet projected 

population growth, projected to be sustainable over its estimated useful life.

Please note that DWSRF and CWSRF-eligible projects are generally presumed to be necessary 

investments. Additional eligible projects generally must be responsive to an identified need to achieve 

or maintain an adequate minimum level of service. Recipients are only required to assess costeffectiveness of projects for the creation of new drinking water systems, dam and reservoir 

rehabilitation projects, or projects for the extension of drinking water service to meet population 

growth needs. Recipients should review the supplementary information to the final rule for more details 

on requirements applicable to each type of investment.

APPLICABLE STANDARDS & REQUIREMENTS

Treasury encourages recipients to adhere to 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. Treasury also encourages recipients to prioritize in their procurements employers with 

high labor standards and to prioritize employers without recent violations of federal and state labor and 

employment laws.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Broadband Infrastructure

The Coronavirus State and Local Fiscal Recovery Funds may be used to make necessary investments in 

broadband infrastructure, which has been shown to be critical for work, education, healthcare, and civic 

participation during the public health emergency. The final rule broadens the set of eligible broadband 

infrastructure investments that recipients may undertake.

Recipients may pursue investments in broadband infrastructure meeting technical standards detailed 

below, as well as an expanded set of cybersecurity investments.

BROADBAND INFRASTRUCTURE INVESTMENTS

Recipients should adhere to the following requirements when designing a broadband infrastructure 

project:

1. Identify an eligible area for investment. Recipients are encouraged to prioritize projects that 

are designed to serve locations without access to reliable wireline 100/20 Mbps broadband 

service (meaning service that reliably provides 100 Mbps download speed and 20 Mbps upload 

speed through a wireline connection), but are broadly able to invest in projects designed to 

provide service to locations with an identified need for additional broadband investment. 

Recipients have broad flexibility to define need in their community. Examples of need could 

include:

✓ Lack of access to a reliable high-speed 

broadband connection

✓ Lack of affordable broadband

✓ Lack of reliable service

If recipients are considering deploying broadband to locations where there are existing and 

enforceable federal or state funding commitments for reliable service of at least 100/20 Mbps, 

recipients must ensure that SLFRF funds are designed to address an identified need for 

additional broadband investment that is not met by existing federal or state funding 

commitments. Recipients must also ensure that SLFRF funds will not be used for costs that will 

be reimbursed by the other federal or state funding streams.

2. Design project to meet high-speed technical standards. Recipients are required to design 

projects to, upon completion, reliably meet or exceed symmetrical 100 Mbps download and 

upload speeds. In cases where it is not practicable, because of the excessive cost of the project 

or geography or topography of the area to be served by the project, eligible projects may be 

designed to reliably meet or exceed 100/20 Mbps and be scalable to a minimum of symmetrical 

100 Mbps download and upload speeds.

Treasury encourages recipients to prioritize investments in fiber-optic infrastructure wherever 

feasible and to focus on projects that will achieve last-mile connections. Further, Treasury 

encourages recipients to prioritize support for broadband networks owned, operated by, or 

affiliated with local governments, nonprofits, and co-operatives.
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3. Require enrollment in a low-income subsidy program. Recipients must require the service 

provider for a broadband project that provides service to households to either:

✓ Participate in the FCC’s Affordable 

Connectivity Program (ACP)

✓ Provide access to a broad-based 

affordability program to low-income 

consumers that provides benefits 

commensurate to ACP

Treasury encourages broadband services to also include at least one low-cost option offered 

without data usage caps at speeds sufficient for a household with multiple users to 

simultaneously telework and engage in remote learning. Recipients are also encouraged to 

consult with the community on affordability needs. 

CYBERSECURITY INVESTMENTS 

SLFRF may be used for modernization of cybersecurity for existing and new broadband infrastructure,

regardless of their speed delivery standards. This includes modernization of hardware and software.

APPLICABLE STANDARDS & REQUIREMENTS

Treasury encourages recipients to adhere to 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. Treasury also encourages recipients to prioritize in their procurements employers with 

high labor standards and to prioritize employers without recent violations of federal and state labor and 

employment laws.
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U.S. DEPARTMENT OF THE TREASURY

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Restrictions on Use

While recipients have considerable flexibility to use Coronavirus State and Local Fiscal Recovery Funds to 

address the diverse needs of their communities, some restrictions on use of funds apply.

OFFSET A REDUCTION IN NET TAX REVENUE 

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

tax revenue resulting from a change in law, regulation, or administrative interpretation

beginning on March 3, 2021, through the last day of the fiscal year in which the funds 

provided have been spent. If a state or territory cuts taxes during this period, it must 

demonstrate how it paid for the tax cuts from sources other than SLFRF, such as 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 repaid to the Treasury.

DEPOSITS INTO PENSION FUNDS

• No recipients except Tribal governments may use this funding to make a deposit to a pension 

fund. Treasury 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 connected to an eligible use of funds 

(e.g., for public health and safety staff). Examples of extraordinary payments include ones that:

 Reduce a liability incurred prior to the 

start of the COVID-19 public health 

emergency and occur outside the 

recipient's regular timing for making the 

payment

 Occur at the regular time for pension 

contributions but is larger than a regular 

payment would have been

ADDITIONAL RESTRICTIONS AND REQUIREMENTS

Additional restrictions and requirements that apply across all eligible use categories include:

• No debt service or replenishing financial reserves. Since SLFRF funds are intended to be used 

prospectively, recipients may not use SLFRF funds for debt service or replenishing financial 

reserves (e.g., rainy day funds).

• No satisfaction of settlements and judgments. Satisfaction of any obligation arising under or 

pursuant to a settlement agreement, judgment, consent decree, or judicially confirmed debt 

restructuring in a judicial, administrative, or regulatory proceeding is itself not an eligible use. 

However, if a settlement requires the recipient to provide services or incur other costs that are

an eligible use of SLFRF funds, SLFRF may be used for those costs. 

• Additional general restrictions. SLFRF funds may not be used for a project that conflicts with or 

contravenes the purpose of the American Rescue Plan Act statute (e.g., uses of funds that 
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undermine COVID-19 mitigation practices in line with CDC guidance and recommendations) and 

may not be used in violation of the Award Terms and Conditions or conflict of interest 

requirements under the Uniform Guidance. Other applicable laws and regulations, outside of 

SLFRF program requirements, may also apply (e.g., laws around procurement, contracting, 

conflicts-of-interest, environmental standards, or civil rights).
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Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

U.S. Department of the Treasury

Program Administration

The Coronavirus State and Local Fiscal Recovery Funds final rule details a number of administrative 

processes and requirements, including on distribution of funds, timeline for use of funds, transfer of 

funds, treatment of loans, use of funds to meet non-federal match or cost-share requirements, 

administrative expenses, reporting on use of funds, and remediation and recoupment of funds used for 

ineligible purposes. This section provides a summary for the most frequently asked questions.

TIMELINE FOR USE OF FUNDS

Under the SLFRF, funds must be used for costs incurred on or after March 3, 2021. Further, costs must 

be obligated by December 31, 2024, and expended by December 31, 2026.

TRANSFERS

Recipients may undertake projects on their own or through subrecipients, which carry out eligible uses 

on behalf of a recipient, including pooling funds with other recipients or blending and braiding SLFRF 

funds with other sources of funds. Localities may also transfer their funds to the state through section 

603(c)(4), which will decrease the locality’s award and increase the state award amounts. 

LOANS

Recipients may generally use SLFRF funds to provide loans for uses that are otherwise eligible, although 

there are special rules about how recipients should track program income depending on the length of 

the loan. Recipients should consult the final rule if they seek to utilize these provisions.

NON-FEDERAL MATCH OR COST-SHARE REQUIREMENTS

Funds available under the “revenue loss” eligible use category (sections 602(c)(1)(C) and 603(c)(1)(C) of 

the Social Security Act) generally may be used to meet the non-federal cost-share or matching 

requirements of other federal programs. However, note that SLFRF funds may not be used as the nonfederal share for purposes of a state’s Medicaid and CHIP programs because the Office of Management 

and Budget has approved a waiver as requested by the Centers for Medicare & Medicaid Services 

pursuant to 2 CFR 200.102 of the Uniform Guidance and related regulations.

SLFRF funds beyond those that are available under the revenue loss eligible use category may not be 

used to meet the non-federal match or cost-share requirements of other federal programs, other than 

as specifically provided for by statute. As an example, the Infrastructure Investment and Jobs Act 

provides that SLFRF funds may be used to meet the non-federal match requirements of authorized 

Bureau of Reclamation projects and certain broadband deployment projects. Recipients should consult 

the final rule for further details if they seek to utilize SLFRF funds as a match for these projects. 

ADMINISTRATIVE EXPENSES

SLFRF funds may be used for direct and indirect administrative expenses involved in administering the 

program. For details on permissible direct and indirect administrative costs, recipients should refer to 

Treasury’s Compliance and Reporting Guidance. Costs incurred for the same purpose in like 

circumstances must be treated consistently as either direct or indirect costs.
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Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule

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REPORTING, COMPLIANCE & RECOUPMENT

Recipients are required to comply with Treasury’s Compliance and Reporting Guidance, which includes 

submitting mandatory periodic reports to Treasury.

Funds used in violation of the final rule are subject to remediation and recoupment. As outlined in the 

final rule, Treasury may identify funds used in violation through reporting or other sources. Recipients 

will be provided with an initial written notice of recoupment with an opportunity to submit a request for 

reconsideration before Treasury provides a final notice of recoupment. If the recipient receives an initial 

notice of recoupment and does not submit a request for reconsideration, the initial notice will be 

deemed the final notice. Treasury may pursue other forms of remediation and monitoring in conjunction 

with, or as an alternative to, recoupment. 

REVISIONS TO THE OVERVIEW OF THE FINAL RULE:

• January 18, 2022 (p. 4, p. 16): Clarification that the revenue loss standard allowance is “up to” 

$10 million under the Replacing Lost Public Sector Revenue eligible use category; addition of 

further information on the eligibility of general infrastructure, general economic development, 

and worker development projects under the Public Health and Negative Economic Impacts 

eligible use category. 

• March 17, 2022 (p. 18): Specified that provision of child nutrition programs is available to 

respond to impacts of the pandemic on households and communities.