AN INTRODUCTION TO THE

Guidance on Distributions to Nonentitlement

Units of Local Government 

May-June 2021

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About This Webinar

The U.S. Department of the Treasury is providing this webinar, the State and Local contact 

channels, and other resources for informational purposes.

The descriptions provided in this document are non-exhaustive, do not describe all terms and 

conditions associated with the use of Coronavirus State and Local Fiscal Recovery Funds, and do 

not describe all requirements that may apply to this funding. 

Any Coronavirus State and Local Fiscal Recovery Funds received will be subject to the terms and 

conditions of the agreement entered into by Treasury and the respective jurisdiction, which 

incorporate the provisions of the Interim Final Rule and guidance that implements this program. 

Treasury is accepting public comment on all aspects of the Interim Final Rule, which Treasury will 

consider in developing the Final Rule on the program.
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Introductions

On May 24, Treasury released guidance to assist states with distributions to 

nonentitlement units of local government (NEUs), which are local governments typically 

serving populations of under 50,000.

This webinar provides a process and technical overview of the guidance for 

representatives of state governments and key associations. 
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SECTION 1: Overview of the Guidance

SECTION 2: Overview of the List of Local Governments

SECTION 3: Q&A

Agenda
SECTION 1: Overview of the Guidance
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Key Guidance Documents 

List of Local 

Governments

Definitional and Data 

Methodology

Guidance

Aggregate NEU 

allocations for states

There are four key guidance documents for state governments focused on the allocation and 

distribution of funds from states to NEUs.
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Key Guidance Documents 

List of Local 

Governments

Definitional and Data 

Methodology

Guidance

Aggregate NEU 

allocations for states

There are four key guidance documents for state governments focused on the allocation and 

distribution of funds from states to NEUs.
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Pre-Distribution

Initial Distribution

Subsequent Distribution

Post-Distribution

Overview of the Guidance Process

State governments will follow a four-step process to allocate and distribute funds to 

NEUs.

• Request the state’s payment from Treasury

• Identify eligible NEUs

• Calculate initial allocations

• Establish a process and receive requests for funding

• Disburse the initial distribution of payments

• Record key information for reporting purposes

• Provide guidance to NEUs on their requirements to Treasury

• Apply for extensions, if necessary

• Gather required information on “remaining funds”

• Allocate remaining funds, including applying the 75% cap

• Disburse the subsequent distribution

• Record key information for reporting purposes

• Submit interim and other reports to Treasury on distributions

• Return excess amounts

• Provide guidance to NEUs on their reporting requirements

• Await Second Tranche amount

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4
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Pre-Distribution

Initial Distribution

Subsequent Distribution

Post-Distribution

Overview of the Guidance Process

State governments will follow a four-step process to allocate and distribute funds to 

NEUs.

• Request the state’s payment from Treasury

• Identify eligible NEUs

• Calculate initial allocations

• Establish a process and receive requests for funding

• Disburse the initial distribution of payments

• Record key information for reporting purposes

• Provide guidance to NEUs on their requirements to Treasury

• Apply for extensions, if necessary

• Gather required information on “remaining funds”

• Allocate remaining funds, including applying the 75% cap

• Disburse the subsequent distribution

• Record key information for reporting purposes

• Submit interim and other reports to Treasury on distributions

• Return excess amounts

• Provide guidance to NEUs on their reporting requirements

• Await Second Tranche amount

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2

3

4
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Pre-Distribution Phase (Request Payment + Identify Eligible NEUs)

• Request the state’s payment from Treasury

– State governments that have made a request for their own funds in the Treasury 

Submission Portal will be considered by Treasury to have requested funding for their 

NEUs as well

– State governments should expect to receive their First Tranche of payments for 

distribution to their NEUs within a few days of submission

• Identify eligible NEUs from list of local governments on Treasury website

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Incorporated Places Minor Civil Divisions (MCDs)

42 states 

No-MCD and 

strong-MCD states

All governments on list are eligible

8 weak-MCD 

states 

IL, IN, KS, MO, NE, 

ND, OH, SD

All governments on list 

are eligible

State must undertake facts-andcircumstances test and post explanation of 

exclusions on website

Test: “whether the MCD has the legal and 

operational capacity to accept ARPA funds 

and provides a broad range of services 

that would constitute eligible uses 

under ARPA”
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Pre-Distribution Phase (Calculate Initial Allocations)

• Calculate initial allocations with general formula (for all states)

Total population of the NEU

Total population of all eligible NEUs

× Aggregate state NEU payment

For overlapping jurisdictions (CT, IL, IN, KS, MI, MN, MO, NE, NY, OH, VT): 

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1 Allocate overlapping 

population only to 

subsidiary

2 Split overlapping 

population between 

parent & subsidiary 

(e.g., 50-50)

3 Allocate overlapping 

population 

only to parent

4 Double count 

overlapping 

Population

(Based on facts-andcircumstances test)
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Pre-Distribution Phase (Establish Process + Receive Requests)

Establish process for NEUs to request payment

– Collect the following information

» Local government name, Entity’s Taxpayer Identification Number, DUNS number, and 

address

» Authorized representative name, title, and email

» Contact person name, title, phone, and email

» Financial institution information 

» NEU reference budget 

» Award terms and conditions agreement 

» Assurances of compliance with Title VI of the Civil Rights Act of 1964 

– Should confirm that the NEU is not excluded or disqualified on SAM.gov 

– Should advise the NEU to register in SAM.gov as soon as possible after receiving the 

award if the NEU is not already registered

– Should assign each NEU a “NEU Recipient Number”

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4•
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Pre-Distribution Phase (Establish Process + Receive Requests)

• Receive requests for payment and transfers

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Scenario A: 

NEU requests payment

Scenario B: 

NEU requests transfer to state

Scenario C: 

NEU is unresponsive

Key 

Steps

• State must compare NEU 

budget total with allocation 

in order to apply the “75 

percent budget cap”

• Ex: If Town A is allocated 

$100,000 and its reference 

budget totaled $100,000, 

Town A would be capped at 

$75,000 ($25,000 withheld 

across both Tranches; 

$12,500 withheld from First 

Tranche)

• NEUs can decline their 

funding and transfer funds 

to the state under Section 

603(c)(4)

• NEU must submit signed 

Treasury form to state, 

which the state must 

transmit to Treasury as 

part of interim report

• Funds can be reallocated in a 

subsequent distribution 

(detailed later)
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Pre-Distribution

Initial Distribution

Subsequent Distribution

Post-Distribution

Overview of the Guidance Process

State governments will follow a four-step process to allocate and distribute funds to 

NEUs.

• Request the state’s payment from Treasury

• Identify eligible NEUs

• Calculate initial allocations

• Establish a process and receive requests for funding

• Disburse the initial distribution of payments

• Record key information for reporting purposes

• Provide guidance to NEUs on their requirements to Treasury

• Apply for extensions, if necessary

• Gather required information on “remaining funds”

• Allocate remaining funds, including applying the 75% cap

• Disburse the subsequent distribution

• Record key information for reporting purposes

• Submit interim and other reports to Treasury on distributions

• Return excess amounts

• Provide guidance to NEUs on their reporting requirements

• Await Second Tranche amount

1

2

3

4
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Initial Distribution from First Tranche

• Disburse the initial distribution of payments

– States may not impose additional conditions or requirements on distributions to NEUs, 

beyond those permitted by the statute, IFR, or Treasury’s guidance

• Record key information for reporting purposes

– States should keep records of allocations and amounts paid for submission to Treasury 

in interim report

• Provide guidance to NEUs on their requirements to Treasury

– States should direct NEUs to the statute, IFR, guidance, along with documents on the 

website, including Checklist for Nonentitlement Units of Local Government 

• Apply for extensions, if necessary

– Statutory “30-day” clock begins once a state receives a payment for its NEUs

– Treasury will grant a 30-day extension if state can certify excessive administrative 

burden

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Pre-Distribution

Initial Distribution

Subsequent Distribution

Post-Distribution

Overview of the Guidance Process

State governments will follow a four-step process to allocate and distribute funds to 

NEUs.

• Request the state’s payment from Treasury

• Identify eligible NEUs

• Calculate initial allocations

• Establish a process and receive requests for funding

• Disburse the initial distribution of payments

• Record key information for reporting purposes

• Provide guidance to NEUs on their requirements to Treasury

• Apply for extensions, if necessary

• Gather required information on “remaining funds”

• Allocate remaining funds, including applying the 75% cap

• Disburse the subsequent distribution

• Record key information for reporting purposes

• Submit interim and other reports to Treasury on distributions

• Return excess amounts

• Provide guidance to NEUs on their reporting requirements

• Await Second Tranche amount

1

2

3

4
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Subsequent Distribution from First Tranche

• Gather required information on “remaining funds”

– Remaining funds are amounts allocated to non-responsive NEUs 

» Non-responsive means NEUs that have neither requested funding nor declined allocation 

and requested a transfer to the state

– Remaining funds can be allocated among “residual NEUs” (NEUs that requested funding or 

transferred funding to state and whose allocation was below the 75 percent cap)

• Allocate remaining funds, including applying the 75 percent cap

– Formula: Total pop. of the residual NEU

Total pop. of all residual NEUs

× Remaining state aggregate NEU allocation

– Total allocation, including remaining funds, must not exceed 75 percent cap

• Disburse subsequent distribution

– States are similarly prohibited from putting additional conditions or requirements on these 

distributions

• Record key information for reporting purposes

– States should keep records of the residual NEUs that received a subsequent distribution, and 

the amount of the allocation and distribution

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States may issue a subsequent distribution of the funds that had been allocated to nonresponsive NEUs
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Pre-Distribution

Initial Distribution

Subsequent Distribution

Post-Distribution

Overview of the Guidance Process

State governments will follow a four-step process to allocate and distribute funds to 

NEUs.

• Request the state’s payment from Treasury

• Identify eligible NEUs

• Calculate initial allocations

• Establish a process and receive requests for funding

• Disburse the initial distribution of payments

• Record key information for reporting purposes

• Provide guidance to NEUs on their requirements to Treasury

• Apply for extensions, if necessary

• Gather required information on “remaining funds”

• Allocate remaining funds, including applying the 75% cap

• Disburse the subsequent distribution

• Record key information for reporting purposes

• Submit an update on distributions with periodic reports

• Return excess amounts

• Provide guidance to NEUs on their reporting requirements

• Await Second Tranche amount

1

2

3

4
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Post-Distribution

• Submit an update on distributions with its interim report (August 2021) and first quarterly report 

(October 2021)

– States should be prepared to include in their interim report the following:

» Whether NEU received funding, declined funding and requested a transfer to the state, or has 

not taken action on its funding

» NEU name

» NEU DUNS number

» NEU address

» NEU email address

» NEU Recipient Number 

» Initial allocation and, if applicable, subsequent allocation to the NEU (before 75 percent cap)

» NEU reference budget

» Amount of the initial and, if applicable, subsequent allocation above 75 percent of the NEU’s 

reference budget which will be returned to Treasury 

» Payment amount(s)

» Payment date(s)

– States should also provide transfer forms signed by the NEU (if applicable) and weak-MCD states 

should list MCDs that the state deemed ineligible

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1
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Post-Distribution

• Return excess amounts (August-October 2021)

– Treasury will provide instructions to states on the return of funds

Provide guidance to NEUs on their reporting requirements to Treasury (October 2021)

– NEUs will be asked to provide the following in their first report to Treasury due October 2021, 

among other requirements:

» NEU Recipient Number 

» Copy of signed award terms and conditions agreement

» Copy of signed assurances of compliance with Title VI of the Civil Rights Act of 1964 

» Copy of actual budget documents validating the top-line budget total provided to the state 

as part of the request for funding 

Await Second Tranche amount (Spring-Summer 2022)

– Treasury will distribute the Second Tranche no earlier than 12 months after the date on which 

the First Tranche of payments is paid to the state

– More information will be forthcoming

•

•

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SECTION 2: Overview of the List of Local Governments
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Key Guidance Documents 

List of Local 

Governments

Definitional and Data 

Methodology

Guidance

Aggregate NEU 

allocations for states

There are four key guidance documents for state governments focused on the allocation and 

distribution of funds from states to NEUs.
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Overview of List of Local Governments

• Orientation to the spreadsheet, including Contents and 

Overview tabs

• Preview of list for majority of states (36) that have no 

overlapping jurisdictions or weak MCDs

“Straightforward” 

States

• Preview of list for 11 states with overlapping populations 

• CT, IL, IN, KS, MI, MN, MO, NE, NY, OH, VT

States with 

Overlapping 

Populations

• Preview of list for 8 weak-MCD states 

Weak-MCD States • IL, IN, KS, MO, NE, ND, OH, SD

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Overview

Spreadsheet Snapshot

The spreadsheet has one list for all states except for the 8 weak-MCD states, which have two 

lists each

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Weak-MCD states receive 

two lists (one with and one 

without MCDs)

All states except the weakMCD states receive one list
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“Straightforward” States

Spreadsheet Snapshot

Below is a preview of the list for the majority of states (36 states) that have no overlapping 

jurisdictions or weak MCDs

2

These states can 

directly apply 

the statutory 

formula for 

individual NEU 

allocations
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States with Overlapping Populations 

Spreadsheet Snapshot

Below is a preview of the list for 11 states with overlapping jurisdictions

CT, IL, IN, KS, MI, MN, MO, NE, NY, OH, VT

3

These states should apply the 

guidance to allocate the overlapping 

population (Newtown borough) 

between the parent (Newtown town) 

and the subsidiary (Newtown borough)
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Weak-MCD States

Spreadsheet Snapshot

Below is a preview of the list for 8 weak-MCD states 

IL, IN, KS, MO, NE, ND, OH, SD

4

These states should apply the 

guidance’s “facts-and-circumstances” 

test to determine whether the MCD is 

eligible for an NEU payment

A

B

List including MCDs

List excluding MCDs
SECTION 3: Q&A
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Thank you.

For More Information: 

Please visit Treasury’s State & Local website 

at www.treasury.gov/SLFRP

For Media Inquiries: 

Please contact the U.S. Treasury Press Office 

at (202) 622-2960

For General Inquiries:

Please email SLFRP@treasury.gov