New Guidance Announced for Coronavirus Local Fiscal Recovery Funds (FRF)
The Treasury issued guidance on May 24 regarding the distribution of Coronavirus Local Fiscal Recovery Funds (FRF) to non-entitlement units of local government (NEUs). This guidance clarifies how states should distribute funds to local government entities with populations typically below 50,000.
States are required to allocate and distribute FRF monies to each NEU in the state based on the NEU’s proportionate population and within 30 days of receipt. They must also ask NEUs to complete an application process that includes NEU identifying information as well as the NEU’s budget in effect as of Jan. 27, 2020. This budget is defined as the annual total operating budget, including general fund and other funds, or top-line expenditure total (in exceptional cases in which the NEU does not adopt a formal budget).
While the burden of identifying NEUs falls to the states, there are some steps that NEUs should take now to ensure expedient receipt of funding. NEUs will be required to submit the project and expenditure report annually and should maintain a copy of any award agreement from the states to include with this report. Their initial annual Project and Expenditure reports will cover activity from the date of award to Sept. 30, 2021 and must be submitted to Treasury by Oct. 31, 2021. The subsequent annual reports must be submitted to Treasury by Oct. 31 each year.
If you have questions about your plans to utilize these funds, as always, reach out to your governmental audit CPAs. Conversations with your auditors prior to expending FRF monies can save your team from headaches and surprises during the audit.
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