American Rescue Plan Funds for Non-Entitlement Cities

On March 11, 2021, President Biden signed the $1.9 Trillion American Rescue Plan to provide additional relief to offset the impacts from the Covid-19 pandemic. This plan includes $350 billion in federal aid for states, cities, municipalities, counties, tribes and territories with $377 million to be allocated to Non-Entitlement Cities in Minnesota.

Funding Information:

  • The money is disbursed to the State in two payments; the first payment was disbursed on May 10, 2021 and the second payment will be disbursed a year or later after the first payment is received; the State will then distribute to the cities. The certification process opened in June (Funding Request Form) and the cities should expect to receive the first payment in July or August.
  • Item requirements for funding application:
  • All costs must be incurred or obligated by December 31, 2024 with a period of performance through December 31, 2026 or the funds will need to be returned to the federal government.
  • To obtain a rough estimate of funding expected to be received, use the 2019 census population estimate from the Treasury spreadsheet and multiply it by $105.
  • Funds will be capped at 75% of Jan 27, 2021 Operating budget or 2020 Expenditures.
  • Funds may be used to cover costs incurred beginning on March 3, 2021.
  • Funds may be held by the City while deciding how the funds will be used.
  • Subject to Single Audit Requirements:
    • $750,000 total Federal Aid received within a year

Provisions for the Use of the American Rescue Plan Funds


  • Respond to the public health emergency with respect to COVID-19 or its negative economic impacts including:
    • Assistance to households
    • Small businesses and nonprofits
    • Aid to impacted industries such as tourism, travel, and hospitality.
    • Mitigation efforts
  • Medical expenses, behavioral healthcare and certain public health and safety staff.
  • Provide premium pay to essential workers or grants to eligible employers.
  • Provide government services affected by a reduction in revenue of states, territories or tribal governments due to the public health emergency.
  • Make investments in water, sewer or broadband infrastructure.
  • Replace loss of revenue directly related to COVID-19 impacts.
  • Provide COBRA subsidy that is available for up to six months for eligible individuals.
  • Provide other employee benefits, including temporary increases for dependent care benefits and extension of credits for paid leave when offered on a voluntary basis.
  • May be used for payroll and covered benefits expenses for public safety, health, health care, human services, and similar employees to the extent that their services are devoted to mitigating or responding to COVID 19.
  • Cover administrative costs of allocating or distributing funds.

School Districts:

  • Develop and implement procedures and systems to improve the preparedness and response efforts to COVID-19.
  • Training for employees on sanitation and minimizing the spread of COVID-19.
  • Purchase supplies to sanitize and clean the facilities.
  • Plan for activities during long term closures, including meals, technology, and lesson plans.
  • Purchase technology.
  • Provide mental health services and support.
  • Plan and implement activities related to summer learning and afterschool programs.

Special-Purpose Units:

  • Special-Purpose units of local government will not receive funding allocations. State or local governments may transfer funds to a special-purpose units of local government.
  • These transfers will be subject to sub-recipient monitoring. City is responsible for ensuring they are spending the funds appropriately and meeting the reporting requirements.

Funds are Prohibited from Being Used to:

  • Directly or indirectly offset a reduction in their net tax revenue resulting from a change in law during the covered period that reduces or delays any tax or tax increase. (Offset a tax cut)
  • Deposit into any pension fund.
  • Bolstering rainy day reserves.
  • Debt service payments.
  • Satisfy nonfederal matching requirements under the Stafford Act or nonfederal matching requirements generally.


  • Submission of Project and expenditure report annually (DUNS number required). If the City does not have a valid DUNS number, they can register for one online:
  • Initial Annual Project & Expenditure report will cover activity from date of award through September 30, 2021.
  • Reports are due each year by October 31st.
  • Records must be kept for 5 years after all funds have been expended or returned to Treasury, whichever is later.

Questions? Call one of our governmental audit experts at (888) 388-1040.