New Jersey Division of Local Government Services Local Finance Notice 2021-13

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Wielkotz & Company
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August 18, 2021
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Local Finance Notice 2021-13 American Rescue Plan Act of 2021: Supplemental Compliance & Reporting Guidance

This Notice provides an overview of recent U.S. Treasury guidance on Coronavirus Local Fiscal Recovery Fund program compliance and reporting responsibilities, along with new resources from the Office of the State Comptroller for preventing fraud, waste, and abuse.

Use of LFRF Funds for Staffing – Sustainability Considerations

  • Local units can rehire employees laid off due to the pandemic or augment staffing levels. However, local units should consider the long-term budgetary impact and explore shared services to address pandemic-related challenges.

Overview of U.S. Treasury Reporting Guidance

  • U.S. Treasury has developed an online portal through which counties and municipalities must submit all reporting information, and has issued a supplemental user guide.
  • The local unit must report expenditures and obligations that correspond to one of the expenditure categories specified in Appendix 1 of the Compliance and Reporting Guidance.
  • All counties and metropolitan cities must file a one-time interim Report with U.S. Treasury by August 31, 2021.
  • All counties and municipalities must submit Project and Expenditure Reports, and all non-entitlement units must register with the System for Award Management (SAM) database before submitting their first Project and Expenditure Report due October 31, 2021.
  • LFRF funding supports new or existing government services and investments, and provides detailed obligation and expenditure information for individual assistance greater than $50,000.
  • An NEU municipality’s first Project and Expenditure Report must include the signed Award Terms and Conditions Agreement and Civil Rights Assurances provided to the State.
  • All counties and metropolitan cities with equal to or greater than 250,000 in population must file a Recovery Plan Performance Report with U.S. Treasury by August 31, 2021.
  • Local units may determine the general form and content of the Recovery Plan, so long as it includes the minimum information U.S. Treasury requires.

Use of LFRF Proceeds to Offset COVID-19 Attributable Revenue losses

  • U.S. Treasury requires that local units use LFRF proceeds to offset COVID-19 revenue losses, rather than using them to boost long-term surplus. Local units must calculate COVID-19 related revenue loss on an entity-wide basis.
  • A local unit can add revenue losses from more than one period to determine the maximum that can be allocated toward providing government services in the local unit’s 2022 budget.
  • Sections 602(c)(1)(C) and 603(c)(1)(C) of the American Rescue Plan Act allow counties and municipalities to use LFRF Funds for the provision of government services, including maintenance of infrastructure, modernization of cybersecurity, health services, environmental remediation, school or educational services, and the provision of police, fire, and other public safety services.
  • If a local unit established a deferred charge for COVID-19 related revenue loss, using LFRF funds to offset the cost of providing government services would free up available fund balance to satisfy the deferred charge.
  • The Division of Local Government Services has determined that the Local Budget Law does not require counties and municipalities to use American Rescue Plan LFRF dollars to offset COVID-19 related revenue losses.
  • A county or metropolitan city using LFRF funds for revenue replacement must include key inputs into the revenue replacement formula and an explanation of how revenue replacement funds were allocated to government services.

Using LFRF Funds for Crime Prevention and Response

  • The U.S. Treasury updated its FAQ document to elaborate upon how LFRF funds may be used for crime prevention and response, including hiring back employees laid off due to the pandemic, and restoring staffing levels to pre-pandemic levels.
  • The pandemic has increased gun violence, and the government is responding by investing in technology, community violence intervention programs, and enforcement efforts. These efforts include mental health and substance use disorder services, as well as school-based social-emotional support and other mental health services.
  • Counties and municipalities may use LFRF funds to hire additional law enforcement officials or pay overtime to address the increase in gun violence associated with the pandemic. However, they must closely evaluate post-grant legacy costs and collaborate with other local units in applying LFRF funds toward public safety initiatives.

Premium Pay

  • Employees in public health, public safety, social services, and home health aides are eligible for premium pay. The county or municipality must not have incurred the obligation to pay premium pay prior to March 3, 2021.
  • A county or municipality allocating LFRF funds towards premium pay must list the sectors their chief executive designates as critical to the health and well-being of residents.
  • The local unit’s Project and Expenditure Report must include a written justification explaining how the premium pay or grant is responsive to workers performing essential work during the public health emergency.

Using LFRF Funds for Business Assistance

  • While economic impacts may be immediate or delayed, assistance to businesses that did not experience a negative economic impact from the public health emergency is not an eligible use of LFRF funds.
  • – Number of small businesses served; – approach to ensuring small business aid responses to a COVID-19 related negative economic impact.
  • Local units establishing LFRF-funded small business assistance programs should establish an application process where business applicants document the COVID-19 related negative economic impact and avoid duplicating benefits.
  • Certain municipalities have property tax rewards programs where residents can receive property tax credit by using program cards in participating local retail establishments. To ensure compliance with U.S. Treasury regulations, municipalities must undertake due diligence before utilizing a property tax rewards program in this fashion.

Administrative Costs and Audit Expenses

  • LFRF funds may be applied toward administrative costs, including retaining a grant consultant or an independent integrity monitor to ensure compliance with legal and regulatory requirements. Administrative costs must be reasonable and allocable under 2 CFR 200.404 and 2 CFR 200.405 of the federal regulations.
  • Nonfederal entities that spend $750,000 or more in federal awards must have an audit conducted for that year, unless the federal government specifically requires the grant recipient to conduct one.

Local Finance Notice 2021-13

Please follow the link below to read more about these items and guidance on how your local unit can implement them:

Contact Wielkotz & Company, LLC Today

For further information on Local Finance Notice 2021-13 and its implementation feel free to reach out to Steven Wielkotz at (973)-835-7900 ext. 201 or

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