American Rescue Plan Act of 2021: Spending Revenue Replacement Funds on Salaries and Benefits

UPDATED August 2022: On July 27, 2022, US Treasury amended its Final Rule FAQs to exempt expenditures in the Revenue Replacement category from some Uniform Guidance provisions. Those changes are reflected in the updated post below. 

Many NC local governments, particularly those receiving under $10 million and claiming the standard allowance, have decided to spend some or all their American Rescue Plan Act Coronavirus State and Local Fiscal Recovery Fund (ARP/CSLFRF) monies to cover employee salary and benefit expenditures. Spending ARP/CSLFRF funds on these internal expenditures affords a local government the easiest path through the applicable compliance requirements.  And, importantly, it frees up the non-grant revenues that would have been used to cover the salaries and benefits to be expended on new projects or programs, to increase fund balance, or to replace other revenue sources. The freed up non-grant revenues are not subject to award terms, time limits, or other federal grant regulations.