About the American Rescue Plan Act

The American Rescue Plan Act of 2021 (ARPA) passed Congress and was signed into law by President Biden in March 2021 in response to the COVID-19 pandemic and its impact on state and local economies, workers, and families. It funds several different programs and initiatives, but the main focus here is on its State and Local Fiscal Recovery Fund, which provides grant money directly to states and individual local governments, including cities.

What Are the Limitations on Cities’ Use of ARPA Funds?

The State and Local Fiscal Recovery Fund (SLFRF), created by ARPA and administered by the U.S. Department of the Treasury, dedicates money to cities under the premise of assisting cities and their residents with recovering from the health and economic impacts of the COVID-19 pandemic. As such, SLFRF funds are meant to be used primarily to replace lost city revenue and to remediate the harmful impacts of the pandemic. Funds expenditures should generally fall under these seven categories:

  1. Public Health
  2. Negative Economic Impacts
  3. Services to Disproportionately Impacted Communities
  4. Premium Pay
  5. Infrastructure
  6. Revenue Replacement
  7. Administrative

Cities have broad discretion to interpret these guidelines and use funds as needed, but must have a justification for the funds that meet ARPA guidelines.

Additionally, in developing funding plans for ARPA funds, cities should keep in mind the key objectives underlying SLFRF funds:

  • Support the urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control.
  • Replace lost revenue for eligible recipients to strengthen support for vital public services and help retain jobs.
  • Support an equitable recovery through immediate economic stabilization for households and businesses
  • Address systemic public health and economic challenges that have contributed to the unequal impact of the pandemic on certain populations.

Additional ARPA Resources

These resources contain further information and ideas about how cities can use ARPA funds to address particular concerns.

General Resources

Coronavirus State & Local Fiscal Recovery Funds: Overview of the Final Rule (US Treasury)

Coronavirus State & Local Fiscal Recovery Funds: January 2022 Presentation (US Treasury)

Public Health & Safety

Housing Stability and Community Development

Business Recovery and Worker Support