State and Local Fiscal Recovery Funds, commonly called SLFRF, provided federal financial assistance to help governments respond to the COVID-19 pandemic, maintain public services, and invest in eligible community needs.
Authorized through the American Rescue Plan Act, the program delivered approximately $350 billion to state, territorial, local, and Tribal governments. The U.S. Department of the Treasury administers the program.
For recipients managing remaining funds, the immediate priorities are confirming valid obligations, completing eligible expenditures, maintaining accurate reports, and preparing for closeout. For businesses, nonprofits, and residents, access generally depends on programs administered by recipient governments rather than a direct application to Treasury.
What Are State and Local Fiscal Recovery Funds?
SLFRF is a federal assistance program established under the American Rescue Plan Act of 2021. It gave eligible governments resources to address pandemic-related public health and economic challenges while supporting specified investments and services.
The program provided flexibility within defined eligible-use categories. It did not give recipients unrestricted authority to spend the money on any local priority.
Treasury’s rules, award terms, reporting guidance, and subsequent updates determine how recipients must administer the funding.
How SLFRF Relates to ARPA
ARPA is the broader law. SLFRF is one program created by that law. Education funding, housing assistance, and other ARPA-supported programs can have different administrators, eligible uses, and deadlines. A rule applying to SLFRF should not automatically be applied to every ARPA award.
How SLFRF Differs From a Federal Contract
SLFRF is financial assistance to eligible governments. It is not a federal procurement contract. A government may use its allocation to procure eligible goods or services, but that resulting contract is a separate arrangement governed by applicable procurement and award requirements.
Who Received SLFRF Funding?
Eligible recipients included states, territories, Tribal governments, metropolitan cities, counties, and qualifying smaller local governments.
Most eligible recipient categories received funding directly from Treasury. Smaller governments classified as non-entitlement units generally received their allocations through their state. These units can include towns, villages, townships, and other qualifying local governments.
Can Nonprofits and Businesses Receive Funds?
Yes, where a recipient government establishes an eligible program or enters into an appropriate agreement. However, a nonprofit or business does not become a direct Treasury recipient simply because its project receives SLFRF support. Its role might be a subrecipient, beneficiary, or contractor. That classification affects its responsibilities and should reflect the substance of the arrangement.
Can Individuals Apply?
Individuals generally do not apply directly to Treasury for an SLFRF allocation. A household may qualify for assistance through an eligible state, local, or Tribal program. Availability depends on the administering government’s current program rules, funding commitments, and deadlines.
What Can SLFRF Funds Be Used For?
Treasury identifies several eligible-use categories. Each has its own conditions, and some projects require additional analysis or documentation.
Replacing Lost Public Sector Revenue
Recipients could use qualifying revenue replacement funding to provide government services. Treasury’s framework included a standard allowance of up to $10 million, limited by the recipient’s award amount, as an alternative to calculating revenue loss under the prescribed method.
The standard allowance was a revenue-loss determination method, not an additional award. Recipients must review the election and reporting history already applicable to their award rather than assume they can make a new unrestricted election now.
Responding to Public Health and Economic Impacts
Eligible activities included responses to pandemic-related public health needs and negative economic effects on households, businesses, nonprofits, and communities.
A recipient must establish that an activity fits the applicable rules. A project’s general community benefit does not by itself establish eligibility.
Premium Pay for Essential Workers
The program authorized qualifying premium pay for eligible essential workers, subject to the category’s requirements.
Recipients need documentation establishing worker eligibility, qualifying duties, and compliance with applicable limits.
Water, Sewer, and Broadband Infrastructure
SLFRF supported necessary investments in eligible water, wastewater, stormwater, and broadband infrastructure.
Project eligibility depends on the relevant framework, technical conditions, and documentation. Not every infrastructure project qualifies under this category.
Additional Authorized Uses
Later amendments added categories for emergency relief from natural disasters, surface transportation projects, and certain activities eligible under the Community Development Block Grant and Indian Community Development Block Grant frameworks.
These added categories have separate conditions and limitations. They should not be treated as unrestricted alternatives to the original categories.
What Restrictions Apply?
A recipient should establish an eligible-use basis before charging an expenditure to SLFRF. The program restricts certain uses, including specified pension deposits, debt-related payments, and contributions to reserves.
Separate restrictions apply to certain uses by states and territories to offset reductions in net tax revenue. The exact restrictions and any exceptions must be reviewed under the applicable rules.
Avoid Duplicate Funding
The same cost should not be charged to multiple funding sources. When several grants support a project, maintain a clear allocation showing which source pays each expense.
Check Matching Requirements
Do not assume SLFRF can satisfy another federal program’s nonfederal match requirement. The answer depends on the SLFRF eligible-use category and the other program’s authority. Revenue replacement treatment can differ from other categories, and specific statutory exceptions may apply.
Apply Procurement and Other Award Rules
An eligible project can still create compliance problems if procurement, financial management, civil rights, environmental, or other applicable requirements are not met. Eligibility and administration are separate parts of compliance.
What Are the SLFRF Deadlines?
The general deadline to obligate SLFRF funds was December 31, 2024. The general expenditure deadline is December 31, 2026. Funds used under the Surface Transportation and Title I eligible-use categories had an earlier expenditure deadline of September 30, 2026.
Treasury requires recipients to return funds not expended by the applicable deadline, subject to the program’s specific rules governing expenditures and permitted closeout activity.
As of October 2026, the earlier September deadline has passed. Recipients should promptly review affected balances and any unresolved transactions.
Local Agreements May Require Earlier Completion
A state or local government can establish earlier deadlines for its subrecipients or contractors. These dates may allow time for invoice review, corrections, reconciliation, and federal reporting. Do not assume the federal deadline overrides an earlier agreement.
Obligations and Expenditures Are Different
An obligation generally involves a qualifying order, contract, subaward, or similar transaction requiring payment. Treasury also recognizes specific other obligations under its rules.
An expenditure concerns the use of funds for eligible costs.
A Budget Allocation Is Not Necessarily an Obligation
Approving a project budget, adopting a resolution, or announcing an intention to spend does not automatically create a qualifying obligation.
Likewise, transferring money to a general fund under revenue replacement does not alone establish compliance with the obligation requirement. Recipients should retain evidence showing when the obligation arose and what it required.
A Contract Does Not Mean the Funds Are Fully Spent
A timely contract may establish an obligation, but performance, expenditure, and documentation requirements remain. Recipients must assess open commitments rather than treating contracted amounts as completed expenditures.
Can Remaining Funds Be Moved to Another Project?
Potentially, but the rules are limited. Treasury describes circumstances in which funds can be reclassified to another eligible activity that also satisfies the timely-obligation requirement.
This does not provide unrestricted authority to launch unrelated new projects after the obligation deadline.
Before changing a project, review the original obligation, the proposed activity, prior reports, and the applicable guidance. A reporting change cannot create a timely obligation that never existed.
How Businesses and Nonprofits Access SLFRF Support
Start with the government administering the relevant program. Review its current assistance notices, procurement opportunities, and program contacts. Historical announcements do not establish that applications remain open.
Subrecipients
A subrecipient carries out part of the funded program. Its agreement may impose eligibility, reporting, financial management, and monitoring requirements. The recipient government remains responsible for appropriate oversight.
Beneficiaries
A beneficiary receives assistance through a qualifying program. Documentation may focus on eligibility, the permitted use of assistance, and evidence that program conditions were met.
Contractors
A contractor provides goods or services through a procurement relationship. Contractual deliverables, invoicing requirements, and applicable procurement conditions govern its role. A contractor should not assume that an agency’s award balance guarantees payment for work outside the agreement.
What Reporting Requirements Apply?
Recipients submit Project and Expenditure Reports according to their assigned reporting tier. Some report quarterly, while others report annually. Certain larger recipients also have Recovery Plan Performance Report requirements.
Use Treasury’s current guidance and reporting instructions to determine the schedule and required information.
Reconcile Reports With Accounting Records
Reported obligations and expenditures should agree with supporting records. Investigate differences between the general ledger, project records, subrecipient reports, and Treasury submissions.
Provide Clear Project Descriptions
A project description should explain the activity and its eligible-use basis. Generic labels such as “community expenses” may not provide enough information to understand how the funds were used.
Respond to Treasury Requests
Recipients should monitor portal messages and official correspondence. Treasury may request supporting information or clarification. Missing a response deadline can create compliance problems even when the underlying project is eligible.
What Happens During SLFRF Closeout?
Closeout confirms the financial and administrative status of the award. Spending the full allocation does not automatically close it. Treasury has established a process for eligible recipients invited to begin closeout.
Its resource hub provides preparation materials and submission instructions. Recipients should reconcile expenditures, resolve reporting issues, account for remaining funds, and complete required certifications.
Closeout Does Not Extend Project Spending
Treasury provides specific rules for certain closeout costs, final subrecipient invoice processing, and check-related issues. Those provisions are limited. They should not be interpreted as a general extension allowing projects to continue beyond the applicable expenditure period.
Responsibilities Can Continue After Closeout
Records, audit cooperation, and other post-closeout obligations can remain. Follow the award’s retention requirements and preserve records longer where an audit, investigation, litigation, or another applicable requirement demands it.
How to Manage Remaining SLFRF Funds
Reconcile the Entire Award
Compare the original allocation with valid obligations, expenditures, outstanding commitments, and cash balances. Separate unobligated amounts from obligated but unspent amounts.
Review Unfinished Projects
Identify incomplete work, disputed invoices, retainage, credits, and other unresolved items. Determine whether each cost can meet the applicable requirements and deadline.
Confirm Subrecipient Status
Obtain current financial and performance information. Review supporting records rather than relying only on assurances that spending will be completed.
Maintain a Complete Project File
Keep eligibility analyses, procurement records, contracts, invoices, payment evidence, reports, and relevant correspondence together.
The file should allow another reviewer to understand the transaction without relying on staff memory.
Escalate Uncertainty Early
Finance, grants, procurement, and legal personnel should coordinate on questionable obligations, changes, and delayed projects. Deadline pressure does not make an otherwise ineligible expenditure allowable.
Common SLFRF Compliance Mistakes
Common mistakes include confusing appropriations with obligations, assuming revenue replacement removes all restrictions, and treating a transfer to a subrecipient as proof that funds were fully spent.
Other problems include inadequate procurement records, duplicate charges, unsupported project changes, and stopping reports before the award is formally closed.
A recipient should also avoid relying exclusively on older summaries. Treasury has updated guidance over the program’s life, including instructions addressing obligations and end-of-program transactions.
Conclusion
State and Local Fiscal Recovery Funds supported government services, pandemic recovery, and eligible community investments. As the program approaches its general expenditure deadline, recipients should focus on valid obligations, completed expenditures, accurate reporting, and documented closeout.
Businesses, nonprofits, and residents should work through the administering government and confirm the terms of any available assistance. Clear records and careful review help recipients demonstrate that funds were used for authorized purposes and within the required timeframe.