CRF vs CSLFRF Funding

In March 2020, the CARES Act was passed by Congress and established the $150 billion Coronavirus Relief Fund (CRF) to aid State, Local, and Tribal governments in navigating the immediate impacts of the COVID-19 outbreak and pandemic.

The CARES Act required that the payments from the CRF only be used to cover expenses that

  1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19);
  2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and
  3. were incurred during the period that begins on March 1, 2020, and ends on December 31, 2021.

The Coronavirus State and Local Fiscal Recovery Fun (CSLFRF) program was established in March 2021 as part of the American Rescue Plan Act (ARPA) and delivers $350 billion to State, Local, and Tribal governments with the resources needed to:

  • Fight the pandemic and support families and businesses struggling with its public health and economic impacts
  • Maintain vital public services, even amid declines in revenue resulting from the crisis
  • Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity

The Treasury has released the Final Rule for the program, which will take effect on April 1, 2022.


Although both CRF and CSLFRF funding are provided to state, local, and Tribal governments for expenses related to COVID-19, there are key differences between the two programs.

The Coronavirus Relief Fund (CRF) was designed as an immediate response, focusing on short-term needs and providing funding for a short-period performance. The guidance was ever-changing and left many areas open for interpretation. Meanwhile, the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) was designed for the costs necessary to aid in the long-term recovery from the pandemic with funding available through December 31, 2024. The guidance has been more detail-focused, providing less opportunity for interpretation.

Program Administration Provisions

The Final Rule includes several sections describing the process and requirements for administering the CSLFRF program on an ongoing basis, specifically for the distribution of funds, transfer of funds, use of funds for program administration, reporting on the use of funds, and remediation and recoupment of funds used for ineligible purposes. I recommend you consult the Treasury’s Compliance and Reporting Guidance for additional information on program administration processes and requirements, including the applicability of the Uniform Guidance.

Unallowable Costs and Limitations for CSLFRF

The Treasury left a lot of latitude for what the funds may be used for, but there are some very clear rules for things that are not permitted, including:

  • Deposits into Pension Funds
    • Extraordinary contribution for the purpose of reducing an accrued, unfunded liability.
    • Routine Payroll contributions associated with wages charged to the program for an eligible employee are allowable.
  • Debt Service payments
  • Rainy day fund/reserve replenishments
  • Satisfaction of a settlement or judgment
  • Use cannot undermine the COVID-19 mitigation practices in line with CDC Guidance and recommendations.
  • Use may not violate Uniform Guidance conflict-of-interest requirements or other applicable laws.

Using CSLFRF Funding for Non-Federal Match and Cost-Share

As a general matter, referenced in the Supplementary Information to the Final Rule, funds provided under one federal program may not be used by a recipient to meet the non-federal match or cost-share requirements of another federal program. However, Treasury has determined that any funding you claim under the revenue loss provisions of the program may be used for non-federal cost-share or matching requirements. However, funds not claimed under revenue loss may not be used for non-federal cost-share or matching requirements.

There are two specific exceptions listed in the guidance. There is a specific allowability written into the Infrastructure Investment and Jobs Act for using these funds for local match-type purposes and for certain broadband deployment projects. This is defined better within the guidance and if you’re working on a broadband project, I highly recommend you read all of the details.

The second exception listed is these funds cannot be used for state Medicaid or CHIP programs for matching purposes, even if funds are available under revenue loss.


All federal programs must follow the procurement requirements in the Uniform Guidance. The guidance covers large project issues and micro and small purchases. It also specifically defines emergency procurements.

Treasury does not prohibit cooperative procurements, as long as the original procurement was conducted in accordance with the requirements in the Uniform Guidance. If you are not certain if the cooperative procurement was completed in accordance with all requirements, you would want to avoid using that option and either pursue another cooperative procurement option or conduct your own procurement process.

It is important to note that the Davis-Bacon wage rate requirements do not apply to CSLFRF funding, with one exception. If the CSLFRF funds are being used in conjunction with other Federal funds that contain Davis-Bacon wage requirements, then that will require Davis-Bacon to be followed for the CSLFRF portion of funds used for that project as well.


Reporting Requirements

Reporting requirements for CSLFRF funding will be more extensive than CRF funding and the requirements vary based on certain factors. The Treasury has divided funding recipients into six tiers based on entity type, population and the amount of funding received.




States, U.S. territories, metropolitan cities and counties with a population that exceeds 250,000 residents


Metropolitan cities and counties with a population below 250,000 residents which received more than $10 million in SLRFRF funding.


Tribal Governments which received more than $30 million in SLRFR funding.


Tribal Governments which received less than $30 million in SLRFR funding.


Metropolitan cities and counties with a population below 250,000 residents which received less than $10 million in SLFRF funding.


Non-entitlement units of local government (NEUs)


Interim Reporting

A one-time initial report was due by August 31, 2021 or if you received funding prior to October 15, 2021, the report was due sixty days after you received the funding. The only exception is tier 6, NEUs. You can view reports filed by others on the Treasury website.

Project & Expenditure Reporting

There are two categories for project and expenditure reporting that must include information on projects, expenditures, revenue loss, and contracts and subawards over $50,000.

Recipients in tiers one, two and three will be required to provide quarterly reports starting January 31, 2022. This includes all localities that received over $10 million in funds and have a population of more than 250,000 residents or Tribal Government that received more than $30 million in funds.

Recipients in tiers four, five and six will be required to provide a report on April 30, 2022 then annually thereafter. This includes smaller localities that received less than $10 million in funds and have a population of less than 250,000 residents, Tribal Governments that received less than $30 million in funds, and all NEUs

Recovery Plan Performance Reporting

Only recipients in tier one, states, territories, cities, and counties with a population that exceeds 250,000 residents, are required to provide a recovery plan performance report. This report must include information on project undertakings, a plan to ensure program outcomes are achieved and include key performance indicators (KPIs) to gauge program success. The first report was due on August 31, 2021 and all future reports are due annually starting July 31, 2022.


Single Audit Impacts

The CSLFRF program will be a major program for most localities. With the amount of funding involved and the amount of funds you’re likely to use on an annual, it’s going to be a major program for the next few years. Treasury and OMB have designated this program to be of higher risk. That means, your auditor must consider this program to be riskier than the average program when making their annual risk assessment and what they are going to test every year.

Smaller towns that have not had to complete a single audit in the past, or have not had one in a while, will experience a very new process. I encourage you to reach out to your auditor and talk through what’s going to happen and what it means for you moving forward.

In 2021, Treasury and OMB released a compliance supplement addendum providing an indication of what will happen going forward. While we will have to wait for the release of the 2022 compliance supplement for any changes, based on current guidance, auditors will be focusing their testing on:

  • Activities Allowed/Unallowed
  • Allowable Costs/Cost Principles
  • Period of Performance
  • Procurement, Suspension, and Debarment
  • Reporting
  • Subrecipient Monitoring

Treasury provides a nice overview of these compliance requirements and what they include on pages 6-10 of the compliance and reporting guide.


Lessons Learned from CRF Audits

Based on the results of our audits of CRF in the fiscal year 2021 audit cycle, we have a few suggestions and best practices to aid in your CSLFRF audits:

  1. Make sure all reporting is reviewed and documented. The finance director shouldn’t be the only eyes involved in reviewing the reports.

  2. Retain copies of reporting filed in portals, google docs, etc. This is a huge help to your auditor, who will have a hard time auditing without them.

  3. All subrecipients should have written agreements, periodic monitoring and accounting for funds. Verbal communications and formal email do not meet the requirement of having a written agreement. A written agreement is a requirement of the Uniform Guidance. You need to establish a periodic monitoring process to ensure funds are being used appropriately.

  4. Document your rationale in writing. Don’t rely on your memory or others to retain information. You should have all documentation available when it comes time to justify expenses and support your reporting to either Treasury or your external auditor.

Finally, I encourage you to explore Treasury’s website and the guidance they have published. There you can find the Final Rule document, an overview document, and reporting guidance and guides. Additionally, Treasury has released descriptions of what it considers best practices for internal controls. This can be found in their reporting and compliance guidance document.

Other resources include the websites for the Government Finance Officers Association (GFOA), the National Association of Counties (NACO), and the National League of Cities (NLC). Each of these entities has been publishing information and updates on a regular basis.

Please reach out to me or any of the Brown Edwards auditors if you have any questions or concerns regarding federal funding. You can watch my full presentation on the Brown Edwards YouTube channel.

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