ARPA allows recipients to use funds to replace lost revenue in order to avoid cuts to governmental services, or to return services to their pre-pandemic level. The Interim Final Rule requires that the revenue loss be calculated at the entity-wide level, and specifies which revenues are allowable and which are excluded. Allocating grant funds to revenue loss is a multiple step process. First, grantees must calculate their lost revenue. For Massachusetts communities, the last full fiscal year that ended prior to the pandemic was FY2019, which will become the “Base Year” for calculation purposes. Communities are then able to compare the base year to each of four periods: calendar years ending December 31, 2020; December 31, 2021; December 31, 2022 & December 31, 2023. The base year is adjusted by a growth factor of 4.1% or average growth rate of the prior three years. The County will be awarding sub-grantees revenue loss based on the 4.1% rate.
Once the loss has been calculated, the grantee must use the funds towards a wide-range of governmental services. The Interim Final Rule did specify some exclusions that the funds cannot support.
In addition, grantees may not use these funds to lower their tax rate. Finally, only costs incurred beginning March 3, 2021 are eligible.
The projects will be treated as advancements to the applicant and will require the grantee to report on a quarterly basis the status of the project, including expenditures.