The end of the pandemic public health emergency largely doesn’t change how state and local governments can use ARPA fiscal relief funds

Last week, Congress passed H.J.Res.7, a resolution that formally ends the public health emergency declared at the beginning of the COVID-19 pandemic. This termination is effective as of today—April 10, 2023—and signals the end of certain programs put in place in the past three years, including important measures related to Medicaid and health insurance.

However, the resolution will largely not affect the ability of state, local, territorial, and tribal governments to spend the close to $200 billion in unspent State and Local Fiscal Recovery Funds (SLFRF) allocated by the American Rescue Plan Act (ARPA). State and local governments will still be able to use remaining SLFRF dollars to make transformative investments to enhance equity and support working families and communities.

It’s not unreasonable to wonder if the official end of the public health emergency will limit the uses of SLFRF. References to the pandemic state of emergency appear throughout SLFRF’s enabling legislation and its final rule, which makes clear that the funds must be used “to respond to the public health emergency or its negative economic impacts.”

Thankfully, clear new guidance issued today by the U.S. Treasury Department clarifies that governments can and should continue to use SLFRF dollars for originally intended purposes. As the guidance says, ”recipients generally will be able to continue to make investments using their SLFRF funds without changes.”

The end of the public health emergency does not mean the impacts of the public health emergency have gone away, and SLFRF was intended to address those impacts. State and local governments will still have until December 31, 2024, to make spending decisions on SLFRF, and until December 31, 2026, to make expenditures.

There is one exception to how state and local governments can use SLFRF dollars. One of the allowed uses of SLFRF is to provide premium pay to low-wage workers who performed essential work during the pandemic. Premium pay (often called hazard pay or hero pay) is an effective tool to support low-wage workers and their families who kept our economy and health care systems afloat during the pandemic. Premium pay is still an eligible use of the funds; however, because premium pay can only be allocated for work performed “during the COVID-19 public health emergency,” premium pay can only apply to work done between January 27, 2020, and April 10, 2023.

The Treasury Department’s rules still allow for many options to use SLFRF to support low-wage workers, including allocating funds toward retention and recruitment bonuses for public-sector employees, paid leave to workers, and direct economic assistance to workers impacted by the pandemic. As such, the limitation on premium pay should not pose too great an inconvenience to state and local governments.

The Treasury guidance should allay any concerns that policymakers or advocates may have about allowed uses for the funds. SLFRF dollars should continue to be used to support transformative investments that support working families.