Important information for local governments regarding the latest round of federal aid in the American Rescue Plan.

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Important information for three+one® clients regarding the latest round of federal aid from three+one®’s Director of Public Partnerships, Bill Cherry:

The latest federal aid package includes $65.1 billion going directly to counties, and another $65.1 billion earmarked for cities, towns, and villages. Also included is $130 billion for K-12 schools, $40 billion for colleges and public universities, and $30 billion for public transit. Provided below is our initial interpretation for three+one® clients of the allowable uses of the funds. We will continue to rely on our partners at the National Association of Counties (NACo), and the guidelines soon to be issued by the U.S. Treasury Department and the U.S. Department of Education for more detailed information as it becomes available.


  • COVID EXPENSES: Municipalities and public entities will be allowed to use the funds to cover any public-health expenses related to Covid-19, or to pay for any mitigation efforts related to stopping or slowing the spread of the pandemic.
  • COMMUNITY ASSISTANCE: The funds can be used to offset the negative impacts to the community and its businesses brought about by the health crisis. This could include grants to small businesses and not-for-profit organizations, rental and homeowner assistance, help for tourism, and a wide range of similar recovery programs.
  • PREMIUM PAY FOR ESSENTIAL WORKERS: The funds can be used to offer

“Premium Pay” to public employees who have been designated as “Essential Workers.”  These funds can also be transferred to the private sector through grants in order for businesses to offer Premium Pay to their essential workers. There will be a cap of no more than a $13 per hour bonus per employee, with a limit of no more than $25,000 going to any single individual.

  • LOSS OF REVENUES: The funds can be used to offset the loss of revenues brought about by the pandemic. For example, if a municipality’s sales-tax receipts were lower in 2020 than they were in 2019, funds from the American Rescue Plan could be used to fill in that revenue gap.  The U.S. Treasury may also require data that shows a reduction in government services related to the corresponding dip in revenues, but that is not completely clear at this point.
  • INFRASTRUCTURE: The funds can be used for infrastructure projects such as broadband expansion or improvements, water and sewer system improvements, and other similar infrastructure projects that are not necessarily directly related to COVID-19. Additional guidance from the U.S. Treasury, when it is issued, is expected to further clarify these types of allowable expenditures.


  •  NO PENSION EXPENSES: The funds cannot be used to pay for public or private employee pension-fund contributions or costs.

There may be other prohibited uses of American Rescue Plan funds. Rest assured, we will constantly monitor the U.S. Treasury website in order to provide our three+one® clients with the most recent information.

We are expecting our valued municipal and public-entity clients to see an inflow of about $1 billion in cash within the next 60 days.  And about 12 months from now, we expect to see a second $1 billion infusion going to these same clients. That is an enormous amount of liquidity that must be managed with the same due diligence and fiduciary oversight that our clients have already been using to manage their other public funds.

We have expanded our three+one® team and added new technologies in order to be fully prepared to seamlessly assist our clients with this once-in-a-lifetime funding opportunity. Keep in mind that by maximizing the interest income of these funds while they are in your custody, your municipality and your community can get an even bigger “bang for the buck.” It is also important to remember that three+one®’s services are considered to be an allowable expense under the latest U.S. Treasury guidelines.

We have an early estimates of allocations to state and local governments:


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