Some cities might not realize they can invest ARPA dollars into human resources.

Last year, Congress passed the American Rescue Plan Act (ARPA) sending billions of federal dollars directly to cities across the country. While many communities are considering investments in infrastructure, replacing lost city revenues, or setting up community support programs, some cities might be overlooking a valuable option: investing in human resources.

Here are three things human resources can use ARPA funds for under Treasury’s Final Rule.

1. Fund public safety, public health, and human services staff
Using ARPA dollars, cities may fund payroll and covered benefits for the portion of an employee’s time spent responding to the COVID-19 pandemic. Eligible staff include:

• Police officers
• Firefighters
• Emergency medical responders
• Correction and detention officers
• Dispatchers and supervisor personnel that directly support public safety staff
• Employees providing or administering social services and public benefits

If cities decide to fund these positions using ARPA dollars, they must track and maintain records to support their assessment. However, cities do not need to track staff hours.

To help streamline, Treasury has indicated that cities can consider the employees listed above entirely devoted to responding to COVID-19 if the employee or their unit or division is primarily dedicated to responding to COVID-19. Per Treasury, “primarily dedicated” means that more than half of the employee, unit, or division's time is dedicated to responding to COVID-19.

As a reminder, responding to the COVID-19 pandemic covers more than just responding to the direct health impacts of the virus. Responding to the pandemic also includes activities such as:

• Providing support and services to individuals and families who lost jobs or income due to the pandemic;
• Responding to an increase in community violence; or
• Supporting local businesses and nonprofits that may have seen a downturn in business or donations due to the pandemic.

With this in mind, you might have more staff than you initially thought who qualify as “responding to COVID-19.” For example, a staff member tasked with running a grant program for local businesses impacted by COVID-19 could be considered eligible to have their payroll and benefits covered for the portion of time they are spending running the program.

2. Rehiring and staffing up public sector staff
During the initial months of the pandemic, over 50% of surveyed cities indicated they had implemented hiring freezes in response to the pandemic. An additional 25% of cities implemented furloughs with almost 20% of cities laying off employees.

Under ARPA, cities now have more ways to rehire staff laid off due to the pandemic and hire additional employees to fill staffing needs within the city. Cities have two options:

• Hire back employees for pre-pandemic positions:
  Cities may use ARPA dollars to hire employees for positions that existed on January 27, 2020 but were unfilled or eliminated as of March 3, 2021. For example, if you had a city planner position on January 26, 2020 but that position was eliminated on August 28, 2020, you could use ARPA dollars to rehire the city planner position and cover payroll and benefits through December 31, 2026.
• Hire above the pre-pandemic staff levels or hire different positions:
  Treasury is allowing cities to hire up to an additional 7.5% of a city’s pre-pandemic staffing levels. To do so, cities must use the following process:
  • Calculate the pre-pandemic baseline: Cities will need to identify their budgeted FTE level on January 27, 2020. This budget level should include filled and unfilled positions.
  • Calculate the adjusted pre-pandemic baseline: Using the pre-pandemic baseline, cities should multiply that number by 1.075.
  • Calculate the actual number of FTEs: Next, cities will need to calculate the budgeted FTE level on March 3, 2021. Cities may (but are not required to) exclude the number of FTEs hired specifically to respond to the COVID-19 public health emergency.
  • Calculate the number of FTEs covered by ARPA funds: Cities can then subtract the actual number of FTEs from the adjusted pre-pandemic baseline.

Cities using this formula are not required to hire staff for the same roles or positions that existed prior to the pandemic.

Here’s an example of how you can use the above formula:

• On January 27, 2020, your city had 95 FTEs with 5 vacant FTEs. Your city’s pre-pandemic baseline would be 100 FTEs.
• Taking that number and multiplying it by 1.075 would yield 107.5 FTEs as the city’s adjusted pre-pandemic baseline.
• On March 3, 2021, your city has 102 FTEs. This would be your actual number of FTEs.
• Finally:
  • Take your adjusted pre-pandemic baseline (107.5 FTEs); and
  • Subtract your actual number of FTEs (102 FTEs); which
  • Yields the number of positions your city could hire using ARPA funds (5.5 FTEs).

As a reminder, cities can only fund these positions using ARPA dollars through the period of performance which ends on December 31, 2026.

3. Retain existing city staff
By this point, we all know about the Great Resignation. Under the Final Rule, cities can use ARPA funds to retain current employees and avoid layoffs. Here are three ways cities can use ARPA funds to retain existing staff:

• Provide additional funding to employees who experienced pay reductions or who were furloughed since the beginning of the pandemic. Cities will need to take into account unemployment benefits that employees received.
• Maintain current salary levels to prevent layoffs. ARPA funds can be used to maintain current salary levels including taking inflation into account in order to prevent layoffs.
• Providing worker retention incentives, including reasonable pay increases. Retention incentives need to be additive to an employee’s current compensation and should not exceed incentives traditionally offered by the city to compete for employees. Treasury states that incentives that are less than 25% of the base rate of pay for an individual or 10% for a group or category of employees are reasonable to retain employees.

4. Bonus: Cities can use ARPA dollars to pay for the administrative costs of hiring, support, and retention programs listed above

For more information on how cities can invest in human resources, please check out the Final Rule or the Overview of the Final Rule. Remember, be sure to review allowable uses of public funds under Washington state law. Before using any ARPA funds, please be sure to review your plans with your city’s legal counsel.