American Rescue Plan Act Guidance

Monday, May 10, 2021, The U.S. Treasury Department issued guidance that established limits on the $350 billion in direct aid to States and Municipalities issued in the American Rescue Plan. The money was allocated to help state and local governments shore up budget deficiency created by the COVID-19 economic crisis and to reinvest in economic recovery.

The state funding is allocated based on each state’s unemployment rate in the past year. Massachusetts  received $5,286,067,526.40.  Local governments received half the money in May and the second half next year. States have broad flexibility and discretion to use the funds within specified categories of eligible use.

      • Public Health– by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff.
      • Address Negative Economic Impacts- including economic harms to workers, households, small businesses, impacted industries, and the public sector.
        • Delivering assistance to workers and families, including aid to unemployed workers and job training, as well as aid to households facing food, housing, or other financial insecurity.
        • Supporting small businesses, helping them address financial challenges caused by the pandemic and making investments in COVID-19 prevention and mitigation tactics, and providing technical assistance.
        • Speeding the recovery of the tourism, travel, and hospitality sectors, supporting industries that were particularly hard-hit by the COVID-19 emergency and are just now beginning to mend.
        • Rebuilding public sector capacity, by rehiring public sector staff and replenishing unemployment insurance (UI) trust funds, in each case up to pre-pandemic levels.
      • Replace Lost Public Sector Revenue-using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic.
      • Premium Pay for Essential Workers– offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors.
      • Water, Sewer, and Broadband infrastructure– making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and expand access to broadband internet.

States cannot use the money to offset operating expenses and then cut taxes. If a state does cut taxes, it will have to demonstrate to the Treasury Department that it offset that lost revenue with spending cuts or another source of revenue that does not include the fiscal recovery funds. The treasury reserves to right to claw back money it deems improperly spent. States can also not deposit ARPA dollars into pension funds or rainy-day funds. More information is available on the Treasury’s Website.

AIM recommendations for ARPA funds

Unemployment Insurance Trust
      • The state UI system took an unprecedented hit during COVID-19 when unemployment rates skyrocketed following public health guidelines and business closures from state and federal government.
      • Businesses stepped up and fulfilled their obligations, but it will still be upon them to pay off the Trust Fund deficit in the long term through additional surcharges on their traditional UI bills.
      • Replenishing the state UI Trust Fund – the program through which Massachusetts pays out all unemployment claims, will allow businesses to keep more money in their pockets for rehiring and operations purposes necessary to get the Commonwealth’s economy back on track.
      • The female workforce across the nation lost a generation’s worth of progress throughout the pandemic, bringing women’s labor force rates to the same levels as 1988.
      • Lack of affordable and reliable childcare is a leading cause of gender disparity in the workforce.
      • We ask that this money be spent to fund:
        • Direct support to childcare providers to bring centers up to sufficient enrollment capacity, with an emphasis on providing flexible services as the Commonwealth adjusts to hybrid working models;
        • Viable new centers in identified ‘childcare deserts’ across the state;
        • Vouchers and contracts to offset the burdensome costs of childcare on parents.
Workforce Training
      • $150 million for Vocational Technical Education and workforce credentials for entry and mid-level wages;
      • $35 million to Community Colleges million to fund English for Speakers of Other Languages programs and Adult Basic Education;
      • $265 million to fund a suite of job proven training programs,
        • $25 million for work readiness and essential skills programs;
        • $25 million for Workforce Competitiveness Trust Fund;
        • $30 million to Career Technical Institutes;
      • We strongly believe that affordable housing options will be a critical issue for Massachusetts to remain competitive in the labor market
      • $300 million to support expanded homeownership opportunities
      • $200 million to support MassHousing’s Commonwealth Builder Program and similar efforts, which aim to help communities of color build wealth by promoting home ownership
      • $200 million to fund rental housing production
      • $300 million to finance the statewide production of senior and veteran housing.
Non Profits
      • Many nonprofits reimburse the UI system on a per-employee basis rather than through a traditional payroll tax and, due to the pandemic, they suffered closures and heavy workforce losses at the same time as demand for their services was increasing.
      • It is difficult for nonprofits to increase service costs to make up for the revenue lost in the last year and a half.
      • AIM believes a state-run grant process could aid some of the nonprofits still reeling from the COVID-19 crisis

Sam Larson
Associate Vice President, Government Affairs

Learn more about 2021 COVID Stimulus Package »

Policy Watch

Vaccines and testing

$8.75 billion to federal, state, local, territorial, and tribal public health agencies for distributing, administering, and tracking vaccinations, with some funds specially dedicated to making sure the vaccination process reaches underserved communities.

Vaccine development

$20 billion going to federal biomedical research for a vaccine and therapeutic manufacturing and procurement; $3 billion for a strategic national stockpile of vaccines and $25 billion would be spent on testing, contact tracing, and reimbursing hospitals for lost revenue related to the pandemic.

Tax credits for children

For one year only – Increase the $2,000 Child Tax Credit to $3,000, set the credit at $3,600 for parents of children under age 6, and make parents of 17-year-olds eligible. It would also make the credit fully refundable, so low-income households would get the full benefit, no matter how little they earn.

Student loan forgiveness

Student-loan forgiveness free from income taxes for 2021-2025.

Minimum-wage increase

$15/hour minimum wage not included.


$130 billion in funds for K-12 schools to reduce class sizes, improve social distancing, improving ventilation, and provide more PPE.


Expands eligibility for subsidies to purchase insurance to people of all incomes and caps the maximum premium at 8.5% of a person’s income. It also takes steps to lower, or even zero out, premiums for people making less than 150% of the federal poverty line.


Encourages the expansion of Medicaid by having the federal government pay for new recipients. Employees who lose their jobs or lose benefits because of working fewer hours qualify for 100% Cobra health-insurance subsidies.


Federal workers, including postal workers, take as many as 600 hours of emergency paid leave related to Covid-19. The restaurant industry will receive $25 billion in relief targeted at small and midsize restaurants and chains.