Municipal finance directors know the difference between restricted and unrestricted funds. Grants come with strings. Federal programs come with reporting requirements. State funding comes with approved use categories and audit trails.
PFAS settlement funds are different.
These aren’t grants. They’re damages. And once recovered, they become discretionary revenue for your municipality. You determine the priority. You decide how to allocate them. No federal oversight. No state approval process. No restrictions limiting you to water-related projects.
For municipalities constantly navigating funding constraints, this distinction matters.
Damages vs. Grants: Why the Structure Matters
When your municipality receives a federal or state grant, the money comes with conditions. You apply for a specific purpose. You spend according to that purpose. You report on how funds were used. Deviations require approval or can trigger clawback provisions.
Settlement funds work differently.
The PFAS settlement represents damages paid by 3M, DuPont, and other manufacturers for contamination they caused. Your municipality isn’t receiving a benefit from a government program. You’re recovering compensation for harm done to your community.
“Settlement funds are damages rather than grants,” explains Marcus Chen, Recovery Director at ERCZilla. “The legal structure is fundamentally different. Once these funds reach your municipality, they’re yours to allocate according to local priorities.”
This isn’t a technicality. It’s the difference between funding that serves someone else’s priorities and funding that serves yours.
What Unrestricted Actually Means
PFAS settlement funds are generally not restricted to water-related projects. While many municipalities will choose to invest in water infrastructure (and that’s a perfectly reasonable choice), it’s not required.
Once recovered, these funds can support:
Capital Infrastructure
Roads, bridges, municipal buildings, equipment replacement. The backlog of infrastructure needs that never quite makes it to the top of the budget.
Public Safety
Police, fire, EMS equipment and facilities. Training programs. Vehicle replacement. The investments that protect your community.
Community Facilities
Parks, recreation centers, libraries, community spaces. The quality-of-life infrastructure that makes your municipality a place people want to live.
General Fund Balance
Reserves, rainy day funds, budget stabilization. The financial cushion that protects against unexpected expenses or revenue shortfalls.
Water System Resilience
Treatment upgrades, distribution improvements, source redundancy. If water infrastructure is your priority, settlement funds can absolutely support it.
Debt and Liability Management
Paying down existing obligations, funding pension liabilities, addressing deferred maintenance. Strengthening your municipality’s long-term financial position.
Economic Development
Business attraction, workforce development, downtown revitalization. Investments that grow your tax base and create opportunities.
Stormwater Management
Drainage improvements, flood mitigation, green infrastructure. Projects that protect property and reduce long-term costs.
“The flexibility is the point,” says Sarah Mitchell, Municipal Partnerships Lead at ERCZilla. “Every municipality has different priorities. Settlement funds let you address yours, not someone else’s idea of what you should care about.”
Why This Matters for Municipal Budgets
Municipal budgets are zero-sum games. Every dollar allocated to one priority is a dollar unavailable for another. And restricted funding sources, however welcome, don’t solve the fundamental problem of limited discretionary capacity.
PFAS settlement funds change that equation.
Consider a municipality that recovers $2.5 million (approximately the average recovery, though amounts vary). That’s not $2.5 million earmarked for water projects. That’s $2.5 million of budget flexibility.
Maybe your water system is fine but your fire trucks are aging. Maybe your roads are deteriorating faster than your paving budget can address. Maybe you’ve been deferring maintenance on municipal buildings for years. Maybe your general fund balance is below where it should be.
Settlement funds can address any of these. All of them. Or something else entirely.
“For finance directors, unrestricted revenue is the scarcest resource,” notes David Park, PFAS Claims Specialist at ERCZilla. “Grants are great, but they fund what the grantor wants funded. Settlement damages fund what you need funded.”
The Strategic Opportunity
Smart municipal leaders are thinking about PFAS settlement funds not as water money, but as a one-time opportunity to address deferred priorities.
Every municipality has a list. Projects that matter but never rise to fundable. Investments that would pay off over time but can’t compete with immediate needs. Infrastructure that’s adequate today but won’t be in ten years.
Settlement funds can move items from that list into reality.
Some municipalities will use the funds for water system improvements. That makes sense, especially for systems that need treatment upgrades or have aging infrastructure. The settlement exists because of water contamination, and reinvesting in water systems is a logical choice.
But it’s a choice, not a requirement.
Others will use the funds to accelerate road repairs, replace public safety vehicles, build reserves, or invest in economic development. These are equally valid uses. The settlement doesn’t judge. The funds are yours.
“We’ve talked with municipal officials who immediately see the strategic value,” Mitchell says. “They’re not thinking about this as a water issue. They’re thinking about it as a budget issue, and asking how they can use this opportunity to strengthen their overall financial position.”
What This Means for the Decision
If your municipality has been hesitant about the PFAS settlement because water isn’t your top priority, reconsider.
The settlement isn’t asking you to care about water more than you do. It’s offering discretionary revenue that you can allocate however you determine. If water is priority number five on your list, you can still recover funds and spend them on priorities one through four.
The only requirement is that you file a claim before the July 2026 deadline.
The average recovery is approximately $2.5 million, though amounts vary based on water system size and PFAS detection levels. For systems with multiple water sources, each source may qualify separately.
That’s real money. Unrestricted money. Money that goes wherever your community needs it most.
Next Steps
If you want to understand what your municipality might recover and how those funds could fit into your budget priorities, schedule a brief call. We can confirm eligibility, discuss the likely recovery range, and talk through how other municipalities are thinking about fund allocation.
You can also learn more about the claims process or review additional questions. The deadline is July 2026. The funds are discretionary. And the only municipalities that won’t benefit are the ones that don’t file.
