How State and Local Governments Can Optimize Their ARPA Funds

In March 2021, Congress passed the American Rescue Plan Act (ARPA). ARPA will deliver $350 billion for eligible state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and bring back jobs.

This much-needed relief is intended to:

• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control
• Replace lost revenue for eligible state, local, territorial, and Tribal governments to strengthen support for vital public services and help retain jobs
• Support immediate economic stabilization for households and businesses
• Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic

The Coronavirus State and Local Fiscal Recovery Funds (SLFR) provide substantial flexibility for each government to meet local needs—including support for households, small businesses, impacted industries, essential workers, and the communities hardest hit by the crisis. These funds can also be used to make necessary investments in water, sewer, and broadband infrastructure.

These SLFR funds will be received in May 2021 and May 2022, must be formally obligated to be spent by December 31, 2024, and must be fully expended by December 31, 2026.

STRATEGIZE

ARPA spending should be linked closely with the long-term strategic objectives of your government. Funds should be spent on one-time projects expected to have long-term, sustainable impact on the community. We recommend:

• Establishing a steering committee to set guidelines on how SLFR funds are to be spent and to ensure that they are integrated into annual operating budget and long-term capital budget spending priorities
• Surveying your constituents on how they would like funds spent
• Avoiding temptation to commit all the money to projects known today. Great ideas may come up over the next few years. Save a few bucks to fund those initiatives later

CONTINUOUSLY MANAGE AND MONITOR

While the regulations provide substantial flexibility, the SLFR funds do come with strings attached. We recommend:

• Establishing a separate cost center to track closely all SLFR spending
• Tracking individual projects separately, including monitoring not only monies already spent, but also projecting the estimated time to completion to ensure projects are done on time and within budget
• Spot checking costs incurred to ensure appropriate documentation is maintained and that they are spent on allowable costs

TRANSPARENT REPORTING

With this much money, numerous parties will be interested in how the money is spent. We recommend:

• Establishing a public transparency portal so that constituents can see how the money is being spent
• Developing an executive dashboard to present, by project, the project status, including money already spent and money projected to be spent. This will monitor total spending to ensure that there is no money projected to be “left on the table”
• Developing a monthly report to be presented to your Board/Council, detailing summarized information so that they can monitor how SLFR funds are being spent in order to be responsive to their constituents
• Tracking all reports to be submitted to appropriate state and federal entities

THE NEXT STEP

If you would like further information about setting your ARPA strategy, managing and monitoring your SLFR funds, or reporting your spending to the appropriate authorities, contact us today.