Best Practices for Monitoring the Distribution of ARPA Resources

More than 18 months have passed since the first American Rescue Plan Act (ARPA), and monies have been made available to US governments. While many localities have begun to invest their funding, many others are beginning their spending journey after carefully assessing their needs and gathering input from the community on spending priorities. One of the keys to maximizing the return on your ARPA investment is to regularly monitor how these funds are being spent to ensure compliance.

Regardless of its position in the spending lifecycle, there are several actions a locality can take to create a robust monitoring process to ensure that, once a project has been identified for investment, this ARPA funding is invested as intended and creates a long-term impact.

Set clear monitoring expectations

The Treasury Department (Treasury) has established recurring reporting obligations on how this money is spent.  Before entering into an agreement with the recipient, a locality should ensure that the recipient is aware of what information will need to be reported to Treasury so that they are ready to provide this information. These requirements should be included in all legal agreements between you and the recipient. It should also be made clear to the recipient that they will not only be providing the information required, but that the records supporting that information will also be subject to inspection by you or your designee and to be retained five (5) years after funding has been fully spent.

Differentiate your level of monitoring

There are not unlimited resources to be able to monitor every single transaction initiated by every ARPA recipient. Resources should be allocated to monitor those recipients using a risk-based approach. 

Allocate resources to monitor those deemed to be at a high level of risk.  Some indicators that a recipient may be at higher risk of non-compliance are:

• This is the first time that a recipient has received federal grant funds.
• The recipient does not have written policies and procedures governing basic financial management activities.
• The recipient is not drawing down on their ARPA funding in a timely manner.
• The recipient is not submitting the required reporting needed to report information to Treasury.

Identify specific needs

Once clear monitoring expectations are set, determine the frequency and plan for monitoring.  Whether it’s weekly (too much), monthly (about right), quarterly (at worst), or some other frequency, develop a monitoring plan, stick with it, and make sure recipients know exactly what documentation and data needs to be provided. Financial data that recipients should include:

• Executed contracts (including related procurement information if necessary)
• Purchase orders
• Invoices
• Payroll records supporting payroll charges
• Cancelled checks or other proof of payment
• Any other data to support disbursements paid with ARPA funding

It’s not just about financial data. You need to specify what non-financial data should be provided. In many instances, these non-financial measures will come from the program being delivered, such as how many customers were served. It may also include outcome measures, such as how many job trainees stayed employed at least six months after the program. Make sure to get a mix of both output and outcome measures.

Report the results

The result of your monitoring should be reported not only to those being monitored, but also to your constituents. The public should be aware of how these monies are being spent. Tell the story of how the ARPA funds are being spent and how the spending has a positive impact to community. Take before and after pictures, gather testimonials about the impact of the spending on the lives of recipients, and highlight success stories. All these actions enhance the credibility of your monitoring efforts and shows how the funds have been used to recover from the pandemic.

01/05/2023