Throughout the COVID-19 pandemic, the federal government has provided numerous financial stimulus packages to support the community and the economy. However, local governments have seen their largest funding source come from the signing of the American Rescue Plan Act (ARPA). The CARES Act funding primarily landed with states and counties, but for the first time with ARPA, 19,000 municipal governments were entitled to a direct, non-competitive federal formula grant from the U.S. Treasury Department.
ARPA includes $360 billion in the Coronavirus State and Local Fiscal Recovery Fund, which is the portion of ARPA designated for states and local governments. The allocation of the funding is as follows:
- State governments: $195.3 billion
- Tribal governments: $20 billion
- Local governments: $130.2 billion split evenly into
- $65.1 billion for 19,000+ municipal governments
- $65.1 billion for 3,000+ county governments
- New “Capital Project Fund”: $10 billion for broadband grants to states
Many local governments are currently trying to determine the best method for spending their designated ARPA funds. Since the ARPA funds will likely be subject to grant compliance single audits in the future, there is apprehension about ensuring the usage of the funds in an eligible fashion, and that all compliance remains a top priority. For many smaller governments, the receipt of this funding can lead to an entity’s first single audit. The compounding effect of this apprehension with the political pressures of utilizing the funding on efficient and effective programs, along with the Treasury Department’s guidance giving ample latitude for eligible spending, results in a wealth of uncertainties. For many governmental entities, there doesn’t seem to be a proper place to start when it comes to creating a spending plan.
If your organization received ARPA funds and is unsure of how to properly plan for efficient spending, there are several resources that can provide detailed insight into the process.
- Treasury Fact Sheet – this is an excellent source for anyone looking for a high-level summary that covers the key facts of the fund, including good descriptions of eligible and ineligible funding uses.
- Treasury FAQs – these are useful illustrative examples that describe how the act’s rules apply to specific scenarios. Although the examples don’t cover every possible scenario, the detailed explanations in the answers often provide good insights into the intent of the rules, which in turn help provide guidance for other scenarios.
- Treasury Interim Final Rule – this document provides extensive detail in a non-summarized version of the current interim final rule.
- Treasury Compliance and Reporting Guide – if you are looking for specific guidance on compliance or reporting requirements, this easy-to-digest guide contains two parts—one for general guidance and one for reporting requirements). There are also two appendices covering expenditure categories and additional information on evidenced-based intervention.
- GFOA Revenue Replacement Calculator – this is a simple but effective revenue replacement calculator is available to members on the GFOA website. The user-friendly experience functions similarly to an easy-to-understand spreadsheet. The revenue replacement rules provided by the Treasury Department may come in handy prior to using this calculator.
- National League of Cities and Association of Counties Websites – these organizations have consistently stayed up to date with the latest guidance and have provided helpful information for both cities and counties. These websites have pages dedicated to pandemic relief funding, and the National League of Cities has even included a large amount of data regarding where various cities are planning to spend their funds.
- State Websites – these can be particularly useful as certain states have additional layers of requirements or statutory considerations.
Despite this broad range of resources, it can be very challenging for governments to determine the best course of action to utilize these funds. However, engaging with a CPA firm allows governmental entities to receive answers to all of their questions while confidently preparing a plan for the future. If your organization has further questions on ARPA and how to utilize those funds, we encourage you to reach out to a CRI advisor for more information. You can also register to view CRI’s free webinar that further discusses the subject matter and will enable participants to pose questions to advisors.