Leveraging ARPA Funds

Leveraging ARPA Funds

President Biden signed the American Rescue Plan Act (ARPA) into law on March 11, 2021, in order to support the U.S. economy that continues to feel the impacts of the ongoing Covid-19 pandemic.

The pandemic continues to impede tax revenues and increase costs across the nation along with highlighting disparities amongst the most vulnerable in the country. The ARPA stimulus package of $1.9 trillion dollars of federal funding brings communities an unprecedented opportunity to strategically plan for how to leverage the funds to rebuild a stronger, more resilient country with a long-term vision of a more equitable environment for all Americans.

The federal funding is to be used to support a sustainable economic recovery from the pandemic; allocated funds for under the ARP Act, in the State and Local Fiscal Recovery Funds (SLFRF) can address municipal infrastructure issues in four eligible use categories according to the US Department of the Treasury’s Final Rule, just released on January 6, 2022, and it goes into effect April 1, 2022.  Until that time, the Interim Final Rule remains in effect after which the Treasury can take action to enforce Final Rule to ensure compliance and accountability. The Final Rule Overview is here for reference.

The Treasury began distributing funds to governments in 2021 and were encouraged to spend it under the Interim Final Rule.

To date, according to a 2022 press release, the Treasury has distributed more than $245 billion to state, local, and tribal governments as a part of the SLFRF program, accounting for over 99% of funds eligible to be disbursed in 2021. The expeditious allocation of these federal resources must address state and local communities’ most urgent and critical needs in a maximized manner that is lasting and inclusive, and must have powerful positive impacts on public services that will spur economic growth benefits for those most impacted during the pandemic. The Center on Budget and Policy Priorities found that state governments have appropriated nearly 70% of their available funds as of November 2021. According to a January 6, 2022 statement of compliance, such significant steps include “initiation of procurement or grant making actions, detailed planning of projects or programs, appropriation of funds, and other significant planning steps.”.

The allocation of the federal funds provides the governing bodies with the flexibility to address unique budget challenges associated with the ongoing pandemic.

Each municipality must determine and commit to addressing their specific needs and  consider the most advantageous solutions with a clear understanding of their particular community’s needs. The key is to align the funding with the diverse and evolving needs of their  citizens to ensure a broad scope and depth that can allow coverage of essential government services. It is essential to stay on top of the evolving regulations and forthcoming updates on how to comply and report,proceeding with caution, carefully maintaining compliance.

In response to carefully considered feedback, the Treasury’s Statement of Compliance on the SLFRF, approved uses of the funds have been clarified to support strategic planning:

  • Replacing lost revenue to maintain public services in decline,
  • Restoring the state unemployment trust fund or paying back advances from Title XII under the Social Security Act for payment of benefits
  • Providing premium pay to retain essential workers
  • Hiring up to 7.5% more employees above pre-pandemic levels
  • Investing in water or sewer projects, including dams or reservoir rehabilitation issues with stormwater, private wells, or remediation of lead in water
  • Modernizing broadband infrastructure and cybersecurity along with offering access to affordable programs to access the internet
  • Investing in neighborhoods with abandoned or vacant properties
  • Determining presumptive eligibility for low to moderate income households
  • Offering public health insurance subsidies and paid family and sick leave

Scrupulous planning that complies with federal standards will pay off in the future.

The heart of the ARP’s vision relies on policies, and the implementation of those policies by all stakeholders who must carry them out fairly and equitably. Be sure to maximize your allocation by building net worth in this once in a lifetime opportunity to invest wisely. Moreover, feel free to contact our dedicated team of professionals at RBT who specialize in helping government clients. We look forward to providing you with personalized services and answering industry-specific questions.