American Rescue Plan Act: Invest in Resilient Infrastructure

August 5, 2021 - James McCann

Our posts have covered the American Rescue Plan Act, focusing on the State and Local Fiscal Recovery Funds (SLFRF). We delved into strategic planning, best practices, allowable uses, reporting, and accounting. We suggested a concrete course of action. In this blog post, we want to conclude the series with discussions of using ARPA for updating technology, the third mandated report, and a brief look at GFOA’s important guidance.

Buying Technology with SLFRF: Three citations from the guidance

We have previously recommended taking a slice of your SLFRF to upgrade the government’s ERP and other information technology, moving into the cloud for greater security and efficiency. The SaaS business model means that even major moves are no longer old-school capital projects, and can be funded on a pay-go basis for annual fees and one-time consulting and professional services support.

Modern technology makes it easier to plan, communicate, and implement financial and performance plans, administer subrecipient programs, and report, audit, and provide transparency around it all. These three citations from Treasury’s Compliance and Reporting Guidance recognize these values:

1. Improvements to data or technology infrastructure and data analytics

“To support their performance measurement and program improvement efforts, recipients are permitted to use funds to make improvements to data or technology infrastructure and data analytics, as well as program evaluations.” – Compliance and Reporting Guidance page 27

2. Administering SLFRF programs

“Recipients may use funds for administering the SLFRF program . . .  Recipients are permitted to charge both direct and indirect costs to their SLFRF award as administrative costs….

• Direct costs are those that are identified specifically as costs of implementing the SLFRF program objectives, such as contract support, materials, and supplies for a project.

• Indirect costs are general overhead costs of an organization where a portion of such costs are allocable to the SLFRF award such as the cost of facilities or administrative functions like a director’s office.” – Compliance and Reporting Guidance page 7

3. SLFRF revenue replacement for a broad range of government services

“Consistent with the broad latitude provided to recipients to use funds for government services to the extent of reduction in revenue . . . For example, a recipient with $100 in revenue replacement funds available could indicate that $50 were used for law enforcement operating expenses and $50 were used for pay-go building of sidewalk infrastructure.”  – Compliance and Reporting Guidance page 14

Subrecipient Programs Under SLFRF

Subrecipients are entities that receive an award from an SLFRF receiving government to carry out programs or projects on behalf of that government. ARPA provides numerous references to potential subrecipient programs that governments might consider:

• Assistance to individuals within the eligible use categories 

• Assistance to households – such as rent, mortgage, or utility assistance

• Subawards to third-party employers for premium pay retrospectively for work performed at any time since the start of the COVID-19 public health emergency. 

• Small Business Economic Assistance

• Aid to Travel, Tourism, and Hospitality or Other Impacted Industries

• Education Assistance

• Transfers made to other government entities

Programs might include contracts, grants, loans, and/or direct payments

Eligible Costs Timeframe: March 3, 2021, to December 31, 2024

Your organization, as a recipient of an SLFRF award, may use the funds to cover eligible costs that your organization incurred during the period that begins on March 3, 2021, and ends on December 31, 2024, as long as the award funds for the obligations incurred by December 31, 2024, are expended by December 31, 2026. 

Costs for projects incurred by the recipient State, territorial, or local government prior to March 3, 2021, are not eligible, as provided for in Treasury’s Interim Final Rule.

Assistance to others for costs incurred prior to March 3, 2021

Recipients may use SLFRF award funds to provide assistance to households, businesses, and individuals within the eligible use categories described in Treasury’s Interim Final Rule for costs that those households, businesses, and individuals incurred prior to March 3, 2021.

Treasury Report

Initial Project and Expenditure Report by October 31, 2021 (all governments)

The Initial Quarterly Project and Expenditure Report will cover two calendar quarters from the date of award to September 30, 2021, and must be submitted to Treasury by October 31, 2021.

1. Quarterly Reporting: Metropolitan cities and counties that received more than $5 million in SLFRF funding. Subsequent quarterly reports will cover one calendar quarter and must be submitted to Treasury within 30 calendar days after the end of each calendar quarter. Quarterly reports are not due concurrently with applicable annual reports. The table below summarizes the quarterly report timelines:

2. Annual Reporting: Metropolitan cities and counties that received less than $5 million in SLFRF funding and NEUs. Subsequent annual reports will cover one calendar year and must be submitted to Treasury by October     31. The table below summarizes the report timelines:

3. Required Information for Project and Expenditure Reports:

•  Projects: Information on all SLFRF funded projects. Projects are new or existing eligible government services       or investments funded in whole or in part by SLFRF funding.

Expenditures: Once a project is entered the recipient will be able to report on the project’s obligations and expenditures. Recipients will be asked to report:

• Current period obligations

• Cumulative obligations

• Current period expenditures

• Cumulative expenditures

Project Status: Once a project is entered the recipient will be asked to report on project status each reporting period, in four categories:

1. Not Started

2. Completed less than 50 percent

3. Completed 50 percent or more

4. Completed

Project Demographic Distribution: Recognizing the disproportionate impact of the pandemic-related recession on low-income communities, recipients must report whether certain types of projects 15 are targeted to economically disadvantaged communities

1. Subawards : Detailed obligation and expenditure information for any contracts and grants awarded, loans issued, transfers made to other government entities, and direct payments made by the recipient that are greater than or equal to $50,000.

Important Guidance from GFOA

GFOA published an excellent set of principles for ARPA which we have briefly highlighted here. The full document is available at GFOA’s library and is well worth including in your planning preparations.

Temporary Nature of Funds

• Avoid creating new programs or add-ons that require ongoing funding

• Budget restraint may be necessary to maintain structural balance in future budgets.

• Infrastructure is well suited because it is a non-recurring expenditure.

Scanning and Partnering Efforts

• Be cognizant of state-level ARPA efforts, new state funding resources, and requirements.

• Consider regional initiatives and cooperative spending plans

Take Time and Careful Consideration

• Use other dedicated grants and programs first whenever possible 

• Whenever possible, expenditures should be spread out for budget stability

• Adequate time should be taken to carefully consider all alternatives

So what’s next?

We started with a set of concrete suggestions:

1. Take the money. Yes, it has federal strings, but it is once-in-a-generation federal help.

2. Make a plan. Engage local stakeholders, service providers, and residents.

3. Rehire your team. You need folks back in every authorized position more than ever.

4. Buy some modern technology. Help your teams manage all this.

5. Help your community. Equitably allocate funds to local subrecipients.

6. Just don’t forget those strings. Plan or transparency, reporting, and your auditors.

In conclusion, this plan prioritizes replacing lost revenue, rehiring staff, moving towards cloud technology, and getting funds out to people and organizations who can do the most good. 

We would encourage government leaders to be thoughtful, professionally cautious, and creative. Seize the moment to transform your government and your community.

At OpenGov, we are all happy to help in any way we can, we are watching the ARPA culture evolve and solidify, and will continue to share our research, insights, recommendations, and opinions with you. Please feel free to /" target="_blank" rel="noopener">reach out to me or anyone on our team.

Want to learn more?

Click HERE to read our eBook covering what you need to know about ARPA (and how to use it).

Category: OpenGov Updates