Cities and counties have an important story to tell about how they are using their Local Fiscal Recovery Funds from the American Rescue Plan (ARPA).  While keeping careful records of obligations and expenditures is essential for Treasury reports and audits, telling residents and the media how the funds have helped the community should be an ongoing priority.

There are competing and overlapping financial timelines for cities and counties and any subrecipients that have emerged because of ARPA. For example, while you may have institutional timelines set for budgeting and capital planning, you likely also have an organizational timeline set for consolidating financial transactions and financial reporting. To add to the timeline, Treasury requires prime recipients to be responsive to yet another timeline for compliance and reporting of your ARPA funds. It’s (mostly) all the same information, but these competing timelines could put a strain on your financial team. The purpose of this article is to give you some examples from the field and provide a few tips and tricks for streamlining the internal controls that will help to inform all the financial timelines at play.   

What’s coming up next? The next project and expenditure (P&E) reports are due to Treasury July 31. Treasury published an updated version of its reporting and compliance guide in June, adding new requirements[1]. We also expect to see a new Portal User Guide revision prior to the July 31 submission date, which will address key data that will be required for project reporting.

These will not be the last updates. Treasury is constantly looking for ways to help streamline the submitting process while at the same time augmenting the information collected. For example, for large jurisdictions, this most recent revision requires more capital reporting, including programmatic data, written justification, and a description of labor requirements. Additionally, large jurisdictions have a new template to use for their July 31 program report, which provides a framework for forward-looking information.

As we anticipate these Treasury reporting updates from time to time, it’s important to set your internal controls to be responsive to a few key indispensable logics:

1. Treasury’s Portal utilizes a project-based reporting structure[2]. Organize and track your expenditures accordingly. Spending ARPA proceeds may take place throughout your organization, so be sure that your organization can reconcile and report by project. If an expenditure exceeds $50,000, whether it is through an established subrecipient relationship or if it is a subaward, you are required to provide additional information about the vendor or the nonprofit. Having SAM.gov registration information for all procurement relationships will be a major benefit when reporting throughout the covered period.
2. Uniform Guidance and Single Audit eligibility (for those spending over $750,000 in other federal funds each year) are key to proper reporting. These federal spending principles must be adhered to in all expenditure categories, even when a direct recipient is spending in “government services.” Treasury has not offered any universal or specific waivers to prime recipients or subrecipients and asks all to consider the waiver thresholds as defined in uniform guidance. To say it plainly, because these are federal funds, payments under procurement contracts using ARPA funds must be consistent with the procurement standard set forth in Uniform Guidance (aka 2CFR200).
3. Monitoring your subrecipients is a major responsibility! Both the U.S. Treasury and Uniform Guidance recommend that prime recipients set up internal controls and processes that track subrecipients of the funds. This also includes monitoring risk of noncompliance by subrecipients. Be sure to establish that monitoring process as soon as the relationship is established and before funds are distributed. Proper documentation will help monitor the relationship throughout the covered period.
4. The covered period for ARPA can only be changed by Congress. Unless otherwise stated, the covered period begins on March 3, 2020, and ends on December 31, 2024. Expenditures made outside of those key dates are ineligible unless “otherwise stated.” Exemptions include premium pay that may have been incurred prior to the covered period--which is covered--and expenditures that were “obligated” or encumbered prior to December 31, 2024, to be expended by December 31, 2026.
5. Project and expenditure reports are due April 30 each year for all direct recipients. For larger municipalities and counties, program reports are due July 31 of each year. Quarterly reports will be due for certain recipients[3]. Consider establishing internal controls that include monitoring GFOA and U.S. Treasury resources to ease the burden of compliance and reporting.

Innovative practices have helped local governments streamline their data collection, track expenditures, and align their strategic goals with ARPA-eligible projects.

Prioritizing homelessness

After Hemet, California, received $21 million in ARPA funds, results from a resident survey prompted the city to allocate $1 million in case management and outreach to those experiencing homelessness.  Other priorities include economic support for households experiencing financial hardship, assistance to individuals who had lost jobs during the pandemic, and affordable housing. Using Polco’s ARPA engagement package, the city is aligning its 2021 strategic plan goals with Treasury guidance and resident feedback. 

Online database and metrics

The City and County of Denver has invested ARPA dollars on innovative programs and tracking systems. For example, Denver’s “logic model” mechanism was created to log, track, and inventory all output and outcome measures per project and per agency/department. In addition to tracking, an equity dimension is overlaid on all metrics. All agreed-to measures were signed by agency representatives. And finally, the data will be collected through a data intake tool that will feed a forthcoming public-facing performance dashboard. Additionally, Denver created responsibility checklists, a freely available dashboard, training videos for subrecipients as well as a “COVID-19 Justification Form” which is helpful for review, reference, and future audit needs.

Tracking expenditures in government services

Perhaps one of the most nebulous concepts of the eligible spending criteria is spending on “government services”--but it doesn’t have to be! Many non-entitlement units (NEUS) have chosen to allocate all their funds to government services.  Keeping track of how those funds are used is still essential for audits, even if the jurisdiction is able to use the alternative to the single audit.  Vienna, Virginia, chose to document ARPA spending through an online “ARPA Funds Request Form,” which was then documented through prioritization of town council. An internal spending tracker has been kept up to date by the small finance team and is organized by project. Vienna has documented several key projects with peers in the state and nationwide through participation in a coalition and in ICMA and GFOA events.

ICMA and GFOA have several resources available to you for your ARPA spending processes

• U.S. Treasury’s ARPA Recovery Fund Compliance and Reporting Guidance

•       U.S. Treasury’s Project and Expenditure Report User Guide

•       Uniform Grant Guidance (aka 2 CFR Part 200)

•       2021 Single Audit Compliance Supplement

•       Addendum 3 – Single Audit Alternative

•       U.S. Treasury step-by-step video walkthrough of reporting portal

•       U.S. Treasury step-by-step video walkthrough on how to report revenue loss/government services (EC 6.1)

•       U.S. Treasury step-by-step video walkthrough of how to designate user roles in Treasury portal

•       GFOA Resource: Recommended guiding principles

•       GFOA Resource: GFOA FAQs

•       ICMA members and registered ARPA Coordinators can use ICMA Connect to ask questions and share solutions around ARPA spending https://connect.icma.org/home