Finance Professionals Associations Seek Guidance on ARPA Fiscal Recovery Fund

The good news: The American Rescue Plan Act (ARPA) made available some $1.9 trillion in COVID relief funds. The bad news: There remain numerous questions and concerns surrounding the administration of these funds.

One particular area relates to the new Coronavirus State and Local Fiscal Recovery Fund (CSLFRF), under which the federal government will provide $350 billion through ARPA to states, local governments, tribes and territories to keep first responders, frontline health workers, teachers and other providers of vital services safely on the job. Funds are available until Dec. 31, 2024.

As the federal government now considers issuing CSLFRF guidance, the National Association of State Auditors, Comptrollers and Treasurers, along with the Government Finance Officers Association, National Association of State Budget Officers and National Association of State Treasurers issued a joint coalition letter to the White House Office of Intergovernmental Affairs providing input from state and local finance professionals on how to best ensure these funds are used effectively and efficiently. “We know that it is in our mutual best interest to create clear interpretations of allowable uses on the front-end, and we are grateful that you are seeking input for clarity on implementation,” the letter states.

In the letter, the groups sought more detail and examples on the covered period for eligible uses of these funds; clarification on the methodology that governments must use to measure their reduction in revenue caused by the pandemic; and more information on linking the Department of the Treasury's Coronavirus Relief Fund (CRF) and CSLFRF dollars. Finance professionals also sought more guidance on what long-term investments (i.e., infrastructure) and payroll costs would be allowable with these funds. While the funds may not be used on pensions, the letter sought guidance and examples on using the proceeds for salaries and not benefit contributions.

The groups explained that ambiguity around the terms “incurred” and “expended” stalled the ability of recipients to spend CRF funds provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Therefore, they sought clear definitions of these terms “to ensure efficient and expeditious spending of the funds.” They also sought better explanations of the terms “subrecipients” and “beneficiaries.” However, they said the greatest challenge under the CARES Act was “keeping up with nine iterations of guidance, FAQs and audit specifications" issued by Treasury, and they “respectfully request that Treasury consider taking time to adequately prepare and issue comprehensive guidance,” noting that future updates should “be additive and not contradict previous guidance.”

In the letter, the groups also stressed the importance of understanding whether the funds are applicable under the Single Audit Act, and if Treasury will assign a new Assistance Listing numbers for the ARPA sections included under CSLFRF (i.e., the Coronavirus State Fiscal Recovery Fund, Coronavirus Local Fiscal Recovery Fund, Coronavirus Capital Projects Fund and the Local Assistance and Tribal Consistency Funds).

Lastly, the groups requested that the federal government assign a federal liaison to each state with the authority to answer questions and provide guidance to recipients. They also requested the creation of a clearinghouse of ARPA information, which would be a repository for state and local governments to use to find out about possible grant relief for which they are eligible.

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Virtual Federal Grants Forum: For State & Local Governments | May 11 - 12, 2021