Sneak Preview: SLFRF Oversight Proves Challenging for Grantees
(The following was excerpted from a recent Thompson Grants 360 article.) Many state and local governments receiving Department of the Treasury State and Local Fiscal Recovery Funds (SLFRF) have struggled to maintain adequate capacity ― which includes knowledgeable staff and internal financial and technical resources ― to disburse and report on these funds, and have expressed confusion over whether various costs are allowable under the program, according to a recent Government Accountability Office (GAO) report.
The 430-page-plus comprehensive report provided an assessment and recommendations on numerous COVID-19 recovery programs overseen by multiple agencies. Specifically addressing the SLFRF program, under which Treasury provided $350 billion in American Rescue Plan Act (Pub. L. 117-2) funding to states, localities, tribal governments and U.S. territories to respond to the COVID-19 pandemic, GAO explained that Treasury had distributed about $240 billion of these funds as of Aug. 31. Recipients must incur obligations for these dollars by Dec. 31, 2024, and must liquidate all obligations by Dec. 31, 2026.
GAO surveyed 48 states and 45 localities on their status for plans to spend these funds. Only 24 of the states and four localities had proposed or adopted a spending plan as of July, while the rest reported that they needed to take additional steps before proposing or adopting a plan. These steps included collecting public or stakeholder input, or waiting for approval from a legislative body.
In addition, 13 states and seven localities said they had less than sufficient capacity to allocate and disburse SLFRF funds, and 17 states and eight localities surveyed said they had less than sufficient capacity to report on the use of their SLFRF allocations consistent with federal requirements. Some (39 states, 13 localities) planned to hire new staff, including contractors or consultants, to assist with these duties, while others (38 states, 18 localities) had reassigned existing staff to manage the allocations. Six states reported that they may face challenges in expanding staff capacity. For example, one state told GAO that onboarding contract staff is a long process, and is unlikely to help the state meet its staffing needs, so it is “relying on existing staff, who have been strained by the demands of responding to the pandemic, to manage its allocation.”
In addition, few states and localities told GAO that Treasury’s guidance on the allowable uses of SLFRF funds (seven states, five localities) and the program reporting requirements (three states, nine localities) was “very clear,” as many of the states and localities requested additional information about the allowable uses and reporting requirements.
(The full version of this story has now been made available to all for a limited time here.)
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