This month state auditors, comptrollers, and treasurers from across the country convened in San Diego for the NASACT Annual Meeting. One of the most pressing topics at the 2021 event: the American Rescue Plan Act (ARPA).

ARPA addresses ambitious, transformative goals, with significant funding earmarked for state and local governments to help “turn the tide on the pandemic, address economic fallout, and lay the foundation for equitable recovery.” This funding includes $350 billion for the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF; sometimes referred to as Fiscal Recovery Funds, or FRF).

The ARPA funding streams provide unprecedented opportunities to transform public services and public service delivery. It’s a chance to drive generational change – for example, by closing the digital divide, working to increase equity, and bolstering communities with investments that could reshape how individuals and families live and thrive.

Across the country, public officials are torn between competing priorities for these funds. First is the imperative of addressing immediate pandemic and emergency needs. Second is the opportunity to plant seeds for long-term transformational investments. Diverse stakeholder dynamics and authority over the funds, both within and across state and local governments, make this choice – between short-term needs and longer-term, strategic planning – even more complex.

In the meantime, these funding streams come with understandably complex requirements and deadlines. Managing the process of securing funds – and complying with related requirements – is proving to be a significant challenge for state and local government units.

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For example, as they work to secure the funding, state and local governments also must meet performance reporting requirements:

  • By the end of August 2021, states were required to provide a one-time interim report on expenditures incurred by June 20, 2021. This includes distributions to non-entitlement units of local government (NEUs). Which NEUs have received funding? Which has requested a transfer to the state? And which NEUs have been unresponsive to their funding? States also must report detailed sub-recipient information for each NEU.
  • Also by the end of August, any CSLRF/FSF recipient with more than 250,000 residents were required to submit their first annual performance report. This report must be shared on a public-facing website, and it needs to highlight how they plan to measure the performance of the funds, including the planned use of Key Performance Indicators (KPIs). The planned KPIs should address goals for promoting equity, increasing community engagement, addressing labor practices, and demonstrating the use of evidence.
  • By October 31, 2021, CSLRF/FSF recipients must submit their first quarterly project and expenditure report. (NEU and cities and counties with fewer than 250,000 residents and less than $5 million funding are exempt from this reporting requirement.) Each project must align to one of 66 expenditure categories and include project-level information and demographic distribution. Subawards – that is, funds distributed by states to cities, counties and NEUs – also require detailed expenditure reporting. Programmatic performance indicators are another required element of these quarterly reports.

Overwhelming? It may feel that way at first. But as FRF recipients hustle to meet upcoming deadlines, they are also thinking about how to use these requirements to spark lasting – in some cases, structural – change in future cycles.

In the case of the annual performance report, for example, central federal funds teams were required to collaborate across departments and agencies to better understand and measure FRF program effectiveness and equity impacts of spending and to articulate and assess these impacts to diverse audiences. If managed well by states, this performance report requirement could be a test case for fundamentally improving public sector performance evaluation efforts into the future.

As your state or local government continues to navigate the complexities of ARPA funding, including these and other ARPA requirements, please get in touch via LinkedIn to share your experiences and feedback.

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Kelly Rogers

Senior Manager – Public Service, North America

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