Should the Deadline to Spend ARPA Dollars be Extended?
The Baltimore skyline. The city is one of thousands of local governments that received American Rescue Plan aid from the federal government. Sean Pavone via Getty Images
Some local officials involved in managing American Rescue Plan Act aid describe a 2026 cut-off to use up all of the money as uncomfortably close.
Local government officials involved in overseeing hundreds of millions of dollars in federal pandemic aid are cautioning that a 2026 deadline to spend the money could be tight.
Part of the reason it’s taking awhile to get the American Rescue Plan Act dollars out the door, they say, is that governments devoted significant time during the past two years to conducting community outreach to align their spending with residents’ priorities. Another set of difficulties is that the money can get bogged down in bureaucratic finance procedures, rigid procurement processes and working with outside “subrecipient” organizations brought on to run programs.
In many cases, local governments are moving to spend on initiatives that they are either starting from scratch or significantly expanding, which can also prove to be time consuming. And while President Biden signed the law in March of 2021, the Treasury Department didn’t finalize guidance for the $350 billion State and Local Fiscal Recovery Funds Program until January of this year, leaving some governments hesitant to start putting the money to use right away.
“Do we have enough time? No,” said Shamiah Kerney, chief recovery officer in the city of Baltimore’s Mayor's Office of Recovery Programs. “I do think that every one of us is very committed to doing as much as we can in the timeframes that we can, but I believe that all of us, if we're being honest with ourselves, would advocate for additional time to make sure that we're doing this right, and that we're avoiding, or mitigating the risk of waste, fraud and abuse.”
“It doesn't mean that because we have more money that we're able to move it more quickly,” she added.
Kerney was among the local officials who spoke during an online roundtable co-hosted on Thursday by the National League of Cities and the Pandemic Response Accountability Committee, a federal watchdog agency overseeing pandemic aid.
Cities and smaller-sized localities received $65 billion in direct federal aid from ARPA. Counties received the same amount. Under the rules for the program, governments have until Dec. 31, 2024 to “obligate all funds” and until the end of 2026 to spend the money.
“We really spent a lot of time with our communities. And so that naturally pushed back the timeline for how we were going to spend the money,” said Annette C.M. Guzman, budget director for Cook County, Illinois, where Chicago is located.
Cook County, according to Guzman, used survey tools and community meetings to gather thousands of responses from residents on how to use the funds and received 426 proposals for spending the roughly $1 billion in ARPA aid it received.
Examples of spending the county eventually settled on include things like $42 million to provide recurring monthly payments to about 3,200 low-income households, $12 million to pay off medical debt for area residents, and $74 million to support behavioral and mental health programs. Overall, $700 million is going to community programs and $300 million to county operations expenses, such as covering revenue losses and employee pay.
When it comes to the 2026 deadline, Guzman said that “there's a lot packed into why the timeline is particularly aggressive.”
“The procurement process is the procurement process,” she said, noting also that the county is working with over 100 subrecipient entities that will carry out programs funded with the money. “They're not even all signed,” Guzman added, of the subrecipients her county is working with. “That has an impact on how quickly you're spending.”
(A simple example of a subrecipient arrangement, not specific to Cook County, would be a city awarding a nonprofit group part of its ARPA funding to provide homelessness services.)
Adding another layer, Guzman said, is that while sometimes funding for programs is paid out in advance, other times it is in the form of a reimbursement. “You're not spending until you get that invoice back from your subrecipient,” she said.
Grace Kyung, senior strategic initiatives manager for St. Louis Mayor Tishaura Jones, said that the city has made efforts to partner with smaller subrecipient service providers on ARPA-backed programs, organizations with track records of successfully working in different communities. But this can be challenging because they often lack the staff, structures, and expertise needed to deal with the reporting and compliance requirements for handling the federal funds.
The mayor’s office is looking to streamline request for proposals processes and at bringing on staff who might be able to offer technical assistance to potential subrecipients. But, Kyung said, “All of this takes time, which goes into this timeline question.”
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