Press Release: 2024-12-20

Countdown to ARPA obligation deadline

 

With the Dec. 31 deadline quickly approaching for obligating American Rescue Plan Act funds, municipal officials are leveraging U.S. Department of the Treasury resources to help them avoid any potential clawing back of federal funds.

Passed in March 2021, ARPA provided critical financial assistance to state and local governments, among other entities, as the country was emerging from the COVID-19 pandemic. Under the law, ARPA’s State and Local Fiscal Recovery Funds must be obligated by Dec. 31, 2024, and expended by Dec. 31, 2026.

The Treasury established a specific definition for “obligation,” as follows:

• An order placed for property and services and entry into contracts, subawards, and similar transactions that require payment, which may include, an order placed for property or services, a contract, a subaward, similar transactions that require payment

• A requirement under federal law or regulation or a provision of the SLFRF award terms and conditions to which the recipient becomes subject as a result of receiving or expending SLFRF funds

The Treasury has also clarified that the following are not considered an obligation of funds:

• An adopted budget or budget amendment

• An appropriation of SLFRF funds

• An executive order

• A resolution

• A written or oral intention to enter into a contract

• A grant of legal authority to enter into a contract

• Claiming funds under the revenue loss category

• Moving SLFRF funds to a general fund as revenue loss but not further establishing an obligation with those funds by Dec. 31, 2024

The Treasury posted a webinar covering these topics in greater depth, and has updated the frequently asked questions found on the SLFRF website.

The webinar discusses specific examples related to employee expenses using SLFRF funds after Dec. 31, 2024, interagency agreements, and questions regarding modifying contracts.

Written by Jackie Lavender Bird, MMA Deputy Legislative Director