Spending ARPA funds — Does your city have a plan?

It’s been nearly 18 months since the passage of the American Rescue Plan Act (ARPA) — a $1.9 trillion economic stimulus bill including an allocation of $350 billion to help state, local, and tribal governments to address economic and health impacts of the COVID-19 pandemic. While ARPA’s State and Local Fiscal Recovery Fund (SLFRF) dollars offer flexibility, it is important for all municipalities to have a plan in place, and the time to act is now — as cities and towns must obligate their funding by December 31, 2024.

How can municipalities spend SLFRF funds?

Cities and towns have many options for using their ARPA dollars. According to the U.S. Department of the Treasury, there are four separate eligible use categories. Local governments may use SLFRF funds to:

  • Replace lost public sector revenue, using this funding to provide government services up to the amount of revenue lost due to the pandemic.

  • Respond to the far-reaching public health and negative economic impacts of the pandemic, by supporting the health of communities, and helping households, small businesses, impacted industries, nonprofits, and the public sector recover from economic impacts.

  • Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical sectors.

  • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, to support vital wastewater and stormwater infrastructure, and to expand affordable access to broadband internet.

More on SLFRF Rules and Regulations

As a municipality, it’s important to understand how you can use ARPA funding — but that’s only part of the equation. The more challenging element is determining how you should apply these dollars. 

The goal for any municipality should be to capitalize on this tremendous opportunity for recovery in ways that meet the most prevalent needs of the community. The challenges many cities and towns face is — identifying those needs, and assessing the most effective pathways to meet those needs. Many communities are developing recovery and growth plans that involve:

ARPA money for municipalities in the U.S.
  • Constituent Communications — engaging with the people in their communities to assess needs and priorities.

  • Data Analysis —  Collecting, organizing, and analyzing data points to gain insights to accelerate community recovery and equity.

  • Peer Evaluation — Reviewing what other similar communities have done and are doing with their ARPA funds, learning from their successes and challenges.

  • Compliance and Reporting — Ensuring projects meet the Treasury’s requirements for suitability and that quarterly reporting requirements are met and timely filed.

  • Project Management — Defining a plan and developing the roadmap to deliver the intended outcomes.

How are cities and towns using their ARPA money?

As it’s been more than a year since ARPA’s passing, more and more data on how these funds — specifically those of the State and Local Fiscal Recovery Fund — are being allocated. The Council of State Governments published a database of all state-level allocations of SLFRF funding. Additionally, there is a Local Government ARPA Investment Tracker project developed through a partnership between the National League of Cities, Brookings Metro and the National Association of Counties pulling in data from ARPA projects from cities and counties with populations of at least 250,000. 

According to data from the Local Government ARPA Investment Tracker, as of August 31, 2021, 150 local governments submitted 2,577 projects involving $18.5 billion in SLFRF funds. Specifically, these projects involve a number of spending categories:

  • Government Operations (37.6%)
  • Infrastructure (12.5%)
  • Housing (12.5%)
  • Community Aid (12.3%)
  • Public Health (12.2%)
  • Economic and Workforce Development (11.1%)
  • Public Safety (2.3%)

While information on how state governments and large cities are deploying their recovery funds is easily accessible, there is very little reporting on how small towns and medium-sized cities are making use of ARPA dollars. That’s why it may be beneficial for small-to-medium cities and towns to work with consultants and project managers to help ensure they are using these SLFRF funds in the most meaningful and efficient ways.