Considerations for Reprogramming of ARPA-SLFRF

Obligation Deadline

The Obligation Deadline for American Rescue Plan Act, State and Local Fiscal Recovery Funds (SLFRF) is 12/31/2024. Past this date, any SLFRF funding that is left unobligated will be returned to the U.S Treasury. While recipients are bound to the 12/31/2024 obligation deadline, this requirement does not ‘flow-down’ to subrecipients. Where monitoring and oversight identify the need for a cancellation of a project or program, these determinations must be made with sufficient lead time to abide by the cancellation terms of the agreement, so that the recipient has time to process and reprogram the funds. Time is of the essence for program managers to ensure recapture of SLFRF for essential recovery efforts.

There is good news for recipients - the 2023 Obligation Interim Final Rule and clarifications issued by US Treasury offers permissible exceptions to the rule, and the following framework for de-obligation or reprogramming:

• Termination of the contract/subaward due to contractor/subrecipient’s default, the contractor/subrecipient going out of business, or determination that the contractor/subrecipient will be unable to fulfill the scope of work.

• Termination for convenience of the contract or subaward by mutual agreement.

• Termination of the contract/subaward for convenience by the recipient - if the contract/subaward was not properly awarded, there is clear evidence that the contract/subaward was improper, the recipient documents the determination that it was not properly awarded, or the original contract/subaward was entered into by the recipient in good faith.

If these conditions are not met, any reprogramming must occur before the 12/31/2024 deadline. Thorough performance assessments of all SLFRF-funded activities will identify potential opportunities for improved service delivery, more effective delivery of the project or the determination that the investment is not producing the expected results. Accordingly, swift action is imperative to ensure compliance and optimal utilization of resources.

Through the proper monitoring and oversight of SLFRF-funded projects and programs, as required by Uniform Guidance, non-Federal entities can determine if reprogramming is warranted, and where to focus these efforts. The insights that arise from these processes are crucial for enabling more strategic management and optimal resource allocation within these Federally funded projects.

Expanded List of Eligible Uses

If the recipient determines that reprogramming of SLFRF is necessary, this action must occur before the 12/31/2024 deadline. The 2023 Interim Final Rule expanded eligible uses of SLFRF from four to seven:

1. Responding to COVID-19 and its negative economic impacts;

2. Providing premium pay to eligible workers for work performed prior to 4/10/2023 - the date on which the national emergency was declared over by Congress;

3. The provision of government services, to the extent of the reduction in revenue due to the COVID-19 public health emergency;

4. Investments in water, sewer, or broadband infrastructure;

5. Emergency relief from natural disasters or their negative economic impacts;

6. Projects eligible under the 26 Surface Transportation program specified in the 2023 CAA (Surface Transportation projects); or

7. Projects eligible under Title I of the Housing and Community Development Act of 1974 (Title I projects).

Note, the maximum amount of SLFRF funding that can be spent on the combination of 26 potential Surface Transportation and Title I projects (Uses 6 – 7) is limited to the greater of $10 million and 30% of a recipient’s total SLFRF allocation. For example, an SLFRF recipient with an allocation of $20 million dollars would have $10 million (as $10 million is greater than 30% of that recipient’s total allocation) to direct toward Surface Transportation projects and Title I projects combined. This restriction does not extend to expenditures under other eligible categories, such as those for the provision of government services under the revenue loss eligible use category.

Governments that are considering reprogramming their SLFRF funds can learn more about requirements for program eligibility here: (Effective use of ARPA fiscal recovery funds — Bronner Group — Bronner Group, LLC | Public Sector Consulting)

BRONNER can help your local government manage its APRA SLFRF accountability and compliance, through performance measurement and monitoring, reporting preparations and eligibility analysis.