Effective use of ARPA fiscal recovery funds
The American Rescue Plan Act (ARPA) included $350 billion for state and local governments to spend on pandemic recovery through the Coronavirus State and Local Fiscal Recovery Fund (FRF). State, county, and municipal governments across the US are working to set up programs and services with this money as they rebuild from the impact of the COVID-19 Pandemic.
As governments determine what projects to fund, they will be well-served by adopting a systematic approach to identify, evaluate, select, and manage the investment of these dollars.
Establishing Proposal Pipelines
Governments receiving the funds need to establish a clear and consistent process to receive internal project proposals, including for revenue loss and department-run initiatives. Staff should understand the broad principles of how FRF dollars may be used. This knowledge is then used to complete a single form that describes the project and provides the necessary information for the recipient to determine eligibility and assess the merits of each proposal.
The ARP program may also accept proposals from external applicants, such as non-profits or businesses. It is important for governments to determine ahead of time what types of projects they want to fund, then create a transparent public-facing process for applicants to navigate in a fair and objective manner.
Determining Eligibility
Treasury’s Final Rule guidance requires that all programs funded by FRF respond to a pandemic-related harm and benefit an impacted population, the beneficiary class, in a reasonable and proportional manner. Recipients should first-and-foremost consider whether a proposed project is eligible for funding before assessing any of its other merits. The government should establish a process for informing the proposer on the reason for ineligibility and provide guidance on resubmitting, if appropriate.
Assessing Proposals
Once eligibility has been determined, the recipient should compare and assess project proposals using a standardized process. One common method is to use an assessment rubric to measure proposals against values that the recipient wants to highlight in its recovery. These can include measures of impact, equity, immediate need, evidence-based practices, and many other values. Using double blind reviews, committee reviews, or public input can further maintain fairness in the process.
Managing Projects
Once projects are identified and funds obligated, focus shifts to management, compliance monitoring, and federal reporting. Recipients should ensure that departments and subrecipients understand their data reporting responsibilities and have a system in place to collect key performance indicators. Program oversight should follow a risk-based model, ensuring that the most complex projects with high-risk potential receive adequate monitoring. Finally, the recipient should maintain strong record keeping, maintaining documentation for each program in a centralized location that is accessible to key decision makers and auditors.
Fiscal Recovery Funds hold transformative potential, but only if invested strategically. Through responsible management of these funds, recipients have an opportunity to deliver the power of local government to improve the lives of their citizens and rebuild resiliently from the COVID-19 pandemic.