The U.S. Department of Treasury states that the American Rescue Plan (ARP) Act will deliver $350 billion for eligible state, local, territorial, and Tribal governments to respond to the COVID-19 emergency and bring back jobs. The guidance includes information on how the substantial infusion of resources is to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a solid and equitable recovery. In contrast to the 2020 CARES Act, the ARP is much broader in scope and much larger in size. Its contents provide local governments quite a bit of flexibility in using their allocated funds and implementing programs to change the future for their communities.
Another aspect of the plan offers increased flexibility to entities regarding the established time frame given to spend the eligible funds. The ARP funds must be spent by the end of the 2024 calendar year. This time frame is also significantly longer than what is outlined in the CARES Act.
Any planning for the use of funds needs to start with the allowed categories per the treasury guidance:
- Support public health expenditures
- Address negative economic impacts caused by the public health emergency
- Replace lost public sector revenue
- Provide premium pay for essential workers
- Invest in water, sewer, and broadband infrastructure
In laying out an effective program for potential uses of the ARP funds, governments can spend the necessary time creating a thorough plan due to the extension allowed by ARP to spend the funds. A valuable use of time would be to create detailed cash flow projections and forecasts based on potential programs implemented by the local government. Some options for governments may require ongoing financial resources to maintain or generate future revenues for the entity. Performing a financial analysis for the intended outcomes and required resources would be imperative to achieve success.
Entities should also consider going through a strategic planning phase to determine what options are available for the funds. Consider asking questions similar to the following:
- How are other governments planning to use their funds? What would have a long-lasting impact on the hardest-hit communities for the next 5, 10, or 50 years?
- If funds were available to provide premium pay to those most at risk in responding to the public health emergency, how would compensation be structured?
- What would it take to provide clean water and broadband access to everyone in the community?
- What collaboration options are there with neighboring governments or public/private partnerships?
- How will the surrounding community compare to peers when determining an effective use of these unique funds?
While there are many outstanding questions for the effective use of ARP funds, there is also an immense amount of available opportunities. Governments should be thorough in their planning and strategic planning. If you are unsure of how to take advantage of these ARP funds, be sure to reach out to your local CRI office for assistance throughout the planning phase as you work to develop a highly effective, long-lasting program.