ARPA SLFRF funding in 2024 and beyond

Bert Nuehring, Andrea Prena
2/29/2024
ARPA SLFRF funding in 2024 and beyond

State and local government leaders can still benefit from ARPA funding if they act now. Our timeline can help.

In 2021, the American Rescue Plan Act of 2021 (ARPA) authorized $350 billion for state, territorial, local, and tribal governments across the country through the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program.

While there’s still funding left, time to receive these funds is beginning to run out. Recipients must obligate all funds by Dec. 31, 2024, and expend funds by Dec. 31, 2026. As a reminder, the U.S. Department of the Treasury updated the definition of “obligation” in its 2022 final rule to be "an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment."

The good news for state and local government leaders is that if they act now, they can still strategically plan for spending, engage subrecipients, and use SLFRF dollars within the funding parameters. Following is a timeline that can help organizations plan.

Recommended timeline
Source: Crowe analysis, February 2024

2024: Strategic planning and execution of obligations

Since recipients must obligate all funds by Dec. 31, 2024, there’s no time to waste. However, planning appropriately from the beginning can help yield the most positive impact from funding. Organizations should make time for any needed strategic planning, program design and implementation, and business process reengineering as soon as possible.

SLFRF might provide state and local governments with more federal funding than they have ever had at one time. Without strategic foresight, it can be tempting to throw money at every issue that’s been historically underfunded and see what happens.

A more productive route is to intentionally fund programs that advance the goals and objectives set forth by an established strategic plan. If organizations don’t have a strategic plan, it is a good idea to develop one. Alternatively, if a comprehensive strategy doesn’t make sense at this time, organizations can establish an ARPA SLFRF-specific plan to help make the most of future funds and determine what obligations they’ll execute by the end of 2024.

2025 and 2026: Obligation to spend in two years

All funds must be expended by Dec. 31, 2026. To go from ideation and planning to spend requires subrecipients or beneficiaries to execute your program goals. Following are some subrecipient monitoring leading practices and recommendations.

Subrecipient monitoring essentials

Subrecipient monitoring occurs to make sure the money an agency receives is used correctly. It’s important to establish subrecipient application processes, understand the compliance language used in subaward agreements, and perform compliance reviews.

During a compliance review, all financial transactions against the subaward are reviewed to make sure the spending is being used to achieve program goals in compliance with federal statutes. A compliance review also provides a means for how states can gather and review subrecipient and project data for reporting to Treasury. In general, the process of reviewing the data helps maintain accuracy in reporting.

Audit preparation activities

Audit preparation activities allow state and local governments to get their houses in order before an audit. Reporting agencies undergo a risk assessment and expenditure testing against ARPA-required compliance areas. Data validation reports then identify instances of material noncompliance and discuss next steps to achieve compliance. Using a data validation methodology to determine whether an agency is in compliance, in all material aspects, with the award requirements and applicable laws and regulations is critical.

2024-2026: ARPA compliance activities

Some activities need attention throughout the entire funding process. Following are details on Treasury reporting, program closeout, and program assessment.

Treasury reporting

State and local governments are required to report to Treasury on their ARPA SLFRF spending. The reporting frequency depends on the government’s size. For example, states provide a highly detailed financial and programmatic data report quarterly and a higher level report for non-entitlement units annually.

Reporting can be tedious, complex, and require significant employee time if the right practices and technology are not in place – especially if an organization is required to report every quarter.

Program closeout

SLFRF-funded projects must be formally closed at the conclusion of the project life cycle. Program closeout includes:

  • Expenditure of all SLFRF funds for agency projects
  • Completion of financial and programmatic reporting for all projects
  • Collection of all project documentation and data for retention

Generally, closeout procedures allow agencies and compliance review teams to:

  • Complete final financial and programmatic data reviews
  • Reconcile the Treasury submission portal with known information
  • Gather and maintain supporting documentation
  • Review 2 CRF 200 for compliance and establish continuing compliance procedures

Treasury likely will issue closeout guidance toward the end of the SLFRF spending window. However, as some subrecipients will wrap up their spending before Dec. 31, 2026, governments need to establish closeout processes and procedures in advance.

Program assessment

As ARPA SLFRF spending winds down in 2026, governments need to review which programs (if any) should stay and identify how they are going to fund these programs moving forward. Program assessments can help leaders understand which programs are working based on performance against recognized standards and best practices, benchmarks from comparable organizations, and an evaluation of outcomes against goals and objectives.

2027: Closeout

While all funds must be spent by the end of 2026, 2027 is when the real closeout work happens.

Closeout tasks in this phase include:

  • Final reporting of programmatic and financial data
  • Working with subrecipients to confirm contract compliance
  • Proceeding through Treasury-required closeout procedures, liquidations, and settlements
  • Accounting for property acquired

Following a set of procedures along with a checklist that guides agencies through the closeout process can help set teams up for success with their subrecipients and help teams understand what's expected of them going forward in case of an audit.

Don’t miss out on available funds for your community

ARPA remains an active program and funding stream for state and local governments. From initial planning to Treasury reporting, subrecipient monitoring, program closeout, and everything in between, the Crowe public sector consulting team can help your organization through the complex process of getting and using needed funds for your community.

Reach out for help 

With more than 50 years of public sector experience, our team of specialists is prepared to help you make a lasting difference in the lives of your constituents.
Bert Nuehring
Bert Nuehring
Partner, Consulting
Andrea Prena
Andrea Prena
Public Sector Consulting