Treasury Threatens to Curtail ARPA Support

The U.S. Department of the Treasury last week notified recipients of State and Local Fiscal Recovery Fund (SLFRF) grants that it will sharply curtail its administrative support for local governments unless Congress authorizes more funding. Kentucky cities received nearly $930 million from the American Rescue Plan Act (ARPA) program, and they have additional reporting requirements over the coming years.

Treasury created an email address and a call center (844.539.9527) to handle questions posed by the thousands of governmental entities that must file compliance reports. Based on the inability to reallocate among certain federal programs, the department will end its call center support and severely curtail its email response operations in the coming weeks.

“Treasury is facing constraints that will put our ability to continue this level of support to recipients at risk,” stated Deputy Secretary of the Treasury Adewale Adeyemo in an email to local ARPA administrators. He noted that while some programs have sufficient funding for continued assistance, the State and Local Fiscal Recovery Fund does not.

A lack of funding to cover administrative functions within the department will result in delays of Treasury responding to questions or troubleshooting the reporting portal. The department previously provided several webinars on how to access and complete the required reporting, but the funding gap will result in less direct engagement and response.

Adeyemo also said Treasury would reduce the reporting and recipient monitoring footprint while instituting a hiring freeze for the program. Around 30,000 cities, towns, states, territories, counties, and tribes must report to Treasury how they obligated and/or spent their ARPA funds according to various deadlines. The next reporting deadline for most Kentucky cities is April 30, 2023.

Treasury officials have asked Congress to allow them to repurpose some money originally allocated to other pandemic-related programs that no longer need much administrative oversight. They claim that other programs have more than enough cash to handle the administrative burden in the near term, but recovery funds cover a longer period. SLFRF money must be obligated by Dec. 31, 2024, and spent by Dec. 31, 2026.

A long-stalled Senate measure (S. 3011) includes language to restore Treasury’s administrative funding for ARPA grants. The Senate passed the bill by unanimous consent almost a year ago, but the legislation has not moved in the House. Legislators could include this or similar language in a continuing resolution or appropriations omnibus. Congress has not presented any of the 12 normal appropriations bills to the president even though the federal fiscal year ends Sept. 30.