With three months remaining until the December 31, 2024, deadline for local governments to meet their American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF) commitments, local governments must obligate those awarded funds or risk the possibility that the Federal government may request those funds back.
ARPA provides critical financial assistance to local governments through its State and Local Fiscal Recovery Funds (SLFRF) Program. Kentucky cities are now in the final stretch to obligate any awarded funds or risk the remaining unobligated funds awarded through the SLFRF to the US Treasury.
The US Treasury obligation final rule (OFR) outlines what is an “obligation” for local governments under the SLFRF. An “obligation” is defined as “an order placed for property and services and entering into contracts, sub-awards, and similar transactions that require payment,” which means the money cannot just be budgeted but must be within the procurement process if purchasing a service or property or must follow state and local practices if the funds are for payroll. Certain interagency agreements may also qualify as an “obligation.”
An overview of the 2023 US Treasury OFR can be found here.
However, the US Treasury has awarded flexibility to permit existing projects to continue if the SLFRF dollars are dedicated to administrative and compliance costs beyond the December 31, 2024, deadline. Examples include reporting and compliance requirements, single audit costs, property standards, and compliance with environmental, civil, and non-discrimination requirements.
Personal costs must be obligated unless it is time spent with the administrative and compliance costs outlined above.
The NCSL is hosting a webinar regarding the December 31, 2024, SLFRF obligation deadline on Wednesday, October 9, 2024, at 3:00 PM EDT. The webinar will focus on best practices and resources to expense any remaining unobligated funds. Interested attendees can register here. You can submit any questions before the virtual event here.
