As the December 31, 2024, deadline for obligating American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF) approaches, local governments across the United States are finalizing their strategies to allocate and obligate these critical resources. With $65.1 billion in direct, flexible aid provided to counties, cities, towns, and other local entities, ensuring that these funds are appropriately committed is a significant milestone.

This guide outlines the key details, challenges, and actionable steps local governments need to take to meet the looming deadline and maximize the benefits of these funds for their communities.

Understanding the ARPA SLFRF Obligation Requirement

Passed in 2021, ARPA’s SLFRF program allocated $350 billion to support state, local, and tribal governments. Of this, $65.1 billion was directed specifically to counties, providing flexible funding to address local needs and challenges, including pandemic recovery, infrastructure improvements, and economic development.

The December 31, 2024 deadline requires that local governments:

• Allocate Funds: Develop and approve spending plans that align with eligible uses outlined by the U.S. Department of the Treasury.
• Establish Contractual Obligations: Ensure contracts or agreements are in place to obligate the funds. This means that local governments must move beyond planning and have commitments formalized with vendors, contractors, or other entities.

Failure to meet this deadline could result in unspent funds being returned to the federal government, which underscores the urgency of meeting this obligation.

Key Challenges for Local Governments

Local governments face several challenges as the deadline approaches, including:

1. Time Constraints: With less than two weeks remaining, the pressure to finalize contracts and allocations is significant.
2. Compliance Complexities: Ensuring all obligations meet Treasury guidelines is critical to avoid potential clawbacks or penalties.
3. Resource Limitations: Many local governments are working with limited staff and technical resources to manage the allocation and compliance process.
4. Community Input: Balancing community priorities with funding requirements often adds complexity to the decision-making process.

Steps to Meet the Obligation Deadline

Here are actionable steps local governments can take to ensure compliance with the December 31, 2024, obligation deadline:

1. Review Treasury Guidelines
   Familiarize yourself with the U.S. Department of the Treasury’s SLFRF compliance and reporting guidelines. Ensure all projects and contracts align with eligible use categories, including public health, economic recovery, water and sewer infrastructure, broadband expansion, and premium pay for essential workers.
2. Prioritize High-Impact Projects
   Focus on projects that address urgent community needs and can be quickly obligated. This includes programs already in the pipeline or those with minimal administrative hurdles.
3. Streamline Procurement Processes
   Expedite procurement and contracting processes by leveraging existing contracts, cooperative purchasing agreements, or pre-qualified vendor lists where possible.
4. Engage Stakeholders
   Collaborate with community leaders, nonprofits, and other stakeholders to ensure alignment with community priorities while meeting Treasury requirements.
5. Utilize Available Resources
   Participate in educational sessions, such as the National Association of Counties (NACo), National League of Cities (NLC), and U.S. Treasury webinar on December 18, 2024. These sessions provide valuable insights and best practices for obligating SLFRF funds.
6. Seek Assistance
   For counties, parishes, and boroughs, direct questions to Eryn Hurley, Managing Director of Government Affairs at NACo, via [email protected]. Cities, towns, villages, and NEUs can reach out to Dante Moreno, Legislative Manager at NLC, via [email protected].

The Importance of Meeting the Deadline

Meeting the obligation deadline is not just a compliance requirement; it’s an opportunity for local governments to make meaningful investments in their communities. These funds can support critical projects, drive economic recovery, and enhance quality of life for residents.

Missing the deadline could result in the loss of unspent funds, which would be a missed opportunity to address pressing local needs. By acting swiftly and strategically, local governments can ensure they maximize the impact of these resources.

Join the December 18, 2024 Webinar

To support local governments in meeting the obligation deadline, NACo, NLC, and the U.S. Treasury are hosting an educational webinar on December 18, 2024, at 12:30 p.m. ET. This session will provide:

• Detailed guidance on compliance requirements.
• Insights from local governments that have successfully obligated their SLFRF funds.
• Resources and tools to support the allocation and obligation process.

The webinar is available on-demand for those unable to attend live. For access, or if you encounter issues with the recording, email [email protected].

The December 31, 2024 obligation deadline for ARPA SLFRF funds is a pivotal moment for local governments. By prioritizing high-impact projects, streamlining processes, and leveraging available resources, local governments can meet this milestone and ensure these funds drive meaningful change in their communities.

With the support of organizations like NACo, NLC, and the U.S. Treasury, local governments have the tools and guidance they need to navigate this critical process successfully.

For more information, visit NACo.org and NLC.org.