Since the first COVID-19 case was discovered in the United States in January 2020, the pandemic has inflicted a public health and economic crisis on municipalities across the nation. The American Rescue Plan Act (ARPA) allocated funding to help with the crisis, including funds for public safety and local governments to:
- Fight the pandemic and support families and businesses struggling with its public health and economic impacts
- Maintain vital public services, even amid declines in revenue
- Build a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity
Now, more than three years since that first COVID-19 case, Congress has taken an important step to make these funds even more useful.
How We Got Here
In March 2021, Congress passed ARPA, which established the Coronavirus State and Local Fiscal Recovery Funds (SLFRF) to provide state, local and tribal governments with resources to respond to the pandemic and its economic effects and to build a stronger economy during the recovery.
SLFRF funds may be used:
- To respond to the public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel and hospitality.
- To respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers.
- For the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency.
- To make necessary investments in water, sewer or broadband infrastructure.
In May 2021, the U.S. Department of the Treasury issued an interim final rule implementing the SLFRF program. Since that time, it has disbursed over $240 billion to state, local and tribal governments and received over 1,500 public comments on the interim final rule.
ARPA Flex allows states, tribes and local units of government to spend up to $10 million—or 30% of the total ARPA funds received—on newly eligible SLFRF grant expenditures.
On Jan. 27, 2022, the Treasury issued the final rule, providing substantial flexibility to recipients so they may respond to their unique pandemic-related needs. This flexibility is designed to help state, local and tribal governments adapt to the evolving public health emergency while allowing them to tailor their response to the needs of their local communities.
In December 2022, Congress passed the final budget for 2023, setting funding levels for every federal agency and grant program for the year. The budget package included a significant provision to make the SLFRF program more flexible, known as ARPA Flex.
What’s Changed?
The ARPA Flex provision provides additional flexibility for states, tribes and local units of government to spend up to $10 million—or 30% of the total ARPA funds received—on newly eligible SLFRF grant expenditures.
The new eligible SLFRF grant expenditures include spending on:
- Emergency relief from natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.
- Transportation infrastructure eligible projects and matching funds.
- Any program, project, or service that would also be eligible under HUD’s Community Development Block Grant program.
- Government services, which includes the modernization of cybersecurity (hardware, software and critical infrastructure).
In addition, Congress issued two types of ineligible uses of funds: 1) funds may not be used for deposit into any pension fund and, 2) for states and territories only, funds may not be used to offset a reduction directly or indirectly in net tax revenue resulting from a change in law, regulation or administrative interpretation.
Under ARPA Flex, funds must be used for costs incurred on or after March 3, 2021. Further, costs must be obligated by December 31, 2024, and expended by December 31, 2026.
ARPA Flex provides another opportunity for public safety agencies and local governments to access federal funding they may have previously missed out on. Now is the time for leaders to revisit funding needs and if appropriate, advocate for a share of any ARPA funds received at the local level but not yet allocated.
Considering Lexipol’s policy, training or wellness solutions? They may be eligible for ARPA Flex funding. Download our ARPA funding guide.
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