Professional Standards Committee Highlights - New Guidance for American Rescue Plan Act (ARPA) Funds

On March 29, 2024, the U.S. Department of the Treasury released an update to Frequently Asked Questions (FAQs) related to Coronavirus State and Local Fiscal Recovery Funds (SLFRF) authorized under the American Rescue Plan Act of 2021 (ARPA), which can be found here. The updated FAQs guidance addresses questions related to the Obligation Interim Final Rule (Obligation IFR) that was released in November 2023, which clarified the definition of an “obligation” means “an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment.”

The Treasury recognized that recipients may obligate funds through means other than contracts or subawards. For example, in the case of payroll costs, a recipient may have incurred an obligation even though the recipient and its employee may have not entered into an employment contract. The Treasury also provided further guidance on several ways that recipients may consider payroll costs to be obligated, including for purposes of using SLFRF funds to cover personnel costs between January 1, 2025, and December 31, 2026 to the extent the employee is serving in a position that was established and filled prior to December 31, 2024. However, it is important to note that recipients must follow state or local law and their own established practices and policies regarding when they are considered to have incurred an obligation and how those obligations are documented. Please refer to the FAQs for the specific guidance governing obligations.

The Treasury is hosting webinars on May 8th and 9th to further explain the updates to the FAQs. SLFRF recipients are encouraged to attend either one as the same material will be presented in both webinars. Click here to register for the May 8th webinar from 7:00am – 8:30am PDT, and click here for the May 9th webinar from 10:00am – 11:30am PDT.

If you have questions regarding this topic, contact Donna K. Lee, Chair of the Professional Standards Committee at standards.chair@csmfo.org.

The Professional Standards Committee operates as a technical resource to CSMFO members. The Committee is comprised of municipal and commercial members whose mission is to keep members informed of emerging issues and best practices.