Since the start of the pandemic, state and local governments across America have needed federal support to help combat COVID-19 in their communities. In terms of impactful federal funding, if the Coronavirus Aid, Relief, and Economic Security (CARES) Act was Round 1, then the proposed $1.9 trillion American Rescue Plan (ARP) is Round 2.
For local governments, territories and tribes, the ARP will require a significant amount of strategy, planning and risk awareness. Let’s start by making sure we are all on the same page regarding what the ARP is and what you need to know now.
The ARP is a $1.9 trillion relief package proposed by President Joe Biden with the purpose of aiding individuals and communities throughout the country. All state and local governments will have access to non-competitive funding from the U.S. Department of Treasury (Treasury). Allocations will be determined formulaically by population. Larger cities and counties are expected to receive payments directly from Treasury within 60 days of certification of need. Non-entitlement communities (generally, those with less than 50,000 in population) can expect a formulaic distribution by population, distributed by their state within 30 days of receipt from Treasury, if unextended. The legislation is anticipated to be signed into law as close as possible to March 14, 2021, as unemployment benefits begin to phase out. Additionally, funding will be available across most federal agencies through competitive grant applications.
As we compare the ARP to the CARES Act, we see several important differences this time around, all of which are positive and appear to allow for more flexibility. The primary anticipated differences are:
It’s important for local governments to mobilize early to develop a plan for spending the funds to help ensure allocations are spent timely and on necessary objectives.
Assessing the risk involved with the eligibility of each potential expenditure is a critical part of this process that may require professional assistance, depending on your team’s depth of expertise in this area.
With the increase in relief funding, it is more likely that the program funds will be subject to audit. Governments should be prepared for potential reviews to avoid identification of ineligible costs or penalties that require repayment of funding. More details will become clearer as the legislation is finalized and additional guidance is released, but adequate planning, documentation and accounting controls will help you stay on track.
Additionally, some communities were not able to spend all the money they received in 2020 through the CARES Act. This may be due to unclear spending guidance, restrictions from pass-through entities or perhaps inability to spend within the allowable timeframe. With potentially more money available soon, it is critical to ensure all of the funds are accounted for and address the specific needs in your community.
While the exact date the ARP will be signed into law is not yet known, we are confident in saying that the time to act is now. If you are not already preparing, begin this process as soon as possible.
Because the amount of money distributed may be significantly greater than your community received last year, it is imperative to increase the amount of strategic planning and risk awareness that your leadership team puts into the preparation process.
Additionally, you may now have a better idea of where the biggest needs exist in your community. Last spring was a whirlwind and a chaotic time for local governments. Since that time, you may have had the opportunity to better evaluate the segments of your community – both individuals and businesses – that are hurting the most and could benefit most from additional support.
And as you know, wherever there are needs to be met and programs to be aided, there are procedures and policies to develop and oftentimes bureaucratic hoops to navigate. These things take time. This isn’t breaking news, of course, but rather a reminder to get started (and, if needed, to ask for help) as soon as possible.
We have learned from our experience with the CARES Act, just as you have, and our public sector professionals are more equipped to provide you with proactive, valuable advice and guidance as it pertains to the ARP.
Due to the sheer volume of dollars involved and the complexities of the plan – not to mention the pressure to get things right in your planning and strategy process – Baker Tilly’s public sector specialists can be an excellent source of support for your municipality. In addition to assistance with strategic planning and competitive grant applications, we can help develop programs focused on:
Your organization has an unprecedented opportunity to provide critical help to individuals and businesses in need throughout your community. We encourage you to contact us, or reach out directly to members of your Baker Tilly engagement team, to discuss how we can provide valuable insight tailored to your particular situation at this important time.