Treasury Department releases new obligation guidance for the ARPA State and Local Fiscal Recovery Fund

Key Takeaways

On March 29, the U.S. Department of Treasury (Treasury) released new Frequently Asked Questions (FAQs) related to their Obligation Interim Final Rule (IFR) for the ARPA State and Local Fiscal Recovery Fund (Recovery Funds). Addressing concerns raised by NACo, the FAQs offer insights into personnel costs, subrecipient obligations, revenue loss and handling excess funds.

What are the major wins for counties included in the new guidance?

• Counties may use Recovery Funds for personnel costs for any eligible position through December 31, 2026, that was filed prior to December 31, 2024 – This is a deviation from the Obligation IFR, which stated funds may only be used to cover personnel costs for individuals responsible for reporting/compliance for Recovery Funds.
• If a county decides to use Recovery Funds for personnel costs, it is required to collect information and report this to Treasury by either January 31, 2025 (for quarterly ARPA report filers) and April 30, 2025 (annual ARPA report filers) – This is an extension from the previous April 30, 2024 deadline.
• Subrecipients are NOT subject to the December 31, 2024, obligation deadline.
• After the December 31, 2024, obligation deadline, if a county has excess funds that were already obligated but not yet expended, the county may reclassify funds from the original activity to another project that is eligible under Recovery Fund guidance.

Why did Treasury release new obligation FAQs?

• After the original Obligation IFR that was released by Treasury in November 2023, counties had outstanding questions regarding the ability to use Recovery Funds to cover payroll costs and costs associated with award reporting and compliance beyond the December 31, 2024, deadline.
• Because of the nature of the county budgeting process, most counties are limited in obligating funds to be expended beyond one fiscal year. Additionally, most counties obligate payroll costs each pay period as opposed to an annual basis.
• NACo successfully urged Treasury to provide counties with clarifications and flexibility as it relates to the Recovery Fund obligation deadline via the new obligation FAQs.

What's next?

• Counties should these new flexibilities into consideration as they get ready to submit their Project and Expenditure (P&E) report on April 30, 2024.
• Join NACo for a webinar to hear about the new FAQs and requirements associated with the P&E reporting deadline.