Do you remember what we went through in local government five years ago when the COVID-19 pandemic changed our lives in unprecedented proportions?  How could we forget, this was a stressful time, but the ARPA funding helped our budgets tremendously, helping to offset the loss of sales taxes, hotel taxes, and other local tax revenues.

Hopefully, you already obligated 100% of these COVID monies, which are subject to the Single Audit for compliance, and you will have fully expended these federal funds by end of 2026.

If federal funding has ever left you scratching your head, you are not alone. Right now, there’s over $130.2 billion in ARPA infrastructure funds just sitting there, waiting to be put to work. But for many cities, confusion is standing in the way. Unlike traditional federal programs that come with complicated applications and red tape, the American Rescue Plan Act (ARPA) flips the script completely. It requires a totally different mindset, and if you’re a local government leader, you’ve probably felt that shift already. So, how do you move from confusion to confident action? That’s exactly what we’re diving into here.

With decades of hands-on experience navigating the complexities of municipal finance, John Herrera, President and CEO of MuniTemps, brings 35 years of expertise as a municipal finance officer and consultant. John has helped countless local government organizations and their employees successfully manage public funds and build solid financial frameworks. Email him at John@munitemps.com to talk about ARPA Funds as this federal funding ends.

This article is especially relevant for city and county leaders, finance professionals, and other public sector employees who need to establish a long-term plan for effectively managing ARPA funds and driving real community impact.

March 11, 2021 changed everything. President Biden’s signature on the $1.9 trillion ARPA created a once-in-a-generation opportunity for communities to rebuild critical infrastructure and revitalize local economies. But time isn’t your friend here. Cities must allocate these funds by December 31, 2024, with all projects completed by the end of 2026. The urgency is real – over one-third of State and Local Fiscal Recovery Funds from major cities have already flowed toward infrastructure projects, proving both the demand and the opportunity these dollars represent.

The real challenge isn’t getting ARPA funding – it’s managing it effectively while working within the flexibility built into federal guidelines. Recipients must follow specific Uniform Guidance requirements from award date through December 31, 2026. This combination of massive opportunity, tight deadlines, and strict compliance creates a perfect storm that leaves many local leaders feeling overwhelmed.

Let’s face it, you didn’t get into local government to become a federal compliance expert. But here’s the good news, you don’t need to reinvent the wheel. This article will show you a proven framework that moves you from uncertainty to confidence, ensuring both compliance and maximum community impact. You’ll discover practical strategies to implement immediately, no matter where you stand in your ARPA journey.

Are you ready to turn this historic opportunity into lasting community transformation?

Understanding ARPA Funds and Their Purpose

The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program drops $350 billion directly into the hands of state, territorial, local, and Tribal governments across America. This historic investment provides your community with a clear blueprint for pandemic recovery and future growth.

Think of ARPA’s structure like a well-designed foundation – built to support your community’s long-term stability. The $130 billion local government allocation splits equally between cities and counties, with $65.1 billion dedicated to counties and $65 billion flowing to cities. For cities specifically, $45.57 billion goes to metropolitan municipalities (populations over 50,000), while the remaining $19.53 billion gets allocated to smaller non-entitlement units based on population.

ARPA funds serve three primary purposes that work together like interconnected support beams:

1. Supporting pandemic response and economic recovery efforts
2. Maintaining essential government services despite revenue losses
3. Enabling long-term infrastructure investments for sustainable growth

What sets ARPA apart from traditional federal programs? Flexibility. The Treasury Department’s final rules outline seven key eligible uses – each one designed to address specific community needs:

• Public Health & Economic Recovery: Address COVID-19 impacts on households, small businesses, nonprofits, and hard-hit industries like tourism
• Premium Pay: Provide additional compensation for essential workers who faced significant health risks
• Revenue Replacement: Fund government services up to your lost revenue amount (with a simplified $10 million standard allowance option)
• Infrastructure: Invest in water, sewer, and broadband projects to improve community infrastructure
• Emergency Relief: Provide assistance following natural disasters (added in 2022)
• Transportation: Support eligible surface transportation projects
• Community Development: Fund projects eligible under Title I of the Housing and Community Development Act

The timeline doesn’t wait for anyone. You must obligate your allocation by December 31, 2024, and complete all expenditures by December 31, 2026. With over 30,000 government recipients nationwide tapping into these funds, proper management becomes the difference between success and missed opportunities.

The question is, are you prepared to handle this level of responsibility? Unlike traditional federal programs that force you through complex application processes, ARPA delivers funding directly to your doorstep. This gives you unprecedented control – but also places full responsibility for compliance and strategic implementation squarely on your shoulders.

Your community deserves more than just spending these dollars. It deserves a strategic approach that maximizes every penny for lasting impact.

Build Your ARPA Management Framework That Actually Works

Your ARPA fund management framework isn’t just paperwork – it’s the foundation that determines whether these historic dollars create lasting community impact or become a compliance nightmare. Strong frameworks don’t happen by accident. They require thoughtful planning and robust internal controls that protect both your investment and your community’s future.

Start with the non-negotiables. Every local government must adopt and implement an Eligible Use Policy that establishes clear procedures for project requests, approvals, and documentation. This foundation ensures your decisions align with Treasury’s Final Rule while creating the audit trail that keeps you out of trouble. Think of this policy as your roadmap – without it, you’re driving blind through federal compliance requirements.

Effective ARPA management frameworks include six essential components:

1. Rock-solid internal controls: Establish a dedicated ARPA team with segregated duties to ensure accuracy in claims processing, record keeping, and reporting. This team should commit to ongoing education about ARPA regulations through webinars, seminars, and published resources. Don’t let knowledge gaps become compliance gaps.
2. Project-based tracking systems: Treasury’s reporting portal operates on a project-based structure, so organize and track your expenditures accordingly. Consider implementing technology solutions to shoulder the reporting burden – these administrative costs are eligible expenses. Your tracking system today determines your reporting success tomorrow.
3. Subrecipient management protocols: Providing funds to subrecipients? Develop written policies and procedures for monitoring and risk assessment. Evaluate each subrecipient’s risk based on factors like prior experience managing federal funds, previous audits, personnel, and policies. Their compliance failures become your compliance failures.
4. Equity integration: Embed racial equity into your ARPA project development and administration. Cities like Boston, Fort Worth, and Kansas City have successfully incorporated equity through data-driven, community-focused processes. This isn’t just good policy – it’s smart investment strategy.
5. 5. Cross-agency collaboration: Partner with other agencies and community organizations to strategically invest these federal dollars. This collaboration promotes cross-cutting investments and sustainable approaches that multiply your impact beyond individual projects.
6. Transparency measures: Create public dashboards and databases tracking allocations and expenditures. This builds public trust while providing taxpayers, policymakers, and researchers visibility into how funds are being used. Transparency today prevents problems tomorrow.

The framework you establish now will determine both your compliance success and the lasting impact these funds have on your community. Get it right, and you’ll have a management system that turns opportunity into transformation.

Protect Your ARPA Investment: Compliance and Lasting Impact

Here’s a hard truth, treasury actively reclaims funds from non-compliant recipients, and strict compliance vigilance with ARPA guidelines isn’t optional, it’s survival. Following the April 30, 2025 reporting deadline, all municipalities must remain in good standing through the program’s conclusion. Treasury has explicitly committed to “vigorously monitor recipients’ methods of obligating funds” and recoup misused allocations.

Non-compliance consequences hit fast and hard. If flagged for recoupment, municipalities face a rapid escalation of penalties – within just 91 days, your community could incur over 30% in additional charges. The penalty timeline moves with ruthless efficiency:

• Days 1-30: Grace period with no penalties
• Day 31: 5% daily interest begins accruing (backdated to Day 1)
• Day 91: Additional 6% penalty plus 30% administrative fee

Think of your compliance strategy as the fortress walls around your ARPA investment. Establish a dedicated compliance team with clear accountability for monitoring expenditures. This team should conduct regular internal audits, maintain comprehensive documentation, and ensure all subrecipients adhere to federal requirements. For organizations expending over $750,000 in federal funds annually, a Single Audit is required – though eligible entities receiving under $10 million may qualify for a simplified attestation process.

But compliance alone isn’t enough. Plan for sustainability beyond the 2026 deadline. Assess each ARPA-funded program’s long-term viability through three essential lenses:

4. Future policy alignment with community priorities
5. Program effectiveness and measurable outcomes
6. Fiscal impact assessment – including operating costs and alternative funding sources

As stated above, before the December 31, 2026, expenditure deadline, begin developing transition strategies for valuable programs. This includes identifying potential long-term funding sources, determining which programs demonstrate sufficient impact to continue, and incorporating successful initiatives into regular budget planning.

Don’t underestimate the power of transparency. Creating accessible dashboards that track expenditures builds trust while providing valuable context for your strategic investments. Your community deserves to see how these historic funds are creating lasting change.

The programs you launch today with ARPA funding shouldn’t disappear when federal dollars stop flowing. Smart planning now ensures the most valuable initiatives continue serving your community long after 2026.

Your Path Forward

ARPA funds represent far more than a funding opportunity – they’re your community’s foundation for lasting transformation. Throughout this guide, you’ve discovered how the right framework bridges the gap between ARPA’s flexibility and its demanding compliance requirements.

The clock continues ticking toward those critical deadlines. December 31, 2024 for allocation. December 31, 2026 for completion. Your decisions today will determine whether your community captures this historic opportunity or watches it slip away.

Think of the framework we’ve outlined – clear policies, strong internal controls, project tracking, subrecipient management, equity integration, collaboration, and transparency – as your roadmap through the ARPA maze. This structured approach doesn’t just keep you compliant; it shields your municipality from Treasury’s aggressive recoupment efforts that could drain your budget with penalties exceeding 30%.

Don’t view ARPA as just another federal program to manage. View it as your strategic tool for sustainable community development. The careful planning you implement now creates pathways for programs that outlast 2026 through alternative funding sources or integration into regular budgets.

The journey from confusion to confidence with ARPA funds requires balancing immediate community needs against future sustainability. When you manage these historic funds effectively, they won’t just address pandemic recovery – they’ll build lasting infrastructure and economic resilience that serves your community for generations.

Your framework doesn’t just ensure compliance. It maximizes the once-in-a-generation potential these funds represent for your municipality’s future. The peace that comes from knowing you’ve managed these resources wisely will make every hour spent on implementation worthwhile.

After all, you’re not just managing federal funds – you’re building your community’s legacy. Managing it well ensures your community doesn’t just recover—it thrives. And that starts with strategy, structure, and a clear framework to guide every decision.

Alongside the strategies shared in this article, John Herrera, CPA, encourages every public servant to set strong financial foundations and commit to effective fund management practices. This empowers you to fully capture the purpose of ARPA—transforming temporary relief into long-term community growth.

Contact our team at jobs@munitemps.com or visit www.munitemps.com.

MuniTemps is an expert for “all things municipal,” offering staffing, recruiting, and career opportunities for professionals who are passionate about serving the local government.

We also invite you to explore the MuniTemps CitySpeak YouTube channel, where you’ll find valuable video blogs from five years ago that promote a conservative, long-term financial planning approach. These timeless insights may offer tools or concepts you can apply to your current role in municipal or public service.

And don’t miss the video titled “What Recession Feels Like at City Hall.” which provides real-world perspective on managing through economic downturns in the public sector.

Thank you for joining us today! Your commitment to smart, strategic public service makes all the difference.