Recommendations on Receipting American Rescue Plan Funds
Local governments will soon be receiving the first tranche of funding that was authorized by the American Rescue Plan Act of 2021 (ARP). As referenced in the previously provided memorandum prepared by the Comptroller’s Office, much remains unknown regarding the exact allocations that local governments will receive, as well as the applicable uses of the funding. However, we have compiled a brief list of recommendations that we believe should assist in preparing local governments for receipt of the funds in the upcoming weeks.
Establishment of New Fund: The Comptroller’s Office has recommended that funds received relative to provisions of the ARP be maintained separately from other funds received by your organization. We wholeheartedly agree with this recommendation and believe that establishment of a separate fund would be the easiest way to ensure proper segregation. While the amended chart of accounts does not contain a fund specifically dedicated to ARP funding, we recommend use of a special revenue fund such as Fund 127 (Other General Government Special Revenue) or Fund 128 (Other Special Revenue).
Establishment of New Bank Account: In an effort to further segregate the ARP funding, we recommend that the Trustee establish a new bank account in which to receipt the proceeds. This is especially important if the account that the money is receipted into is an interest-bearing account, as the expenditure of any interest that is accrued as a result of the ARP funding will be subject to the same restrictions as the original funding received by the local government.
Communication with Local Bank: Counties will be receiving their ARP allocations directly from the Federal Government. It is vitally important that your bank is aware of the impending deposit of funds and that they are prepared to adequately collateralize those funds within the timeframe provided by statute. Communication with the bank beforehand should alleviate any potential issues, as well as provide the county an opportunity to explore other alternatives if necessary.
Avoid Taking Trustee Commission: As with many other sources of Federal funding, trustees should avoid taking commission on ARP funds.
Usage of ARP Specific Accounts: The Comptroller’s Office has amended the Uniform Chart of Accounts to provide additional revenue, expenditure, and equity accounts for use with ARP funding. Please note that any funds that remain unspent at year-end will need to be restricted in one of the corresponding equity accounts per GASB 54.
Verification of DUNS Number and SAM Registration: As outlined by the U.S. Treasury Department on 4/15, local governments should ensure that they have an active DUNS number as well as an active SAM registration. More information regarding that guidance can be found here.
Potential Establishment of Oversight Committee: As more guidance is released on the allowable uses of ARP funding, it may be beneficial for counties to explore the creation of an oversight committee to develop a plan for usage of the funds. While current guidance is limited, the potential uses appear to be extremely broad, and it may be helpful if a specific group within your county is tasked with developing a plan that connects the allowable uses with the most prevalent needs of the community.
While the above list should not be considered all-inclusive, it should hopefully assist counties as they prepare to receive the first payments from the Federal Government.
We are expecting additional guidance from the U.S. Treasury around the same time the funds will be distributed in mid-May. We will continue to monitor future guidance and provide additional updates as necessary.
As always, please do not hesitate to contact your County Government Consultant should you have any questions.