How can cities balance the need to move with urgency while also ensuring that awarded funds are allocated in a manner that ensure the greatest level of flexibility with respect to spending?

In order to move quickly and maximize flexibility in spending funds, municipalities should have well-qualified leadership teams. The teams must have the ability to:

1. understand available funding streams;
2. ensure compliance with the applicable rules and regulations; and
3. monitor program goals and update them as necessary.

Below are some good practices for municipalities to consider:

Expert involvement: Consider hiring or contracting a grant administrator with the experience needed to lead the grant management effort, including relevant federal grant administration experience and familiarity with relevant provisions of the Code of Federal Regulations.[1]

Needs assessment: Consider performing a needs assessment prior to the actual receipt of funds or to help disburse funds already received. The assessment can help identify the critical projects which address economic recovery, revenue replacement, infrastructure, and community recovery aid, with an emphasis on reaching those most in need so that they are addressed as soon as funds are available. The municipality might consider engaging community groups, not-for-profits, or other local organizations to help prioritize its needs.

Cost tracking protocols: If possible, establish COVID-19-specific cost codes to identify and track COVID-19-related expenses within the municipality’s financial management system(s) and any associated anticipated funding source. Cost tracking protocols allow municipalities to identify costs still in need of a funding source and avoid duplication of benefits. Additionally, should funding regulations and eligibility criteria change, municipalities can more easily identify costs that could be funded under a more suitable alternative source.

Educating staff: Understanding and setting expectations regarding the scope and eligibility of each funding source is important for a municipality’s grant management team. Funding source eligibility requirements may include a variety of factors and timeline considerations and may also impose reporting, compliance, and monitoring requirements. Understanding key rules and regulations will help the municipality prioritize more restrictive funding over more flexible funding. For example, prioritizing the use of The Coronavirus Aid, Relief, and Economic Security Act (“CARES”) Coronavirus Relief Fund when reasonable over American Rescue Plan Act of 2021 (“ARP”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) may be appropriate in some instances. Further, some eligible grant categories under the CSLFRF are less restrictive than others, with “government services” being the least restrictive.[2] As a result, grant managers may want to consider reserving government services for expenditures not covered by more restrictive categories.

Also, these funding sources have strict deadlines. CARES funds must be incurred by December 30, 2021, while ARP funds must be incurred (obligated) from March 3, 2021, through December 31, 2024.[3], [4], [5], [6]

As a result, staff should be assigned to regularly review regulations and guidance that have been issued in connection with the different funding sources. Keeping well-informed on the latest guidance should help the municipality maximize the flexibility allowed in spending. Below are links to sources of information that can be helpful to grant management staff and where grant managers may continually monitor for updates:

• https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments
• https://home.treasury.gov/system/files/136/CRF-Guidance-Federal-Register_2021-00827.pdf 
• https://oig.treasury.gov/cares-act-reporting-and-record-keeping-information
• https://www.naco.org/resources/naco-analysis-american-rescue-plan-act 
• https://www.nlc.org/covid-19-pandemic-response
• https://www.ncsl.org/ncsl-in-dc/publications-and-resources/american-rescue-plan-act-of-2021.aspx

Oversight: Typically, programs making use of federal funds are required to maintain specific documentation showing that the program meets the eligibility requirements for the relevant federal funds.[7] As municipalities attempt to meet the urgent needs of their communities and disburse money as quickly as possible, it will be important to maintain oversight and adequate internal controls to ensure compliance with federal and state statutes, regulations, and the terms and conditions of the awards.[8] If a municipality fails to provide oversight and cannot meet the relevant documentation requirements to adequately support the municipality’s claim under any given source, it could result in recoupment or disallowance of federal funds.

Last Updated: February 2, 2022