COVID-19 Federal Assistance e311


Timing of Funds

When must ARP funds be spent and are there exceptions for long term projects?

The U.S. Department of the Treasury’s (“Treasury”) Interim Final Rule (the “Rule”) provides guidance for municipalities regarding the timeline for using Coronavirus Local Fiscal Recovery Funds (“CLFRF”). The Rule outlines both the obligation and expenditure period of CLFRF funding:

(c) Return of funds. A recipient must return any funds not obligated by December 31, 2024, and any funds not expended to cover such obligations by December 31, 2026.[1] 

In short, funds are available under CLFRF to respond to the pandemic or its negative economic impacts and must be obligated, or, as per the Uniform Guidance, orders must be placed for property and services, contracts, subawards, and other similar transactions[2] by December 31, 2024,[3] with the period of performance for projects and expenditures extending until December 31, 2026.[4] This will allow construction on eligible water, sewer, or broadband infrastructure projects to continue until that later date.  

At this time, there is no Treasury guidance providing exceptions for the expenditures of CLFRF funding past the final date of December 31, 2026.

Treasury has addressed the concern of ongoing or extended projects in the Coronavirus State and Local Fiscal Recovery Fund (“CSLFRF”) Frequently Asked Questions (“FAQ”). FAQ #6.2 addresses the concern of longer-term projects:

Treasury is interpreting the requirement that costs be incurred by December 31, 2024 to only require that recipients have obligated the funds by such date. The period of performance will run until December 31, 2026, which will provide recipients a reasonable amount of time to complete projects funded with Fiscal Recovery Funds.[5]

Below are some steps that municipalities may consider taking in planning and budgeting longer-term projects with respect to CLFRF and other sources of funding: 

  • Conducting stakeholder engagement activities and other planning efforts to ensure that these programs can be mobilized as soon as funding and guidance are available;
  • Prioritizing capital and other projects that will be obligated by December 31, 2024, and ultimately completed by December 31, 2026, and meeting all of the allowability and federal flow-down requirements for use of the CLFRF funding. This will free up bond proceeds and other more flexible funding sources for longer-term projects;  
  • Reviewing local government expenditures that may be supported through the CLFRF funding that could create longer-term budget flexibility for the community; and 
  • Updating procurement vehicles and policies not only so they are ready to be used once the funding is available, but also so that all options including but not limited to: pre-payment, front-loading, and cost-share have been fully explored and can be compared to the CLFRF regulations. 

Last Revised: 7/23/2021

[2] Cornell Law School Legal Information Institute, “2 CFR § 200.71 – Obligations.,” available at:

[4] Id., at 99.

[5] Coronavirus State and Local Fiscal Recovery Funds: Frequently Asked Questions (updated July 19, 2021) – FAQ #6.2, at 28, available at: