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Making the Most of Federal ARPA Funds

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Michael R. Ford
August 19, 2022

The 2021 federal American Rescue Plan Act (ARPA) is providing a $350 billion cash infusion to state and local governments in the United States. The influx of funding is an opportunity for governments to facilitate their recovery from the worst of the COVID-19 pandemic. But, the federal investment in state and local government is not without risks. How do we ensure funds are spent wisely? How do we ensure funds are used for their intended purposes? And, how do we maximize the likelihood that these one-time funds have a lasting positive impact? These are not easy questions to answer given the amount of funds and the scope of allowable uses.

I am far from the first to wrestle with the issue of ARPA funds. Donald Kettl, for example, argued that the lack of accessible information regarding ARPA expenditures will lead to fighting about whether the money was well spent. I think he has a point here. The dearth of national comparable data will likely make ARPA expenditures a political talking point for years to come. Here in Wisconsin multiple think tanks have already expressed their belief that ARPA money is being squandered on frivolous expenditures. But, the absence of a clear federal database does not mean that ARPA funds cannot be spent in an accountable manner, it simply means that accountability frameworks must be created at the local level.

I must acknowledge that accountability is the ultimate buzz term. Everybody wants it, few agree on what it means. For purposes of ARPA, I define accountability as a three-step process. First, it requires the articulation of a plan. Second, it requires the execution of said plan. Third, it requires a political review to ensure the adopted plan was executed as intended. Here in Oshkosh, WI we passed a resolution creating guidelines on how ARPA funds can and cannot be used with the goal of maximizing the impact of ARPA funds while creating a mechanism for residents to hold their government accountable.

We began by setting broad priorities for our $20 million allocation. The top priority was to fund infrastructure projects that were already scored and approved as part of our Capital Improvements Program. The thinking was that these projects were already approved, were clearly needed and would have a lasting impact. In addition, funding infrastructure projects with cash allows the City to save on debt costs that can instead be used to fund our second priority, which was community projects generated through a call for proposals. Funding amounts were set at 75 percent for infrastructure and 25 percent for community generated projects. The logic in the funding split was tied to the amount of interest payments that would otherwise be spent if infrastructure projects were funded through bonding.

Next we set parameters. First, no ARPA funds could be used to create new programs with ongoing expenses. This parameter prevents a structural deficit from appearing once ARPA funds are used up. Second, we asked that new infrastructure projects include estimates for maintenance costs so as to get a true forecast of expenses over the life of each project. Third, we required that funds be spread out evenly over the allowable expenditure period, thus creating flexibility to fund unforeseen post-COVID costs that may emerge. Finally, we required that social equity be considered as a guiding value for each expenditure, i.e., ensuring funds are used for projects and programs that benefit City residents as a whole.

I do not share Oshkosh’s framework because it is perfect, it is not, but because it is an example of what a local ARPA policy can look like. Good governance is not about finding what works everywhere, rather, it is about finding what works for a specific local government. Adopting a local ARPA policy gives municipal management clear direction, gives the public clear expectations and allows for after the fact evaluation of whether the policy was followed. While a national ARPA database could be beneficial, it is beyond the power of state and local governments to make it happen. But that does not make state and local governments powerless. They can, and should, adopt a policy that maximizes the impact of ARPA funding.

Author: Michael R. Ford is an associate professor of public administration at the University of Wisconsin  Oshkosh, where he teaches graduate courses in budgeting and research methods. He frequently publishes on the topics of public and nonprofit board governance, accountability and school choice. He currently serves as an elected member of the Oshkosh, WI Common Council.

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