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Update on the City of Wauwatosa’s spending of American Rescue Plan Act funds and consideration of a re-allocation decision framework
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Submitted by:
John Ruggini
Department:
Finance Department
A. Issue
In 2021 the Congress passed the American Rescue Plan Act (ARPA) that included funds for state and local governments to mitigate the impact of the pandemic. On March 15, 2022 the Common Council approved the allocation of $24,663,875 in funds that the City received. Funds must be obligated by 12/31/24 and spent by 12/31/26.
B. Background/Options
Wauwatosa received a total of $24,663,875 in American Rescue Plan Act (ARPA) funds which are intended to support the efforts of local governments in their response to and recovery from the COVID-19 pandemic. The City implemented a robust public engagement process that included internal stakeholder engagement and extensive external engagement with community meetings, interviews, and online feedback opportunities. The Common Council allocated $24,663,875 in ARPA funds among seven program areas including:
• COVID response
• General Government/Administration
• Equity
• Infrastructure
• Mental Health
• Parks
• Small Business Support & Development
For more information on the funded projects, please see <www.wauwatosa.net/ARPA>
The City is required to file quarterly reports with the Department of Treasury on the status of its spending of ARPA funds. As of of December 31, 2023, 23% of the funds had been spent and an additional 11% were encumbered as depicted in the graph below.
With the pending obligation deadline approaching at the end of this year, departments updated their cash flow projections and provided detailed information on how they planned to obligate funds by year’s end.
Based on these cash flow projections, we’re projecting that 70% of the funds will be spent by the end of this year. There is the potential for surplus in a few areas, but given that $9.8 million of infrastructure projects will be bid out in the next 6 months, we are not recommending any decisions be made yet for reallocating funds in the event the infrastructure projects exceed budget. We do recommend the following framework in priority order for addressing any surplus funds:
1. Address any shortfalls among infrastructure projects
2. Reallocate funds to new projects within the same program area where possible. This could mean partnering with a non-profit agency as these agreements are considered obligations.
3. As there is no way to obligate the contingency or budget stabilization funds, use these funds to increase general fund balance by allocating them to incurred public safety expenses in 2024.
Specific decisions related to these priorities will require Council approval but having the framework in place will help staff develop contingency plans. It is anticipated that reallocation decisions would be presented to Council in July.
C. Strategic Plan (Area of Focus)
Economic Development, Infrastructure, Housing, Quality of Life
D. Fiscal Impact
None
E. Recommendation
Staff recommends the committee adopt the reallocation prioritization framework.