American Rescue Plan Act Updated to Provide Additional Flexibility

September 5, 2023

The State and Local Fiscal Recovery Funds program has been amended to allow funds to be used to respond to natural disasters, build critical infrastructure, and support community development.

The American Rescue Plan Act (ARPA), distributed in 2021 and 2022, provides $350 billion to state, local, territorial, and tribal governments under the State and Local Fiscal Recovery Funds (SLFRF) program. On Aug. 10, 2023, details of the 2023 Interim Final Rule were released and include amendments that provide additional flexibility.

These updates create three new spending categories:

Emergency Relief from Natural Disasters
Surface Transportation Infrastructure
Title I Projects

View a list of new and 2022 eligible uses of SLFRF (pdf)

Eligible spending timeline

For the three newly created eligibility categories, SLFRF funds may be used for costs incurred beginning Dec. 29, 2022.

The deadline to obligate and spend SLFRF funds remains the same and includes both existing eligible use categories and newly created categories, with one exception. Funds must be obligated by Dec. 31, 2024, and spent by Dec. 31, 2026, however SLFRF funds obligated for the new transportation infrastructure projects and Title I projects must be used by Sept. 30, 2026.

Standard allowance

Most cities elected the “standard allowance” allowable under the “revenue replacement” category of eligible expenditures. By making this election, cities already had the most flexible use of funds available under the SLFRF program and don’t need to worry about this new rule.

Reporting reminder

Non-entitlement units (generally cities with populations of 50,000 or less) are required to complete the Project and Expenditure Report annually, even after all funds have been used and reported. The reporting period is April 1 to March 31 and the next report is due by April 30, 2024.