Report Shows City Still Sitting on Bulk of ARPA Funds, Raises Transparency Concerns

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A new report from the nonprofit Bureau of Government Research found that the city is still sitting on the bulk of the $388 million in American Rescue Plan (ARPA) funds. According to BGR analysts, the City’s appropriations of ARPA funds in 2021 and 2022 were used to cover expenses normally taken from the city’s general fund. As a result, the city stored a similar amount of General Fund revenue as surplus, in part because projected funding gaps didn’t materialize.

“The city’s expenditures of its first half of its ARPA funding, the first $194 million, allowed it to save its own revenue and build its own reserves with the surplus,” BGR research analyst Susie Dudis said at a Wednesday webinar hosted by BGR.

According to the report, General Fund expenditures totaled only $532 million in 2021 – $101.4 million under budget. Even without spending the $77.3 million in ARPA funds appropriated in 2021, the city would have generated a $25 million surplus after covering all of the city’s expenses. The city estimates that General Fund savings over the past two years has boosted that fund balance over $200 million. However, that leads to BGR’s next concern: transparency over how that money is eventually spent.

“The City has sometimes fallen short of providing sufficient information on its use of ARPA funds, limiting accountability,” the report states.

Under ARPA, bolstering the city’s General Fund isn’t prohibited. However, federal reporting requirements regarding ARPA use as well as the City’s reporting only focus on direct ARPA spending. As a result, future expenditures the city finances through its now-flush General Fund cushion would be directly attributable to ARPA funds, even if they’re not required to be reported the way that direct expenditures are.

BGR makes several recommendations for how the city can improve in this area, including providing the public with details on the components and objectives of spending plans and regular updates on actual spending and outcomes. In addition, the think tank suggests that the city compile this information, as well as information on the ARPA fund’s impacts on the General Fund budget (including initiatives adopted in the 2023 budget) in easily accessible reports for public to review.

“As with the ARPA funds, the City should provide the public with the full details of the components of all fund balance use plans, including the objectives of individual initiatives, before it begins spending,” the report says. “It should report regularly to the public on actual fund balance usage during the three-year period and the outcomes of those investments. And if it intends to use money for recurring expenses, it should identify how it plans to cover those costs in future years.

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