All told, $350 billion was disbursed through the fund (see chart). The program was established under the 2021 American Rescue Plan Act to support pandemic response and recovery efforts.
A September 2024 analysis by the Government Accountability Office, based on reports through the first quarter of that year, found that state and local governments had each spent 60 percent of their awards. State entities had obligated a slightly larger share (84 percent) than local (76 percent).
Governments have until 2026 to spend their awards, but only those funds that have been obligated by the upcoming deadline. Eligible uses include replacing lost public-sector revenue, public health services, public-sector workforce investments, emergency relief and water, sewer and broadband infrastructure.
The Government Accountability Office found that as of March, 45 percent of spending from recovery award money had been for revenue replacement and almost 40 percent to address negative economic impacts on small businesses, industry, nonprofits and households. More than 10 percent of local governments serving populations under 50,000 had not obligated or spent any of their recovery awards.
Even 1 percent of the funds disbursed under the State and Local Fiscal Recovery Fund (SLFRF) represents billions of dollars. Analysts from the Pew Charitable Trusts have highlighted last-minute strategies being used to secure this money.
Flexibility, Within Guidelines
Massachusetts is handling its remaining funds by treating any that remain unobligated as revenue replacement, says Rebecca Thiess, manager of Pew’s managing fiscal risks project. “That gives the state a lot of flexibility.” (The requirements for making such an obligation in a manner that the Treasury department will accept can be found in a compliance document issued in October.)
Vermont, which has experienced severe flooding events in recent years, used previously unobligated funds to match Federal Emergency Management Agency disaster relief dollars. This decision was reflected in the state’s fiscal year 2025 appropriations bill. Disaster relief is one of the expenditures allowed in the SLFRF. Given events of recent months, this kind of obligation could make sense in other jurisdictions.
Honolulu anticipates directing about $5 million in unobligated funds to cover hazard pay for city workers employed during the pandemic. New Mexico’s state auditor recently announced that $171 million in funds remain uncommitted, noting that it was “crucial that local governments act swiftly” so these resources stay in the state.
Any SLFRF “obligation” must meet specific requirements if a jurisdiction hopes to keep funds. An executive order or resolution is not sufficient. As defined in a reference guide from the Treasury, an obligation is “an order placed for property and services and entry into contracts, subawards, and similar transactions that require payment.” (Contracts must be signed before the Dec. 31 deadline.)
Further details are covered in the guide and were discussed in detail by Treasury officials in a recent listening session hosted by the National League of Cities and the National Association of Counties and is available online.
It seems likely some money could be left on the table. “The balance of unobligated funds can be difficult to track,” says Thiess in her report. For example, it’s possible to lose track of relief dollars that remain unspent if they were obligated to a project that has been canceled or paid for from another source.
Planning and approval take time, and that is running short. Tensions are growing among government and community stakeholders in Jackson County, Kan., over the inability of county leaders to agree on a plan for its unobligated funds. Gwendolyn Grant, CEO of the Urban League of Greater Kansas City, is frustrated that it's a real possibility that they won't meet the deadline. "When you send $70.4 million back, nobody wins,” she says.
This story first appeared in Governing, part of e.Republic, Government Technology's parent company.
