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City officials lay out steps taken to speed up spending of ARPA funding as major deadline looms
City Hall is pictured in this file photo. [Don Vincent/The Daily Line]
Budget Director Annette Guzman and Chief Operating Officer John Roberson told members of the City Council Committee on Budget and Government Operations Monday that Chicago has spent 40 percent of the federal COVID-19 relief funds that are meant to go to myriad community initiatives across the city.
Officials also noted a few steps the mayoral administration has taken to speed up spending to meet the city’s goal of using all the nearly $1.9 billion at the city’s disposal before it’s clawed back by the federal government.
Of the American Rescue Plan Act (ARPA) funds the city received, $576 million has been allocated to 50 community initiatives spanning things such as rapid rehousing, mental health support, financial assistance to artists, small business assistance, broadband access programs and tourism and hospitality recovery. The other $1.3 billion went toward helping shore up the city’s revenue loss as a result of the pandemic.
Overall, the city has obligated 89 percent of its total ARPA dollars and spent 82 percent of it as of May 21. The vast majority of that spending went to address revenue loss to fund essential city services, with 100 percent of the $1.3 billion having been spent already.
The city has until the end of this year to encumber or obligate funding. Guzman said that under federal guidelines, appropriating the money through the city’s annual budget ordinance isn’t enough. Encumbrance means the city has formally begun the procurement process for the spending of the funds, indicated by actions such as the selection of vendors, subawards to delegate agencies and finalized contracts.
The city must spend all ARPA funds by the end of 2026. Anything that isn’t encumbered or spent by the deadlines set out by the federal government will be returned to the U.S. Department of the Treasury.
Chicago’s aim is to return none of the funds, but it’s been slow to get community funding out the door.
At the end of 2023, Chicago had spent just 29 percent of its community initiative ARPA funds, according to reporting from WTTW. In dollar terms, that represented $160 million, according to WTTW.
On Monday, Guzman said that amount had jumped to 40 percent, with the city spending $231 million as of May 21. The city has obligated $370 million total, meaning $139 million of the obligated community funds remained unspent and $206 million in allocated community funds remain unobligated and unspent.
As the city tries to meet its deadline to obligate all funds by the end of the year, officials said the administration has specifically worked to increase centralization and oversight of the ARPA funds to ensure money gets out of the door as efficiently and as risk-free as possible.
“We realized that we needed to revamp our internal processes and our protocols so that we could remove the obstacles from our ability to contract and to pay,” Roberson said. “We had to figure out, how do we get out of our own way? How do we make sure that we are expediting the ability for us to spend these monies?”
“One of the things that we noticed when we first came [into office] was that the departments who were responsible for getting dollars out the door, getting contracts signed, getting payments actually done, really weren't as engaged in ARPA as we had wanted them to be,” Guzman said. “So we brought all of them together, and we're talking about the heads of these departments, because buy-in at the top means that there's buy-in all the way through the organization.”
The administration formed an internal departmental steering committee to provide “high-level strategic direction” and broad policy guidance and established a project management office to implement programs and handle fiscal monitoring and oversight.
Also, Guzman said the city will bake an annual spending analysis into the next three upcoming budget seasons to help the city ensure all funds are spent by 2027. The first analysis will take place early in the 2025 budget season this August and will allow adjustments to spending and procurement based on current performance of programs and other conditions.
In addition to ensuring that the federal grant funds are entirely and efficiently used, city officials will also analyze which programs are fit to continue past the exhaustion of ARPA dollars and which alternative funding sources are available, Guzman said.
“That analysis isn't only just looking at fiscal sustainability, but also program evaluation, policy alignment, who are the stakeholders that are impacted by these programs, and how are those programs really engaging with our community and furthering equity and inclusion through the work that they do,” Guzman said. “Based on that, we'll be able to come back as part of the budget season each year and make decisions about which programs will receive sustained funding.”
Since ARPA represents an injection of one-time funding, not all the programs created or bolstered by ARPA funds can be sustained long-term.
“There are a lot of good programs that have either been enhanced through ARPA dollars or are new programs that have been made possible through ARPA dollars, and we really want to understand the impact of those programs, and if to continue them,” Guzman said.
Roberson said some of the programs the city wants to keep going have already started to be funded by other means.
“There are some programs that ... had originally been funded through ARPA, but through our analysis, we found that there were more sustainable resources and more sustainable sources of revenue to carry forth some of these programs that were more appropriately funded through our capital bonds or bonds programs,” Roberson said.
Transparency is another goal that city officials are hoping to boost as part of the ongoing ARPA initiative. A new ARPA data dashboard and monthly reports to the City Council will aim to inform the public and alderpeople about the progress of spending on a more regular basis and with greater specificity.
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