Authors: Jennifer Teal, Senior Consultant (Email) and Mark Olson, Senior Manager (Email)

Developing an Effective ARPA Investment Framework for Your Community

The American Rescue Plan Act (ARPA) funding program is a once-in-a-lifetime opportunity for communities around the country to identify and address critical community needs that arose from or have been brought to light by the COVID-19 pandemic. For many communities, the amount they have received in ARPA funds is unprecedented – oftentimes equivalent to a large portion of their annual spending on core services and capital. To ensure that these resources are allocated in a way that maximizes their impact for the community today and in the future, it is important to meaningfully engage community stakeholders in the process of identifying community needs and develop a decision-making framework that supports transparent and well-informed evaluation of funding opportunities.

Many of the immediate impacts of the COVID-19 pandemic are fairly universal and well understood, like investment in Personal Protective Equipment (PPE), upfitting facilities to promote social distancing, and adjusting to remote and hybrid learning and work arrangements. However, the full impact of the COVID-19 pandemic has proven much more far-reaching, particularly in historically disadvantaged groups. Without meaningfully engaging with a wide range of individuals and stakeholder groups in the community, it is challenging to understand the full-range of impacts and needs that ARPA funds could support. Designing and carrying out a robust engagement process is key to developing a comprehensive picture of how the COVID-19 pandemic has impacted the community and creates an environment that supports innovative and creative problem-solving using ARPA funds.

The City of Wauwatosa, Wisconsin has been allocated $24,663,875 in ARPA funds and the Wauwatosa School District has been allocated an additional $3,027,252. These funds are intended to be used to support the efforts of local governments and schools in their response to and recovery from the COVID-19 pandemic.

Given the magnitude and unprecedented nature of this funding opportunity, the City engaged Raftelis to help them implement a transparent decision-making process for prioritizing the allocation of ARPA funds that includes significant public engagement. Further, due to the Wauwatosa School District’s close connection with the City government and shared stakeholders, the information gathered during the public engagement process will be shared with the school district.

This project consists of internal stakeholder engagement, including an initial workshop with the Common Council to determine an internal administrative and governance structure for managing ARPA funded projects and identify key focus areas for the ARPA funds, as well as a workshop with the City’s Department Directors and management team to review the Council’s key focus areas, and identify an initial list of specific project ideas. Extensive external stakeholder engagement will follow, including development of external communications materials, creation of an online engagement tool, stakeholder focus groups, community meetings, and key stakeholder interviews. The issues and project ideas identified during the internal and external engagement will be compiled and prioritized for Council consideration.

The process developed for the City of Wauwatosa is based on an ARPA Investment Framework that will guide and support the City’s allocation decisions. It includes three components: guiding principles that ensure that the organization is strategic in its investment of ARPA funds; key funding priorities that represent the community’s needs and strategic vision; and an evaluation methodology that supports objective assessment of funding options and proposals.

Guiding Principles

Guiding principles represent the values and philosophy of the organization and serve as guardrails for decision-making. The Government Finance Officers Association (GFOA) has identified the following three guiding principles that can serve as a starting point for a community to consider as they develop their own guiding principles for the investment of ARPA funds:

• Temporary Nature of ARPA Funds: ARPA funds are non-recurring, so their use should be applied primarily to non-recurring expenditures. Care should be taken to avoid creating new programs or add-ons that will require ongoing financial commitment.
• ARPA Scanning and Partnering Efforts: Local jurisdictions should be aware of state-level ARPA efforts and consider regional initiatives and partnerships.
• Take Time and Careful Consideration: Adequate time should be taken to carefully consider all alternatives for the prudent use of ARPA funding prior to committing the resources to ensure the best use of temporary funding.

Key Funding Priorities

Given the magnitude and visibility of the ARPA funding received by local governments, it is critical that the funds are invested in a manner that aligns with each community’s specific needs and strategic priorities. Elected bodies and decision-makers should engage in thoughtful deliberation to identify their key funding priorities for ARPA funding. A community’s strategic plan and other community-wide plans like specific master plans, equity and inclusion plans, capital infrastructure plans, and emergency management plans are a good starting point for these efforts. The priorities included in these plans should be considered in conjunction with key themes and ideas identified through the community engagement process as decision-makers identify their specific funding priorities for ARPA resources.

Evaluation Methodology

To ensure that a community’s funding decisions are aligned with community needs, the organization’s guiding principles for ARPA investment, its key funding priorities and legally allowable uses of ARPA funds, a well-defined methodology for evaluating and prioritizing these proposals is critical.

An effective evaluation methodology should include consideration and scoring of factors such as:

• Priority Area: How well does the proposal align with the community’s key funding priorities?
• Eligibility: Does the proposal meet eligibility guidelines for ARPA funds?
• Alternative Funding: Are other sources of funding available to replace or supplement ARPA funding?
• Timeline: Can the proposal be implemented and completed within the ARPA program deadlines?
• Cost: Does the proposal cost represent a reasonable allocation of resources relative to other community proposals?
• Equity: What is the impact of this proposal on equity and inclusion in the community?
• Community Impact: What portion of the community would benefit from this proposal?
• Impact on Operating Expenses: Will this proposal require ongoing funding? Will it reduce ongoing operating expenses?

It is important to use a consistent evaluation methodology for reviewing all funding proposals for ARPA investment that a community receives, both those that come from within the organization and those that originate in the community-at-large. By using a consistent approach, organizations create a transparent and systematic way to ensure that their investment goes towards those projects and programs that will have the greatest impact on the community.

The ARPA program represents an unprecedented opportunity to invest in programs and projects that will support the community’s COVID response while addressing broader community needs and priorities. Meaningfully engaging with residents and stakeholders to identify the ways that the COVID-19 pandemic has impacted individuals and disadvantaged groups as well as developing a framework for ARPA investment and decision-making will ensure that communities invest their ARPA resources effectively and make the most of this opportunity for future generation.