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State reports $163 million in remaining ARPA funds; payroll swaps proposed to preserve awards
Summary
Douglas Farnham told the House Appropriations Committee that $163 million of American Rescue Plan Act (ARPA) funds remain and the administration may use Treasury-authorized payroll-swap options to prevent recapture while programs finish work ahead of a Dec. 31, 2026 spending deadline.
Douglas Farnham, chief recovery officer for the Agency of Administration, told the House Appropriations Committee on May 13 that Vermont has about $163 million in remaining ARPA funds and is monitoring a portfolio of programs to ensure federal deadlines are met.
Farnham said the state filed its latest report with the U.S. Treasury covering activity through March 30, 2025, and “we have until April 30 to file that report.” He described current quarterly spending at about $30 million and said, “we're down to a hundred and 63,000,000 out of a billion dollars,” adding that the administration is tracking pace and program risk.
The nut graf: The administration outlined two tools to reduce the risk of federal recapture — restoring swapped funds to original ARPA programs if projects complete, or using Treasury-authorized rehiring/payroll-replacement rules to reclassify certain expenditures while preserving flexibility. Farnham cautioned that swaps require reporting and, when applied, would be disclosed to the Joint Fiscal Committee.
Farnham described how payroll swaps have been used in Vermont: ARPA may be expended to pay for rehiring of public-sector capacity under Treasury rules, then the general fund equivalent is restored to programs or allocated elsewhere with legislative oversight. “The payroll that we're covering... has to be new employees that started after March of 2021,” Farnham said, explaining the rehiring category’s eligibility window. He said the administration has used rehiring and revenue-loss capacity to fund limited-service positions and higher-education payments and that about $50 million of the AOA line came from payroll swaps.
Farnham said the administration prefers the payroll-replacement category because it is “a very simple category” from an audit perspective and reduces exposure compared with dozens of smaller programmatic grant accounts. He also said any swap to move money among ARPA projects requires Joint Fiscal Committee approval: the administration would present a specific list and the committee would decide.
Committee members asked about reporting cadence and next steps; Farnham said the administration will provide another update at the end of July and will continue quarterly reporting to joint fiscal. He said the plan is to preserve options through the fall of 2026 and, if necessary, perform swaps earlier in order to “buy time” for legislative conversations about program pace and priorities.
Ending: Farnham emphasized transparency and oversight, saying the administration will notify the Joint Fiscal Committee of any swaps and that the legislature retains final authority to reallocate general funds in later budget actions.
