Vermont officials say ARPA obligations met; $26.4 million reverted to hazard‑mitigation appropriation

At a Jan. 21 Senate Appropriations Committee meeting, state fiscal staff said Vermont has met the U.S. Treasury obligation deadline for American Rescue Plan Act (ARPA) state fiscal recovery funds and has moved some balances into state accounts to reduce the risk of federal recapture. "We have obligated everything and there's no risk of recapture," Douglas Farnham, chief recovery officer for the State of Vermont, told the committee.

The overview described how roughly $1 billion in ARPA state fiscal recovery funds awarded to Vermont were appropriated through fiscal 2022 and fiscal 2023 budget acts and distributed across programs including workforce and economic supports, housing, broadband and IT, climate and clean‑water projects, and administrative needs. Committee members were advised that the obligation deadline was Dec. 31, 2024, and that ARPA expenditures must be paid (expended) by Dec. 31, 2026.

Why it matters: federal ARPA rules allow the U.S. Treasury to recapture funds not obligated by the obligation deadline and to require return of funds not expended by the expenditure deadline; the administration said its actions were intended to avoid those outcomes and to preserve program continuity.

What the administration reported

- Obligation and expend rules: Emily Burns of the Joint Fiscal Office explained basic ARPA rules: funds must be obligated (committed in a contract or grant) by Dec. 31, 2024, and invoices paid by Dec. 31, 2026. Burns said obligation means a contract, order or grant is in place, not merely an appropriation.

- Scope and appropriation history: Burns said Vermont received about $1 billion of the federal $350 billion state-and-local recovery pool and appropriated the state funds through several budget acts (the presentation named 2021 and 2022 budget acts that established individual appropriations).

- Reversions and the 'waterfall': The administration said it identified about $26,400,000 of ARPA funds that were at higher risk of not being expended and reverted those dollars into a contingency list created in the fiscal 2024 budget (Act 113, Sec. E.106). That first item on the contingency list is a $36 million FEMA‑match/hazard‑mitigation appropriation; the reverted $26.4 million went into that hazard‑mitigation line.

- 'Curing' or swapping federal funds to state general fund: Officials described a process they called "curing," where program spending authorities were converted from federal ARPA accounting to state general‑fund accounting (a net neutral reclassification) to give programs more time to complete projects. The administration said approximately $234 million was converted to general fund reporting; of that, about $26.4 million formed the hazard‑mitigation appropriation and roughly $208 million was treated as general fund for original programs and must still be spent in accordance with the state's timelines.

- Remaining ARPA balances: Officials told the committee they expect roughly $170 million of federal ARPA funds to remain as ARPA‑accounted balances after the administration's December swaps; those funds must be expended by Dec. 31, 2026.

- Revenue‑loss designation and higher education payments: The administration said it used the Treasury revenue‑loss eligibility category where needed; Burns and Farnham said that designation was used in some cases (for example, certain climate and higher‑education payments) because those programs did not fit other Treasury categories. Farnham said the administration anticipated reporting roughly $170,000,000 as expended for higher‑education payments as part of year‑end reporting.

- Tracking and reporting: Farnham said the administration has compiled a detailed spreadsheet listing more than 80 appropriations and showed the committee a dashboard that tracks original appropriation, obligations, reversions and whether funds were converted to general fund. He said the administration will file the state's ARPA report with the U.S. Treasury by Jan. 31 and expects Treasury to publish state filings in February.

Other details and constraints

- Local fiscal recovery funds that were sent directly to towns are administered separately by the Treasury and are not overseen by the state, Farnham said.

- Officials said reversions were relatively concentrated: about a dozen appropriations out of more than 80 contained the reversions. The administration said it attempted to limit reversions and to spread any necessary curing across programs so as to preserve legislative intent.

- The administration warned of one unintended consequence of curing: because ARPA had been exempt from federal environmental and historic preservation reviews during the pandemic emergency, converting ARPA accounting to general fund accounting in some cases meant projects converted to general fund might now need reviews they had not required when federally funded. Officials said they were addressing that issue.

What the committee will see next

Douglas Farnham told the committee he will finalize the Treasury report by Jan. 31 and provide follow‑up presentation materials in early February showing year‑end status. Any transfers the administration makes after Jan. 1, 2025, that fall outside the December net‑neutral authority would be reported to the Joint Fiscal Committee and would require its approval.

The committee discussion included questions about which acts established specific appropriations; committee members and staff asked the administration to add statutory citations (Farnham said the hazard‑mitigation line is Act 113, Sec. E.106).