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Montgomery County adopts five policies to preserve $5 million in ARPA funding
Summary
The Montgomery County Board of Commissioners voted to adopt five prerequisite policies so it can reclassify approximately $5 million in American Rescue Plan Act funds to the revenue-replacement category and avoid returning the money to the federal government.
Montgomery County commissioners voted at their December 2024 meeting to adopt five policies required to reclassify roughly $5,000,000 in American Rescue Plan Act (ARPA) funds from an infrastructure allocation to the revenue-replacement category.
County officials said the change is intended to meet a federal deadline and prevent the county from reverting the funds to the federal government. The policies adopted are: an eligibility determination policy, a record-retention policy, a nondiscrimination policy, an allowable-cost/cost-principles policy and a conflict-of-interest policy.
The county manager explained that although the county has begun engineering work for water-plant improvements, it was unlikely the project could reach full contract award, bonding and related procurement steps before the federal deadline. "I would rather not take the risk of losing $5,000,000 of improvements to our water system," the county manager said during discussion. Officials described revenue replacement as a standard-deduction approach that requires less project-level contracting to meet the obligation deadline.
Commissioners were told the county initially planned to allocate nearly all of its ARPA allocation to capital and water-system improvements but faced procurement timing and contracting complexities that threatened the federal spending deadline. Staff described aspects of the water-plant project under engineering — including moving from a chlorination process to a different disinfection approach — and said some professional services were already under contract, but construction contracting would take longer.
A commissioner moved to adopt the resolutions creating the required policies; the motion received a second and the board recorded unanimous assent. Separately, staff presented a proposed budget amendment to move the funds into the revenue-replacement expenditure category (CSLFRF/ARPA expenditure category 6.4). A motion to approve the budget amendment was made and seconded during the meeting; the transcript excerpt does not record the board vote on that motion.
The county manager said the policy-adoption route is the "safest" way to ensure the county retains ARPA funding rather than risk returning it. Officials said the money would ultimately again be used on water-system improvements when procurement milestones allow.
