Vermont officials say $63 million in ARPA funds must be spent this year; administration to seek reallocations at July 28 Joint Fiscal meeting

Doug Farnum, the state’s chief recovery officer, told the Vermont House Committee on Commerce and Economic Development on May 27 that approximately $63 million in American Rescue Plan Act (ARPA) funds remained unexpended as of March 31 and must be fully documented and invoiced by Dec. 31, 2026 to avoid potential federal recapture. "The American Rescue Plan Act of 2021 allocated $1.049 billion to Vermont," Farnum said, describing how the legislature appropriated that funding across broadband, water and sewer, public health and other purposes.

Farnum said the legislature authorized the Agency of Administration (AOA) to reallocate ARPA expenditures to the most appropriate federal eligibility categories so long as any general fund dollars freed by that move are restored to the originating programs. He told the committee that AOA shifted about $240 million in December 2024 into federally eligible categories and restored general fund amounts to preserve legislative intent.

The $63 million remaining as of March 31 is the main focus of summer reviews, Farnum said. He described a two-step approach AOA plans to present to the Joint Fiscal Committee on July 28: first, charge allowable administrative expenses to ARPA where they fit; second, where appropriate, reallocate ARPA into federal categories such as rehiring-state-staff payroll (for example, Department of Corrections payroll) to free up general fund dollars for the legislature to reallocate. "At this point we can only move money between ARPA projects that were established as of 12/31/24," he said. "Joint Fiscal cannot reappropriate general fund — the legislature will decide the final disposition."

Farnum also flagged programmatic details that could cause reversions: limited-service positions created with ARPA (more than 100), projects awaiting permits, incomplete construction activity, and invoices not yet processed. He said some projects are functionally complete but remain unpaid in state systems, and that federal partners are showing little tolerance for paperwork errors that could trigger recapture. "The federal administration is not forgiving in the slightest on any technical issues that cause us to owe them money," Farnum said.

Broadband and several ARPA capital portfolios showed progress and were expected to largely expend on schedule, Farnum said. By contrast the Agency of Natural Resources' water and sewer portfolio accounts for a large share of the remaining dollars and is more exposed to delays tied to permitting, federal approvals and local appeals. Farnum said AOA will meet with each program this summer to collect granular status updates — permit status, construction timelines, and what remains to be invoiced — and will prepare materials for the Joint Fiscal Committee showing which projects may be flagged for reversion.

The committee’s chair thanked Farnum for the spreadsheet and invited further dialogue between committee staff, House Appropriations and the administration to identify where legislative or administrative steps could reduce the risk of recapture. Farnum said he hopes to report next year that the state did not have to send significant funds back to the U.S. Treasury but warned that some narrowly defined rental-assistance awards already required a small return of funds because of eligibility limits.

What happens next: AOA will continue meetings with program leads this summer, present limited reversion and reallocation proposals to the Joint Fiscal Committee on July 28, and compile an after-action review for programs that fail to complete obligations by the deadlines.