Over the weekend, the Arkansas Democrat-Gazette ran a deeply reported analysis of Pulaski County’s use of the $76 million it received in fiscal recovery funds under the 2021 American Rescue Plan Act (ARPA). This legislation, among many other things, gave $350 billion to state and local governments to fight the pandemic and deal with the economic fallout, averting a prolonged recession. The paper found the county—which is the largest in Arkansas and includes the state capitol of Little Rock—failed to document how it spent the funds, and that lack of documentation raises questions about whether the use of funds were in line with ARPA’s rules. By contrast, thousands of cities and counties used ARPA funds to bolster economic recovery and improve the lives of working families. The missed opportunity in Pulaski County case is the exception, not the rule, and demonstrates how important federal oversight of the program was.
As part of the passage of ARPA, the U.S. Department of the Treasury issued extensive rules outlining both how State and Local Fiscal Recovery Funds (SLFRF) could be spent and how the spending should be tracked. Unlike most other federal disbursements to state and local governments, recipients had great discretion in how they used their SLFRF allocation. This was one of the great strengths of the program, as it allowed each recipient to tailor its use of the funds to meet their specific needs.
Because of the wide flexibility they were given, state and local governments had to follow very clear procedures in accounting for the funds. Passing a budget alone was insufficient; governments had to formally obligate their ARPA funds through written contracts or interagency memoranda.
While this process did indeed cause some confusion, especially among smaller local governments with less experience dealing with federal funds, Treasury provided local governments with regular updates, held informative webinars, and created an extensive FAQ document to address the many issues that arose. Additionally, groups like the National League of Cities and the National Association of Counties provided extensive assistance to local governments to help them navigate SLFRF.
Pulaski County, like all other cities, counties, states, and tribal governments, was required to fully obligate its fiscal recovery funds by December 31, 2024. Despite this, the Democrat-Gazette found that the county could not account for over half of the funds it received—at least $38.6 million of the $76 million—and much of the information the county did provide the paper did not meet the Treasury Department’s reporting standards.
An EPI analysis of the county’s most recent filings with Treasury, from the end of 2025, bear this out. Pulaski County reported over $41 million falling under “Administrative Expenses,” but that category is supposed to be used only for the costs of “administering the SLFRF program.” Only five governments (out of more than 30,000 total state and local governments receiving funds) reported spending more than $41 million on administrative expenses: Three were states/commonwealths, and the other two were the City of Detroit and Fulton County, Georgia, whose SLFRF allocations were much larger than Pulaski County’s. It is difficult to imagine that Pulaski County needed to use 54% of its total SLFRF funds just to administer its use of SLFRF funds.
Moreover, the Democrat-Gazette reported the county’s reserve fund ballooned by almost $40 million during the same period. Treasury’s rules specifically prohibit SLFRF from being used for rainy-day funds or to replenish reserves. The funds were intended to be spent to address the myriad challenges arising from the COVID-19 pandemic.
SLFRF was a vital resource
It is important that state and local governments are held to account for their use of fiscal recovery funds. The case of Pulaski County illustrates that accountability safeguards for the program are necessary and effective rather than being bureaucratic burdens. Pulaski County’s apparent failure to follow the guidelines for using SLFRF funds is a rare exception. The Treasury Department implemented a novel, flexible program with guardrails and responsibilities that the vast majority of state and local governments were able to abide by. SLFRF was a vital component of ARPA, and did much to speed the economic recovery and prevent a Great Recession like the U.S. saw in 2008–2009.
SLFRF was vital in preserving and rebuilding the public-sector workforce. In the wake of the Great Recession, it took 11 years for state and local government employment to recover. Because of SLFRF, it took a fraction of that time (just three years and eight months) for the public sector to recover from the COVID-19 downturn. This rapid recovery mirrored the recovery of the overall job market. The typical U.S. state needed 77 months after the start of the Great Recession for its job numbers to recover; it only took 29 months after the beginning of the COVID-19 pandemic for the same level of recovery.
Additionally, SLFRF allowed states and localities to enact programs of social insurance and income support that directly responded to immediate community needs. In just the first two years of SLFRF’s operation alone, more than 4.5 million households received mortgage, rent, or utility assistance. Emergency programs offered housing to people who had been displaced by the pandemic and direct government assistance to food pantries and other programs that helped people facing food insecurity. These programs were valuable tools for helping working families in need.
Pulaski County, therefore, missed a tremendous opportunity to use its fiscal recovery funds to spur economic recovery and provide assistance to working families. The $350 billion SLFRF program was a vital resource during the pandemic and its aftermath. The example of Pulaski County demonstrates the importance of federal accountability requirements for largely unrestricted funds, not the failure of the program. Lessons from the vast majority of localities that successfully used SLFRF funds and the rare exceptions in which local governments failed to do so should continue to inform future policy design for similar programs.