A Summary of OMB Memorandum M-21-20

American Rescue Plan spelled out in Scrabble letters

On March 11, 2021, President Biden signed the American Rescue Plan of Act of 2021. The plan provides $1.9 trillion in funding for resources to “strengthen the backbone of our country” by responding to the wide-ranging needs of every American caused or exacerbated by the COVID-19 pandemic.

On March 19, 2021, the Office of Management and Budget (OMB) published Memorandum M-21-20 – Promoting Public Trust in the Federal Government through Effective Implementation of the American Rescue Plan Act and Stewardship of the Taxpayer Resources to outline the Administration’s approach to “effective implementation and stewardship of American Rescue Plan funds.” 

The memo was broken into five sections that either underscore the federal government’s need for a swift response to the public health crisis, outline its commitment to accountability and transparency of ARP spending, or ensure that all Americans are supported through the advancement of racial equity and that underserved communities are supported.

This post will summarize each of the five sections, however, it is recommended that the reader visit WhiteHouse.gov to read the full memo. It is important to note that Appendix 3 may be the most relevant for recipients of federal financial assistance.

Improving Program and Service Design to Achieve More Equity-Oriented Results for Federal Financial Assistance

Source: Office of Management and Budget Grants Team

OMB directs agencies to apply the requirements of 2 CFR to federal financial assistance funded through the ARP to the maximum extent authorized by law and apply the provisions of 2 CFR 200 to grants and cooperative agreements awarded to for-profit entities, with limited exceptions.

In addition, agencies are instructed to:

  1. Submit their proposed implementation plan of 2 CFR to OMB for approval prior to submitting an Assistance Listing. 
  2. Apply, where appropriate, flexibilities for recipients in 2 CFR and those detailed in Appendix 2: Achieving More Equity-Oriented Results for Financial Assistance.
  3. Include ARP programs in ongoing processes for agency equity and service assessments, action plans required per Executive Order 13985 – Advancing Racial Equity and Support for Underserved Communities Through the Federal Government/
  4. Consider, where appropriate, and as outlined in EO 14008 – Tackling the Climate Crisis at Home and Abroad, how the implementation of ARP funding could increase benefits that reach disadvantaged communities and invest in opportunities that help revitalize energy communities. Check out the White House Fact Sheet that outlines key resources to invest in coal and power plant community economic revitalization.
  5. Apply, where appropriate, flexibilities outlined in Appendix 3: Disaster Relief Flexibilities to Reduce Burden for Financial Assistance and other flexibilities permitted by law.
  6. Establish and submit an initial plan and quarterly status updates to develop detailed award descriptions at the time of award to ensure accountability and transparency. Agencies are also required to develop procedures to ensure specifics such as the award purpose, activities to be performed, deliverables, and more are included in the descriptions.
  7. Use federal data to assess the effectiveness and equitable distribution of program funding.
  8. Consult with the relevant Quality Service Management Organization prior to developing new or modernized technology.
  9. Collect recipient performance reports in a way that allows the federal government to clearly explain the outcomes of federal financial assistance to the American people while also minimizes the reporting burden on recipients.
  10. Integrate performance planning, management, and agency reporting for ARP funding into existing organizational performance management routines and ensure public reporting of these details.

Ensuring Robust and Transparent Reporting

In addition to reinforcing the financial transparency and accountability requirements outlined in OMB Memorandum M-20-21 – Implementation Guidance for Supplemental Funding Provided in Response to the Coronavirus Disease 2019, this section mandates or recommends the following:

  1. Agencies must report monthly to USASpending.gov on all funding in the ARP.
  2. Expand the use of the Disaster and Emergency Funding Code and track ARP funding with a specific domain value.
  3. The development of an Assistance Listing prior to public release of information regarding the administration of a new financial assistance program and update each Assistance Listing annually.
  4. Agencies revisit the subaward reporting requirements as outlined in 2 CFR 170 and ensure the implementation of processes that support the reporting of quality subaward data including steps agencies should take when recipients are non-compliant with the reporting requirement.
  5. Maintain a Data Quality Plan as required per the DATA Act and manage risks to reporting objectives. 
Screenshot of American Rescue Plan Act breakdown by funding area
Source: Office of Management and Budget Grants Team

Appendix 1: Management of Payment Integrity Risks Related to American Rescue Plan Funding

Agencies are instructed to assess their existing internal controls for the payment integrity of current programs and design controls for new programs to avoid payment integrity risks. To do this, agencies are instructed to utilize existing resources such as those available from U.S. Department of Treasury and work with their Inspector Generals to identify other risks. They are also required to continue reporting improper payments on paymentaccuracy.gov. Finally, the increased use of automation, predictive analysis or a new or revised internal process are recommended to mitigate these risks. 

Appendix 2: Achieving More Equity-Oriented Results for Financial Assistance

Per 2 CFR 200, federal awarding agencies are required to administer programs that promote fair and equitable administration of financial assistance. Agencies are also required to submit their proposed implementation of 2 CFR to OMB prior to program administration and award issuance.

OMB also reiterated ten requirements in 2 CFR that are particularly relevant for administering crisis relief funds. The ten sections are: (1) Program Planning and Design, (2) Public Availability of Notice of Funding Opportunities, (3) Performance Reporting, (4) Risk Management, (5) Case-by-Case Exceptions, (6) Innovative Funding Approaches, (7) Procurement of Common or Shared Goods and Services (including Information Technology), (8) Financial Assistance Awards to For-Profit Organizations, (9) Other Types of Federal Financial Assistance, and (10) Use of Single Audit to Drive Accountability and Transparency.

Appendix 3: Disaster Relief Flexibilities to Reduce Burden for Financial Assistance