Dallas City Council members are aiming to earmark all $355 million of the city’s COVID-19 pandemic recovery funds to meet a federal deadline by the end of September — but they are waiting on answers from city staff on how much is left to spend.

At a briefing Wednesday, the City Council members discussed how the city can find ways to spend $9.6 million in federal funds from the American Rescue Plan Act, or ARPA, after more than $28 million was reallocated for different programs in February.

Janette Weedon, Dallas’ director of Budget and Management Services, said the city has about $126 million left in ARPA funds, but many of the projects attached to those funds are “underway.”

At the briefing, council members Tennell Atkins and Paul Ridley questioned how much of the total $355 million has yet to be “encumbered,” or earmarked for specific uses, ahead of the September deadline. City staff provided conflicting numbers after council members peppered them with questions, ultimately asking them to provide answers in a Friday memo to the City Council.

September deadline

Encumbered funds are typically a portion of a budget set aside for specific uses but not yet spent. ARPA recipients are required to encumber funds by the end of September 2024 and spend the money by the end of 2026.

The $355.4 million that Dallas received in state and federal funds from the American Rescue Plan Act was divided into specific program uses in September 2021 by the City Council. The city’s 94 different projects prioritized funds for various uses, including replacing lost revenue and paying for police overtime, squad cars, street lights, traffic signals and sidewalks.

Jack Ireland, Dallas’ chief financial officer, said only the $9.6 million is unallocated from the $28 million that was reprogrammed this year, but the city will review programs periodically to determine if unspent funds can be “scrubbed.”

“I’m sure over the next year and a half, we will find other savings,” Ireland said. “And when that comes up, if a project finishes under budget, I will need to bring that back before this body with a recommendation for another reprogramming.”

It’s likely some programs won’t use all allocated funds or other programs could be cut entirely, freeing up cash for City Council to reprogram the funds for new uses, Ireland said.

Atkins asked for the city to give City Council updates every 90 days on the status of the funds, especially as the city tries to fix the pension systems that are facing a multibillion dollar shortfall.

The city must deliver a plan to the Legislature by November on how it will fully fund the police and fire pension systems by 2055.

Ridley asked if the city was going to meet the September deadline to obligate all its funds.

Weedon replied that’s the city’s goal. But if her department suspects the city can’t meet the goal, Weedon said staff will ask the City Council to transfer the ARPA funds into a multiyear account that has less restrictions and spending deadlines.

Asked to give the total amount of funding not yet encumbered, Weedon first replied that all funds were encumbered but then asked to give a more comprehensive look in the Friday memo.

Finding home for $9.6M

In February, the City Council reprogrammed more than $159.3 million from various infrastructure, health and safety and economic development projects to pay Dallas Fire-Rescue emergency response payroll.

More than $37 million of the $159 million were originally budgeted to provide water and wastewater services to areas of the city that lack access.

The City Council also approved in February to reprogram more than $28 million into various uses, like City Hall generators, a hospital demolition and citywide deferred maintenance. But the City Council only approved four projects with an $18 million price tag, leaving $9.6 million left to be attached to other projects.

Out of the $9.6 million, $2.5 million would fund permanent supportive housing projects for people experiencing homelessness.

The City Council will vote Wednesday on whether the city should allocate the remaining reprogrammed funds to five projects recommended by city staff, including $5 million to relocate some city departments to the 7800 N. Stemmons Freeway building.

Atkins said he thinks some departments moving to Stemmons is a “waste of money” that could otherwise be used to fund projects.

Inspectors found violations that included issues with the fire alarm system during reviews of the city-owned 11-story building in February and in April. On April 10, the city closed the facility amid concerns about its condition.

Compliance monitoring

More than $1.7 million of the $9.6 million would pay a contractor to conduct financial compliance monitoring of ARPA funds, a use that Ridley said Wednesday seemed unnecessary.

“So when you say financial compliance monitoring, you’re talking about city staff going outside of City Hall to hire a watchdog to tell city staff if they’re complying with the ARPA requirements,” Ridley said. “Why can’t city staff just do that?”

Weedon said the city recommends hiring experts in financial compliance who are well-versed in ARPA regulations to prepare for a federal audit.

“We went through a very lengthy desk audit with the U.S. Treasury for coronavirus funds,” Weedon said. “We did have some recommendations associated with that, and so we’re trying to avoid that same experience.”

Ridley said he’d rather the funds for compliance monitoring be used on more tangible and “more credible” projects.

Ireland said hiring an expert in compliance would help protect the city against a potential federal “recapture” of funds.

“We were asked to push that money through the system and get it spent as quickly as we could while the U.S. Treasury was still making up the rules,” Ireland said. “The last thing I want to do is for the City of Dallas to have to pay out of local tax dollars back to U.S. Treasury because I spent the federal money wrong.”

Council member Jaynie Schultz said she supports the compliance monitoring and called it a reasonable use of funds.