OMB Memo September 15, 2011

EXECUTIVE OFFICE OF THE PRESIDENT

OFFICE OF MANAGEMENT AND BUDGET

WASHINGTON, D.C.

THE DIRECTOR

20503

September 15,2011

M-11-34
MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES
FROM:

JACOBJ. LEW ~
DIRECTOR
\J"'" \IV v •

SUBJECT:

Accelerating Spending of Remaining Funds from the American
Recovery and Reinvestment Act for Discretionary Grant Programs

In light of the current economic climate and the urgent need to put Americans back to work,
it is imperative that we exhaust all available options to drive the economy forward and create jobs.
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That is why the President submitted the American Jobs Act to Congress on September 12 , 2011,
which will put more people back to work and more money in the pockets of working Americans.
And that is why we must also ensure that existing Government programs are doing everything to
ensure that funds are spent as quickly and efficiently as possible to drive job creation right now.
On February 17,2009, the President signed into law the American Recovery and
Reinvestment Act of2009, Pub. L. No. 111-5 ("Recovery Act"). As the Congress made clear in
enacting the Recovery Act, two of its primary purposes have been to "preserve and create jobs and
promote economic recovery" and to "assist those most impacted by the recession." To that end, the
Congress directed the President and the heads of Federal departments and agencies ("agencies") to
"manage and expend the funds made available in this Act so as to achieve the purposes [of the Act],
including commencing expenditures and activities as quickly as possible consistent with prudent
management. "
In underscoring the importance of spending Recovery Act funds quickly and efficiently, the
President established a goal that by September 30, 2010, 70 percent of Recovery Act funding should
be spent (i.e., both obligated and outlayed). That goal was met, and this focused implementation
has been instrumental in driving the positive effects ofthe Recovery Act on the economy and job
creation. According to the most recent report from the Congressional Budget Office, the Recovery
Act has raised real GDP by as much as 2.5 percent compared to what it otherwise would have been,
lowered the unemployment rate by as much as 1.6 percent, and increased the number of people
employed by nearly three million.
Nearly 85 percent of Recovery funds have now been paid out and the vast majority of
remaining funds have already been obligated for projects that communities are counting on for job
creation. Despite the rapid pace of spending of Recovery Act funds over the past 30 months., there
remain billions in discretionary Recovery Act funds that, although they have been obligated, have
not yet been outlayed. In light of the current economic situation and the need for further economic
stimulus, it is critical that agencies spend these remaining funds as quickly and efficiently as
possible.

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Accordingly, subject to the exceptions described below, Federal agencies are hereby
directed to accelerate the spending of remaining Recovery Act funds in discretionary grant
programs (including formula grant programs that received discretionary funding in the Recovery
Act), consistent with existing laws and regulations and programmatic objectives. Ifthose funds
have not been spent by September 30, 2013, agencies shall reclaim them to the extent permitted by
law.

Acceleration of Unspent Discretionary Grant Funds
In order to ensure that remaining Recovery Act balances are spent in an expeditious fashion,
Federal agencies should establish aggressive targets, consistent with programmatic objectives, for
outlaying remaining funds. To that end, subject to certain exceptions, Federal agencies are directed
to take steps to complete Recovery Act projects by September 30, 2013. This new policy would
compress the period of availability for the bulk of remaining funds in discretionary grant programs
into the next two years.
In executing this policy, Federal agencies should work collaboratively and transparently
with recipients of discretionary Recovery Act grants to accelerate the spending rate for all awarded
funds while still achieving core programmatic objectives. Agencies are encouraged to reduce
administrative hurdles that can delay expenditure of funds, as well as decrease delays between
receipt of invoices and outlaying corresponding funds. In addition, agencies should implement
programmatic safeguards to protect against unnecessary delays that would otherwise extend current
spending timelines beyond the new deadline established in this memorandum. Although this policy
is limited to discretionary Recovery Act grant programs, agencies should also establish appropriate
safeguards for ensuring the integrity of current spending timelines for other types of Federal
assistance and contracts, and encourage the acceleration of spending for these funds as well where
possible.
Federal agencies may request waivers from the September 30, 2013 deadline for discretionary
grant funds where contractual commitments by the grantee with vendors or sub-recipients prevent
adjusting the timeline for spending, where a project must undergo a complex environmental review
that cannot be completed within this timeframe, where programs are long-term by design (such as
the majority of the High Speed Rail program) and therefore acceleration would compromise core
programmatic goals, or where other special circumstances exist. Agencies should request such
waivers sparingly, and they will be granted only due to compelling legal, policy, or operational
challenges. Agencies must submit all proposed waivers to OMB for review and approval by
September 30, 2012. Any waiver requests must be made directly by the head of the agency.
Agencies should clearly communicate the requirements of this memorandum to grant recipients
through adding these requirements to new grant agreements, modifying terms and conditions of
existing grant agreements, or other appropriate written means consistent with law.

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Reclamation of Unspent Discretionary Grant Funds after Deadline
Agencies should revise the terms of Recovery Act discretionary grant agreements,
to the extent permitted by law, to provide for reclamation of funds that remain unspent after
September 30, 2013, absent a waiver issued by OMB pursuant to this memorandum.
Section 1306 of the Dodd-Frank Wall Street RefOlID and Consumer Protection Act, Pub. L.
No. 111-203, amended Title XVI of the Recovery Act to require the rescission and return to the
General Fund of the Treasmy certain funds that a Federal agency "withdraws or recaptures for any
reason" and that "have not been obligated by a State to a local government or for a specific project."
Agencies should consider whether this rescission-and-return requirement would apply to unspent
Recovery Act funds for discretionary grant programs that are reclaimed under the policy set forth in
this memorandum.
By September 30, 2012, agencies must submit to OMB any waiver requests from this policy
and have established a process for the reclamation of funds and suspension of activities for balances
that remain unspent after September 30, 2013 and are not subject to a waiver.