Oversight office director explains why ARPA funds are banked off island
Pago Pago, AMERICAN SAMOA — American Samoa’s more than $400 million allocation under the federal American Rescue Plan Act (ARPA) of 2021 is held at a U.S-based bank due to US Treasury requirements for the banking institution, while the territory is awaiting a final decision by the US Treasury on the designation of the Office of Samoan Affairs to administer federal money allocated for counties and non-entitlement units of local government.
This is according to ASG ARPA Oversight Office executive director Keith Gebauer, during a Senate Rules Committee hearing on Tuesday. He was requested to provide information and answer questions on American Samoa’s $479.13 million share from ARPA.
Gebauer also provided for the committee the American Samoa Recovery Plan Performance Report for the State and Local Fiscal Recovery Funds (SLFRF) 2021 Report, which was released early this month by his office and posted to the agency’s website. The report summarized American Samoa’s plan for use of the ARPA funds with the majority of it allocated to the Public Health service. (See Samoa News editions Sept. 1st and 2nd for details.)
Among the questions raised by senators, is where the funds are being held and whether its in an interest bearing account — which is an issue raised by Sen. Fai’ivae Iuli Godinet.
Gebauer responded that the $479 million is held at Utah-based Zions Bank, but as of the time of the hearing, it is not in an interest-bearing account. “But the language in the award allows states and territories to put it in an interest bearing account,” he said.
He explained that the ASG Treasury will be working with “Zions Bank to determine how much of this $479 million that we do not expect to use in the next 12 months to 18 months — based on our planning and allocation schedule” and anything over that can go into an interest earning account.
“We haven’t gotten to that point yet, where we can determine the exact amount. Once we figure out that exact amount, based on the planning, they will be able to determine the interest rate and all the other pertinent information that relates to putting it into an interest bearing account,” he said.
Gebauer recalled his testimony before a House committee hearing recently, that “we have not gotten to that point yet where there is a separate interest-bearing account — think of it as a CD (certificate of deposit) that you can’t touch for a certain period of time and we do not have to over commit the amount of money that we put into it.”
“Once we complete that planning [phase] and know what our allocation schedules look like, then we’ll determine the amount that will go into the interest bearing account,” he pointed out.
Fai’ivae asked a follow-up question on plans by ASG to use any of the money from an interest-bearing account and the determination criteria for use of such money.
Gebauer said funds from an interest bearing account, “will be rolled up in the overall funds [and] subject to the exact same rules as the core of the funds — the $479 million.”
“We’ll just earn additional funding because the grantors realize that the states and territories will not be able to expend this money, in a year that they typically issue a grant award,” he explained. “Because of that extended period, they have allowed states and territories to put money in interest bearing accounts. But any interest generated, rolls into the original fund and is subject to the same rules. It does not become a separate fund.”
Because there is not yet an interest bearing account, Gebauer said that the determination of how it will be used has not been considered yet.
Senate President, Tuaolo Manaia Fruean, sought an explanation as to why the money is held with Zions Bank instead of locally at the Territorial Bank of American Samoa. Gebauer responded that the “feds have a requirement for the institution where the money is held” — including that the bank be FDIC insured.
FUNDS FOR COUNTIES
Fai’ivae pointed to a section of the ASG performance report, which shows ARPA State and Local Fiscal Recovery Funds for Counties at $10.78 million and $5.07 million for Non-Entitlement Units of Local Government. And he sought an explanation of Non-Entitlement Units and how these funds are to be used, since there’s no summary in the report on projects to be funded with such a large amount of money.
Gebauer used California as an example for his explanation, with the state having various counties, such as Los Angeles County and Ventura County. For American Samoa, it has Eastern, Western and Manu’a Districts. For non-entitlement units, he points to cities in California, with their own major, annual budget, procurement process, and so forth.
“For us, the closest thing is the Office of Samoan Affairs that represents the local government. However, the language in the statute, it has to be a certain criteria to be considered a non-entitlement unit of local government. American Samoa is a single state jurisdiction,” he explained.
He said his office is currently working with the U.S Department of Treasury “to determine our designated Office of Samoan Affairs as the local unit of government, as well as our county level to be able to use the funds allocated for those particular parts of government.”
“But as of right now, the federal government has said [that], our designation does not meet the criteria and all those funds are currently on hold,” he said noting that use of the funds for counties and non-entitled units of local government “are subject to the same rules as the $479 million but as of today, the US Treasury has asked us not to allocate the funds or disburse the funds until they determine whether that language in the criteria is met by American Samoa.”
Fai’ivae queried on the plans for distribution of these funds and how they’re allocated, to which Gebauer responded, “we were going to use the Office of Samoan Affairs — the Secretary of Samoan Affairs, the District Governors” to handle the administering of the funds and allocation of the funds will be made to the county leaders and the Office of Samoan Affairs.
“But since the designation is on hold, we have not entered into the part of distribution of any funds. Because anything that we would disburse without it being finalized, would be owed back to the federal government,” Gebauer said. “So we’ve committed to them [the feds] that we would not, until such time that they determine that our designation of the Office of Samoan Affairs is American Samoa’s non entitlement unit of local government.”
Committee chairman Sen. Magalei Logovi’i moved to conclude the hearing to allow additional time for senators to review the performance report, and to have it continue today. He said the concern from the committee is that the governor and lieutenant governor met and decided on the priority projects and spending of the $479 million without including Fono leaders in such a meeting and discussion.
He informed Gebauer that if there are any problems that surface later on how ASG spends this money, “we will have to repay that money back” to the feds and it’s the Fono that will have to be involved in appropriating that money.
Gebauer acknowledged Magalei’s concern, saying that “it’s so important that we follow the eligibility guidelines for every project and proposal to ensure we use the funds for its intended purpose.”
Tuaolo was also concerned, along with senators who spoke during the hearing, that there was no input from the Fono on spending and priorities of use of a huge-amount of federal funding, which is allocated for “American Samoa as a territory” and all leaders should have been given the chance to provide input.