Special Analysis 10-03
July 30, 2010

In an effort to address increasing concerns about the federal budget deficit, Congress has sought to identify offsets for any legislation with a significant cost. A common theme that has emerged is the rescission of unspent funds included in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5). Certain program areas, such as education and broadband technology, have been mentioned specifically.

At this point, it is unclear how Congress is defining unspent funds: unobligated at the federal level, obligated at the federal level, but not yet spent, or both. Regardless of the definition, these funds may already be committed at the federal and/or state level. For example, federal agencies may have awarded unobligated funds or are in the process of awarding the funds. Funds that are obligated at the federal level but not yet liquidated may already be obligated by states, meaning that states have entered into contracts and have projects underway to spend the funds.

In addition, it is not surprising that some ARRA funds remain unspent, given that most formula grant programs allow states until the end of fiscal year (FY) 2010 or FY 2011 to obligate the funds. States then have additional time to liquidate the funds, with ARRA providing the longest timeframe for capital programs.  (See Table 1 for specific obligations and liquidation deadlines, where available.)

This Special Analysis uses recent ARRA financial data released by federal agencies to identify the amount of unspent ARRA funds as well as programs or areas that may be at risk. It also summarizes the legislative proposals to rescind ARRA funds.