Controller report warns of tight timeline for remaining ARPA funds, outlines reallocation plan

CANYON POINT, Utah

A confidential internal report from the Navajo Nation Office of the Controller lays out a proposed shift in how the Nation finishes spending its remaining State and Local Fiscal Recovery Funds dollars. The document lists $347,544,063 left to spend as of Dec. 31, 2025, and puts overall spending at 83.29%.

Federal rules drive the urgency. The Jan. 16, 2026, report, obtained by the Navajo Times, states there are 11 months, two days left to spend the funds before the Dec. 31, 2026, deadline and that dollars not spent or spent outside federal guidelines can revert to the U.S. Department of the Treasury.

The controller’s office argues that the remaining balance now carries two practical risks at once, the pace of project delivery and the ability to document spending in compliance. It points to uneven progress across major categories and cites internal investigations connected to housing and bathroom addition spending as a source of compliance concern.

To enhance the ability to fulfill full expenditure before the Treasury deadline, the report proposes a reallocation built around three uses. It would distribute the remaining NTUA obligation, fund a proposed hardship program and hold a smaller pool to finish selected projects in other categories.

Three large distributions moved quickly

The report states three major distributions account for most spending so far and happened within a relatively brief period. It lists the first hardship distribution at $555 million, revenue replacement at $521 million and what it calls 50% payments to NTUA to begin water related projects. Together, it states those distributions make up roughly 65% of total expenditures to date.

Outside those transfers, progress varies. The report describes spending on the remaining projects as uneven and estimates a spend rate of $33.22 million per quarter, or $11.073 million per month, for those project categories.

A table in the report shows where large remaining obligations still sit. Housing shows $106,206,450 spent with $78,282,405 remaining. Bathroom projects show $39,034,826 spent with $61,142,229 remaining. Water projects show $62,207,077 spent with $30,008,502 remaining.

Other categories carry smaller but notable remaining obligations. Rural addressing shows $12,703,025 remaining. Broadband shows $7,604,645 remaining.

Across all categories the report groups as other projects, it lists an obligation balance of $212,474,301.

Risk is the current pace, compliance exposure

Using current spend rates and four quarters left, the report projects $132,881,382 could be spent across the remaining project categories outside the three major distributions. It lists an obligation balance of $212,461,701 and calculates a projected shortfall of $89,870,306 if the pace does not change.

The controller’s office identifies three drivers behind that gap. It states spending has lagged because of the lack of adequate planning and execution. Bureaucratic steps slowed spending because flexibility normally associated with federal spending was not contemplated. It also cites lack of transparency and accountability that resulted in internal investigations surrounding housing and bathroom addition funding and caused compliance concerns.

The report points to three areas where it states the exposure is most pronounced, remaining housing projects, remaining bathroom projects and remaining water projects connected to the Department of Water Resources. It adds that the remaining housing and bathroom work carries increased compliance risk associated with the internal investigations it references.

The report does not question the need for the projects. It focuses on whether the remaining federal dollars can be spent and documented in compliance before the deadline.

Reallocation plan built around closing out obligations

The report proposes dividing the $347,544,063 left to spend into three uses. It lists an NTUA distribution of $127,643,557, a proposed hardship program of $119,900,506 and $100 million to fund remaining projects to the extent possible by the end of 2026.

The document also describes the thinking behind the reallocation. It states the premise is to use remaining funds for identified need, work that is quickly attainable and work that finishes remaining obligations. It adds that the time for continued long term development projects is gone.

A reallocation table in the report shows how the $100 million project pool would be structured by category. It proposes increasing government administration by $5 million and holding delegate region plans at their current level. It proposes reducing bathroom projects to $15 million, broadband to $2,604,645 and housing to $35 million. It proposes rural addressing at $6,125,222 and water projects at $14,075,461.

In the housing section, the report spells out how that reduction would work. It proposes focusing on purchasing inventoried homes from vendors and moving away from long term building, while using remaining funding to pay amounts owed under existing indefinite delivery, indefinite quantity contracts.

For bathroom projects, the report ties the proposed reduction to what it calls the risk of timely spending shown by the spend rates, coupled with apparent compliance issues. For broadband, the report states other plans exist and that current spending levels pose a risk to meeting the deadline, with remaining funds used to wrap up current projects. It makes similar statements about rural addressing and water projects, citing timely spending risk.

Taken together, the plan narrows the list of projects the Nation tries to finish with the remaining federal dollars and increases reliance on categories the controller’s office sees as more likely to close out in time.

Hardship proposal, narrower and built for documentation 

The report presents the hardship proposal as a response to both economic conditions and the risk that remaining funds could be difficult to spend and document through project work alone. It states there are local and national economic factors that warrant distributing cash assistance and that risk factors put timely and compliant expenditure of remaining funds at risk.

It also draws a clear distinction between a broad cash payment and the structure it recommends now. The report states the controller’s office will not determine who receives the distribution and recommends leadership identify a population considered to have economic hardships. It adds that Treasury advice requires a system that justifies the use of the funds for another hardship distribution and that the distribution must be reasonable.

On that basis, the report states it does not recommend another mass payment and instead calls for a carefully designed payment to a selected population within the Navajo Nation.

To support that design, the report requests that the Navajo Nation Department of Justice work with the controller’s office and external auditors to develop a standard form with standard language people can use to justify the hardship distribution. It states the language should cite economic hardship factors, including inflation, low wages and inflated costs of living.

The report also recommends using the new vital records system to facilitate payments to the identified population, stating it should save time and costs around distribution.

The report characterizes the proposal as a significant reallocation and states certain projects are in jeopardy of not being completed as planned. It adds that the controller’s office will work to fund projects that remain a need through other sources that do not carry the time and use restrictions associated with the remaining federal funds.

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