Council approves emergency legislation to obligate $1.86 billion in recovery funds before federal deadline

WINDOW ROCK

In a special session on Monday, the Council approved emergency legislation aimed at ensuring the timely obligation and expenditure of remaining funds from the Navajo Nation Fiscal Recovery Fund, or the NNFRF. This action comes as the tribe faces critical deadlines set by the U.S. Department of Treasury.

The legislation, No. 0264-24, introduced by the Council and supported by Speaker Crystalyne Curley, authorizes a Comprehensive Interagency Agreement to streamline the process of obligating funds. Under ARPA guidelines, the Navajo Nation must obligate its $1.86 billion allocation by the end of December and fully expend the funds in two years, or by Dec. 31, 2026, to avoid the reversion of any unused federal dollars back to the U.S. Treasury.

The special session discussed the urgency of the matter as Curley emphasized the need to protect critical funding intended for recovery projects following the devastating economic impacts of the COVID-19 pandemic.

“This legislation ensures that we meet federal deadlines and prevent the loss of funds designated to support our people,” Curley said. “Our recovery efforts must remain on track to provide public health services, housing, water infrastructure, and other vital projects for the Navajo Nation.”

ARPA allocation

The Navajo Nation’s ARPA allocation of $1.86 billion was distributed to various programs and entities to address public health needs, economic recovery, and infrastructure improvements across the Nation.

Major allocations include $35 million for the Division of Public Safety to establish a comprehensive E911 emergency system, $215 million for the Department of Water Resources to develop critical water infrastructure, and $112.9 million for the Community Housing and Infrastructure Development program to address long-term affordable housing needs.

The Navajo Nation Veterans Administration received $50 million to provide housing for eligible veterans, while the Navajo Tribal Utility Authority was allocated $290.2 million to improve utility services, and the Navajo Engineering & Construction Authority received $150 million for infrastructure projects. Additionally, $211.2 million was distributed to the Navajo Nation Chapters for local community development projects.

The legislation also highlighted $5.6 million in Navajo Nation Fiscal Recovery Funds that remained unobligated as of the internal Nov. 1 deadline. Under Resolution CMY-28-24, these funds will automatically revert to the Hardship Assistance Program if not obligated through the newly approved interagency agreement.

To ensure compliance with federal guidelines, the legislation transfers administrative oversight of all NNFRF projects and expenditures to the controller’s office. This transfer will allow for expedited approvals of expenditure plan modifications and reallocation of funds as necessary to meet deadlines.

Under the new interagency agreement, the controller can approve project modifications without requiring the Navajo Nation Council or standing committee action. This streamlined process is designed to prevent delays that could jeopardize the timely expenditure of funds.

Spending ARPA monies before deadline

Controller Sean McCabe urged lawmakers to pass legislation that would provide much-needed flexibility in spending the tribe’s $2 billion in American Rescue Plan Act, or ARPA, funds.

McCabe laid out the technical challenges the Navajo Nation faces in obligating and spending the $1.8 billion in ARPA monies before the Dec. 31 deadline.

“We have a tendency to pile a lot of different policies and procedures and approvals upon what should be a pretty simple process,” McCabe told the Council. “Treasury said, ‘Navajo Nation, in response to COVID-19, here’s $2 billion. Go buy a Coke.’ But we’ve created this alphabet soup of bureaucracy that we have to go through just to spend the money.”

McCabe was referring to how many entities within the tribal government were needed to approve the purchase of a can of soda.

“Before we buy a Coke, we have to see has got to look at it: DOJ has got to look at OMB (Office of Management and Budget) has to look at it. Budget and Finance Committee needs to look at it,” said McCabe.

With only about 10%, or about $279 million, of the ARPA funds spent so far, McCabe warned that the current rigid contracting and spending requirements could leave the Navajo Nation unable to utilize the remaining $1.5 billion before the federal deadline.

“We had three years to do it, and now here we are, two weeks before the deadline, and all the money is obligated,” he said. “It is, but we don’t have the flexibility to do much with it other than what’s under the current contracts.”

The proposed legislation, 0264-24, would grant the controller’s office the authority to shift unspent funds between approved projects if it adheres to Treasury guidelines. This, McCabe argued, would help address recent audit findings related to subrecipient monitoring and allowable costs under ARPA.

“If we stay in the current contracts, that’s how we have to spend it, absent another contract that allows us or scope of work, that allows us to do something,” he said. “And it goes to the third question about auditing. We have had findings in the audit, and that’s another reason why I think we need to do this.”

Speaker Curley and Delegate Shaandiin P. Parrish, the BFC chair, both voiced their support for the legislation, emphasizing the need to streamline the spending process to ensure the Navajo Nation maximizes the use of its ARPA allocation.

“We don’t want to be sitting in this very room two years from today, with two weeks left, and we got $30 million left, because we’re under budget on something, and we don’t have the ability to move it somewhere else, where we can spend it,” McCabe warned.

The controller’s office will also assume responsibility for monitoring NNFRF projects, overseeing administrative costs, and reporting on progress to federal agencies.

Unobligated funds revert to federal government

The U.S. Department of Treasury mandates that all ARPA funds must be obligated by Dec. 31, meaning financial agreements, contracts, and similar transactions must be in place by that date. Funds that remain unobligated at the end of the year will revert to the federal government.

The legislation also reiterated to the Council that the FRF funds must be fully obligated and expended by the Dec. 31, 2026, deadline for full expenditure of all funds. If funds are not spent by this date, they, too, will be reclaimed by the federal government.

The controller’s office will immediately begin implementing the Comprehensive Interagency Agreement. Programs, agencies, and subrecipients managing NNFRF projects are directed to assess any needed modifications to their expenditure plans to ensure funds are spent efficiently and on time.

The controller’s office is also tasked with providing quarterly performance reports to the president’s office and the Naabik’íyáti’ Committee to ensure transparency and accountability throughout the process.

Tracking the outbreak

The Navajo Department of Health has released its latest COVID-19 situation report detailing the ongoing impact of the pandemic on the Navajo Nation. As of Dec. 1, 2024, the total number of confirmed COVID-19 cases has reached 93,705. In the past month alone, 304 new cases were reported, with an additional six delayed cases added to the cumulative total.

The pandemic has also continued to claim lives across the Navajo Nation. The report states that nine more Navajo people have died from COVID-19 between May and November 2024, bringing the overall death toll to 2,328. These numbers highlight the persistent, though decreasing, presence of the virus within the community.

Examining recent trends, the report outlines the daily confirmed cases over the past 90 days, excluding cases in border towns. A bar graph included in the report shows fluctuations in daily infection rates, while the accompanying seven-day moving average reveals a gradual decline in cases throughout November. Despite sporadic spikes earlier in the period, the trend has notably improved as the month progressed.

Weekly case numbers further support this decline. In early November, the Navajo Nation recorded 79 cases in the week ending Nov. 1. Similar numbers persisted through mid-November, with 74 cases reported in the week ending Nov. 8 and 79 cases in the week ending November 15. However, by late November, the case count began to drop significantly, falling to 59 cases by Nov. 22 and plummeting to just 13 cases in the final week of the month.

While these figures reflect a positive trend in terms of declining infections, the report also notes that tracking of vaccination and hospitalization rates has been discontinued. This shift in data reporting may mark a transition in pandemic response strategies but also underscores the importance of remaining vigilant as COVID-19 continues to affect the community.

Hardship assistance

In terms of hardship assistance, the funds have all been spoken for, said the sponsors of the bill, so the amount of assistance Navajo citizens got two to three years ago won’t happen. At the moment, $5.6 million could go toward it, but Council Delegate Cherilyn Yazzie said that would mean about $14-$15 would go out to Navajo people.

Yazzie raised concerns during a Council session about keeping the Navajo public informed on the status of hardship assistance funds under ARPA.

She noted that the current $5.6 million in hardship assistance could potentially increase, and she wanted to know who would be responsible for regularly updating the public on the funding levels.

“At what point are we telling them, ‘OK, this is how much is going into this hardship,’” Yazzie said. “That way, they stay informed. They understand, you know, possibly, you know, if they want to lobby for something or they need, you know, they have some ideas of how we could use this hardship.”

In response, Speaker Curley acknowledged Yazzie’s points and said the legislation aims to improve transparency and accountability around ARPA funds. Curley suggested implementing a tracking system, quarterly or monthly newsletters, or radio announcements to keep the public regularly updated on the hardship assistance funds.

“We just need to make sure that we set a good new foundation midway through with these funds so that that was more of my vision of seeing how this could fold out,” Curley said.

Earlier in the discussion, Curley said to the Council that the legislation did not specify how the $5.6 million would be used as hardship.

“It does not say what type of hardship, but we are laying down the expenditure plan,” said Curley.

The Council unanimously passed emergency legislation 20-0 after debating and discussing the legislation’s language, most of all to prevent any of the tribe’s fiscal recovery funding dollars from being returned to the feds.

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