FY2022-21: Encumbrance Funding Guidance
Recently, the Office of the Comptroller (CTR) has received inquiries from departments managing the expenditure of funds appropriated by Section 2A of Chapter 102 of the Acts of 2021 (the “ARPA bill”). In particular, because Section 2A specifies that the sums set forth in that section shall be made available until June 30, 2027, questions have arisen regarding the proper way to encumber funds for contracts relying on that funding source that may cross fiscal years.
While the source of funding may be new, the standard policies and procedures around encumbrances and spending apply to these appropriations. Thus, absent specific legislative authorization, departments may not make payments in advance of receipt and acceptance of goods, services, or other performance (cost reimbursement). Office of the Comptroller Bill Payments Policy, p. 10. If performance will occur over the course of several years, departments must have a supporting budget and/or payment schedule that aligns with anticipated performance deliverables over the contract duration. Funding in MMARS is reserved (pre-encumbrance or encumbrance) to align with the deliverable dates, and department verification and acceptance of goods, services, or other performance (cost reimbursement).