Hundreds of communities across Minnesota were poised to lose out on significant sums Monday — until state officials opted to give them another week to request federal aid.

The deadline for smaller local governments to ask for American Rescue Plan Act dollars was slated for Monday. But on the cutoff date, 568 eligible townships and 113 cities had not yet sought the dollars they are eligible for, according to Minnesota Management and Budget (MMB) officials. The municipalities would have left behind $18 million in federal funds that could be spent on improving their water systems, expanding broadband access, covering revenue lost during the COVID-19 pandemic and other needs.

The state, which set the Monday deadline, made a last-minute extension, giving communities until Oct. 11 to submit their requests.

"These ARP funds are a huge opportunity for local governments to address inequities and negative economic impacts in their communities and improve access to water and broadband infrastructure," MMB Commissioner Jim Schowalter said in a statement. "We urge every city and town in the state to request these funds, and we hope this extended deadline will help make that happen."

States are responsible for distributing the federal dollars to so-called nonentitlement units, which are generally municipalities with populations of less than 50,000. The aid is divvied up based on population and amounts to roughly $100 per resident.

But Minnesota has struggled to get those small communities to submit their requests compared to some other states, like Wisconsin, where nearly all of the eligible towns have applied for their chunk of the cash.

If a township or city is not responsive or declines the funds, a U.S. Department of the Treasury official said the default situation is to redistribute the money to local governments in the state that did request the dollars. A community can also choose to transfer their money to the state, according to the U.S. Treasury.

Minnesota's original deadline was set for Monday in part so the state could meet a federal reporting deadline for American Rescue Plan Act funds and have time to redistribute the dollars if needed. But, an MMB spokeswoman noted, that reporting deadline was extended last week from Oct. 31 to Jan. 31, giving the state more leeway to handle an extension.

Minnesota Association of Townships Executive Director Jeff Krueger stressed that one extra week could mean a lot.

"MMB can attest to the frantic pace at which applications are coming in to them with the looming deadline," Krueger said. "Extending it by even just a week will mean a great deal to those townships who wish to accept the funds."

Jessie Van Berkel • 651-925-5044