A $650 million question

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Monroe County and its municipalities are slated to receive a more than a $380 million financial injection from the federal government—a boost designed to help them recover from the COVID-19 pandemic and reposition for the future. 

The county’s allocation from the $1.9 trillion American Rescue Plan Act—signed into law on March 11—is expected to top $144 million. Ontario County is set to receive $21.3 million, followed by Wayne County at $17.4 million, Livingston County at $12.2 million. and Wyoming County at $7.7 million. The counties of Genesee, Orleans and Yates will receive $11.1 million, $7.8 million and $4.8 million, respectively.

The city of Rochester, meanwhile, expects to receive $202.1 million. And the Rochester City School District expects to receive $197 million—on top of $87 million coming from the Coronavirus Response and Relief Supplemental Appropriations Act, signed into law on Dec. 27.

In total, the ARP is expected to deliver at least $650 million to the Rochester region—and that figure does not include other assistance such as expanded unemployment benefits, direct payments to individuals, and support for small businesses.

Unlike past federal COVID relief efforts, the fiscal shot in the arm from the ARP isn’t riddled with statutory guidance. Termed flexible aid, these funds can be used by local governments as they see fit. Measurement of impact will hinge on progress reports filed by municipalities. The process of auditing these reports is unclear at this point.

“The first thing that state and local governments are likely to do with the flexible funds is to restore services and personnel they had to cut in response to the economic crisis,” predicts Alan Berube, a senior fellow and deputy director at the Brookings Metropolitan Policy Program.

The pandemic caused a loss of revenue for counties and municipalities in the region. Budget deficits, job loss and health inequities are some of the repercussions of the coronavirus outbreak, and what the ARP is designed to remedy. 

“As the COVID-19 pandemic continues, the need for state and local funding relief has only become more urgent,” said Rep. Joe Morelle earlier this month. “From education to health care to emergency services, so many of the vital programs and services that our families utilize every day rely on this funding.”

According to his office, the towns of Irondequoit and Greece will get $22.4 million and $11.8 million, respectively. Fund allocations for smaller municipalities are not yet available.

Details of the plan

The funds for local governments in the Rochester region will be drawn from a federal pot totaling $350 billion. Dollars are headed to eligible state, local, territorial and tribal governments to meet needs and build the foundation for a strong recovery. In total, New York counties will get $8.1 billion. The funds are intended to buttress the immediate pandemic response and increase employment by bringing back jobs, the U.S. Treasury said on May 10.

The relief targets:

■ coronavirus response and efforts to bring the pandemic under control;

■ lost revenue and support for public services and jobs;

■ economic stabilization for households and business; and

■ systemic public health and economic challenges that have contributed to an unequal pandemic impact on some populations.

States are slated to get the majority of the funds—$195.3 billion—in a flexible fashion to meet these needs.

Recipients are expected to get half the money this month and the remainder a year later. States with a net unemployment rate increase of more than 2 percentage points from last February to the latest data will receive all funds in a single payment. The ARP funds must be spent by the end of 2024.

How the money can be used

Restoring local economies is at the core of the ARP—22 million jobs were lost from February through April 2020, according to the U.S. Bureau of Labor Statistics. As of April, the nation was still behind in employment numbers by more than 8 million compared with before the pandemic. More than 3 million women nationwide have dropped out of the labor market. 

Funding recipients can use monies to provide aid and job training to the unemployed and support survivor benefits for families of COVID victims. Those who face food, housing or other financial insecurities also are eligible for aid, as are small businesses. Using these dollars, local governments can deploy loans, grants and other programs to help businesses recover. Rehiring public-sector staff, replenishing unemployment insurance funds and executing other economic relief programs are part of rebuilding the sector.

Governments need to demonstrate that the ultimate recipients of funds did experience economic hardship from the pandemic, Berube and Eli Byerly-Duke, a research assistant at the Metropolitan Policy Program, wrote in a piece for the Brookings Institution.

In an effort to address inequities, the ARP wants municipalities to look at social determinants of health—conditions in the places where people live, learn, work, and play—and fund community health works and community violence intervention programs, for example. 

Services to help the homeless, build affordable housing and housing navigation assistance to facilitate moves to neighborhoods with high-income opportunity could also receive dollars. Education funding could target early learning service expansion and school districts with high-poverty rates while efforts to provide child care and afterschool programs promote healthy childhood environments in a bid to instill equity.

“Recipient governments have enormous flexibility to help disproportionately impacted populations and communities,” Berube and Byerly-Duke wrote.

In addition to the categories above, the Treasury Department hopes local governments will double down on efforts to control the spread of COVID through vaccination programs, contact tracing and purchase of personal protective equipment, among other measures. Supporting behavioral health care by attending to mental health needs exacerbated by the pandemic is also on the list, in addition to payroll and covered benefits expenses for public health, health care, human services, public safety and other employees who are working on the coronavirus response. Recipients can use funds to cover these costs within eligible departmental units.

In their article, Berube and Byerly-Duke note that the ARP allows for premium pay to be awarded at up to $13 an hour, up to a maximum of $25,000 per worker. 

“Importantly, state and local officials can apply premium pay retrospectively for work performed at any time since the start of the pandemic—recognizing that many essential workers have yet to be adequately compensated for work they previously performed,” they state.

And then, there’s infrastructure. Governments will have the opportunity to invest in necessary upgrades to their water and sewer infrastructures, including projects that address the impacts of climate change. 

Alan Berube

Bridging the digital divide is also part of the plan. The pandemic exposed areas without broadband access at a time when many Americans were looking for information online and working and learning from home. Now, communities can look to building broadband infrastructure with reliable download and upload speeds.

Using the city of Rochester as an example, Berube says it might decide to dedicate dollars to a mix of continued emergency financial assistance for affected households and businesses, premium pay for essential workers, and critical infrastructure needs like drinking water and broadband. 

“They may also, however, address longer-standing issues (education, housing, child care, safety) facing lower-income communities that predated the crisis, and that heightened those communities’ risk from the pandemic,” he notes.

Implementation and reporting requirements

While the city, Monroe County and other local governments will have a great deal of leeway in how they use ARP funds, there are some rules. Governments cannot use the monies to fix old or long-running issues like unfunded pension liabilities or to offset tax cuts.

In addition, they cannot use the funds to pay interest or principal on outstanding debt or settle legal agreements. For example, if the city and Monroe County decide to settle the class action lawsuit filed over alleged brutality by the Rochester Police Department and other local law enforcement agencies, they are cannot use ARP funds to do so. 

Use of these funds will be subject to the normal local decision-making process, Berube says.

“In most cases, the chief executive would make a proposal to the legislative body (county commission, city council, etc.) for its consideration,” he says.

Records and supporting documents related to ARP awards are required to be retained for five years after the funds have been used or returned, whichever is later. These reports include details on how the funds were used in line with guidance and regulations from the Treasury Department.

Governments must submit interim, quarterly and expenditure reports and annual recovery plan performance reports. Each state is expected to submit one interim report with expenses by category from the date of award to July 31 and submitted to the Treasury Department by Aug. 31. Local governments, like Monroe County, must submit quarterly project updates with financial data, contract information and subawards over $50,000. Types of projects funded, and other information, also must be reported by Aug. 31.

The first quarterly project and expenditure report will cover the six-month period ending Sept. 30 and must be submitted to Treasury by Oct. 31. The subsequent quarterly reports will cover one calendar quarter and must be submitted to the Treasury Department within 30 days after the end of each calendar quarter, officials say. 

Hoping for a recovery

Recovery has been on the minds of government officials already. Governments had already established some recovery programs for businesses and using CARES Act funding. Those programs, Berube says, will generally be eligible uses of ARP funds as well.

Monroe County last November said it would distribute $9 million in CARES Act funding to local municipalities and fire districts to reimburse them for COVID-related expenses. The county also committed $15 million in CARES Act funding for small businesses affected by the pandemic, providing businesses with two to 50 full-time employees in the personal services industry with financial assistance.

The city dedicated $19 million to direct rent assistance and $2.5 million to offset day-to-day expenses for businesses through Business Emergency Retention grants to nearly 600 ventures, said Mayor Lovely Warren while proposing this year’s budget. 

For many cities and counties, the ARP’s state and local funds represent the largest positive jolt to their budgets in decades, observe Brad Whitehead and Joseph Parilla of the Brookings Institution’s Metropolitan Policy Program.

When County Executive Adam Bello proposed the first budget under his administration, he noted the unprecedented impact of COVID. His spending plan appropriated $11.6 million of previously assigned fund balance within its general fund to partially offset the loss of sales tax revenue and the 20 percent withholding of state aid. The budget took into account other impacts of the pandemic, including the opioid epidemic. At the city level, Warren lists various ways to fill its budget gap.

The Center for American Progress argues that local economies were in trouble before the pandemic hit. Several factors, including massive income and wealth inequality, have contributed to low business investment, which has resulted in a marked slowdown of productivity growth for more than a decade, a CAP report states.

Even then, ARP funds present an opportunity to act and reset for the future. Whitehead and Parilla suggest that local governments look to stabilize operating budgets and pay attention to helping businesses immediately while maintaining an inclusive approach. With ARP funds, they say, governments have an opportunity to ensure future prosperity.

How will Rochester-area governments track these investments?

“I think there are short-term indicators communities might use to understand whether and where the dollars are reaching the populations and communities most affected by the pandemic—which projects and organizations did ARP funds support, who are they serving (demographically), and where are they providing those services (geographically),” Berube suggests. “They might also track the degree to which ARP dollars leveraged other public, private, and philanthropic dollars toward the same priorities.”

Cities and counties, in collaboration with local civic partners, should consider maintaining a visible dashboard for the spending, he says. 

“The longer-run outcomes, which the spending can support but which also depend on a lot of other factors, would include jobs, business establishments, employment rates, incomes, and narrowed disparities in these outcomes by race and by place (i.e., across neighborhoods),” Berube says.

In a report with colleague Mary Jean Ryan, Berube points to the fact that the pace and shape of a national recovery depends on what happens in places like Rochester, Monroe County and neighboring counties. Traditionally, federal investments have been fragmented and unsupportive of cross-jurisdictional solutions that reflect the economy’s metros and regions.

The ultimate success of an inclusive recovery, the report states, will rest on the energies and talents of public, private, and civic sector decisionmakers in the regions that overwhelmingly power national prosperity. Ryan and Berube stress the need to seize the moment to ensure federal funds connect the dots across programs and places to address challenges and capitalize on assets in metros nationwide.

Time will tell if the Rochester region, with hundreds of millions of ARP dollars to invest, seeds an inclusive, resilient recovery.

Smriti Jacob is Rochester Beacon managing editor.

One thought on “A $650 million question

  1. “More than 3 million women nationwide have dropped out of the labor market.”

    It’s interesting to say the least, that this is broken down by gender, but NOT by RACE. Why is that???

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