This Week in Federal Funding

Route Fifty's This Week in Federal Funding newsletter provides weekly updates on what's happening with the pandemic-era aid dollars the federal government is sending to states and localities. The newsletter goes out on Tuesdays and Route Fifty Today subscribers receive it automatically. If you don't subscribe to Route Fifty Today and would like to receive This Week in Federal Funding, you can sign up for it here.

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Welcome to Route Fifty's This Week in Federal Funding. I'm Senior Editor Bill Lucia.

From R50 this week: Despite federal aid, transit agencies remain on a difficult track as they try to recover from the pandemic and the massive ridership slump it caused. Dan Vock has the story. Andrea Noble reports on how federal officials have made clear that states can use American Rescue Plan Act funding to extend boosted unemployment benefits. Andrea also has a story on $240 million available from the Labor Department to help combat unemployment fraud.

What we're watching: The role of state auditors. California is the biggest state recipient of ARPA money through the law's state and local government aid program. The Golden State's allotment is $27 billion, with additional funding going to localities there. I recently spoke with State Auditor Elaine Howle about her office's work overseeing federal pandemic aid. The office has about a half-dozen audits underway related to Covid-19 funding, with a total of about 20 to 25 people working on them on and off, Howle said. One of those reports, on a grant program to help address homelessness, is due out as early as today. "A lot of relief is coming in, but we've got to make sure that we do the best we can as a state to administer those dollars in the right way," said Howle, who has served as California's state auditor for more than 20 years.

During our conversation, Howle looked back to last year to explain her office's approach after earlier federal pandemic relief for states and localities became available under the CARES Act. Her office completed a risk assessment, looking at state agencies that would receive significant sums under the law. One consideration here was fairly obvious: Whether agencies had struggled or had other issues managing federal funds in the past. Another risk factor was whether an agency was receiving far more federal funding than it was accustomed to dealing with. Last August, Howle's office designated the state's management of federal pandemic relief funds as a "high‑risk statewide issue," warning of possible inefficiencies and waste. An Aug. 19 update on high-risk state programs retained that designation and said the state's management of federal relief dollars had led to inefficiencies and may have resulted in "substantial fraud."

The office has completed at least three audit reports related to federal pandemic relief that delve into some of the problems and difficulties that have emerged with the money. These have looked at the Department of Finance, the Employment Development Department, which administers unemployment benefits, and the California Department of Public Health. These reports raised concerns like whether the finance department distributed CARES Act dollars in a way that was inequitable for smaller counties; weaknesses in unemployment fraud prevention that led to billions in improper payments; and lagging contact tracing efforts.

Other audits the office has in the works look at areas like rental aid, higher education funding and emergency food assistance, among other programs.

Howle acknowledged that there can be a tension between maintaining strong spending safeguards and adhering to federal guidelines, while also getting money out quickly to help people during a public health crisis and an economic downturn. And, "in fairness to state agencies," she added, "there were some new programs ... that they basically had to figure out how to manage on the fly." For example, expanded unemployment benefits for "gig" workers. Before Covid-19 hit, the state hadn't established a system to verify wages for these workers, a key step in paying out the benefits.

An upside with ARPA, in Howle's view, is that state and local governments will have years rather than months to spend the funding. "The longer timeframe to spend the money is going to allow state agencies and local governments more time to plan ahead," she said, adding that this "will allow agencies to pause and take a breath and say, 'okay, how do we want to manage this program? What are the controls we need to have?'"

Elsewhere… Atlantic City, New Jersey Mayor Marty Small Sr. provided more details Monday about payments the city plans to make to taxpayers and city employees using federal aid. The roughly $4 million program will give eligible taxpayers a one-time payment of $500 and certain municipal workers a $3,500 payment.

Meetings to gather community feedback on how ARPA funding should be spent continue, with sessions in recent days in places like Worcester and Pittsfield, Massachusetts. Worcester residents called for spending on programs like free transit, child care and after-school programs and helping low-income families to buy homes. The Telegram & Gazette has a write up on the Monday listening session there, which drew about 80 participants.

Missouri Gov. Mike Parson, speaking at the state fair last week, rolled out a plan to use about $400 million in ARPA funding to expand broadband access and adoption around the state. 

That's it for this week. In the meantime, if you have news tips or feedback on what we should be covering, if you want to share your community's story, or if you just want to say hello, please email us at: editor@routefifty.com. Thanks for reading!

This week's federal funds stories from Route Fifty:

• Transit Leaders See New Federal Money as a Bridge, Not the End of the Line
• States Can Pay Enhanced Unemployment Beyond Cut Off with ARPA Funds​​​​​​​
• States Snag $240M to Combat Unemployment Fraud​​​​​​​

For last week's edition, which looks at Baltimore's Office of Recovery Programs, click here.