Four Ways State and Local Governments Can Effectively Use Pandemic Relief Funds

Last March, the $1.9 trillion American Rescue Plan Act was passed for pandemic relief, with $350 billion of the money dedicated to state and local agencies as a part of the Coronavirus State and Local Fiscal Recovery Funds (SLRFR) program. The purpose of the SLFRF program was not only to maintain vital public services amidst the pandemic but to allow agencies the opportunity to make investments supporting long-term growth. Though the SLFRF program has presented huge opportunities for state and local agencies, waste and fraud are almost a given considering the amount of money being distributed. This is why Brandon Shopp, VP of product at SolarWinds, put together four guidelines in an article for StateTech with ways state and local agencies can use the resources to their fullest extent. Take a look at his recommendations below:

1. Identify Critical Gaps and Prioritize. With so much money at stake, it can be easy to spend it all in one place unless projects are prioritized. Shopp argues though it may be tempting to place large amounts of money toward “bold new programs, IT infrastructure, or facilities,” the money will eventually run out, and these programs will need to continue to be funded. Think strategically about whether your organization will be able to sustain the projects you’ve decided to spend pandemic resources on and be sure to collaborate and include impacted members of the organization. After all, any new IT projects will have downstream effects. Conducting an analysis of what budgets will look like once funds have been expended is critical.
2. Ensure Oversight and Accountability. With so much money flowing through state and local agencies, close attention to detail and responsible oversight of transactions is imperative. Because state, local, and municipal funds are all allocated separately, a level of risk is introduced with the duplication efforts. Shopp advises state and local agencies to “consider establishing an independent, nonpartisan commission to monitor and administer federal funds.” The committee should be responsible for creating policies and procedures around the distribution of funds and should distribute them in a timely manner.
3. Agencies Should Establish Spending Guidelines. Though the Department of the Treasury has issued guidance on how pandemic relief funding can be spent, agencies themselves need to take a close look at their resources and establish their own guidelines based on their priorities. Task forces can be established to guide spending decisions throughout the process. Shopp says, “These guidelines can help officials set limits on the types of products and services that can be approved, aiding with compliance reporting and ensuring everyone is marching in the same direction.” Of course, there will be exceptions to these guardrails, so there should be some leeway factored in so agencies get the money they urgently need.
4. Monitor for Waste and Fraud. At the end of the day, waste and fraud are almost inevitable considering the amount of money, groups involved, and projects the funds will be used for. With siloed systems being so prevalent at the state and local level (and understaffed teams unavailable to monitor every detail), there will undoubtedly be challenges in detecting unusual activity in spending. Shopp urges agencies to implement artificial intelligence (AI), which can prevent something disastrous from happening with the money. As Shopp says, with AI, “models can be created to detect larger expenditures, multiple smaller purchases from the same vendor, credit card purchases, and the use of unauthorized vendors.” In addition, he says agencies can apply data analytics to funding requests and flag keywords like “COVID” or “pandemic relief” to look at them for closer scrutiny and determine whether they’re legitimate requests for funds.

Though the SLRFR program has provided state and local agencies with a unique opportunity to not only recover but move forward with resiliency after devastation from the pandemic, frameworks must be set up to ensure there’s proper oversight and responsible spending. More than anything, the guidelines should be put in place for transparency’s sake, to improve accountability, and to keep constituents informed about the programs being built to successfully recover from the effects of the pandemic.