How State and Native Fiscal Restoration Funds Are Being Used to Increase Public Sector Capability

By Jacob Leibenluft and Laurel Blatchford

Earlier this yr, Secretary Yellen defined how the State and Fiscal Restoration Funds (SLFRF) program has been essential in not solely serving to communities get better from the COVID-19 pandemic but in addition setting them up for a stronger future. As she defined, alongside investments in areas like public well being, reasonably priced housing, and broadband, SLFRF has set the stage for the passage and profitable implementation of our Administrations historic long-term investments together with the Infrastructure Funding and Jobs Act, CHIPS and Science Act, and Inflation Discount Act. These investments, she added, are serving to state and native governments develop their communities into the sorts of locations that may create and entice the roles of the longer term whether or not [in] an city heart, within the suburbs, or in a rural space.

These alternatives are potential not solely as a result of the financial system is in a stronger place as we speak on account of the American Rescue Plan, but in addition as a result of SLFRF {dollars} are getting used to develop the flexibility of state, native, territorial, and Tribal governments to play a vital position in implementing these legal guidelines as they apply for and oversee the funds now obtainable to draw new jobs to their communities. For instance, theInflation Discount Actenactednovel credit score supply mechanismsthat improve the flexibility of state, native, and Tribal governments to leverage clear power tax credit for vital investments of their communities. The SLFRF program has supplied state, native, territorial, and Tribal leaders with the chance to make investments of their workforce and their native authorities capability in methods that may assist them successfully deploy the numerous federal funds obtainable via the Inflation Discount Act and different latest laws.

At Treasury and throughout the administration, we’re centered on guaranteeing that totally different funding streams that may assist native communities are working in tandem leveraging these {dollars} to their full potential. Under, weve outlined how recipients could use SLFRF funds to construct public sector capability and supplied a number of examples from recipients who’re already utilizing SLFRF funds on this method.

Utilizing SLFRF to Construct Public Sector Capability

Within the early months of the pandemic, state, native, territorial, and Tribal governments minimize over 1.5 million jobs amid sharp declines in income.¹This mirrored the sample of the Nice Recession, when state and native governments minimize 137,000 and 437,000 jobs, respectively,²and declines in state and native authorities budgets had been a drag on the general financial system for greater than three years.³Through the Nice Recession, the dearth of fiscal assist for state and native governments not solely weighed down the general financial system, but in addition restricted the flexibility of those governments to offer help to their residents once they most wanted it.

To keep away from a repeat of the results of the Nice Recession, Treasurys closing rule for the SLFRF program explains that state, native, territorial, and Tribal governments could use funds to assist a broad set of actions to revive and assist public sector employment in addition to associated investments to enhance public sector capability and improve resiliency towards gaps uncovered by the pandemic. However these funds haven’t simply prevented the painful price range cuts of the previous; in addition they present a instrument for governments to strengthen their capability to make new investments. Below the general public well being and detrimental financial impacts eligible use class, recipients could use SLFRF funds to spice up public sector capability for the next eligible makes use of:

• Restoring public sector employment: Recipients could use funds to rent state, native, territorial, and Tribal authorities employees as much as 7.5% above their pre-pandemic baseline. This might embody hiring public sector workers to assist implementation of the Infrastructure Funding and Jobs Act, CHIPS and Science Act, and Inflation Discount Act.
• Supporting and retaining public sector staff: Recipients might also use SLFRF assets to offer extra funds for workers who skilled pay reductions or had been furloughed because the onset of the pandemic, keep present compensation ranges to stop layoffs, and supply employee retention incentives to assist native governments stay aggressive with different employment choices.
• Protecting administrative prices related to hiring and retention: Recipients could use funds to pay for ancillary administrative prices related to administering the SLFRF-funded hiring and retention applications, together with prices to publish job postings, evaluate purposes, and prepare new hires.
• Bettering the efficacy of public well being or financial reduction applications: Recipients could use SLFRF funds for instruments like program analysis, information evaluation, and focused shopper outreach. They might additionally deploy SLFRF assets to assist utilizing information and proof in designing, executing, and evaluating applications, together with hiring public sector employees, contractors, teachers, consultants, technical help assist, and others with experience in analysis, information, know-how, and group engagement. General, funds could also be spent to assist efficient implementation of SLFRF-funded applications in addition to applications that reply to the general public well being emergency and its detrimental financial impacts.

Below the income loss eligible use class, recipients could use SLFRF funds to offer authorities providers as much as the quantity of income misplaced as a result of pandemic. Recipients could decide their income loss by claiming the usual allowance of as much as $10 million (to not exceed a recipients allocation) or calculate income loss based on the formulation in Treasurys closing rule.These investments in authorities providers below the income loss eligible use class enable for a variety of spending that builds authorities capability.⁴As such, this gives one other channel by way of which recipients could make investments that enhance their capability to successfully compete for and implement funds flowing from the Infrastructure Funding and Jobs Act, CHIPS and Science Act, and Inflation Discount Act.

Examples of how native governments are investing SLFRF to spice up public sector capability

Whereas the pandemic illustrated the significance of sturdy and well-resourced native and state governments, there may be nonetheless extra work to be completed to make sure governments are ready for the longer term. The examples supplied beneath, as reported to Treasury by SLFRF recipients, illustrate how native governments are leveraging SLFRF to construct native capability, together with utilizing SLFRF to rent public sector employees that work in devoted places of work or on initiatives centered on administering federal funds.⁵

General Capability Constructing and Service Supply

• Bayamon, Puerto Rico has budgeted $7 million to improve its know-how system to offer higher providers to the general public and enhance usability for workers. The brand new system will develop capability and assist enhance the flexibility to plan, execute, and consider SLFRF-funded actions in addition to different federal and non-federal funded applications which can be important to financial development.
• Seattle, WA budgeted $1.6 million for the Reasonably priced Seattle program, an internet portal obtainable in 16 totally different languages which connects residents with advantages they could be eligible for. This may enhance efficacy of metropolis assist applications by streamlining entry. SLFRF funds had been used for hiring employees to steer the Reasonably priced Seattle program and protecting program prices.

Public Sector Employment

• Pittsburgh, PA spent $52 million to keep away from layoffs throughout all metropolis departments that might in any other case have been crucial as a result of detrimental affect of COVID on the citys income, enabling the town to maintain vital metropolis operations and providers.
• Syracuse, NY spent almost $22 million to assist the citys operations at pre-pandemic ranges, guaranteeing vital authorities and public security providers wouldnt face pandemic-related interruptions. As a consequence of an estimated income lack of $141 million from the pandemic, the town would have needed to cut back staffing ranges throughout all departments, together with police and hearth, with out federal income substitute funds.
• Tarrant County, TX budgeted $4.7 million to extend the variety of full-time equal workers to assist important authorities capabilities.

Planning, Monitoring, and Oversight

• Boulder County, CO budgeted almost $1.3 million for non permanent employees to help in administering the American Rescue Plan Act. Duties embody facilitating requests for funding, guaranteeing monetary compliance, and dealing with accounting, reporting, account reconciling, audit preparation, and different associated duties.
• Buffalo, NY budgeted $400,000 to rent and prepare employees for a brand new workplace inside the Division of Administration, Finance, Coverage and City Affairs, and for a Deputy Director of Planning within the Workplace of Strategic Planning. These employees will monitor the monetary and programmatic stories of subrecipients, analysis finest practices to enhance outcomes, and consider the effectiveness of the outlined proposals.
• King County, WA budgeted over $3.2 million to offer funding for non permanent workers to assist grant administration, accounting, and authorized help.
• Lubbock County, TX budgeted over $350,000 to rent a third-party administrator to supervise the implementation of the Small Enterprise and Non-Revenue Group Grant Program. The third-party will assist in the design, assortment, processing, verification, and validation of grant purposes. They can even assist with advertising and outreach to make sure this system reaches these most in want.
• Milwaukee, WI budgeted $540,000 on allowable administrative bills for American Rescue Plan Act operations, together with staffers to assist with oversight, reporting, and compliance.
• Omaha, NE budgeted $225,000 to rent a staffer to coordinate and oversee using American Rescue Plan Act funds for reasonably priced housing efforts, together with distribution of emergency rental help. This staffer additionally helped create a citywide reasonably priced housing motion plan and helped set up a HUD Part 108 mortgage program, which is able to improve entry to low-cost, versatile financing for financial growth, housing, and infrastructure tasks.
• Raleigh, NC budgeted greater than $450,000 on two new positions devoted to the citywide administration and oversight of American Rescue Plan Act grant funding. One place is housed within the Funds & Administration Companies Division and the opposite within the Finance Division.

Analysis and Knowledge

• Baltimore, MD has obligated $600,000 to companion with the College of Baltimore and Morgan State College to assist analysis, analysis, and evidence-based decision-making about applications and providers created or expanded utilizing SLFRF. The College companions are offering the Mayors Workplace of Restoration Packages with implementation recommendation, affect analysis, finest practices analysis, administrative information evaluation, and efficiency administration.

• The State of Connecticut has budgeted almost $1 million to create an Analysis and Proof-Constructing Unit inside the states Workplace of Coverage Administration. This crew is liable for coordinating the states analysis work and utilizing proof to tell the implementation of state applications. The unit will work intently with state companies, subrecipients, utilized researchers, and evaluators to develop analysis plans, coordinate entry to state information assets, and help in synthesizing proof for reporting and communications.
• The State of Maine budgeted $600,000 for the states Division of Labor to investigate and enhance the outcomes and effectiveness of the Maine Jobs & Restoration Plans workforce initiatives. This effort will observe the success of the workforce and have a look at information in order that communities and industries most affected by COVID-19 notice the advantages of those investments now and sooner or later.

Wanting Forward

Treasury is dedicated to serving to our nation not solely rebuild from the pandemic, but in addition make investments that can strengthen native communities capability to maximise the affect of historic investments in our nations financial future, together with these made below the American Rescue Plan Act, Infrastructure Funding and Jobs Act, CHIPS and Science Act, and Inflation Discount Act.

TheInflation Discount Actenactednovel credit score supply mechanismsthat improve the flexibility oftax-exempt entities, corporations,and different organizations to reap the benefits of the clear power tax credit. For the primary time, thelawallows state, native, and Tribal governmentsto obtain tax incentives as direct funds.This variation willallow states and localitiestosignificantly develop the provision and energy of thesehistoric investments in rising the clear power financial system.Treasury and the IRS are already engaged on an digital pre-filing registration course of forstates, localities, and Tribesthat need to reap the benefits of direct pay.

The advantages of the Inflation Discount Act present a chance to catalyze funding in communities throughout the nation, together with historically underserved areas, and in good-paying, high quality clear power jobs. Treasury will launch extra steerage on the necessities for paying prevailing wages and using apprentices to make sure sturdy labor protections for staff in these new alternatives.

The State and Native Fiscal Restoration Funds are a useful resource for native communities as they work to reap the benefits of these new alternatives introduced by the Inflation Discount Act and different historic federal laws. The examples included above are only a handful of how communities throughout the nation are investing State and Native Fiscal Restoration Funds to construct their public sector capability for as we speak and tomorrow. As Secretary Yellen defined, We all know that legal guidelines dont implement themselves. Turning a regulation into motion requires shut partnership between the federal authorities, state and native governments, staff and unions, companies, and non-profits. As communities seize the brand new alternatives unlocked by latest laws, Treasury appears ahead to serving to governments use their remaining SLFRF funds to proceed to construct the muse for that partnership.