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Navigating Challenges and Opportunities in COVID-19 Grants Management

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Over the past month, Congress approved unprecedented funding to support the nation’s medical and economic recovery from COVID-19. This funding delivers a range of relief, including vital equipment, services, and loans to businesses across the country. It also provides grant funding through programs managed by multiple Federal agencies and is designed to benefit a diverse set of recipients and programs.

As agencies quickly shift to manage and distribute new levels of grant funding, how prepared are grant makers and recipients to manage the funds and track performance? Do their stakeholders and potential sub-recipients understand the process, from eligibility through reporting? What challenges are state and local governments in particular facing?

In a recent joint webinar with eCivis and Grant Thornton Public Sector, Principal Wendy Morton-Huddleston, former Director of the Maryland Governor’s Grants office; eCivis’ Vice President, Merril Oliver; and Grant Thornton’s Public Sector Director, David Barth, shared best practices and guidance on these questions and more.

Here are the major takeaways for state, local, and tribal governments.

Opportunities: Funding Overview

At least eighty percent of appropriated funds in the CARES Act are allocated to state and local governments. Governments are expected to receive roughly $139 billion, with each state to receive at least $1.25 billion. Tribes will receive a historic $8 billion. Cities and counties with over 500,000 populations will be eligible to receive direct funding amounts based on a population formula. This amount will come out of the $1.25 billion given to states. 

For example, New Mexico, with a relatively low state population of 2.1 million, is expected to receive the minimum amount of $1.25 billion from the Federal Government, according to Federal Funds Information for States. How much of that $1.25 billion will go to the city of Albuquerque depends on its population. By now, obviously, some funds have already been distributed. 

In addition to the CARES Act, the major sources of funding for state and local governments (according to the below graphic by NCSL and Deltek) include: 

  • Direct Relief ($150 billion): COVID response, revenue shortfall
  • FEMA ($45.1 billion): COVID response
    • Stafford Act ($25 billion): Major disaster areas in declared states
  • Education ($30.8 billion): COVID response, continuation of business, distance learning
  • Mass Transit ($25 billion): Formula appropriation
    • Airports ($10 billion): COVID response, continuation of business
      • $500 million in grant funding
      • The rest is distributed through a funding formula authorized through transportation programs. 
  • CDC and Public Health Emergency Preparedness ($5.3 billion): COVID response
    • This funding has been allocated to three categories:
      • $1.4 billion is for state and local preparedness and response programs
      • $1 billion for state and local response.
      • $1.3 billion is unspecified
  • Justice and Public Safety ($1 billion): COVID response, continuation of business
    • This includes the purchase of personal protective equipment and public safety supplies as well as medical needs and supplies for inmate populations. 
  • Elections Security 
    • $400 million is allocated to support individual states in voting districts responding to the COVID-19 pandemic and navigating the 2020 election cycle. 

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Challenges: Maintaining Transparency and Accountability During a Pandemic

Oliver, who was on the frontlines of state grant management during the Great Recession, shared that grant administration under the CARES Act will not differ much from navigating the American Recovery and Reinvestment Act of 2009. Agencies that receive funding must still be prepared to report to the Pandemic Response and Accountability Committee. Under the CARES Act, at least $80 million has been appropriated just for this committee and others used to establish these reporting tools. For governments, this means multiple appropriations to the office of the Inspector General and the need to keep transparency and oversight provisions top of mind.

To navigate these chaotic times with utmost transparency, accountability, and compliance, Oliver emphasized the importance of clearly identifying COVID-19-related grants through tagging. Because OMB recently issued guidance that governments can allocate existing grant programs toward COVID-19 response, this means tagging the reallocation of funds from existing grant programs to clearly delineate the amount of funding under the original award and the amount of funding being allocated to COVID-19 response. 

Many states are already putting in place these naming conventions. As they do so, it’s especially important to be consistent when pulling together reports and data. Grant leaders should also ensure that their projects are retroactive back to the beginning of March. For example, the Department of Education has issued guidance about how they would like the funding to be tagged. They recommend applicants attach a "C" for "COVID" as an indicator to clearly discern the difference between regular funding received and COVID-19 dollars. 

For more information on how state, local, and tribal governments can navigate the latest funding and grants challenges in addressing COVID-19, check out Grant Thornton’s COVID-19 Resource Center and eCivis’ COVID-19 Resource Hub