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As America’s counties prepare for a historic federal investment to help mitigate the virus and aid the nation’s economic recovery through the American Rescue Plan, the National Association of Counties issued a report on the Coronavirus Relief Fund (CRF) – part of the previous COVID relief package – and the effectiveness of federal funding in meeting the needs of counties. The report also highlights innovative county strategies to address the pandemic, focusing on initiatives that further social equity. The independent assessment was authored by the National Academy of Public Administration.

Background

In January 2020, the U.S. Secretary of Health and Human Services declared a public health emergency for the United States as the COVID-19 virus spread in the United States and around the world. In partial response to this crisis, Congress passed, and the President signed into law on March 27, the Coronavirus Aid, Relief, and Economic Security (CARES) Supplemental Appropriations Act of 2020 which included over $2 trillion for emergency assistance to help cover health care needs for businesses, families, and individuals affected by COVID-19. This was the largest economic stimulus package in U.S. history. The CARES Act included the Coronavirus Relief Fund (CRF), which provided direct assistance to state, county, local, and tribal governments, the District of Columbia, and five U.S. territories to help cover costs of responding to the COVID-19 pandemic and for navigating the impact of the COVID-19 outbreak.

The National Association of Counties (NACo) requested that the National Academy of Public Administration (the Academy) conduct an independent assessment of the CRF and the effectiveness of the federal funding in meeting the needs of the counties and in providing the controls warranted for federal funds (objective 1). NACo also requested that the study examine innovative strategies undertaken by counties receiving CRF funds to address the pandemic, focusing on initiatives that further social equity (objective 2).

The CRF and Its Implementation

The $150 billion CRF aided state and local governments as they work on mitigating the impact of the COVID-19 outbreak. Counties with a population of over 500,000 received their aid directly; most counties with a population under 500,000 received their allotment of money from their state government. Funds were distributed by the U.S. Treasury within about 30 days (by the end of April 2020) to 120 counties, 32 cities, and 1 town (each of which had a population of over 500,000).

In April and May 2020, Treasury issued initial guidance that defined the eligibility requirements and the basis for funds distribution. The CARES Act specified that payments from the CRF be used to cover expenditures that were necessary due to the COVID-19 public health emergency, were not accounted for in local budgets most recently approved as of March 27, 2020, and were incurred between March 1 and December 30, 2020. Funds also were not to be used to address shortfalls in government revenues.

Much to their concern, counties receiving funds generally found the initial guidance not to be clear enough or sufficiently detailed to give them confidence in what was allowable, so additional iterations of guidance plus Frequently Asked Questions (FAQs) and answers continued to be issued by Treasury well into the year. In fact, guidance issued as late as September 2020 had a significant impact on what counties could spend money on as allowable expenses.

Associations related to different aspects of county operations, such as NACo and the Government Finance Officers Association (GFOA), worked with Treasury on behalf of their members to get clarity from Treasury and to help county officials know how to proceed. Expertise in state and local issues may have been absent at Treasury given that several senior officials with state and local government experience had recently left the department and their positions had not been backfilled. Regarding the designated “spend-by date” of December 30, 2020, legislation enacted on December 29, 2020 extended the spend-by date for CRF funds by a year, to December 31, 2021. According to data from the Council of Inspectors General on Integrity and Efficiency’s (CIGIE) Pandemic Response Accountability Committee (PRAC), 70 percent of CRF funds were spent by counties by December 30, 2020, the original deadline.

As the pandemic proceeded and worsened, uncertainty about the CRF program design and rules affected county expenditure plans, cost county officials time and effort trying to get answers to ensure compliance, and had implications for the counties’ strategies and activities for meeting the pandemic-related needs of their communities.

Recommendations on the Design and Implementation of the CRF

County leaders interviewed were very positive about the amount of money received, and especially about the expeditious delivery of the funds by Treasury. Most noted that the traditional model of developing and getting proposals approved for programs and expenditures would have been too time consuming and difficult during the early days of the pandemic. They said they were scrambling to respond to evolving needs for personal protective equipment, to provide cleaning capabilities where needed, and to perform numerous other support tasks necessary to keep their communities functioning and to minimize the impact of COVID-19 on their citizens. However, overall, the lack of clear guidance and difficulties with some design features of CRF created sustained problems throughout 2020.

For future programs, and/or for further iterations of CRF, a number of recommendations are made to improve program effectiveness and impact:

  • A better coordinated national response is needed for a program of this complexity and urgency.
  • Federal departments or agencies responsible for implementing a program such as CRF – in this instance, the Treasury Department – need legislative funding to stand up a program office with personnel with the skills and expertise needed to design the program, develop effective guidance, and anticipate and respond to questions and issues that will arise, especially during early days.
  • Comprehensive guidance for program operations needs to be available when a program is initiated or very soon thereafter.
  • State and local governments should be allowed to make expenditures with longer-term payoffs with greater flexibility in allowable uses of the funds.
  • Program design should allow coverage of operational expenses and revenue replacement, not only coverage of new COVID-related costs.
  • Future legislation should require that large counties are funded to provide selected services for city residents residing within their counties.
  • Future federal relief legislation should require formal evaluation of program impact during and at the end of the program.

Innovative Approaches by Six Counties to Address the Needs of their Inhabitants

In response to COVID-19, county governments were required to go beyond their established services, to deliver and expand upon a variety of critical social and health-related services responses specific to COVID-19. Examples of these services initially included providing personal protective equipment, services to sanitize certain county locations and facilities, expanding food banks, supporting shelters for those who lost their regular living places due to job loss, and providing support for children without access to computers or the Internet.

NACo asked the Academy to identify and document innovative strategies that counties applied in using CRF dollars, with special attention to programs focusing on inclusive economic recovery and on assisting vulnerable and underserved populations. The counties profiled (and the major cities included in them) are: Cook County, Illinois (Chicago); Franklin County, Ohio (Columbus); Hennepin County, Minnesota (Minneapolis); Lee County, Florida (Fort Myers); New Castle, Delaware (Wilmington); and Pierce County, Washington (Tacoma).

A case study was developed for each of these counties. Each case study highlights selected programs and initiatives undertaken, with a focus on programs designed to advance social equity. Each county worked with nonprofit partners, developed new programs to meet new needs, and collaborated with other levels of government to meet needs and fill gaps caused by the pandemic all the while administering programs for the homeless, providing food security, and supporting small businesses.

Learning from the Impact of the Pandemic on County Governments

Without question, the pandemic has had a significant impact – financial and otherwise – on county and local governments. With vaccine distribution underway, many are looking past the fight against the virus to what it will take to restore (or re-build) their communities and improve social equity.

Recent studies and articles describe the impacts on these governments as including revenue declines, vacant positions in local governments, short and long-term staffing reductions, service cuts and program closures, and in some cases decreased compensation for county employees.

Looking ahead, county leaders are concerned about the impact of deferred maintenance and other planned investments when funds were shifted to immediate, COVID-related support. And some are concerned about changes in bond ratings due to having drawn down reserves.

Future pandemic response legislation should seek to support continued effective and innovative county COVID-19 roles and leadership. It should recognize and strengthen intergovernmental coordination and collaboration, building on lessons learned during the first year of the COVID-19 pandemic about the importance of the working relationships between federal, state, county, city, tribal, and other local governments. Future programs and legislation should also recognize and seek to strengthen counties’ resources and ability to prepare for and respond to day-to-day and future challenges and crises, particularly health emergencies.


Access the full report: Coronavirus Relief Fund: Review of Federal Fiscal Assistance and of Innovative County Response Strategies