Municipal Leaders and the CARES Act: Strengthening Transparency and Operations

Diana Baker Freeman
January and early February brought the regular news of the day, traffic reports and weather. Sprinkled in with these news reports were repeated mentions of hospitals rapidly being built in China. Like so many news reports playing in the background, initial news of COVID-19 barely registered with most people. Americans tended to relegate this to the subconscious as another problem that they would not be dealing with directly. Little did anyone know the chaos, confusion, and disruption that was making its way to the United States. In an unprecedented move, over 60% of U.S. municipalities pivoted to working from home and managing many city services in a virtual format almost overnight. The United States went eerily quiet. While empty streets and shuttered businesses were novel at first, it quickly became obvious that an extended shutdown would have a devastating economic impact. To counter this, Congress promptly went to work and drafted HR 748 that would become known as the CARES (Coronavirus Aid, Relief and Economic Security) Act, which was signed and went into effect on March 27, 2020.

Provisions of the CARES Act

The CARES Act includes $150 billion for state, local and tribal governments. Cities with populations over 500,000 can apply directly for federal funds, with smaller governmental units applying for their share of the recovery money through the state pass-through funds. Allocation is by population, except that $3 billion is reserved for U.S. territories and the District of Columbia, $8 billion is set aside for tribal governments, and each state is guaranteed at least $1.25 billion, even if its population share would otherwise indicate a lesser amount. Notably, the language of the CARES Act mentions counties, cities, and other local governing bodies'and, with a few exceptions, cities are situated within counties, meaning that in many cases there are overlapping eligible populations. While this is to be worked out in the state funding, it is important to note that they may not double up. The city may claim the share associated with its population and the county may claim the share associated with county residents outside the city; treasury could also allow these jurisdictions to share the revenue in other ways.

The hallmark of the CARES plan was speed, and governmental departments quickly set about devising policies and regulations around the disbursement and accounting of these funds. The funds ranged from direct assistance for families to small business loans to an education stabilization fund. CARES Act grants were divided among the states to support local agencies that have been most significantly impacted by coronavirus. These funds would help the agencies continue to provide services and operate administrative functions.

Municipalities have been given wide latitude in how to spend the money from the federal standpoint. However, states could create their own rules. Because the key was emergency relief, the funds distributed to state, local and tribal governments can be used to cover any costs related to COVID-19 that had not been previously budgeted for and were incurred between March 1 and December 30, 2020. Congress recognized the likelihood of significant fiscal declines as the fallout from the economic crisis continues. While there was a lot of flexibility in the funding, governmental agencies were given a list of allowable funding uses in twelve broad categories.

What Does This Mean for Municipal Leadership?

Some agencies may need to consolidate their operations, offer new services, or offer existing services in new ways to protect personnel and the public. Others might need to consider how they can provide clear and consistent communication to staff, contractors, and stakeholders. It is critical for organizations to consider the comfort of their people. The flexibility in spending deadlines means that community leaders should consider the use of funds not only for immediate needs but also for the longer term. Due to the virtual nature of most municipal functions during the COVID-19 crisis, technology became an essential tool in continuing to do the business of the district as well as keeping the community engaged and informed. Congress recognized this would be the case and is allowing technology purchases to be part of the COVID-19 recovery allocations.

Community leaders should recognize that funding criteria vary from state to state. The state plays a significant role in how funds are allowed in each state. Under federal law, eligible uses must meet three conditions:

  1. They must be 'necessary expenditures incurred due to the public health emergency with respect to ...COVID-19.'
  2. The expenditures must not have been budgeted as of March 27, when the CARES Act was enacted.
  3. The expenditures must be incurred between March 1 and December 30, 2020.

Federal funds will likely be audited, so careful records of how the money is spent as well as how it fits funding guidelines are strongly advised. However, there is a unique opportunity to explore CARES dollars to strengthen infrastructure needed to create secure communications among staff and between the agency and the elected officials. Specific activities laid out in the provisions of the CARES Act include:

  • Coordination in response to the coronavirus
  • Designing and implementing procedures and systems to improve preparedness and response efforts
  • Continuing to employ existing staff
  • Other activities to maintain operations and continue services

Using a secure board portal protects sensitive data, including that regarding HIPAA and FRPA regulations. While working and meeting remotely, board software provides for business continuity. It also creates an opportunity to connect with your community and keep citizens informed. Transparency has been a key concern of taxpayers as they watched their elected officials move into virtual meetings. Housing these meetings in your board software creates transparency and confidence that the board is continuing the work of the agency in good faith. A council's primary concern is the long-term viability of the municipality. Acquiring software that ensures operations can continue and allows the organization to still be served'all stated goals of the CARES Act'can help provide for many of the immediate needs of municipal governments to prevent economic decline.

It is highly likely that another, even bigger, package is on the horizon as the recovery continues.

To be ready to take advantage of these funds, as well as apply for existing monies, here are things you can do now:

  • Identify the most critical needs and strategies
  • Maintain and improve systems for effective coordination and integration of funds
  • Analyze and track additional needs as early as possible

If you'd like to learn more about municipal board technology, contact us and we can help you explore your options.
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Diana Baker Freeman

Diana Baker Freeman is a Senior Customer Success Manager for Diligent Mission-Driven Organizations. She holds an MS in Education Leadership and has taught in public schools and at the university level. After being elected as a school board member she developed a deep understanding of board members' roles, and how they drive improved educational outcomes.

As a public school trustee, Diana was nominated and accepted to Leadership TASB, through the Texas Association of School Boards, and graduated as a Master Trustee. Diana became a Board Development Consultant for the TASB and has led boards through strategic planning, goal setting, ethics training and the examination of roles and responsibilities of board members. She has presented at various state-wide, regional and national conferences and developed online training for TASB as well as the Southern Regional Training Consortium.