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How state and local governments can prepare for CARES Act funds

Apr 22, 2020

The Coronavirus Aid, Relief, and Economic Security (CARES) Act is meant to be a lifeline for state and local governments. Nearly half of the appropriations in the $2 trillion aid package will be distributed through state and local governments.

But putting the stimulus money into action can feel like walking a tightrope act. Leaders must balance a number of urgent, competing needs and stay on top of deadlines and new reporting requirements. States have discretion over some distribution terms, so policies and supporting processes have to be enacted quickly, too.

And to top off the challenges, federal assistance must be distributed swiftly to stave off further economic impact and a cascade of longer-term, follow-on consequences.

Of course, given the circumstances, these are “good problems” to have. And any problem can become an opportunity, if given the right amount of planning and support. In this instance, state and local leaders can create several support constructs to help manage the influx of cash. They need:

  1. Leadership and accountability: Someone must lead the relief efforts and create a single source of truth for state and local agency officials. Ideally, the designated relief person or committee would also coordinate with federal counterparts.
  2. Transparent tracking tools: States and local governments need a centralized mechanism to post rules and restrictions related to the aid and to track applications and disbursements. State and local governments can ease some the burden on their agencies by centralizing information and important tasks.
  3. Streamlined processes: Leaders need to assess current funding processes, eligibility requirements, terms and abuse controls to identify potential roadblocks. States can temporarily waive or relax requirements (such as unemployment timelines) at their discretion to speed up impact.
  4. Human resources: Staff may need to be redistributed to align with new processes or meet surges in demand. Since many workers are furloughed or unemployed, state and local governments may be able to augment their staff to meet critical personnel needs. However they plan to tackle it, leaders need to fill a number of short- and mid-term roles.
  5. IT systems and infrastructure: While many organizations tend to cut back in times of crisis, this is exactly when technology can help you work smarter and harder. Make sure IT systems can manage massive upticks in traffic, data velocity, document storage and cybersecurity. Consider where you could use technology to simplify processes, reduce errors, gain speed, increase transparency, or build confidence overall.
  6. Governance and oversight: Even though states and governments are working quickly, they still need to act carefully. They need ways to monitor the use of funds to prevent fraud or malfeasance and ensure all federal statutes and regulations are being properly followed and reported.
  7. Communication: There’s still an enormous number of “unknowns” surrounding COVID-19 today. Share what you can about the relief packages, when you can, and keep lines of communication open. Federal agencies have created a hotline and a web portal as a one-stop shop for information; state and local governments could benefit from a similar approach.

All of these support constructs will benefit state and local governments, well beyond this pandemic. Business may never be “usual” again. But in some ways, it can emerge better.  

While there’s no “easy button” to erase the challenges associated with disbursement, state and local governments can create (and communicate) tiered strategies to distribute the aid. Beneficiaries may be ranked by a combination of factors, like urgency and ease of implementation. Some of the relief can be deposited quickly through existing channels (e.g., increasing matching rates), while other aid packages may require new programs or innovations.

Ultimately, state and local leaders know what’s best for their communities. That’s why they carry so much responsibility for distributing much-needed federal aid.

More related content

Read more about what the CARES Act means to nonprofits, government and tribal organizations and find more support for your community in our COVID-19 Resource Center, such as:

Author(s)

Kimberly Dare, CPA, CFE, CGMA
Partner
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