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Be transparent

How were covid funds used in state? by Joyce O. Ajayi Special to the Democrat-Gazette | September 24, 2022 at 4:46 a.m.

The Arkansas Department of Finance and Administration (DFA) says Arkansas has received over $8 billion in covid-19 relief funds from a combination of funding portfolios from several federal laws passed to address the pandemic.

What have Arkansas state and local governments done to ensure transparency of the influx of covid-19 relief funds? Have we taken the right steps to make sure we spent the money wisely? Research by myself and others at the Arkansas Center for Research in Economics demonstrates that Arkansans don't have access to the same level of transparency about these funds as citizens of other states do.

In the wake of covid-19, the U.S. Congress passed the CARES Act, releasing $2.2 trillion in taxpayer funds to aid Americans. Within the package, the CARES Act established the Coronavirus Relief Fund (CRF), which allocated $150 billion for states and local governments. Less than one year later, Congress passed the American Rescue Plan Act (ARPA), releasing an additional $1.9 trillion. Of the $1.9 trillion package, ARPA allocated $350 billion to eligible state, local, territorial, and tribal governments.

Arkansas received $1.25 billion directly from the CRF. Of the $1.25 billion, $75 million went to cities and towns, and $75 million went to counties. CRF ended in December 2021. The state also received $2.8 billion disbursed by the ARPA through the Coronavirus State and Local Fiscal Recovery Funds (SLFRF). A breakdown of how the $2.8 billion was allocated is on the DFA website.

From the breakdown, the state government received approximately $1.57 billion in discretionary ARPA funds. Counties have received roughly $586 million, $209 million went to metropolitan cities (local governments serving population of more than 50,000), and $216 million to non-entitlement cities (local governments serving less than 50,000) as of May 2022. State and local governments have until Dec. 31, 2024, to commit the funds to specific needs, and until the end of 2026 to complete projects and spending related to the funds.

Early in 2022, Arkansas Center for Research in Economics (ACRE) researchers began examining how Arkansas compares with other states in its CRF transparency, and how state and local governments, like counties, track and report their use of ARPA funds. ACRE recently released two research publications on CRF: "Coronavirus Relief Fund Reporting: How States are Promoting Transparency" by Dr. Mavuto Kalulu and "Covid Relief Done Right: A Local Government Transparency Guide for Following the One-Time Influx of Funds" by Ashley Philips and myself.

ACRE's research reveals that Arkansas has more work to do toward covid relief transparency. States like Idaho, Alabama, Missouri, and Tennessee have been exemplars in this area, providing greater detail than federal law required by allowing residents and other stakeholders, such as the media, to easily follow their governments' allocation and use of covid relief funds. These states provide a dashboard to track covid relief expenditures through specific projects and subcontractors, or simply provide a broad-use category on their transparency websites. Arkansas, like all U.S. states, has a transparency website, but it has not been efficiently utilized.

ACRE's research also reveals that during the initial rollout of the influx of funds, Arkansas did well setting up steering committees to disburse the funds efficiently; however, it did little to follow the money and make the data accessible for residents to track.

In August 2021, the Arkansas DFA's Office of Accounting was concerned that proper and adequate documentation of covid relief funds was not being requested and appropriately maintained at the state agency-level. As a result, DFA entered a contract with emergency response firm CTEH, in partnership with emergency management firm Hagerty Consulting, to provide a covid-19 cost recovery grants management system and expert support and guidance to the state.

It is unclear whether the contract and partnership with CTEH and Hagerty Consulting extended technical expertise to local governments on how to track and report online to residents. However, it would be ideal if the grants management data could be accessible on the Web, and residents could follow their government's allocation and use of these funds. The guidance provided in ACRE's publication, "Covid Relief Done Right," can help localities in this area.

Failing to track the influx of funds weakens the efficiency of the efforts invested in the crisis response and can also result in corruption, which puts the administration of these taxpayer dollars at risk of misuse. Some portion of the covid-19 relief funds could be lost to corruption if state and local governments do not ensure that transparency of the entire process is maintained.

Using open data initiatives like transparency websites and other online technology to provide accountability for using these funds is essential to transparency. Arkansas has already laid a foundation for transparency, but it needs to follow through on that commitment.

Joyce Ajayi is a policy analyst at the Arkansas Center for Research in Economics at the University of Central Arkansas in Conway and co-author of "Access Arkansas: County Web Transparency." The views expressed are those of the author and do not necessarily reflect those of UCA.

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