Cities, counties eating up Rescue Plan largesse trying to stay on the straight and narrow
Flummoxed by a staggering amount of money and by guidelines for how to spend it, Wisconsin counties and cities are spending tens of millions of dollars of American Rescue Plan Act funds to try to administer American Rescue Plan Act funds.
Just exactly how many millions of federal tax dollars are being spent on administrative costs is impossible to say. The state Department of Administration, overseer of federal pandemic spending, doesn’t keep track of individual spending categories at the local level and has not responded to Badger Institute inquiries.
But, according to information kept by the U.S. Treasury Department, spending in just a small percentage of Wisconsin municipalities amounted to nearly $10 million in allocations, budgeting and expenditures for administrative costs.
That amount is just a fraction of total spending on administration of ARPA funds in the state. A Treasury website has not been updated to include spending for the past year, nor were there fillings for most of the 72 counties and more than 1,000 communities in Wisconsin.
A conservative estimate of total spending on administration, based on interviews with financial directors in six Wisconsin counties and cities, is that administrative costs funded with ARPA money is already at least twice that $10 million figure and could very well triple.
It is also clear from those interviews that all this contracted administrative expertise has failed to speed up the actual spending of Rescue Plan dollars.
Walworth County, based on the Badger Institute canvass, is typical of the ARPA spending pattern across the state. More than 19 months after Congress passed the American Rescue Plan Act, Walworth County has spent roughly 20% of the $20.1 million appropriated to it by the state Department of Administration.
The spending percentage of an additional $10 million distributed among 19 municipalities in the county is even smaller, despite the county hiring an emergency management program assistant to help them. The county has budgeted $229,945 in ARPA funds just through 2023 to pay the assistant’s salary and expenses.
Many of the small communities in the rural county of 106,000 people don’t keep a CPA on staff, and the windfall from the CARES Act followed soon after by ARPA has been overwhelming, Walworth County Administrator Mark Luberda told the Badger Institute.
As previously reported, the guidelines for ARPA spending are deceptively simple: Funds are to be spent responding to COVID-19 and its negative economic impacts, on premium pay for essential workers, on offsetting revenue or service reduction caused by COVID, and for infrastructure investments, including water, sewer or broadband.
The Treasury Department’s rules for exactly how to spend within those broad categories go on for 116 pages. Deep in the document is the rule that says ARPA funds may be spent to more effectively spend ARPA funds.
“I can’t say exactly why the federal government did what they did,” Luberda said. “But we knew we were going to help our smaller communities and decided we needed a consultant.”
As prepared as he was, Luberda said the biggest challenge ahead is the volume of spending. “The 2022 budget cannot ignore ARPA,” he wrote in the county’s 2022 budget book. “The $20,175,141 grant authorization is simply too big to ignore. And the ARPA clock is ticking. All funds must be committed by the end of 2024, so there is little time to wait.”
Even the small sampling uncovered by the Badger Institute shows how aware municipalities were of the need to stack sandbags for the flood of ARPA money coming. In their first reports to the Department of Administration, the City of Racine and Milwaukee County, for example, asked for initial ARPA grants of $500,000 each for contracted services to administer ARPA, according to the first filings published last year by the Treasury Department.
But that figure too appears to be just a small fraction of spending in those areas for administrative costs.
According to Milwaukee County’s ARPA Allocation Dashboard, the county intends to spend a whopping $7.85 million on ARPA fund administration. The site says $6.6 million of that total has been allocated but does not say how the allocation is to be spent.
What’s more, the dashboard provides no information about how much of that $7.85 million has been spent. Although the dashboard says the county received $183.7 million total in ARPA aid, there is no spending information of any kind to date.
Milwaukee County did establish a Capital Program Management Office, or at least a website for the office. The website solicited bids for ARPA capital projects administration. But nothing about the bids or spending or anything at all has been posted on the site since February.
Stu Carron, the county’s director of facilities management and the solicitor for the Capital Program Management Office, has yet to respond to emails inquiring about ARPA administrative spending.
The City of Racine has no comparable website tracking its $47 million ARPA aid. The Badger Institute is awaiting answers to ARPA administrative questions posed in an email Oct. 5 to City Administrator Paul Vornholt.
In all, the Badger Institute contacted chief financial administrators for 15 counties and cities across the state. Six, including Walworth County, responded. The sampling suggests statewide administrative costs to manage ARPA will be several times what was initially budgeted.
Waukesha County has so far spent $96,700 to retain a senior financial analyst, “due to the complexity of the grant, amount of the money, and to ensure high quality transparency in reporting,” said Andrew Thelke, director of the county’s Department of Administration.
However, most of the $78.5 million allocated to the county has not yet been spent. Thelke estimates administrative costs will rise to $428,500 through the official 2024 spending deadline. And because the county may schedule projects that will allow for extensions through 2026, Thelke estimates the final administrative cost at $755,800.
To administer the $23.7 million ARPA allocated to it, the City of Green Bay set aside $200,000 in ARPA funds, $182,000 for a grant administrator and $18,000 for the cost of auditing this spending, according to Deanna DeBruler, a legal assistant responding for the city’s Finance Department. Through the third budget quarter of 2022, the city has spent $103,673.56 of the total, DeBruler said.
Through the third quarter of this year, Eau Claire County has spent just $833,000, or 4.1%, of the $20.3 million allocated through the ARPA program, Norb Kirk, the county’s finance director, told the Badger Institute. More than half of that has been spent in grants to small businesses and nonprofits, and another $178,000 has been spent on broadband improvements.
The county has, however, spent almost half of the $250,000 it budgeted for administration, already using up most of the $70,000 set aside for those small business grants. “I do not expect any additional dollars will be allocated to assist with administration of ARPA funds,” Kirk told the Badger Institute.
Outagamie County has spent $3,479,395, or just 9.5%, of its $36,494,460 allocation. Through the end of June, the county had spent $129,463 on outside administration of that fraction of spending, Yvette Mueller, the county’s finance director, told the Badger Institute.
Because “the exact amount and scope is not yet known as we are still defining projects within the approved focus areas,” possibly through 2026, Mueller wouldn’t hazard a guess as to the final administrative cost.
The City of Madison was the only governmental body that responded to us that chose not to use ARPA money to underwrite outside administrative help. Of the $47.2 million allocated, the city spent $16.3 million through June 30, Finance Director David Schmiedicke, told the Badger Institute.
Madison is using $24.4 million, or more than half the total, to plug holes in the city budget, $20 million of that in the 2021 and 2022 adopted budgets. The budget for Schmiedicke’s Finance Department increased by 9.9%, from $4.15 million in 2021 to $4.56 million in 2022.
Mark Lisheron is the managing editor of the Badger Institute’s Diggings magazine. Permission to reprint is granted as long as the author and Badger Institute are properly cited.