The American Rescue Plan of 2021 (ARP) was signed into law on March 11, 2021. The $1.9 trillion stimulus is perhaps best known for the $1,400 stimulus checks which are already being distributed. In addition to providing immediate relief to workers, the ARP has ambitious policy goals, including safely re-opening schools, supporting the national vaccination program, reducing child poverty, and containing COVID-19.

What’s not making headlines is the grant funding packaged within this bill — grant funding that will make a difference in the lives of millions of Americans. The list below is just a sampling of grant funds to be obligated under ARP.

• The Department of Education receives $128 billion to fund grants to local educational agencies, plus $39 billion in grants to higher education institutions.
• The Department of Health and Human Services receives nearly $15 billion for the Child Care & Development Block Grant Program to help support childcare facilities; more than $3 billion to fund grants for mental health care and the prevention and treatment of substance abuse.
• The Small Business Administration receives $25 billion for a new grant program for restaurants and other food and drinking establishments, with an additional $1.25 billion allocated for the Shuttered Venue Operators Grant Program.
• The Department of Housing and Urban Development receives $25 billion for emergency rental assistance, including emergency housing vouchers for people experiencing homelessness, survivors of domestic violence, and victims of human trafficking.
• The United States Department of Agriculture receives more than $1.5 billion to fund Emergency Rural Development Grants for Rural Health Care and the Supplemental Nutrition Assistance Program (SNAP).
• The National Endowment for the Arts and the National Endowment for the Humanities each receives $135 million for grants to state art and humanities councils and regional organizations.

The legislation compels agencies to move quickly to obligate funds — often within thirty days. This may be a challenge for some agencies, as these additional funds greatly increase the amount of money and number of recipients they will be responsible for.

The administration is clearly aware of the impact the ARP will have to grant-making agencies. On March 19, 2021, OMB issued M-21-20 Promoting Public Trust in the Federal Government Through Effective Implementation of the American Rescue Plan Act and Stewardship of Taxpayer Resources.

This memorandum outlines steps the administration plans to take to support the implementation of the ARP, including working with the Pandemic Response Accountability Committee (PRAC) (previously established under the CARES Act) and agency inspector generals with the goals of minimizing the risk of waste, fraud, and abuse and improving overall award administration “with an increased focus on human-centered program and service design to achieve more equitable results.”

The memo also outlines the responsibilities agencies have — including applying Title 2 of the Code of Federal Regulations (CFR) Grants and Agreements — to the maximum extent authorized by law to all recipients — including for-profits, with limited exceptions. It details measures to take to achieve more equity-oriented results for federal financial assistance and ensure robust and transparent reporting of ARP funds. These points of emphasis align with longstanding grants initiatives, including the DATA Act and the Foundations for Evidence-Based Policymaking Act of 2018, and also align with recent executive orders and memorandums, including Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,  Restoring Trust in Government Through Scientific Integrity and Evidence-Based Policy Making. and  M-20-21 Implementation Guidance for Supplemental Funding Provided in Response to the Coronavirus Disease 2019 (COVID-19).

The memorandum also includes three appendices that provide further guidance on management and oversight of ARP programs and awards:

• Management of Payment Integrity Risks – outlines additional risk factors to be considered as agencies conduct improper payment risk assessments for programs receiving ARP funding and recommends existing resources for agencies to leverage, and recommends that agencies work with their OIGs to identify other areas of potential risk and support needs.
• Achieving More Equity-Oriented Results for Financial Assistance – which stresses that agencies are required to administer programs “in a manner that promotes fair and equitable administration of financial assistance and takes a risk-based, data-driven approach that balances compliance requirements with demonstrating successful results.” This appendix is provided to remind agencies of requirements of importance for administering ARP funds and notes that “agencies should apply the requirements of 2 CFR part 200 to all types of financial assistance awards funded through the ARP.”
• Disaster Relief Flexibilities to Reduce Burden for Financial Assistance – which provides agencies with authority to grant certain exceptions to recipients affected by the pandemic, including flexibility with SAM registration, allowance of pre-award costs, no-cost extensions on expiring awards, waivers for prior approvals, and extensions on financial reporting, single audit submission, and closeout as needed. Agencies are required to maintain records of all exceptions provided.

The ARP represents a huge step forward in facilitating recovery from the pandemic. Effective distribution and oversight of the funding are critical. Agencies should review M-21-20 and plan to work with OMB to effectively steward their funds while providing transparency into what the funds are being used for and working to limit waste, fraud, and abuse.

GAO Seeks Action on 66 COVID-Related Recommendations

The Government Accountability Office (GAO) recently issued 28 new recommendations ― several of which are aimed at financial assistance programs impacted by the COVID-19 pandemic ― and called for action on 38 still-to-be-implemented recommendations previously mentioned in other COVID-related GAO reports that federal agencies can take as an effective response to the public health and fiscal emergency.

Noting that the pandemic continues to result in “catastrophic loss of life and substantial damage to the global economy, stability and security,” GAO cited actions taken by Congress, including enacting the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136), along with other relief packages, “to protect the health and well-being of Americans.” A provision in the CARES Act required GAO to report bimonthly on its federal efforts related to the pandemic, and it has issued six reports to date containing 44 recommendations. However, only six of these recommendations have been fully implemented.

GAO is now urging agencies to take “swift action” on its other 38 prior recommendations. In addition, a March 31 report added 28 new recommendations. “These recommendations are tailored to specific federal programs and initiatives, and, if implemented, will strengthen the efficiency, effectiveness and accountability of federal efforts,” GAO said. “We will continue to monitor the status of these recommendations as part of our ongoing oversight of the federal government’s COVID-19 response and recovery efforts.”

New Recommendations

Among the recommendations GAO included it its recent report are some specific key concerns. For example, the U.S. Department of Agriculture (USDA) administers several federal nutrition assistance programs to vulnerable populations, but had released minimal data about participation in these programs since the pandemic started, and had not publicly shared sufficient information about data quality. Therefore, according to GAO, stakeholders and the public could not access sufficient information about and were not given appropriate context in which to interpret key program data and understand the effects of the pandemic on the programs.

GAO recommended that USDA: (1) provide sufficient context to help stakeholders and the public understand and interpret data on federal nutrition assistance programs during the pandemic, and (2) disclose potential sources or errors that may affect data quality during the pandemic, such as manual processing.

Although the Federal Emergency Management Agency (FEMA) administers Disaster Relief Fund monies, tribal governments told GAO that FEMA did not have staff to assist them when they requested technical assistance related to disaster activities. GAO recommended that FEMA provide timely and consistent technical assistance to support tribal governments’ efforts to request and receive public assistance as direct recipients, including providing additional personnel, if necessary, to ensure that tribal nations are able to effectively respond to COVID-19.

The Department of Education (ED) provided COVID-19 assistance dollars through the Education Stabilization Fund for states’ and territories’ education needs, but did not maintain complete data on how these funds were used. GAO recommended that ED regularly collect and publicly report information on school districts’ financial commitments (obligations), as well as outlays (expenditures) to more completely reflect the status of their use of federal COVID-19 relief funds. For example, the agency could modify its annual report on state and school district spending data to include obligations data in subsequent reporting cycles.

Concerning the Department of Labor’s (DOL) Pandemic Unemployment Assistance (PUA) program, GAO continued to have concerns about overpayments and fraud. As of March 15, DOL reported that states identified more than $3.6 billion in PUA overpayments from March 2020 through February 2021. GAO recommended that DOL collect data from states on the amount of overpayments flagged in the PUA program to effectively monitor the recovery of overpayments.

Concerning the Economic Injury Disaster Loan (EIDL) program, GAO said the Small Business Administration should: (1) conduct and document a fraud risk assessment for the program; (2) develop a strategy that outlines specific actions to address assessed fraud risks in the program on a continuous basis; and (3) implement a comprehensive oversight plan to identify and respond to risks in the program to help ensure program integrity, achieve program effectiveness and address potential fraud.

Another key suggestion GAO provided under the 28 new recommendations called for the Office of Management and Budget (OMB) to work in consultation with federal agencies and the audit community (e.g., agency offices of ) (e.g., agency offices of inspector general; National Association of State Auditors, Comptrollers, and Treasurers; and American Institute of Certified Public Accountants) to incorporate appropriate measures in OMB’s process for preparing single audit guidance, including the annual OMB Compliance Supplement, to better ensure that such guidance is issued in a timely manner and is responsive to users’ input and needs.

Previous Recommendations

Among some of its previous recommendations involving COVID pandemic funding, GAO recommended that as the Department of Health and Human Services redesigns its performance management approach to improve its ability to assess whether the Community Services Block Grant program is meeting the national program goals to reduce poverty, promote self-sufficiency and revitalize low-income communities, the agency should include information on how its national performance measures and state outcome measures align with national program goals and include a written plan for how it will assess data reliability. This recommendation remains open.

Another open recommendation is GAO’s request that OMB develop and issue guidance directing agencies to include as part of their improper payment estimation methodologies COVID-19 relief funding with associated key risks, such as provisions contained in the CARES Act and other relief legislation that potentially increase the risk of improper payments or changes to existing program eligibility rules, as part of their improper payment estimation methodologies. This should be required especially for existing federal programs that received a substantial infusion of COVID-19 relief funding, GAO added.

For More Information

The GAO report, “COVID-19: Sustained Federal Action is Crucial as Pandemic Enters its Second Year,” (GAO-21-387) is available at https://www.gao.gov/assets/gao-21-387.pdf.