As the American Rescue Plan Act (ARPA) enters its third year, the nation continues its recovery from the effects of the COVID-19 pandemic. Many of the ARPA provisions were implemented quickly and with directly observable results. One-time direct payments, expanded and extended federal unemployment benefits, additional funding for schools and child care, and funding for vaccine distribution and COVID-19 testing were all put into place with relative speed. But other portions of the American Rescue Plan Act were aimed at the long-term effects of a global pandemic, with the intent to identify, address and prevent shortfalls caused by the economic and social disruption of COVID-19. ARPA created the State and Local Fiscal Recovery Fund (SLFRF) to facilitate a total of $350 billion in aid for states, local governments, and Tribal nations, with the guidance that funds be directed towards communities most impacted by the pandemic.

Distributing funds locally with an equitable outcome in mind is a complex proposal, and local governments followed that guidance in a variety of ways. As ARPA passes into its third year, research and observations on federal funding implementation from the Southern Economic Advancement Project can provide valuable insight, especially for newer legislation like the Infrastructure Investment and Jobs Act, Inflation Reduction Act, and future federal funding initiatives.

For the December 2022 report “Engagement & Equity First: Opportunities and Challenges for Federal Funding Implementation,” the Southern Economic Advancement Project outlined the implementation and execution of federal funding initiatives since 2020, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government Executive Order, and American Rescue Plan Act, along with existing federal funding streams. The report interweaves policy analysis with interviewees, identifying tensions and opportunities in the implementation of federal funding on the ground. That federal funding was crucial in combating the social and economic effects of the pandemic; the more complex question is how that funding is directed, who administers its distribution, how results are collected and evaluated, and most importantly, how communities are engaged in the process to deliver equitable outcomes.

Without changes to federal funding implementation practices, simply pumping more money into the current system risks reinforcing, rather than combating, existing inequities.”
– Engagement & Equity First

The report offers concrete and actionable recommendations for equitable and community-directed funding implementation by the federal government, state and local governments, intermediaries and national / regional institutions (such as membership associations, community development financial institutions (CDFIs), and think tanks), community-based organizations and direct service providers, and philanthropic institutions. Each of those specific points is driven by the report’s four main recommendations:

    1. Mandate equitable allocations and processes. Equity as a goal or vision can too easily become a recommendation rather than a requirement, especially in contexts with limited resources and capacity. An equity mandate requires intentional implementation at all levels, including funding formulas, stakeholder engagement opportunities, and data collection and reporting processes.
    2. Provide wraparound supports. On-the-ground implementation, especially if it is to be sustainable, requires collaboration among partners at multiple levels. Federal funding should incentivize networking among regional, state and local partners, both to share ideas and to amplify successful practices.
    3. Invest in regional infrastructure. Regional bodies – Community Development Financial Institutions (CDFIs), regional Councils of Governments (COGs), and networks and associations of cities and counties – can bridge federal administration and local implementation, but to do so will need expanded levels of support. Investing in these organizations expands their capacity to distribute federal funding where it is needed most.
    4. Require robust evaluations. For accountability and equitability, data on funding implementation should be connected, disaggregated, actionable, and collected on an ongoing basis, from federal to local levels.

The Inflation Reduction Act (IRA), like ARPA, is meant to address gaps in American infrastructures and stabilize the economy. The legislation is a $500 billion package of tax cuts and new spending to reduce inflation by lowering the national deficit, capping prescription drug prices, and investing in clean domestic energy production. Nearly $400 billion of the package is directed toward clean energy through a combination of tax incentives, grants and loan guarantees. Recipients of funding streams are required to demonstrate equity impacts – exactly the kind of equity reporting mandate that the Engagement & Equity First report envisioned. A new loan program launched under the IRA, capped at $250 billion, will provide loans to upgrade, repurpose, or replace our energy infrastructure – transforming cities, counties and regions as they look to the future of energy.

As implementation of the Inflation Reduction Act begins, the lessons from SEAP’s Engagement & Equity First report remain clear. The $43 billion in consumer incentives to encourage electric vehicles, energy-efficient appliances, rooftop solar panels, geothermal heating and more will only have their intended effect if historically marginalized families and communities have an equal opportunity to access and implement these resources. Collaboration across regional, state and local partners will be central to the IRA’s success in strengthening our economy and improving financial conditions for millions of Americans.

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