The Small Municipality Dilemma
By Adam Roth on October 19, 2021
In March, Congress approved $350 billion in Federal funds to state, local, and tribal governments through the American Rescue Plan’s (ARPA) State and Local Fiscal Recovery Funding program (SLFRF). Cities, towns, and jurisdictions with less than 50,000 residents were earmarked to receive $19.5 billion of these funds, but some small municipalities are turning down the funding.
According to the National League of Cities, data is available for 14 states at the moment, and just 171 communities - out of 7,975 that have fewer than 50,000 residents - rejected the funds. While a rejection rate of 2% may not seem like anything to be concerned about, the size of the towns that rejected the funding have around 540 residents on average.
That translates to at least 92,500 people across 14 states that will go without improved infrastructure, education, healthcare, and individual economic relief.
In light of the fact that almost 30% of towns across the country did not get access to CARES funding either, these are decisions that could have repercussions for years to come.
One of the common reasons this phenomenon is occurring, according to the Pew Research Center, is because “Small towns that accept the funds may need help from states, municipal associations and local accountants to manage their grants,” and that small, rural towns “don’t typically have staff used to following federal grant requirements.” This trend appears to be holding true with larger towns as well. Town leaders have cited things such as a lack of infrastructure, resources allocated for managing the funding, and ability to maintain compliance with federal requirements as reasons for turning funds down.
State and Local Fiscal Recovery Funds themselves can be used to hire help to manage federal awards whether that is hiring an accountant, a consultant, or through procuring technology that is created for managing grant funding specifically. If funding management and maintaining compliance are concerns for grant seekers, we have solutions to help.
Most importantly, we also have resources that could be helpful for small municipalities that are on the fence about their ability to manage these funds. Managing funding with limited resources is a challenge, but it is also achievable with the right partners. State and local government grant-making entities and pass-through entities can help as well by sharing resources, passing on helpful information, and even helping local leaders brainstorm ways they could use funds.
With or without technology, if you are concerned about your ability to manage the compliance and reporting requirements associated with SLFRF funding, help is available through many mediums.
Funding is still available and can be applied for through the Treasury’s submission portal.
If you think technology could be a helpful solution for your municipality, or one near your locality that may be on the fence about applying for funds, please reach out today.