Prioritize, Navigate, Execute: State and Local Governments Invest CARES Act Monies in Critical IT Initiatives

After Congress passed and President Trump signed the nearly $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES) in March to fight the harmful effects of the COVID-19 pandemic, billions of dollars began flowing down to state and local governments through a variety of funding streams – many existing, and some new. The funds support public health, schools, businesses, transit systems, residents in need, and more.

State and local governments – reeling from the one-two punch of unbudgeted expenses related to the coronavirus and declining tax revenue due to business closures and rising unemployment – eagerly anticipated the funds. Government leaders also found themselves in a sprint to understand the new funding streams, set up new offices and processes for distributing grant funds, and ensure the new Federal monies are spent in the allotted timeframe, which varies from program to program funded by the CARES Act.

“It’s a learning curve for the full community – procurement teams, program managers, and IT – to become aware of all of the funding channels. Almost every grant has some IT component, even if it’s tracking the grant itself,” said Tony Powell, chief strategist and innovation officer for state and local government at Dell and a former CIO for the departments of Health and Revenue in Florida.

“The CIO is often not included in departmental budget conversations within states and municipalities,” Powell added, “so it’s very important for the CIO to know how grant dollars can be accessed and for what purpose, so they can compete for those dollars. Often, they may be deploying technologies that grants can pay for, but they don’t see the connection.”

Matt Pincus, director of government affairs at the National Association of State Chief Information Officers, noted that governors “are treating this funding as emergency funding, and they may not consider their IT environment an emergency function. CIOs need to make the case for why IT is so important right now and why governors should be allocating Federal resources to it.”

Procurement teams and program managers can leverage funds for a myriad of IT uses – including improving and evolving the remote work environment, strengthening data protection, and modernizing data centers to create flexibility and efficiency. Powell recommends collaborating with IT to prioritize and select solutions that will provide long-term benefit.

The Feds deliberately funneled money through existing grant programs where possible to speed delivery of funds for critical relief efforts, Powell said. Even so, state and local governments are scrambling to avail themselves of multiple funding streams simultaneously. “Grant applications are typically spread throughout the year,” said Eminence Griffin, senior manager for government affairs at Dell. Now, all of these grant processes are happening at once. Keeping up with the new deadlines and processes, while addressing the pandemic, has been quite challenging.”

Among the CARES Act funds, Powell identified these as most important for state and local governments:

  • The Coronavirus Relief Fund (CRF), a $150 billion grant program for states, territories, local and tribal governments. Funds must be spent on pandemic response activities between March 1 and Dec. 30, 2020, that were not already budgeted. Funds were distributed by the U.S. Treasury to states and to municipalities with more than 500,000 residents, based upon population. States could distribute funds to municipalities with less than 500,000 residents, but were not required to do so;
  • The Federal Aviation Administration’s Airport Improvement Program, which received $10 billion to maintain operations and respond to COVID-19 at the nation’s airports, which are typically managed by municipal governments; and
  • The Department of Health and Human Services’ Public Health and Social Services Emergency Fund, which includes $100 billion for grants to hospitals, public entities, not-for-profit entities and Medicare- and Medicaid-enrolled suppliers and institutional providers to cover unreimbursed healthcare-related expenses or lost revenue as a result of COVID-19. Myriad activities can be supported by these grants, from medical licensing to contact tracing to staffing, all of which require technology support, Powell noted.

Step One in Pandemic Response: Prioritizing Needs

One of the biggest challenges state and local governments face is in prioritizing their needs, Griffin said. Dell encourages its state and local government customers to work with the company’s strategists to evaluate their needs, explore technology solutions, and identify funding sources.

“They’re trying to solve so many problems at once, whether it’s telework, telehealth, or remote learning,” Griffin said. “We want to provide as much information as we can to help them make the best decisions for their communities.”

When the pandemic hit, Summit County, Ohio, immediately focused on enabling work from home. Then, it prioritized investments that would drive process improvement and long-term budgetary savings, said Brian Nelsen, chief of staff for County Executive Ilene Shapiro. Officials quickly identified virtual proceedings as essential to getting the courts running safely again.

Discussions between the county and the City of Fairlawn resulted in a plan to expand FairlawnGig, a municipal broadband utility established by Fairlawn in 2017, to create a secure and dedicated fiber-optic network for county and City of Akron municipal buildings that hold criminal justice proceedings or house inmates. The network will be used to enable secure, remote meetings and court proceedings. In mid-August, the Summit County Council approved a grant agreement with Fairlawn that will send $6.5 million of the county’s $94 million in CARES Act funds to Fairlawn to fund the expansion. The project is expected to be complete in December.

Step Two: Addressing the Nuances of the Coronavirus Relief Fund

The CRF in particular presents three pressing challenges, state and local government leaders said:

  • Spending the money by Dec. 30;
  • Ensuring the money is spent only on activities that were not previously budgeted; and
  • Ensuring that local governments with less than 500,000 residents receive a piece of their state’s CRF funds.

The spending timeline is the biggest challenge, said Ana Bradshaw, COVID-19 financial and performance executive liaison for the City of San Antonio. A five-month timeframe for some technology projects is ambitious under normal circumstances, she noted.

San Antonio received $375 million in Federal grant funds, $270 million of which came from the CRF. To accommodate needed investments that require funding past Dec. 30, “We’ve leveraged that [CRF] grant funding to offset some of our city operating expenditures in public health and emergency medical response and create capacity in the city’s general fund, which we can roll over from year to year,” Bradshaw said.

Because the CRF requires that funds are spent on activities that were not already budgeted, many attorneys at the state level had very narrow interpretations of allowable uses, Pincus observed. “We heard from Treasury and from Congress that everything had to be prospective – it couldn’t be used to backfill state budget gaps,” he said. He hopes that any future stimulus bill will include a clarification that allows broader use of stimulus funds.

Because of the restrictions on allowable expenses, state and local governments have closely scrutinized investments with CRF funds. Before embarking upon the FairlawnGig expansion plan, Nelsen and Shapiro talked numerous times with Ohio’s senators, the governor’s office, the state auditor’s office, the National Association of Counties, the County Commissioners Association of Ohio, and the state Office of Budget and Management to ensure the plan would align with CRF requirements.

“With this project, there is a clear line to court operations, which have ground to a halt during this period,” Nelsen said. “In our opinion, this one is a no brainer in terms of CARES Act eligibility. We also believe this is a really good application of those funds in terms of the return on investment for taxpayers. Anything we can do to help us operate efficiently and control costs in the post-COVID environment is important.”

Cybersecurity is an especially critical area for investment, as the cyberattack surface expanded exponentially as workers began working from home and bad actors seized upon the chaos of the pandemic onset to target government offices and healthcare organizations. The need for end-user cybersecurity training has never been greater, IT experts agree, but many counties have questioned whether they can spend CARES Act funds on phishing testing and cyber education, because many had already allotted funds for this purpose, said Rita Reynolds, chief technology officer for the National Association of Counties.

Beyond training, however, many other protections are needed to keep the newly remote workforce and government networks secure, such as multi-factor authentication, endpoint detection, and encryption. CARES Act funds present a great opportunity to bolster cybersecurity, Reynolds said.

Lastly, to ensure local governments with less than 500,000 residents can access some of their state’s CRF money for IT, good working relationships with state CIOs are essential, Reynolds said. “The challenge for those counties that did not get the money directly is how each state is administering that distribution,” she said. “It’s not necessarily a negative, but it does take more time to work through.”

Step Three: Put the Funds to Work

In Montgomery County, Ohio, the Board of County Commissioners stood up the Office of CARES Act to manage and distribute $92 million in direct Federal funding under the CARES Act. Within each of the grant programs, the county is allowing technology expenses, and to date has obligated more than $1 million for IT-related expenses, said Michael Zimmerman, public information officer for Montgomery County Business Services.

“The need for technology services is huge right now,” said Uchenna Youngblood, director of IT for the Montgomery County Board of County Commissioners. “We’ve focused on the actions we can take that best support Montgomery County citizens.” Those efforts have included developing a grants management system, expanding Wi-Fi access to public parking lots, digitizing benefits applications, and enabling remote work with devices, collaboration platforms, and a redundant Internet connection.

San Antonio used a combination of CARES Act funds and city general funds to develop a social services case management tool and a COVID-19 online portal for coronavirus information and recovery resources. It used CRF monies for other eligible uses in order to free $27 million in general funds to connect about 20,000 K-12 students to their respective school district’s network from their homes, across 50 of the city’s most vulnerable neighborhoods, CIO Craig Hopkins said.

To make critical investments quickly, “You need people who have different experiences, talents, and roles working together for a common cause – not just saying ‘No’ because they can only see what’s in their silo,” Hopkins said. In San Antonio, “It always starts with ‘We’re going to figure it out for our customers and our residents.’ We just need to figure out what that looks like within the funding, the procurement rules, and our environment. We’ve got a great culture here that allows me to do that.”

Step Four: Prepare for the Long Haul

Pandemic recovery is a marathon, public- and private-sector IT stakeholders acknowledged. The health crisis has exposed weaknesses and inequalities that the CARES Act and other funding programs are inadequate to address. Chief among them is broadband access for underserved populations – both rural and urban – to broaden access to telehealth, support distance education, and enable economic growth.

“We are very cognizant of competing priorities right now, but we hope state and local governments as well as Congress continue to focus on increasing access to broadband and high-speed Internet and 5G to bridge the digital divide,” Griffin said.

State and local governments also need substantial funding for cybersecurity and IT modernization, Pincus and Reynolds observed. The State and Local IT Modernization and Cybersecurity Act, introduced in mid-August in the House and Senate, calls for $28 billion in Federal funds to address COVID-19-related IT needs, modernize legacy IT infrastructure, and increase cybersecurity resiliency. “This would be huge for state and local IT because they wouldn’t have to fight another agency” for funding, Pincus said. “I’m hopeful that at least some of it will get passed within the next year.”

Recommendations From the Trenches

State and local government leaders – procurement teams, program managers, and IT executives who are in the trenches of pandemic response – offer sage advice for securing and using CARES Act funds for IT initiatives:

Accomplish more by working together – elected officials, program leaders, procurement, and IT. The Summit County-Fairlawn court network partnership is one effort among longstanding collaborators. “Our philosophy is, ‘We’re only as healthy as our neighbors,’” said Fairlawn Mayor William Roth. “We all work together. Politics are really a non-issue.”

Develop a robust governance process. In San Antonio, Hopkins is at the center of all IT spending. Several years ago, the city consolidated its IT operations into a single, shared service. Hopkins works with the deputy city manager and the chief financial officer to review and approve all technology investments. “I don’t own all the money for technology, but I own all the approval of spend for it,” he said. “My first job is to reuse what we have in our portfolio, and then to buy to fill a gap. I call it governance, but it’s really just having a relationship with all the directors, understanding their needs, and applying what we have to their situation.”

Document, document, document. “Make sure to tie spending to the criteria in place at the time of the spending,” Shapiro advised. “We are trying to document everything so it’s clear what we did and why we did it.” For example, Fairlawn is documenting the time city staff spends on the FairlawnGig expansion to the courts. Those costs will be reimbursed from the $6.5 million in Summit County CARES Act funds allotted for the expansion.

Manage your timeline. “If I have a bucket of money that has a narrowly tailored usage, I can use it for that, and then create capacity elsewhere for other projects that are needed in the community,” Bradshaw said. “It’s really keeping the long game in mind, and not just racing to spend the money because of the timeline.”