Agencies Face Significant Challenges in Distributing Unprecedented Sums of COVID-19 Relief

The federal government is facing a historic challenge in distributing $1.9 trillion to help Americans recover from the COVID-19 pandemic, with agencies looking to get unprecedented amounts of money out the door and new programs off the ground. 

In some cases, Congress has simply refilled the coffers of initiatives that are longstanding or started early in the pandemic. Agencies and industry groups are anticipating a straightforward process in those areas. In others, however, Congress tweaked old programs or created new initiatives, placing strains on various portions of the federal workforce to meet deadlines and implement reforms. 

The Office of Management and Budget issued a memorandum last week detailing processes agencies should follow in carrying out the relief bill, known as the 2021 American Rescue Plan Act. 

“This unprecedented and historic crisis requires a swift governmentwide response, underscoring the need to ensure the public’s trust in how the federal government implements [American Rescue Plan] programs and distributes [rescue plan] funding,” acting OMB Director Robert Fairweather wrote. “Accountability and transparency of federal government spending and achieving results are necessary for effective stewardship of these funds.”

OMB vowed to “foster accountability and public trust" through sound financial management and working with inspectors general to minimize waste. President Biden—who as vice president led the efforts to implement the vastly smaller American Recovery and Reinvestment Act in 2009—last week promised “fastidious oversight” of the relief bill, saying his administration would “prove to the American people that their government can deliver for them and do it without waste or fraud.” The White House will work directly with agencies on certain programs that "require additional attention" to provide additional support and to ensure they achieve intended outcomes. Agencies must submit "proposed implementation plans" to OMB for approval for any program newly authorized by the act, and OMB created a special appeals mechanism for agencies to use should their initial plans be rejected. 

OMB instructed agencies to include policies to boost equity and improve energy access when allocating American Rescue Plan dollars. Agencies must also create detailed "award descriptions" for any rescue plan loan or grant recipient that details the purpose and expected outcomes from the funding, which OMB said would ensure transparency and accountability. They must then follow up with recipients to issue performance reports that demonstrate outcomes and best practices.

While OMB will oversee the process from a governmentwide perspective, agencies will face their own requirements under the law. Here is a non-comprehensive list of some of the agencies with the tallest tasks ahead of them: 

Education Department: Education is receiving $170 billion from the relief measure. It will also help oversee $10 billion from the Health and Human Services Department to increase coronavirus testing at schools across the country. Education announced last week the allocation each state will receive from a pool of $122 billion and the allowable uses of the funds for school districts, including improving ventilation, purchasing personal protective equipment, avoiding layoffs, boosting summer and after school programs and expanding the use of Wi-Fi hotspots. While the amounts are ramped up, sending grants out to states is par for the course at Education. It also will not face a strict timeline to get the largest-ever one-time federal investment in K-12 education out the door. 

Still, Nora Gordon, an associate professor at Georgetown University’s McCourt School of Public Policy who has written extensively on Education’s funding distributions, said the department must do more to clarify allowable uses of the relief law dollars. 

“It will be critical for the department to get guidance out and to be sure state agencies understand what appears to be considerable flexibility,” Gordon said. “Otherwise there is a very real risk of state agencies unnecessarily restricting local spending choices based on confusion and fear of running afoul of compliance requirements.”

The department already received more than $100 billion for COVID-19 relief in previous measures, most of which is still unspent. Education Secretary Miguel Cardona said last week he expects the department to release existing funds this month. The new tranche of appropriations, however, will take years to disburse. 

“We know that our schools have to be designed to meet the needs of the students after they return after a pandemic,” Cardona said, “So, this is a long-term process, also, that they can plan for next year and the following year as well with this American Rescue Plan.”

Small Business Administration: SBA is receiving $50 billion as part of the package. About half of that will go toward refilling the coffers of existing programs, including the Paycheck Protection Program and Economic Injury Disaster Loan payments. While SBA faced some struggles in getting PPP off the ground, it is now functioning much more smoothly. It has already replenished the funding on multiple occasions. 

“It’s a well-oiled machine at this point in terms of the infrastructure and the set up,” said Greg Hanover, CEO at Liveops, a firm SBA contracted with last year to provide call center services for the two programs.

He explained his company has a flexible staffing model and SBA has indicated when it expects an increase in volume so Liveops can ensure it has enough operators. At its peak, Liveops centers were fielding 200,000 calls per day. Hanover expects another smooth uptick with the recent refunding, though he has yet to hear about expanding to new programs in the rescue plan.   

SBA will soon have to stand up a program to disburse $25 billion in funds to restaurants and dole out additional funds for the shuttered venues grant, which was only first authorized in late December. While SBA has experience administering PPP, it must also implement eligibility changes Congress passed in the relief package. 

“The SBA will work tirelessly to ensure eligible borrowers will get access to this critical economic relief,” SBA Senior Advisor Michael Roth said. 

Treasury Department: Treasury and the Internal Revenue Service are facing a slew of tight deadlines to reform tax policy, as well as to dole out billions of dollars in rental, homeowner and industry assistance. The airline industry, for example, will receive another $15 billion on top of the $16 billion it received last year. IRS released a statement last week saying it is working on issuing guidance on the expanded child tax credit, tax exemptions of unemployment benefits and other provisions authorized in the relief package "as soon as possible." It has already doled out most of the stimulus payments worth up to $1,400 to eligible Americans. 

IRS must stand up a new online portal for the revamped child tax credit advance payments, while simultaneously handling its busiest tax season. Commissioner Charles Rettig told Congress last week the agency is already at risk of missing its deadline to launch the portal. The agency has pushed back the normal April 15 tax deadline. IRS has managed the pandemic at times with thousands of employees on administrative leave due to an inability to telework or because workers were at risk of severe illness from COVID-19 and Rettig bemoaned ongoing staffing shortages in his recent testimony to lawmakers. 

Treasury will also disburse $350 billion to state, local, territorial and tribal governments to support pandemic relief and offset revenue losses. 

Housing and Urban Development: HUD is receiving a relatively small allocation from the American Rescue Plan, though it will have to dole out billions for emergency housing vouchers and homelessness assistance with limited internal resources. Like IRS, HUD leadership has suggested it is in the midst of a staffing crunch. 

“We are thousands of people short of where we ought to be,” HUD Secretary Marcia Fudge said at the White House last week. “Our staff is outstanding. They are under-resourced, understaffed, and overworked. But we are going to make some major changes and very quickly.”

Meaghan Lynch, a department spokeswoman, said the American Rescue Plan will enable a “historic investment in housing.” The department will focus on implementing the law “so that the funds are efficiently and effectively provided to communities,” she added.  

Agriculture Department: USDA will face a requirement to quickly tweak the Supplemental Nutrition Assistance Program and its Women, Infants and Children (WIC) initiative. The department will see a $340 million injection over the next four years to modernize and reform its WIC program, a first-time authority that will require significant engagement with those the program serves.  

USDA will also stand up a first-of-its-kind program to dole out $4 billion to support farmers of color who have faced historic disadvantages. Another $1 billion will go to a commission seeking to promote racial equity by addressing “longstanding discrimination across USDA.” 

USDA quickly issued guidance on SNAP changes and directed regional staff to keep headquarters apprised of "progress concerning the implementation of these provisions."