Stimulating Lessons

The Recovery Act is fading into history, but its tracking and reporting innovations are likely to be here to stay.
by , | October 3, 2011
 

With President Obama's proposed American Jobs Act serving as a potential new injection of economic-stimulus spending, it makes some sense to look back at some of the implementation lessons from the American Recovery and Reinvestment Act.

The 2009 federal stimulus law provided a one-time boost in spending to state and local governments of more than $275 billion, which was distributed via 65 new or existing federal programs. For those state and local governments, there was intense pressure to spend quickly, spend wisely—and report what they did with the monies in almost real time.

What was new or different about how the Recovery Act was implemented, compared to past grant and stimulus efforts? The biggest difference was how the money was administered and tracked all the way down to the point of expenditure.

The fear that these funds would be wasted—or even worse, stolen—resulted in a new, centralized system of financial and performance reporting, with frequent reporting requirements. Those rules, as well as the rapid implementation time frame required by the Recovery Act, created an enormous implementation challenge for all the participants in our federal-state-local-nonprofit intergovernmental system.

How did local governments meet that challenge? Two academics from Virginia Tech, Anne Khademian and Sang Choi, examined what happened in three localities in Virginia: Alexandria, Richmond and Blacksburg.

Specifically, they examined the impact of the speed at which the localities implemented their funding; how they addressed increased information demands and increased frequency of reporting; how they used risk management as a strategic lens in their decision-making; and how they increased their collaborative efforts with both state and federal partners.

Virginia was awarded more than $6.2 billion via nearly 6,000 contracts and grants. These are reported on both the federal government's centralized reporting website, Recovery.gov, as well as on the state's own stimulus spending website. But how the data got there is an interesting story. Each of the three localities took a different path:

Alexandria—a Washington, D.C,. suburb of about 150,000—centralized the receipt, use and reporting of the Recovery Act funds it received, creating a separate office to manage the monies. The approach it used was similar to the centralized "incident command system" often used to manage in natural disasters. Like the federal and state governments, it created a separate website for transparency.

Richmond—the state capital, with a population of 200,000—retained its traditional decentralized approach to grants management via its various city agencies, but it developed an IT-driven strategy to collect and report the required federal data from the different agencies. This approach allowed a fully automated reporting structure based on standardized reporting elements without centralizing the decision-making. Richmond also created a "Stimulus Tracker" website.

Blacksburg—a rural university town of about 45,000—integrated its Recovery Act monies directly into existing grants-management processes, serving largely as a pass-through for these funds to its traditional nonprofit partners, such as the local affordable-housing organization. (For an example of how its funding is reported in the federal-level Recovery Act database, click here.)

Khademian and Choi also offer a series of recommendations to improve both local and federal grants processes in the future. For example, they encourage local leaders to continue the use of "high coordination, standardization, and enhanced accountability" processes as "the new benchmark for administer grants." And they recommend that federal agencies continue to "promote risk management" as a framework for all their grants to local governments.

Whether the stimulus law aided the faltering economy probably will be debated for decades. But in terms of tracking and reporting spending, Khademian and Choi conclude that the Recovery Act did work, and on several levels. Its speed, and high-level attention, resulted in improvements in grants management at all levels of government. The approach used to implement the Recovery Act may also serve as a new benchmark for rapid information sharing. As a result, this may become the norm for future reporting.

Moreover, Khademian and Choi conclude that the Recovery Act may have changed intergovernmental relations for the better by making data available centrally, because it "has moved the partnership from a more siloed, top-down set of relationships to a more interactive process driven by real-time data."

In fact, Congress seems pleased enough with the stimulus law's data-collection approaches that it is seriously considering expanding the same type of reporting requirements to all federal spending. So, while states and localities may think they'll soon be recovering from the Recovery Act's reporting requirements, they may soon have to apply them to all their federal grants, loans and contracts.

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