Alabama’s local governments have access to hundreds of millions of dollars in federal money to help fight the coronavirus, but nearly all of that money remains unspent. And if they don’t spend it soon, it could go back to the federal government.
“We know these counties are some of the poorest in the nation,” said Felecia Lucky, president of the Black Belt Community Foundation, which is trying to help local governments in 16 Black Belt counties use these funds. “Our goal is to make sure no one is excluded.”
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March to provide economic assistance to Americans, businesses and local governments, made $150 billion available to states and local governments. Alabama got roughly $1.9 billion of that money, including about $115 million for Jefferson County specifically.
The rest was divided up by the state and targeted at helping various groups affected by the pandemic, including state agencies, small businesses, non-profits and faith-based organizations. Advocates say the local governments, including 66 of 67 counties and more than 400 municipalities, may soon forfeit their share.
Money from the Coronavirus Relief Fund has to be spent before Dec. 30, or it will go back to the federal government. The state of Alabama isn’t likely to let that happen. If local governments don’t spend their portion, the state can move that money some place else before the deadline.
Alabama’s local governments now have access to $250 million. The money was divided based on population. But only one county has spent more than half of its share so far.
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$125 million was split among 66 Alabama counties. Of those, only 20 have made any expenditures so far at all, for a combined $2.8 million, which is just 2% of the budget.
The state reimbursed Mobile County for around $750,000 in pandemic expenditures as of Tuesday, the last day for which data was available. That’s the most of any county in the state, but only 7 percent of its budget of $10.6 million.
Monroe County, in south Alabama, has spent around $450,000 of its $824,000 budget, or around 55 percent. It’s the only county to spend more than half of its share.
Most haven’t asked the state for any of the money yet.
How can the money be used?
Coronavirus relief fund money can only be spent in very specific ways, and the federal government hasn’t been exactly clear on what expenditures are allowed.
“The CARES Act is a 600 page bill, and the Coronavirus Relief Fund is three paragraphs of that,” said Susan Wilhelm, Deputy Director of the Alabama Department of Finance. “The intent of those funds was to help local governments with the expenses of responding to and mitigating COVID-19.”
There are three rules written into the CARES Act that explain how this money should be spent. First, the money must be spent on costs incurred because of the coronavirus pandemic. Second, none of the costs could have already been planned. And last, the costs have to have come between March 1, 2020 and Dec. 30, 2020.
Those rules leave plenty up for interpretation, and different states have interpreted them differently. The federal government has come out with slightly more guidance since the CARES Act was first signed, including a Frequently Asked Questions page with more than 60 questions. State governments could be on the hook for the money if it turns out to be spent incorrectly.
Alabama reports expenditures under eight different categories: Cleaning and sanitation, medical, payroll, personal protective equipment, telework expenses, training, workplace safety preparations, and other. The state also gives guidance on what might fall under each of those categories.
But one of the biggest points of confusion so far seems to have been over payroll - which makes up the largest percentage of the money spent by Alabama’s local governments.
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Early in the pandemic, Alabama encouraged local governments to “submit their public safety payroll from March 1 thru current as a reimbursable expense,” according to a document provided to AL.com by the Black Belt Community Foundation and vetted by Alabama Comptroller Kathleen Baxter on August 19. That same document gives some guidance on other expenditures that are typically allowable, including cleaning supplies, such as bleach, and gear, such as masks and gloves.
But later in the pandemic, based on federal guidance, the state changed the way it handled payroll reimbursement.
“The state kind of changed the rules in the middle of the game,” said Chris Spencer, community outreach officer with the Black Belt Community Foundation, which has been trying to help some of the poorest Alabama counties make use of these funds.
A new document from the comptroller’s office, one shared by the state comptroller’s office on Sept. 25, said payroll is only allowable for public health and public safety employees “whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” In Alabama’s case, that means they must spend 75 percent or more of their time working directly in response to COVID-19.
A percentage of payroll can also be reimbursed for employees who spend less than 75 percent of their time working in that way, but that requires more paperwork.
The state offers a couple of examples. If a nurse who is a public employee spends 80 percent of his or her time giving coronavirus tests, their salary and benefits would be an eligible expense. But a police officer who spends half of his or her time enforcing a mask ordinance the only half of that salary counts.
So why does this matter?
It means some local governments spent money on payroll early in the pandemic and already got it reimbursed, while governments that waited might not be able to take advantage in the same way.
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Madison City in north Alabama is one of 20 municipalities in the state that already spent all their share. Madison’s budget was nearly $2.5 million, and the city spent every dime of that on payroll for public health and safety employees.
That’s not unusual. Nearly 90 percent of the funds spent by Alabama’s municipalities has been on payroll, and 61 percent of funds spent by counties has been on payroll.
This change in guidance, along with how strict the guidelines for other allowable expenses are, means some areas might struggle to figure out how to spend to money. And these local governments are at risk of losing any money they don’t spend soon.
“You can only buy so much sanitizer,” said Lucky, the president of the Black Belt Community Foundation. “Do you really want to spend $30,000 on sanitizer?”
You have to spend the money to get the money
There are other problems facing many of Alabama’s smaller local governments. For one thing, the state has chosen to use a reimbursement system for distributing the funds to local governments. That means those governments have to be able to afford to spend the money up front, and then get paid back by the state through the Coronavirus Relief Fund.
For some of Alabama’s poorest cities, towns and counties, that’s a difficult situation to be in, according to advocates with the Black Belt Community Foundation.
“They set up a process to not include folks who are poor,” Spencer said. “The state could have sent out a grant request, explaining it to these places. Instead, they said, ‘we can only give you this money if you spend it.'”
Spencer said in some cases that means these governments have to take out loans to pay for expenses - loans that often come with administrative fees and other costs that likely wouldn’t be reimbursed. And Lucky said many of these small governments might not be able to take on any new debt because they may have already reached debt limits.
To help combat this problem, the Black Belt Community Foundation, along with several partners in Alabama’s philanthropic and business communities, have teamed with Hope Credit Union in Montgomery to help governments in 16 Black Belt counties take advantage of these Coronavirus Relief Funds.
Through Hope Credit Union, the Foundation took out a $1.6 million line of credit and is offering recoverable grants to local governments in those counties. These grants are to help pay for the up front costs that will eventually be reimbursed through the CRF. The grants are interest-free, and come with no administrative fees.
“We knew reimbursement would be a bottleneck,” Lucky said. “We thought, how can we set up a structure for communities without liquid funds?”
But even with these recoverable grants in place, many local governments still haven’t taken advantage of the money. Some aren’t aware the money is out there, Lucky said.
“A lot of these communities have no resources or wherewithal to apply for these funds,” she said. “We’re trying to make sure they know the money is there.”
The Foundation is also helping facilitate communication between local governments and the state, so they can get some expenditures pre-approved for reimbursement. That’s important for the Foundation, which through its grant program with Hope Credit Union could be financially liable if money spent through a grant turns out not to be allowable by the state.
“If we give them a recoverable grant and they buy the wrong stuff, the state won’t reimburse them for it, and we’ll take a loss," Spencer said.
But that process has been frustrating at times, Spencer said. And Daron Harris, who does public relations for the Foundation, said there have been some “mysterious denials.”
Emails sent by the Foundation to AL.com show communications between Spencer and the State Comptroller’s Office, highlighting how the process works - and sometimes doesn’t. One email showed the state wouldn’t approve payments for the transportation of food to citizens within a local community, but would allow for the transportation of PPE. Another refused funds for the purchase of a desktop computer to help with remote work, saying the state has only been approving funds for laptops.
Spencer said he’s had to learn how to word these requests. “They’re trying to find ways not to approve this stuff,” he said.
If the deadline is not extended, any of the nearly $1.8 billion made available to Alabama that isn’t spent will go back to the federal government.
“The CARES Act requires that all CRF funds be expended by December 30, 2020,” said Wilhelm at the state Department of Finance in an email to AL.com. "We are working with the Alabama League of Municipalities and the Association of County Commissions to ensure that our cities and counties are reimbursed for the expenses they have incurred mitigating and responding to Covid-19. If the timeline for expending CRF funds is not extended by Congress, Governor Ivey and the Department, working with the Legislative leadership, will review the spending across all areas to ensure that these funds are fully utilized to the benefit of the citizens of the state.”
She said the state’s share of the money has supported many relief efforts, from testing and support for emergency care providers to programs that help small businesses, nonprofits and faith-based organizations.
“Governor Ivey is working to ensure that this relief money is providing the people of Alabama much-needed assistance during these challenging times," concludes the email. "We continue to explore and look at the best ways to provide this relief, and, as the governor has done throughout this process, we will remain transparent and provide updates on the use of these funds.”
Do you have an idea for a data story about Alabama? Email Ramsey Archibald at rarchibald@al.com, and follow him on Twitter @RamseyArchibald. Read more Alabama data stories here.