US coronavirus relief funds: A guide for state and local governments : The Jeeranont Company Limited

State and local leaders can consider several steps now to capture the full humanitarian and fiscal benefits of the roughly $2 trillion federal relief package.


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The ratification of the historic Coronavirus Aid, Relief, and Economic Security (CARES) Act floated a life raft of $2 trillion to $2.2 trillion1 to many US businesses, families, and local governments reeling from the economic shutdown (exhibit).



Some of these benefits, including $300 billion in direct payments to households, are expected to hit the economy as soon as mid-April. Others may take a month or longer before agency rulemaking, allocations, and recipient certifications allow funds to reach the hands of end beneficiaries.


The Jeeranont’s preliminary analysis of the CARES Act estimates that nearly half of all appropriations in the legislation will be distributed through state and local governments. These funds will primarily cover spikes in demand for state and local services—for example, the more than 6.6 million Americans who filed for unemployment in the last week of March alone2 —but also help state agencies and local organizations recoup lost revenue, as with transportation grants to help the nation’s airports stay afloat amid a drop in passenger demand. CARES Act provisions directed at federal agencies, such as the expansion of subsidized loan programs from the Small Business Administration, are also of great interest to state and local governments because they directly benefit vulnerable constituents and present opportunities for complementary relief measures.


If the American Recovery and Reinvestment Act of 2009 taught us anything, it is that time matters. State and local governments must act swiftly to get money into the hands of beneficiaries. This urgency is one of humanitarian necessity: similar to the previous relief packages, most of the CARES Act programs provide immediate health-related response measures (for example, enhancing hospital capacity). Disbursing money quickly is also an economic imperative: 50 percent of Americans work for or own a small business and, on average, these businesses have only 27 days of cash flow.3 In the aftermath of the Great Recession, states accumulated a total of $500 billion in budget shortfalls, state tax revenue fell 17 percent below the previous year’s levels, and personal income taxes dropped 27 percent4 —despite federal transfers that helped soften the blow.


In this article, we discuss the steps state and local governments can consider to maximize the impact of the CARES Act. These actions include assigning leaders to spur accountability, establishing mechanisms to coordinate with federal counterparts, planning for financial inflows, providing appropriate resources for agencies to handle the influx of demand, and overcommunicating with the individuals, businesses, and organizations that might benefit.

Distribution complexity will vary by benefit and program

Given the multiple types of distribution mechanisms—each with its own complexities—and the volume of funds to be distributed, state and local governments must prepare for a likely capacity challenge.


One bucket of support, which we estimate to be less than 10 percent of the money allocated to state and local governments, augments existing benefit programs that require minimal additional capacity to distribute. An example would be increasing the Federal Matching Assistance Percentage, which determines the degree to which the federal government finances states’ Medicaid programs. Increasing the matching rate for state funds would allow the federal government to provide states with much-needed relief from entitlement obligations.


A second bucket of support will require a moderate increase in capacity to get money out the door. We estimate this approach to include 65 to 75 percent of funds allocated to state and local governments. This funding often requires state or local governments to derive or amend their own allocation and allotment processes for third-party beneficiaries (for example, hospitals and nonprofits) that will deliver direct services. Sometimes the state’s own capacity, such as eligibility verification for new unemployment benefits, will need to be augmented.


A final bucket of support—which we estimate may near 25 percent of these funds—will likely require significant investment in new capabilities (and perhaps innovation) to reach beneficiaries. One example is the expansion of funding for food purchases and demonstration projects to increase flexibility for schools to provide free meals. School districts around the country have scrambled to build creative solutions for distributing these meals during a time of physical distancing and widespread school closures.


State and local governments can consider steps to maximize the impact of the legislation

All levels of government are fully immersed in responding to the most immediate humanitarian needs, so leaders can consider several steps now to ensure maximum impact from additional funds. Many of these actions are based on the experience of state and local governments’ responses to the American Recovery and Reinvestment Act as well as the early experience of states in developing their COVID-19 crisis nerve center.


Assign leaders to spur accountability and improve transparency

· Appoint a relief and recovery lead to coordinate across state and local agency officials. This appointee should be senior enough to convene principal-level leaders in each responsible agency. This appointee is often a deputy chief of staff or chief operating officer.


· Establish a response lead in each agency to manage the response (including federal-agency interaction) for the department. This leader is often a deputy commissioner or secretary.

Establish mechanisms to coordinate with federal agencies

· Track agency-level rulemaking and appropriations. States can continue to rely on tools such as the Federal Funds Information for States that provide leaders with real-time information on disbursements and restrictions.

· Reach out to federal agencies early. Contact US government leaders in national, regional, and state offices as appropriate; in doing so, establish a protocol to maintain open lines of communication as resources go online.

· Centrally track applications and deadlines required by various federal agencies. Doing so will allow states to recoup qualified expenditures or receive up-front payments.

Plan for financial inflows

· Track already-authorized emergency costs to both ensure full understanding of expenditures related to COVID-19 and receive reimbursement from relief packages where applicable.

· Project benefit demand to evaluate financial impact as well as operational considerations.

· Identify sources of working capital (for example, emergency reserve appropriations and interfund borrowing) at the agency level to finance spending surges before federal money becomes available, particularly in the case of reimbursement programs.

· Begin the allocation process by cataloging existing programs, municipalities, and nongovernmental agencies that will be the ultimate recipients of many funding streams. Also, start discussions on distribution criteria and application processes before funds are available.

· Weigh appropriate fraud, waste, and abuse controls, particularly for programs with new eligibility requirements, such as unemployment benefits.

Provide appropriate resources for agencies to handle the influx of demand

· Redeploy staff to areas of higher demand to alleviate bottlenecks in relief fund distribution; state and local governments might even consider augmenting full-time employees with recently furloughed or unemployed private-sector workers as a means of further economic stimulus.

· Test all aspects of systems, such as IT infrastructure and administration capacity, that are likely to experience record levels of use in services—for example, from applications for unemployment insurance and aid through the Supplemental Nutrition Assistance Program.

· Evaluate and upgrade IT infrastructure, including fast-tracking procurement for third-party vendors where needed to accelerate capabilities.

· Build a simple, one-stop web portal with clear, up-to-date links to state and federal resources (overseen by the relief and recovery lead mentioned above) for individuals, businesses, and community organizations seeking information.

· Establish a hotline to support agencies in addressing questions related to relief funds.

· Require agencies to submit citizen outreach strategies to reach relevant segments such as loan recipients eligible for relief. Agencies can also go beyond explanations of benefits to connect vulnerable institutions and firms to service providers (for example, identifying local lenders certified by the Small Business Administration).

Based on what we see today, state and local governments are likely to see revenue shocks as severe, or worse, than those experienced during the Great Recession. We have heard from many local government leaders who hope the next wave of relief will focus on longer-term economic stimulus to the same degree that the CARES Act provides near-term relief. We will continue to monitor developments and share additional guidance as the landscape changes.

Establishing these basic organizational structures and operating processes will leave governments better able to respond to a prolonged economic shutdown. It is ultimately in the hands of state and local leaders to put relief legislation to work to get the money flowing.

COVID-19: How American states can manage the surge in unemployment services

State government leaders can proactively streamline service delivery to the public amid a quickly evolving situation—and maintain the improvements.


In a matter of weeks, a single confirmed case of COVID-19 in the United States has exploded into a human tragedy that has affected hundreds of thousands of people in the country. The pandemic has also created an economic crisis that is stretching state governments’ ability to deliver support services.


As businesses lay off workers in the face of an abrupt economic slowdown, a spike in unemployment has tested state governments’ capacity. Almost 3.3 million people filed initial claims for unemployment benefits between March 15 and March 21, 2020, the highest on record for the country.1 Unemployment programs are underequipped to meet this level of need: programs themselves are understaffed for a crisis, processes easily overwhelm legacy IT systems, and in-person appearances aren’t feasible during a pandemic.

At the moment, claimants are facing obstacles at every step of the process to obtain unemployment benefits (Exhibit 1):

1. Insufficient awareness of services and benefits. Many residents who have lost their jobs don’t know which benefits they are eligible for or where and how to access them. And those who do find an entry point can struggle with navigation, bouncing between websites and call centers to resolve issues—without the option of going to a field office for guidance. Additionally, employers in many states are unaware that they can submit batch applications on behalf of their employees. Employer-submitted batch applications can significantly reduce strain on systems while meaningfully decreasing the number of days it takes for claimants to receive their benefits.2

2. Complex and difficult-to-access systems when requesting services. Application forms for unemployment benefits are long, complicated, and sometimes entirely analog. Unemployment websites often interface and rely on legacy systems that are not designed to handle the current volume of requests. In addition, some states lack mobile-responsive websites, which constrains low-income residents who don’t own computers and cannot access desktop computers in locked-down public spaces such as libraries.

3. Inefficient request processing. Back-end processing is often manual, labor intensive, and fraught with bottlenecks. For example, many states still use mailers to verify loss of employment, delaying processing by at least a few days. In addition, most states’ aggressive antifraud stance means that even simple inconsistencies in an application—writing “Street” instead of “St.,” for instance—can trigger enhanced validations and delay cases.

4. Lengthy and opaque service-delivery timelines. Largely because of process traps, claimants can wait for weeks or even months to receive their benefit checks. During this period, their application status is often unclear or unavailable. Indeed, a claimant might not know that an application is incomplete or erroneous—and therefore not progressing.


Yet the public is depending on unemployment programs to meet the challenge. Unemployment assistance is one of the few immediately available financial lifelines, not only for residents in need but also—in a massive economic event such as the COVID-19 pandemic—for local economies. For a local economy, unemployment insurance has the potential to inject far greater stimulus than the individual assistance in the federal relief package given the level of support per person. In the face of these challenges, states could consider five levers to identify and address bottlenecks and rapidly deliver benefits to residents (Exhibit 2).



Critically, each of these levers can have a tangible impact within days or weeks, enabling states to weather surging demand (to see what states could accomplish immediately, see sidebar, “Easing service backlogs within 24 hours”). Taken together, these levers help set the stage for fundamental process redesigns—rather than mere incremental improvements.




Simplify centers on managing demand and stopping nonessential work. This could be as simple as taking a few hours to execute a governance change that decreases bottlenecks during processing. For instance, several states have revised their eligibility requirements to increase throughput of applications. In addition, states could fast-track claimants who are most likely to qualify for benefits and consider relaxing requirements that might not be worth the incremental complexity. These decisions require careful cost–benefit analysis but could be quite impactful.


Orchestrate refers to redesigning processes to reduce handoffs and bypass bottlenecks. Some shifts could be simple—for instance, expediting straightforward claims in batches. Others could require more legwork, such as moving toward automatic approval for initial claims that meet certain conditions. States can significantly shorten processing time by making end-to-end processes leaner; a virtual “process war room” can help rapidly identify and act on opportunities for improvement. Indeed, multiple states are already expediting claims by waiving requirements such as seven-day waiting periods and employment-search verifications.

Digitize enables states to make significant front- and back-end changes to improve user interaction, enhance data clarity, and streamline workflows—ushering in a completely reinvented process, which is especially relevant given the implications of physical distancing during a pandemic. At the same time, a cloud-hosted model increases the ability to handle surge volumes more easily, web pages updated with simple directions and FAQs improve application quality, optical character recognition scans forms rapidly and automatically, and dashboards track productivity in real time (Exhibit 3). State unemployment program leaders will need to work closely with state or department chief information officers to incorporate considerations such as security and coordinate on procurements, but this lever has significant potential to support physical-distancing efforts by enabling both residents and state employees to avoid physical locations.

Automate refers to techniques such as targeted deployment of low- and no-code technologies (for example, robotic process automation, robotic desktop automation, and chatbots) to rapidly address holdups (such as common errors in forms) and updates for residents on the status of their applications by text or phone. Although these investments can take longer to implement, they can significantly decrease backlog as well as the burden on state staff while efficiently administering services. With staff already overwhelmed, gathering their input to automate processes will require creativity. Work sprints that minimize time commitment from staff and tap former department employees who are not actively responding to the crisis can generate useful input without burdening staff.

Reorganize focuses on people—deploying and upskilling workers to efficiently work through the backlog. In the short term, supporting employees and making sure they can effectively work from home can improve output. Over time, reallocating capacity to the area of greatest need, training agents in customer service, and ensuring consistency can sustainably increase productivity. For example, a midwestern state has redeployed staff from less-utilized services to meet demand at its unemployment call center.

While state unemployment systems have never seen such a surge in volume, our experiences with governments in crisis situations suggest that states can use these tactics to overcome the present challenge. After all, one federal agency achieved a tenfold increase in claims throughput after a natural disaster.

Unemployment benefits is the first of many services to see a spike in demand. States can invest in interventions that will remove process bottlenecks today, increase readiness for the surge that is likely to come, and lay the foundation for broader, longer-term transformational change. States that transform the way they deliver services can improve the likelihood that critical resources reach their most vulnerable residents.

Crisis nerve centers: Supporting governments’ responses to coronavirus

Subnational (provincial, state, and municipal) governments are on the front lines in responding to the spread of COVID-19. The magnitude of the pandemic poses daunting challenges: officials must coordinate fast-moving and interconnected work streams across the private and social sectors while communicating vital information to residents, stakeholders, and the media—all in a clear and consistent way.

Our experience suggests that a crisis nerve center—a highly agile, coordinated body that brings together crucial organizational skills and capabilities—can provide senior government leaders with the structure and clarity to mount an effective response and mobilize every part of society.

This COVID-19 government nerve center shouldn’t supersede existing crisis-management structures. Rather, it is an additional executive-support structure for senior leaders that works closely with all existing emergency-management channels. By using this approach, governments can be better positioned to manage a crisis.

Crafting a rapid response

Nerve centers are particularly appropriate under three conditions:

· Significant disruption to regular activities that threatens to overwhelm existing resources

· Highly unfamiliar, highly novel situations that are unlike anything the organization has faced before, impeding rapid pattern recognition

· High-velocity disruptions, in which organizations do not have enough time to truly understand and interpret threats using traditional means

In these situations, nerve centers provide several integrated benefits that improve leaders’ overall decision-making speed and quality:

· They increase response efficacy by coordinating and adjusting activities around real capabilities—instead of just formal roles and responsibilities—and providing a mechanism to balance what’s important and what’s urgent.

· They increase the quality of information flow by connecting and coordinating disparate efforts through a central source of data collection and analysis.

· They improve response agility by allowing for rapid assembly of cross-functional teams in response to changing needs.

Structuring the COVID-19 government nerve center

Each nerve center should be designed to reflect local context, capabilities, personalities, and needs. A typical structure includes the following:

·

A strong, trusted leader with the capabilities and operating rhythm to manage fast-moving, disparate teams. The overall response leader, often a senior official in government, oversees the operational leads. Selecting a person with the right skills is critical to the success of the crisis response. In our experience, outstanding response leaders are decisive, have authority to act, and bring significant judgment, maturity, stamina, and communications skills to the task.


· A set of agency or cross-functional teams representing the areas of work that are the highest priority. Each team should have a dedicated project manager and core team personnel in addition to a leader. These can be existing or new teams but should reflect actual, on-the-ground needs, not historical organizational divisions. See the exhibit for examples of what this could look like for a COVID-19 government nerve center.

· Representatives of legal, regulatory, and other critical bodies.These representatives should be available to provide on-the-spot guidance and advice.

· Data and analytics team. In recent years, governments have made strides in building their analytics and data-sharing capabilities. An effective crisis response requires operations to have the latest data available—and in formats that can be shared and understood—to aid planning and the allocation of resources and equipment. It is essential that the government have access to a “single version of truth” (as far as that is known) and that the COVID-19 government crisis nerve center be accepted by all parties as the owner of that truth, rather than having competing voices across the agencies.

· Links to stakeholder groups that require regular communications. In the case of a COVID-19 government nerve center, these connections could include citizens, legislatures, the business community, social-sector organizations, and educational institutions, among others.

· Links to other major external partners. In the case of local government, these links could include federal or national partners.


The center is tasked with developing a unified approach to short-term response and long-term stabilization. The primary objectives are to coordinate efforts across multiple operations to serve a focused mission: bring together the disparate sources of information required for decision making, set and act on priorities for the short and long term, craft solutions with all the relevant voices, and execute.

In the initial stages of the response, COVID-19 government nerve centers have often focused on the key medical lines of effort:


Governments can help hospitals and healthcare facilities focus on the most severe cases by making certain that they are fully equipped to provide care and advice.


·

Testing. In many countries, a lack of test kits has been a major obstacle. The COVID-19 government nerve center team could work with multiple suppliers, the healthcare system, and the national government to secure the needed capacity; identify any requirements, laws, or regulations that may prevent rapid test acquisition; facilitate the collection and analysis of critical testing data (including collecting not just positive but also negative testing data); and work with partners to develop creative alternatives.


· Personal protective equipment (PPE). Procuring and distributing PPE to healthcare workers requires governments to identify and overcome supply bottlenecks. These efforts are crucial, since the pandemic will quickly overwhelm healthcare systems crippled by infected workers. Nerve-center teams often work with state emergency-management agencies and others to secure supplies, organize and track donations, project future PPE needs and shortages, and support the issuance of guidance to affected stakeholders.

· Critical care. Governments must determine the capacity of healthcare infrastructure such as hospital beds, ventilators, and healthcare workers. They need to find quick ways of bridging the gaps, including by leaning on private- and social-sector infrastructure, medical students, and retired medical staff; easing procurement rules; and even asking for help from other governments. In addition to other tasks, teams often track, coordinate, and help procure beds of all types; develop additional capacity for a range of discharge needs; and identify and project staffing shortages.

· Telemedicine. Governments can help hospitals and healthcare facilities focus on the most severe cases by making certain that they are fully equipped to provide care and advice. Key tasks include ensuring active call centers, low wait times, and ample capacity—perhaps by tapping more trained personnel, such as nurses.

· Quarantine logistics. The general population and businesses that are essential to remain open (such as grocery stores and pharmacies) will need advance notice to prepare for large-scale quarantines and stay-at-home orders. Governments must clearly communicate restrictions and timelines, model the appropriate quarantine response, and take necessary enforcement actions.

When setting up a nerve center, governments should address a number of key elements:

1. Focus on practical planning scenarios that can be used for real execution, not theoretical scenario planning.

2. Set goals that are concrete and achievable and force the trade-offs that make them credible.

3. Reset those goals frequently—at least once a week—as the situation evolves.

4. Provide tools and structure, such as situation reports, threat maps, and regular interaction cadences, that help people rise above the day-today details.

5. Streamline the hierarchy; ensure it doesn’t take multiple steps for leaders to get to the person who knows the answer or multiple steps for the answer to travel back through the chain of command.

6. Recognize the need to constantly evolve the teams and structure, as the core competencies needed to address crises change quickly.

7. Keep a group protected to think about the next horizon; the here and now is critical, and so is the outlook for 30, 60, and 90 days and longer. Blocking off people for long-term planning allows for better decisions today.

The COVID-19 pandemic has forced all organizations, especially governments, to dramatically elevate their response strategies. The crisis nerve center provides governments with the structure and agility to mobilize resources quickly, execute, and shift gears as conditions change.



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