SUBJECT
Title
COUNTY OF SAN DIEGO AMERICAN RESCUE PLAN ACT FRAMEWORK UPDATE (DISTRICTS: ALL)
Body
OVERVIEW
On June 8, 2021 (3), the San Diego County Board of Supervisors (Board) approved an American Rescue Plan Act of 2021 (ARPA) spending framework for the approximately $650 million in ARPA funds received from the federal government to be used towards the County of San Diego’s (County) response to the COVID-19 pandemic. This ARPA Framework not only addressed the needs of the region to test, trace and treat COVID-19 cases to reduce morbidity and mortality, but also addressed the economic and social impacts of the pandemic.
The ARPA Framework established by the Board was the culmination of input from every supervisorial district and comprehensive community engagement, which included community workshops held in March 2021 as well as review and consideration of correspondence received from community organizations and advocates. The ARPA Framework includes programs to respond to the COVID-19 pandemic as well as services for behavioral health, homelessness, food assistance, seniors and youth, small businesses, and critical infrastructure.
The ARPA funds allocated to the County represent a significant and extraordinary infusion of resources to the region, and the County has taken a leading role in utilizing these funds, employing a strategic three-pronged approach. The first prong prioritizes saving lives and protecting families, ensuring funds were directed towards critical initiatives such as testing, treatment, and vaccination sites. The second prong focuses on countering the economic impacts of the pandemic and making longer term investments for the region. This effort includes efforts to stimulate the economy and help San Diegans get back to work, marked by strategic investments like the small business and non-profit stimulus payments, aimed at revitalizing economic activity. The third prong includes resources for investing in our future, supporting programs such as child care, behavioral health, and evergreen funding initiatives. This structured approach highlights the County's commitment to addressing immediate needs while strategically planning for a resilient and prosperous future.
Of note, the federal guidelines require that ARPA funds are obligated by the end of 2024, and ultimately spent by the end of 2026. To ensure the ARPA funds are used most effectively and fully expended, County staff will be returning to the Board with recommended updates to the ARPA Framework based on discussion and actions taken today. County staff is currently reviewing the ARPA Framework as it relates to those programs that will have a funding need once ARPA funds are fully expended, as well as other programs that align with the ARPA Framework to provide essential services. In addition, consideration will be given to mitigate the impacts of any disallowances that the Federal Emergency Management Agency may have when reviewing the County’s reimbursement submittals for COVID-19 programs.
Today’s recommendations include receiving an update on the ARPA Framework, including projected spending levels and a report out on the Evergreen Fund recommendations of the Fiscal Subcommittee, and requesting direction from the Board related to allocation of any remaining resources of the ARPA Framework, to ensure these resources effectively respond to the priorities and needs across the region.
RECOMMENDATION(S)
CHIEF ADMINISTRATIVE OFFICER
1. Receive the American Rescue Plan Act (ARPA) Framework Update report.
2. Direct the Chief Administrative Officer to develop recommendations to revise the ARPA Framework based on projected remaining ARPA funds and return to the Board.
EQUITY IMPACT STATEMENT
Today’s actions support the mechanism to present the County of San Diego’s framework for the use of American Rescue Plan Act funding in support of the most vulnerable residents in the county. The COVID-19 pandemic has had a significant impact on the lives of individuals, businesses, and communities across San Diego County. To support the most vulnerable, an equity lens and a quantitative and qualitative data-driven approach were used to prioritize and integrate consideration of racial and gender equity in the recommendations to guide the distribution of COVID-19 response and recovery-related federal, State, and local funding and resources. Additionally, monitoring the impacts of the components of the ARPA Framework include the use of the Healthy Places Index to ensure equitable access and distribution of programs.
SUSTAINABILITY IMPACT STATEMENT
The proposed actions to receive an update on the American Rescue Plan Act (ARPA) Framework and provide direction related to allocation of components of the ARPA Framework support the County of San Diego’s Sustainability Goals #2, #4 and #5 by ensuring the ARPA Framework supports just and equitable access to County services, protecting the health and well-being of everyone in the region, and supporting stormwater infrastructure to protect the quality of our region’s groundwater.
FISCAL IMPACT
There is no immediate fiscal impact associated with these requests. The remaining balance of American Rescue Plan Act (ARPA) funds is included in the Fiscal Year (FY) 2023-24 Operational Plan. County of San Diego (County) staff would return to the San Diego County Board of Supervisors (Board) as needed with additional actions tied to any future fiscal impacts that may result from today’s recommendations.
Today’s recommendation is to receive the ARPA Framework Update report (Attachment A on file with the Clerk of the Board). As of the last submitted quarterly report to the United States Department of the Treasury, the County had spent $323.8 million of the approximately $650 million in funds received. This included leveraging an ARPA lost revenue strategy in some areas to redirect General Purpose Revenue. Based on current program activity and Board directive to expend funds by the end of FY 2024-25, $67 million is projected to remain at the end of the period. Combined with the unused Evergreen Fund amount of $66.6 million, the total projected balance for the ARPA Framework is $133.6 million, which does not include infrastructure projects with a multi-year timeline. This balance presents an opportunity to continue to fund ARPA framework activities with ongoing costs for another fiscal year, still within the Treasury’s expenditure timeframes, as well as mitigate some budgetary pressures related to these programs over the next couple of years.
While many programs initiated under ARPA were intended to be one-time to meet immediate needs resulting from the pandemic, ARPA funds were also used to accelerate the development of additional County programs supporting vulnerable populations. These programs, primarily supporting homeless services, do not have sustainable funding identified. ARPA funds remaining at the end of FY 2024-25 could be used to prevent a budgetary gap in these areas beginning in FY 2025-26. Additionally, these funds could be used to address an imminent gap in funding beginning in FY 2024-25 for the Regional Homeless Assistance Program, and to help mitigate impacts of any potential disallowances that the Federal Emergency Management Agency may have when reviewing the County’s reimbursement submittals for COVID-19 programs (Attachment C on file with the Clerk of the Board).
The Evergreen Fund component of the ARPA Framework is funded in the amount of $80.6 million, based on funding from the ARPA Framework ($79 million) and another amount from the Local Assistance and Tribal Consistency Fund ($1.6 million). The Board has already taken action on $14.0 million (Supportive Services for Asylum Seeking Migrants and Housing Every Homeless Person in Addiction Recovery). The remaining balance of the Evergreen Fund, currently $66.6 million, would be brought back to the Board for action on recommended options. The $66.6 million may be reduced by actions taken by the Board today or at any meeting prior to staff’s return. These ARPA funds would be used directly or leveraged through a lost revenue strategy to redirect existing General Purpose Revenue.
BUSINESS IMPACT STATEMENT
N/A
Details
ADVISORY BOARD STATEMENT
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BACKGROUND
ARPA Framework Development
On June 8, 2021 (3), the San Diego County Board of Supervisors (Board) approved the County of San Diego (County) American Rescue Plan Act of 2021 (ARPA) spending framework for the $650 million ARPA funds received from the federal government to be used towards the County’s response efforts to the COVID-19 pandemic. This ARPA Framework not only addressed the needs of the regions to test, trace and treat COVID-19 cases, but also addressed the economic and social impacts of the pandemic.
The ARPA Framework established by the Board was the culmination of input from every supervisorial district and comprehensive community engagement, which included community workshops held in March 2021 as well as review and consideration of correspondence received from community organizations and advocates. The ARPA Framework includes programs to respond to the COVID-19 pandemic as well as services for behavioral health, homelessness, food assistance, seniors and youth, small businesses, and critical infrastructure.
A year after the adoption of the initial ARPA Framework, on August 30, 2022 (20), the Board received an update on projected spending levels and directed the Chief Administrative Officer (CAO) to reallocate $119 million of ARPA funds to ensure the ARPA resources would be fully utilized to support programs most needed in the region. The reallocation continued to prioritize funding for homeless services, mental health services, and cash assistance programs and provided funding for an Evergreen Fund to support behavioral health and housing programs. The action taken by the Board effectively directed the CAO to ensure that ARPA Framework funding is spent by Fiscal Year (FY) 2024-25, to ensure efficient delivery of ARPA Framework programs and full expenditure of funding in advance of the federal deadline of December 2026.
Regional Impact of the ARPA Framework
Although federal guidelines permit the expenditure of ARPA Framework resources through 2026, this calendar year is the final year to obligate these resources. ARPA funding allocations to local governments have been to the magnitude which the State Legislative Analyst deems “once-in-a-generation.” The Board established the initial ARPA Framework and subsequently revised it with consideration for community priorities, great intention to maximize the impact of the ARPA Framework, and with consensus around key areas that would best serve the region. The ARPA Framework has helped to serve the most vulnerable in our region with a broad array of programs addressing day-to-day needs such as transportation and shelter, bolstering the regional economy through grants and direct assistance, and safeguarding the health and sustainability of our region with major infrastructure projects for water, electric vehicles, and broadband access.
This once-in-a-generation infusion of resources to the region provided both immediate relief and made investments with a lasting impact to the region.
Savings lives and protecting families.
The ARPA Framework was established to meet the everyday needs of our region’s residents, first and foremost. This first prong of the ARPA Framework was implemented in partnership with the community groups and included ensuring the public health of the region and mitigating the impacts of COVID-19 with an eye to equity and accessibility, ensuring services were provided in threshold languages. Equity was gauged in multiple ways such as tracking vaccine administration by the Healthy Places Index.
Stimulating the economy and getting back to work.
Along with the immediate and direct response to COVID-19, the second prong of the ARPA Framework also seeks to address the impacts of COVID-19 on the regional economy and San Diego County workers. This includes providing direct stimulus payments to small businesses and non-profit organizations, and fee waivers for restaurants and special event organizers. These funds were used to assist 3,890 small businesses and non-profit organizations with costs of operations including protective equipment. The fee waiver programs of the ARPA program also benefited over 8,700 restaurants and 2,700 special events.
Investing in the future of the region.
Finally, the third prong of the ARPA Framework includes programs that invest in the long-term health and safety of the region by helping vulnerable populations to meet essential needs such as mental health, housing, food assistance, transportation, and internet access. This includes programs that have: provided screenings for thousands of middle school students to help determine social emotional needs and provide early intervention support; assisted over 5,000 households with security deposits, eviction counseling, and other tenant legal services; provided food assistance to 1,900 households and 575,000 nutritious meals to older adults; funded five developments that will result in the creation of 74 extremely low-income permanent supportive housing units across the county; and provided direct stimulus payments to 224 households with imminent needs related to shelter, medicine or food.
Besides this support for day to day needs of San Diegans, the ARPA Framework also provides support for infrastructure to provide equal access and safeguard health and safety for the region. This includes a plan to implement broadband infrastructure based on a study of census tracts throughout the region, investments in stormwater, sewer and drinking water infrastructure.
ARPA Framework Current Status
The current status of the ARPA Framework is provided in Attachment A, which includes the amount allocated for each ARPA Framework component along with projected remaining balances and the status for each program area. Based on current program activity, it is projected that $67 million in ARPA funds will remain at the end of FY 2024-25 for components outside of the Evergreen Fund, and an additional $66.6 million remains unprogrammed for the Evergreen Fund, resulting in a balance of $133.6 million. The anticipated remaining balance of $67 million for ARPA programs at the end of FY 2024-25 provides an opportunity in the current environment of growing needs and programs and constrained governmental revenues experienced Statewide. County staff intend to bring forward recommendations for the Board’s consideration to use these balances to provide funding to extend programs of the ARPA Framework beyond FY 2024-25 that are anticipated to have ongoing costs. In certain cases, ARPA was used to initiate new services which will require funding sources for ongoing operations once the ARPA Framework funds have been expended. These programs are primarily in the homeless services section of the Framework for emergency sheltering solutions, but also included are items like tenant legal services and the recent Board directed employee child care benefit program. Staff continue to explore alternate sustainable funding sources, and the total ongoing funding need could shift as alternate funding sources are identified and sheltering solutions are operationalized.
Other uses that may be considered for the remaining balance include other programs that align with the Framework, like the County’s Regional Homeless Assistance Program, an emergency housing program that supports individuals experiencing homelessness in the unincorporated area of the county by leveraging hotels countywide as emergency housing options, a critical program that does not have an identified ongoing funding source. These amounts could also be considered for mitigating the impact of any potential disallowances by the Federal Emergency Management Agency for COVID-19-related programs, which the County submitted for reimbursement. While the projected available balance presents a significant opportunity to mitigate the gap in funding over the next budget cycle for critical services, it is important to note that even after applying this strategy there will be ongoing gaps beginning in FY 2026-27 for ARPA-initiated programs that will need to be addressed. Potential uses for the projected $67 million balance, including ARPA Framework components as well as other programs, are summarized in Attachment C.
Evergreen Fund
The Evergreen Fund was funded in the amount of $80.6 million based on ARPA funding from the ARPA Framework ($79 million) and another amount from the Local Assistance and Tribal Consistency Fund ($1.6 million). On August 30, 2022 (20), the Board provided initial direction to allocate a portion of the ARPA Framework funds for an Evergreen Fund, which was a fund to leverage ARPA Framework resources to draw down matching funds, philanthropic donations, or other funding sources that might provide a self-sustaining revenue stream. Following this initial direction, the Board further directed the CAO, on December 13, 2022 (30) to return with recommendations to align a portion of the Evergreen Fund with Housing Blueprint and Board direction related to housing based in consultation with the ad hoc Fiscal Management & Budget Strategy Subcommittee (Fiscal Subcommittee). The Fiscal Subcommittee has since sunset on March 31, 2023, pursuant to Board action on January 10, 2023 (2), but prior to sunsetting, the Fiscal Subcommittee did establish a set of recommendations for the Evergreen Fund. Details of each of these six recommendations are discussed in an April 28, 2023, memorandum to the Board summarizing the discussions of the Fiscal Subcommittee related to proposed uses of the Evergreen Fund (Attachment B).
1. Behavioral Health Training Fund. Renewable funds to be used in partnership with the Workforce Partnership Program.
2. Behavioral Health Workforce Training. A Workforce and Empowerment Fund to invest in training and increase opportunities for the behavioral health workforce.
3. Green Economy Local Workforce Study. A comprehensive study to catalyze the region’s green economy workforce.
4. Cleantech Green/Blue Jobs Impact Investment Fund. An Impact Fund used to leverage additional investments from regional partners to create good, well-paying jobs while bolstering sustainability in the region.
5. Incentivizing Manufacturing of Cutting-Edge Modular Housing. A program to develop and implement a plan for modular housing manufacturing in the regions to create affordable housing and generate job opportunities.
6. County of San Diego Employee Housing Opportunities. An affordable housing program to support the County workforce.
The April 28, 2023 Evergreen Fund Memorandum served to report to the full Board the discussions of the Fiscal Subcommittee, offer a staff briefing, and provide next steps, which noted Board action is required to move forward with any of the program recommendations noted in the memorandum. To date, in response to the Evergreen Fund Memorandum, staff have continued to receive inquiries and input in planning for the Evergreen Fund return to the full Board.
Since April 2023, the environment and resultant needs of the region have continued to evolve with additional pressures and response required to the humanitarian crisis for asylum seeking migrants as well as the homelessness crisis and substance use disorders. As a result, there have been recent Board meeting discussions regarding use of these funds for SB 43 planning and the full Board has approved the use of Evergreen Funds to ensure support of the region’s vulnerable populations:
• $3 million for Humanitarian Emergency Response and Relief: Supportive Services for Asylum Seeking Migrants (October 10, 2023 (14))
• $8 million for Housing Every Homeless Person in Addiction Recovery (December 5, 2023 (24))
• An additional $3 million for Enhancing Humanitarian Emergency Response and Relief: Supportive Services for Asylum Seeking Migrants (December 5, 2023 (30))
Currently, $66.6 million of the amounts set aside for the Evergreen Fund remain. This amount may be reduced by actions taken by the Board today or at any meeting prior to staff returning to the Board.
To provide flexibility with regard to timeline and purpose for the Evergreen Fund, the County has put in place a lost revenue strategy. This strategy is based on the revenue loss provision of ARPA, which allows the use of ARPA funds to replace local revenue lost due to the impacts of the COVID-19 pandemic. The remaining lost revenue strategy capacity is projected to be fully utilized with the implementation of the Evergreen Fund.
Today’s recommendations include receiving an update on the ARPA Framework, which includes projected spending levels through FY 2024-25 and a report out on the Evergreen Fund recommendations of the Fiscal Subcommittee. The CAO is also recommending direction from the Board related to the ARPA Framework; this direction will be applicable to the remaining ARPA funds projected at the end of FY 2024-25 in addition to the unprogrammed component of the Evergreen Fund, for a combined balance of $133.6 million. Based on the guidance, direction, and actions of the Board today, County staff anticipates returning with funding recommendations for adoption.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
Today’s actions align with the County of San Diego’s 2024-2029 Strategic Plan initiatives of Sustainability (Climate), Equity (Health, Housing, Economic Opportunity), Empower (Workforce), Community (Safety, Quality of Life), and Justice (Safety, Restorative) by ensuring public funds are maximized and continue to focus on the strategic goals of the Board of supervisors.
Respectfully submitted,
HELEN N. ROBBINS-MEYER
Interim Chief Administrative Officer
ATTACHMENT(S)
Attachment A - County ARPA Framework Project Snapshot - Updated 12/20/2023 Expenditures as of 09/30/23
Attachment B - Fiscal Management & Budget Strategy Subcommittee Recommendations Related to the Evergreen Fund (Board Memo April 28, 2023)
Attachment C - County ARPA Framework - Scenario for Projected Remaining Balance (Excludes Evergreen)