Federal Funding
$5 Trillion in Federal Funding….OMG!
As far as I can remember, this is the largest amount of money in appropriations that I have ever seen. With the Pandemic, money is flowing, and compliance efforts will be increased. More oversight from the federal government means more areas that a grantee and sub grantee need to make sure it complies with. To put you on perspective on the $5 trillion appropriations:
March 6, 2020- $7.8B-The Corona Virus Preparedness and Response Supplemental Appropriations Act, 2020- to provide emergency funding to Health and Human Services (HHS), State Department and Small Business Administration
March 18, 2020- $15.4B-The Families First Coronavirus Response Act- Provide paid sick leave, tax credits, and free COVID-19 testing and expanding food assistance and unemployment benefits.
March 27, 2020- $2.1T-The Coronavirus Aid, Relief and Economic Security, Act- CARES Act create the Paycheck Protection Program, provide tax rebates to individuals, and provide relief to federal agencies.
December 27, 2020- $900B- The Coronavirus response and Relief Supplemental Appropriations Act- This legislation was to extend federal unemployment benefits, provide direct payments to individuals, and started a PPP loans second round.
March 11, 2021- $1.9T- American Rescue Plan Act- Included direct payments, unemployment benefits, and tax provisions, as well as support for small business and schools.
Federal agencies have been awarding grants to states and territories from those appropriations. Puerto Rico has received funding for states agencies, small businesses, health institutions, individuals, among others. The government of Puerto Rico pass thru funding to municipalities, non for profits, and suchlike. Out of the $2,240,625,864, a total of 640 sub recipients have been reported and pass thru $1,722,417,002 (Source: https://www.pandemicoversight.gov, June 2021). That means that not only the Government has a responsibility to oversight, also those 640 sub recipients need to comply with all rules and regulations.
What is the challenge? The emergency itself is a challenge to manage the federal money. The urgency to spend the money, and the changes on ruling and/or not clarity on the rules since we have new initiatives, the urgency to provide services, and the lack of grants management structure on recipients and sub recipients are some of those challenges.
At the beginning of the pandemic, the period of performance of grants issued required less than 10 months for Governments to execute, and less than that for sub recipients. We have sub recipients with periods of less than 2 months to execute a 4-million-dollar project. A lot of entities were building a plane while flying. The risk, to not comply with all regulations, not be able to spend the money, spending money on costs that are not allowable, and so on. If the sub recipient does not have enough experience, and or a good grants management structure, chances are that it will not only have findings, but in some instances, will have to return some of the money.
All the entities that spend more than $750,000 will have to comply with Single Audits reports. They are subject not only to be monitored from the recipient or federal government; they can also be audited by local entities and federal entities.
The United States Government has created the Pandemic Response Accountability Committee (PRCA) to provide oversight of the money during Covid relief, to avoid fraud, waste, and abuse. Another piece to add to this game of audit and monitoring, will be working with the Inspector General. That means that we must be prepared not only now, but for the next 3 to 6 years, to be audited and have the federal government requesting information and accountability for the use of those funds.
We always think about the turmoil that happens during a natural disaster like Hurricane Maria, and the money that has been spent and already is under investigation. Can you imagine now with all that money flowing because of the pandemic? The possibilities not only can be endless for fraud, waste, and abuse, but also for doing something good and putting that money to work for the people of Puerto Rico.
I always believe that we can excel in everything that we put ourselves into, lets excel on federal funds management. If you would like to discuss any aspect of your federal funding compliance please contact us who will be happy to help you!
