American Rescue Plan in Salem
A few weeks ago Congress passed the American Rescue Plan (ARP), a far-reaching COVID recovery measure proposed by the Biden-Harris administration. This $1.9 trillion measure provides direct financial relief to Americans, assistance to businesses, and aid to states, counties, and municipalities.
While Salem has not yet received a formal notice from the federal government as to the amount of the City’s allocation under the bill, the Massachusetts Municipal Association (MMA) has conducted a preliminary analysis of the formulas in the legislation to outline what the expectation is for each city and town in the Commonwealth. Based on their review, the MMA projects Salem will receive $27,393,391 in municipal assistance and an additional $8,383,416 in funding that would have otherwise been directed to the now-abolished Essex County government, for a total estimated aid amount of $35,776,807, equal to about one-fifth of our annual City budget.
The City is still awaiting notice and information regarding these funds. Half of the municipal aid allocation will be distributed in 2021 and the second half in 2022. All funding must be expended by December 31, 2024 and we can expect to receive the first allocation within the next 90 days. Expenditure of the funds cannot take place until after the U.S. Treasury Department develops and promulgates required regulations on the use of funds. From the statute, the broadly acceptable categories of use include costs incurred to:
- respond to the COVID-19 public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
- pay workers providing essential work during the COVID-19 public health emergency or by providing grants to eligible employers that have eligible workers who perform essential work;
- provide government services to the extent of the reduction in revenue to the City due to the COVID-19 public health emergency in the most recent full fiscal year; and
- make necessary investments in water, sewer, or broadband infrastructure.
There are many important parts in the ARP that will benefit Salem residents and businesses substantially, beyond just the direct federal aid. It also includes funding for local health initiatives related to COVID-response efforts, as well as a separate allocation for vaccine related activities to enhance vaccine distribution efforts in cities and towns; these monies will flow through the states to municipalities.
The ARP also establishes the Elementary and Secondary School Education Relief Fund. This consists of $122.8 billion for grants to state and local education agencies. One-quarter of those funds are required to be targeted to address learning loss and additional funds are reserved specifically for summer and afterschool programming. An additional $800 million is directed to providing services for homeless students, $1 billion for Head Start programs, and $39 billion in the Childcare and Development Block Grant Program. At this time, the Salem Public Schools does not yet know precisely how much of the Elementary and Secondary School Education Relief Fund will be allocated to SPS, but based on preliminary estimates it is expected that the allocation will be around $9 million.
Some of the funding programs and grants established by the ARP do not involve the City itself, but instead benefit local nonprofits, agencies, residents, and businesses. As more details about these various programs and opportunities become available, the City will work to connect Salem’s community partners, businesses, residents, and other eligible entities with those available federal funding opportunities, in order to maximize our ability to leverage and benefit from this major legislation.
"This is a significant investment in our community, and we are grateful to the President, his staff, and the members of Congress who supported and made this historic legislation possible," said Mayor Kim Driscoll. "Congressman Moulton, Senator Markey, and Senator Warren each advocated in support of this important legislation, which will help stabilize and grow our local economy post-pandemic. Because this is a one-time source of funds, when it comes to the direct aid we will be smart and forward-thinking with respect to how we expend these dollars. Clearly, there are immediate needs to be addressed, as well as a desire to use these funds to leverage future, equitable prosperity for our City. We will also evaluate opportunities to work with other communities in our region and with state agencies in a complimentary manner, to further maximize the impact of state these resources."
The City will comply with all of the U.S. Treasury Department’s ARP regulations, which are still being developed. "Our hope and intention is to go beyond that by seeking input and reporting publicly on how these funds are being programmed and will be spent," added Mayor Driscoll. "Salem residents rightly expect that we will be transparent and thoughtful with respect to this federal funding. There are no shortage of capital needs and this aid will provide an opportunity to plan and leverage resources for the benefit of everyone in our community."
"Salem residents should be confident and comfortable in our ability to manage this process appropriately," said Mayor Driscoll. "We have, for the last 12 years in a row, received the Government Finance Officers Association’s Distinguished Budget Presentation Award and their Certificate of Achievement for Excellence in Financial Reporting. Our financial statements are audited annually and our budget practices have been based on professionalism, transparency, and fiscal responsibility. These practices have resulted in, among other achievements, the rebuilding of our local reserve funds from their depletion when I first came into office in 2006 and the upgrading of our bond rating to its strongest level in the City’s history. Salem has experience with managing sizable federal grant awards in a responsible manner, for example our annual CDBG process. In total, Salem successfully receives and manages approximately $12 million in federal fund awards each year already. Our community can be confident that this process will be carried out transparently, strategically, and sensibly."