Sacramento received the largest chunk of unallocated federal money in its history back in May. The $89.7 million windfall, designated by the federal government to be used as coronavirus recovery aid, was to be allocated into “buckets” that would address areas like workforce development, small business assistance and youth programming.
But the catch was that all the money had to be spent on coronavirus-related expenses before the end of the year. Now, with just a few months left, the city still has $60 million in federal funds to issue to the nonprofits that were awarded the money.
The reason for the delay? City officials said they’ve been slow to distribute the remaining money because they’ve taken a different approach compared to other cities and counties that received federal funding.
“The City’s overall COVID-relief response has been far more comprehensive and holistic than other cities, with programs such as small business loans, workforce retraining and digital equity for families taking more time to develop and implement than simply using CARES Act funding to backfill other parts of City spending,” a statement from the city said. “The City has made transparency, accountability and fairness a priority with all of its relief programs and is working to strike a balance between diligence and speed.”
The city’s approach stands in contrast with the county’s, which received about $181 million and has already used the majority of the funds. The county used most of its aid on sheriff’s office payroll and benefits, and spent the rest on paying county employees pandemic-related overtime, building out virus tracing and increased testing.
County spokesperson Kim Nava said that the county has allocated some money for nonprofits, but they are issuing the funds differently. Nonprofits will expense costs to the county as they go, rather than receiving the money in full through contracts.
Mayor Darrell Steinberg stated when the city’s federal check arrived that he wanted their approach to focus on spending the money on the city’s underserved communities, because Measure U tax dollars originally promised to go towards these neighborhoods would be going towards filling budget gaps as a result of the pandemic.
But the money must be used in full — not just distributed — before the end of this year. Now, nonprofits who had programs planned around receiving the money arriving are concerned they may not have enough time to use it before the deadline.
For Stephanie Nguyen, executive director of Asian Resources, a nonprofit serving the South Sacramento community, her organization was set to receive $300,000 of the city’s federal coronavirus relief funding to train people to virus trace and do community outreach around the pandemic.
The money was approved by the city at the end of August, but the organization hasn’t received any.
“But my understanding is they’re working through it,” Nguyen said. “What we’ve decided to do is still get the ball rolling and start working on it ahead of time, so that when the money does come in, we’re able to jump right on it and start the work immediately.”
Her group has already started some aspect of the training via Zoom calls. She added that in the worst case scenario, if the money comes too late for it to be used for the training programs, her group will look to just convert the grant into stipends to go directly to community members in need.
It was unclear, however, if the city’s contract with Asian Resources would allow that.
If nonprofits aren’t able to use their money before the end of the year, it would go back to the city, and if the city isn’t able to use their funds before the deadline, it will be returned to the federal treasury.
City officials said the main reason for the delay in distribution is because the city must document how each dollar is spent according to federal guidelines for the use of these funds. They are also writing up individual contracts between the city and each non-profit receiving information before the money can be sent out.
Officials said that because this is an unprecedented amount of federal money, there isn’t enough city staff to process all these contracts as quickly as everyone would like.
“The City recognizes that time is of the essence and is working hard to distribute all funding as soon as possible to both help people in our community and meet federal spending deadlines,” officials said in a statement regarding the delay.
Some organizations have received their federal funds already, like The Center at the Sierra Health Foundation, which received $2 million from the city to create a number of youth and social service oriented-programs.
They were able to launch their programs before actually receiving money from the city because they were financially able. Richard Dana, director of community and economic development for the Center at the Sierra Health Foundation, said that he could see the distribution of federal funds being a hang-up for smaller nonprofits who are having to wait on money to start.
“I think the CARES Act funding timeline, it was not designed to support the most vulnerable population,” Dana said. “It was designed to give money to cities and get it out the door. They wouldn’t put a timeline on it if they really wanted it to be spent in the communities that need it the most.”
Kevin Dewayne Brown is the founder and CEO of People Working Together United, a nonprofit organization that trains people to work in the construction trades. His organization was awarded $675,000 to build an apprenticeship program that could provide a career path to union construction jobs for youth in certain underserved zip codes around the city.
But so far, he said he hasn’t seen the money.
“If the city got the money in May, and we still are yet to receive money, it really cuts down the window of time in which we need to deliver these services,” Brown said. “All services according to the requirements must be delivered by December 31, and that’s a challenge.”
Brown’s program is set to start next week. He said he is willing to pay any start-up costs out of pocket if the funds haven’t arrived by then.
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