Lessons from the 2009 Recovery Act for an Inclusive Recovery from the Pandemic

The federal government and many state and local governments are placing equity at the forefront of their pandemic relief efforts. But to effectively follow through on this important goal, policymakers can learn from initiatives undertaken in response to the Great Recession.

In a new research brief, we described lessons from the 2009 American Recovery and Reinvestment Act (ARRA) on transparency, accountability, equity, and inclusion. And we showed how that experience can inform current state and local actions to leverage their American Rescue Plan (ARPA) funds and other actions to enhance an inclusive recovery from the COVID-19 pandemic.

When Congress passed the ARRA (also called the Recovery Act), state and local governments were given two broad rules for spending federal funds: 1) avoid waste, fraud, and abuse; and 2) spend it fast.

The first goal largely met with success. The Recovery Act created new institutions and processes for overseeing the uses of federal funds and these changes improved transparency and accountability. State and local officials who struggled to meet new reporting requirements without sufficient resources collaborated with other jurisdictions and nonprofit and private-sector partners.

Achieving the second goal came at a cost. Spending Recovery Act funds quickly made it challenging for state and local governments to implement equity-informed projects. And some federal agencies prioritized equity and inclusion unevenly absent an overall legal mandate.

Our review found that the record fiscal relief delivered to state and local governments in 2009 likely helped mitigate a wider economic collapse. However, most aid expired in 2010, when state and local budget shortfalls were reaching their peak. As a result, state and local employment and economic growth declined, which slowed the national economy for years after the Great Recession officially ended. Some state and local officials also felt that the Recovery Act funds were insufficient to implement equity strategies and that their first priority was to close recession-induced budget gaps.

The recovery from the recession caused by the COVID-19 pandemic should address persistent inequities in health care and economic status. Throughout the pandemic, Black, Hispanic or Latino, and Native American communities have been more likely to suffer from COVID-19, medically and from job losses. These racial inequities impose burdens not just on those directly affected but on our economy overall. For example, one study has shown the opportunity costs of long-standing racial disparities in economic opportunities and outcomes could approach $23 trillion over a 30-year period.

ARPA’s state and local funding, especially State and Local Fiscal Recovery Funds, explicitly recognizes the importance of equitable outcomes. Unlike ARRA, state and local governments have several years to spend ARPA funds, giving them more time to plan how to use its funds to respond to community needs.

States and localities across the country, from Rockland County, NY to Victoria, TX, are using surveys and town hall meetings to gather feedback on how to use their ARPA allocations. In some places, such as Richmond, VA and Milwaukee County, WI, government officials are also focusing on ways to reverse historical disinvestments in certain communities. State and local leaders can continue to use a wide range of methods (such as surveys, town halls, focus groups, and social media) to engage residents and community-based organizations. They also can publish easily accessible reports that highlight how community views were incorporated into ARPA decisions.

State and local governments have an opportunity to create unprecedented investments in the communities that were disproportionately harmed by the pandemic and are at risk of being left out of our nation’s economic recovery. And with equity as an administration-wide priority, the federal government is using guidelines, webinars, and technical assistance to help achieve this goal.

Federal, state, and local governments can use their ARPA reporting to highlight the importance of equity. ARPA also may provide a foundation for state and local leaders to incorporate equity when distributing other federal funds – such as the recently enacted Infrastructure Investment and Jobs Act and the Build Back Better Act, assuming it passes Congress.

Given the research on huge potential economic gains from addressing racial inequities, prioritizing equity and inclusion now may also pay off for states and localities in the future.

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