Slow-spending R.I. has two months to disperse $900M in CARES Act money or risk losing it

CRUCIAL CREATION: Dr. Pablo Rodriguez, medical director of community relations at Care New England Health System, says forming an independent committee to plan the state’s vaccine distribution will build trust in the process. / PBN PHOTO/ELIZABETH GRAHAM
CRUCIAL CREATION: Dr. Pablo Rodriguez, medical director of community relations at Care New England Health System, says forming an independent committee to plan the state’s vaccine distribution will build trust in the process. / PBN PHOTO/ELIZABETH GRAHAM

Rhode Island officials rejoiced when they learned in March that the state would get a $1.25 billion slice of the federal coronavirus relief package. Months later, a new problem has emerged: how to spend it quickly yet wisely before the Dec. 30 deadline.

State records show that as of Oct. 1, Rhode Island had spent only about one-quarter – or $299.6 million – of its Coronavirus Aid, Relief, and Economic Security Act funds since it was allocated in the spring.

Democratic Gov. Gina M. Raimondo’s administration has been holding on to most of the money in hopes that it would get more flexibility in how the state could spend it, possibly using some of the funds to close a gaping state budget deficit. That flexibility hasn’t come, though some national organizations and federal lawmakers are pushing for an extension of the deadline.

Meanwhile, small-business advocates, including Democratic Lt. Gov. Daniel J. McKee, and state Republicans have seized upon how the administration has handled relief efforts. GOP leaders note all other New England states have dispersed a far higher percentage of their CARES Act appropriations as the deadline approaches, including Vermont, which has used or earmarked 100% of its $1.25 billion share.

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“What are we going to do by Dec. 30? We’re going to blow that money all over the street, and how responsible is that going to be?” said Rep. Blake Filippi, R-Westerly, the House minority leader. “We should be making smart grants, not rushing around at the last minute to get the money out.”

CHIPPING AWAY

The Raimondo administration has stepped up its allocation of federal COVID-19 aid in recent months.

In July, the governor announced the creation of a job-training initiative called Back to Work RI, using $45 million in federal relief money. Segments of the program continue to be rolled out, including a “virtual career center” set to be online at the end of November.

Late last month, R.I. Commerce Corp. unveiled a $20 million relief program aimed at the hotel, arts and tourism sectors. To qualify, organizations had little more than a week to apply for grants of up to $1 million that need to be spent by Dec. 30.

A day later, Raimondo launched a $5 million grant program aimed at helping small businesses pay for equipment and internet access so employees can work from home.

And earlier in October, the governor declared that she was willing to spend “tens of millions of dollars” for the state to evaluate and distribute future COVID-19 vaccines. An advisory panel has been assembled but no budget has been drawn up. Some advisers say a vaccine won’t be ready until at least January, well past the deadline to spend the CARES Act funds.

The Raimondo administration argues that it was prudent to open the spigot slowly on the stimulus money. So far, the aid has funded crucial public health programs, including extensive COVID-19 testing and contact tracing.

If the state is forced to spend the rest of its $1.25 billion share immediately, future public health spending might have to come from the state’s general fund into 2021 and beyond, said Brett Smiley, director of the R.I. Department of Administration.

“While the state intends to use every dollar of federal aid by Dec. 30 to meet the health and safety needs of Rhode Islanders, we are hopeful that the deadline will be extended,” Smiley said. “This is important because the response to this public health crisis will not end on Dec. 30.”

THE PAYOUT: The state has allocated tens of millions of dollars in CARES Act funding, including to build field hospitals such as the one pictured at the R.I. Convention Center. But now a Dec. 30 deadline to spend the rest of stimulus funding is fast approaching. / COURTESY LIFESPAN CORP.
THE PAYOUT: The state has allocated tens of millions of dollars in CARES Act funding, including to build field hospitals such as the one pictured at the R.I. Convention Center. But now a Dec. 30 deadline to spend the rest of stimulus funding is fast approaching. / COURTESY LIFESPAN CORP.

HOSPITAL HELP

Where has the bulk of CARES Act money gone so far?

While $77.5 million has been spent on “supplies” as of Oct. 1, according to the state’s COVID-19 Transparency Portal, $95.6 million has been spent on “health care” and another $30 million was expended on surge preparation.

Indeed, keeping the hospitals of Rhode Island going, including the three field hospitals built in case of an overwhelming surge of COVID-19 cases, has been a priority for the state.

Lifespan Corp. – the state’s largest hospital group – received $130 million in CARES Act funds from the state and federal governments through August, while Care New England Health System – the second-largest hospital group – received $62.4 million.

According to Raina Smith, CNE spokeswoman, the funds were mostly used to offset lost revenue due to the virus in order to maintain staffing and cover additional expenses. CNE lost approximately $30 million for the fiscal year.

Jane Bruno, Lifespan’s vice president of marketing and communications, said the health care system had treated the majority of hospitalized COVID-19 patients in Rhode Island in the spring, and is preparing to do so again as the state sees another surge of new cases.

“It is premature to determine if the current level of state and federal funding will be enough for Lifespan to remain well-equipped to provide vital health care services for the long term,” said Bruno. “There are just too many unknowns.”

The field hospitals had a hefty price tag, with the state spending about $25 million for their construction and operation. The R.I. Convention Center facility had 500 beds and costs reaching more than $4 million for leasing and more than $6.6 million for the construction and maintenance – all covered by CARES Act funds and dollars from the Federal Emergency Management Agency.

DELIVERY MAN: Lt. Gov. Daniel J. McKee meets with Kim Fortier, co-owner of Me Too Preschool in Woonsocket, as part of his effort to get businesses to apply for the Restore RI grant programs. He is also delivering face masks. / PBN PHOTO/MICHAEL SALERNO
DELIVERY MAN: Lt. Gov. Daniel J. McKee meets with Kim Fortier, co-owner of Me Too Preschool in Woonsocket, as part of his effort to get businesses to apply for the Restore RI grant programs. He is also delivering face masks. / PBN PHOTO/MICHAEL SALERNO

PRICEY PLAN?

As the CARES Act deadline looms, a large chunk of the relief money the Raimondo administration is looking to spend is aimed at the public health plan after a COVID-19 vaccine is approved.

An eventual vaccine may come under political scrutiny and R.I. Department of Health Director Dr. Nicole Alexander-Scott says the 16-member subcommittee of the state’s established Vaccine Advisory Committee – made up of doctors, pharmacists, epidemiologists, and community and nonprofit leaders – will present clear-cut data during outreach efforts.

“The success of a vaccine is going to depend on the trust that the community has on the government to deliver this to the people,” said Dr. Pablo Rodriguez, a subcommittee member and the medical director of community relations at Care New England. “The politicization surrounding COVID-19 itself, vaccines and the CDC has already created a lot of distrust. Having an independent committee to make sure distribution is done well is exactly what Rhode Island needs.”

But how much money the state needs to dedicate to the effort remains unclear.

The panel is slated to meet weekly to start planning for a vaccine, including reviewing a proposed 51-page plan to ensure the state’s most vulnerable residents receive the vaccine first.

Dr. Karen Tashima, director of clinical trials at Lifespan’s Immunology Center, said an effective vaccine could start to be distributed as early as January.

The stimulus money would go toward vaccine delivery, appropriate storage, staff and sites to run mass vaccination clinics, distribution tracking and administration, and a vaccine-awareness campaign, according to RIDOH spokesman Joseph Wendelken.

Potentially dedicating “tens of millions of dollars,” as Raimondo suggested, to the planning and eventual distribution of a vaccine doesn’t seem outside normal public health standards, according to Todd Olszewski, a Providence College professor of health policy and management.

“[That amount] is very much public health doing its job,” said Olszewski, who recently co-authored a book on vaccination. “We don’t want to make the same mistakes there were in the spring with the lack of [personal protection equipment] distribution and testing.”

RELIEF CREW: Kyle Bennett and Kristina Brown of the United Way of Rhode Island are helping to oversee the rental-assistance program Safe Harbor Housing, which has used some CARES Act funding. / PBN PHOTO/
MICHAEL SALERNO
RELIEF CREW: Kyle Bennett and Kristina Brown of the United Way of Rhode Island are helping to oversee the rental-assistance program Safe Harbor Housing, which has used some CARES Act funding. / PBN PHOTO/
MICHAEL SALERNO

RESTRICTED FUNDS

There certainly has been no shortage of need for other types of relief.

Many of Rhode Island’s small businesses are struggling to remain afloat, many Rhode Islanders have lost jobs and the most-needy people are having trouble making rent payments.

According to state records, $21.4 million of the state’s federal stimulus money had been spent on “grants and assistance” as of Oct. 1. Getting the aid to where it’s needed the most has proved challenging.

Months ago, CARES Act money was allocated to rental assistance in two programs: the $7 million Safe Harbor Housing Program administered by United Way of Rhode Island; and $6.5 million HousingHelp RI, overseen by Crossroads Rhode Island and the R.I. Housing and Mortgage Finance Corp.

The programs were quickly inundated with applications, many of which did not include bank account information of the applicants and documentation showing the loss of income due to COVID-19, both required to receive rental assistance.

Many needy families don’t have bank accounts or income documentation, say those reviewing applications. Adding to the difficulties: news of the relief programs hasn’t reached many families whose first language isn’t English, according to Kyle Bennett, director of policy and research at the United Way.

As a result, a combined $920,518 had been dispersed to 246 households as of mid-October, a fraction of the more than 7,150 applications received between the two relief programs.

Bennett said the state is trying to relax some of the regulations, and the Safe Harbor Housing Program staff will be beefed up in the coming weeks to help process the overwhelming number of applications already received.

WHERE HAS R.I. CARES ACT MONEY GONE? The state’s COVID-19 Transparency Portal details how the federal stimulus money has been spent (expenditures) and what the state has issued a purchase order for but has yet to pay out (encumbrances). The figures are from Sept. 30, the last time that information had been updated as of Nov. 4. / SOURCE: R.I. COVID-19 Transparency Portal
WHERE HAS R.I. CARES ACT MONEY GONE? The state’s COVID-19 Transparency Portal details how the federal stimulus money has been spent (expenditures) and what the state has issued a purchase order for but has yet to pay out (encumbrances). The figures are from Sept. 30, the last time that information had been updated as of Nov. 4. / SOURCE: R.I. COVID-19 Transparency Portal

Bennett said United Way recently approved $95,000 of rental assistance for 23 households from the Safe Harbor Housing Program, but he added that it’s far from being enough. He said he sees a tsunami of evictions on the horizon.

Karen Santilli, Crossroads CEO, said the nonprofit has already distributed the $500,000 it received in CARES Act funds for HousingHelp RI and dipped into its own budget to provide another $160,000 worth of rental relief to additional families.

But nearly 3,000 households have been disqualified based on the restrictions, and the program is no longer taking new applications while ones already in the system are reviewed. Santilli said it’s up to the state, not Crossroads, to reopen the application pool.

For state officials, overseeing the rental assistance money – like many other aspects of the pandemic and how to use COVID relief funds – has been difficult. After Safe Harbor Housing and HousingHelp RI started to streamline the application process and send out money to needy residents, the federal government announced an eviction moratorium through the end of the year.

“This is just indicative how this whole year has gone,” Smiley said, noting a lack of guidance from the federal government. “We try to meet a need, but things are changing quickly. Then there’s new information and we have to evolve to meet different needs.”

There have been hitches in getting help to small businesses, too.

In July, R.I. Commerce committed $100 million to provide grants to struggling small businesses in a program called Restore RI.

Three months later, a little more than $14 million in grants has been dispersed to more than 1,650 businesses. Like the rental-relief applications, the initial requirements were difficult for some of the smallest businesses to meet, with Raimondo acknowledging in September that she was “not satisfied” with the status of the program.

R.I. Commerce has since changed the applications and opened the program to sole proprietors, nonprofits and child care facilities while doubling the maximum grant size from $15,000 to $30,000. While Commerce officials say the amount of grants have increased, the changes still haven’t prompted many business owners to reapply, according to McKee.

McKee, who has been critical of Raimondo’s use of the federal stimulus money, has visited businesses in various areas of the state, encouraging them to apply for the Restore RI grants.

In two letters last month to Raimondo, McKee expressed concern about the impending Dec. 30 deadline and suggested that another $75 million be allocated to Restore RI.

“Congress and the [Trump] administration have not been sufficiently reliable where Rhode Island should gamble with small-business funds and risk having them expire on Dec. 30,” he said in a letter on Oct. 13.

Chris Parisi, founder of Trailblaze Marketing in Providence and leader of the Rhode Island Small Business Coalition, says small-business owners are frustrated.

“They feel as though all the work they put in for decades may be gone in an instant,” Parisi said. “We need more money in the hands of more small-business owners. And we need it as soon as possible.”

UNEMPLOYED

With the state facing a budget shortfall that could run into the hundreds of millions of dollars, Raimondo had held onto a large portion of the federal stimulus money, hoping to gain more flexibility in plugging fiscal holes to avoid cuts to personnel and services.

Michael DiBiase, CEO and president of the Rhode Island Public Expenditure Council, wonders whether Raimondo’s desire to use some of the COVID-19 aid to plug budget holes has come at the expense of offering more relief to businesses and individuals.

“These funds were supposed to be for real people and not just for [the] government,” DiBiase said. “Individual Rhode Islanders and Rhode Island businesses, [which] have been most hard hit, should have received a larger portion of these funds.”

DiBiase, Raimondo’s former director of the R.I. Department of Administration, had suggested earlier this year that the state use a portion of the CARES Act money to replenish Rhode Island’s unemployment trust fund, which like many states has been depleted during the coronavirus crisis.

Such a use of the money is allowable under the CARES Act guidelines, and several states have taken that action, including Georgia, which transferred $1.5 billion into its unemployment trust fund last month.

Rhode Island’s trust fund stands at $185 million right now, down from $538 million at the start of the year. About 77% of what the state has paid out in benefits has come from federal initiatives such as the Pandemic Unemployment Assistance program, according to the R.I. Department of Labor and Training.

When asked whether the Raimondo administration is considering this use for the remaining federal stimulus money, Smiley’s office responded:

“All options, including the possibility of using CARES Act funds to replenish the state’s unemployment insurance trust fund, are under consideration at this time.”

Alexa Gagosz is a PBN staff writer. Contact her at Gagosz@PBN.com.

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