How the CARES Act impacts state, local governments

The use of the CARES Act by state and local governments offers a unique insight into how that market operates and where vendors might find opportunities.

As most of us know, the Coronavirus Aid, Relief and Economic Security Act (or CARES Act) is a $2.2 trillion economic stimulus bill that was passed by the 116th U.S. Congress, and signed into law on March 27, 2020. A deep dive into the particulars of the act will help technology vendors and systems integrators understand their role in supporting state and local government initiatives to leverage this funding before it expires.

There are two divisions of the CARES Act, in terms of how budget is to be allocated, labeled Division A and Division B.

Division A is focused on keeping workers paid and employed, along with a health care stimulus and a strategy for economic stabilization. The Coronavirus Relief Fund has been allocated $150 billion, state governments $110 billion and local governments $29 billion. Funding is allocated based on population, with each state receiving at least $1.25 billion.

Only local governments with populations over 500,000 are eligible for funding. In the case of 16 states, no local governments meet this threshold. Consequently, the state will receive the entire allocation.

Funds allocated through Division A can be used for eligible necessary expenditures incurred from March 1, 2020 through Dec. 30, 2020, which were not accounted for in the most recently approved budget (that is, as of the date of bill enactment).

It is in Division B, however, that a broader understanding of technology needs under the CARES Act becomes clearer. This aspect of the act allocates emergency appropriations for appropriate health response and ongoing agency operations. These operations span six different state and local market segments. Let’s take a closer look at the technological implications of each.

Health & Human Services. The Disaster Relief Fund allocates $45 billion for this market segment, with the Centers for Disease Control & Prevention receiving $4.3 billion. Vendors with solutions or applications relevant to contact tracing, case management and data analytics would play a significant support role here for state and local organizations alike.

General Government. In this market segment, the rural development fund receives $25 million, with another $400 million going toward elections through HAVA grants. It’s clear that technologies related to cybersecurity, remote work and remote learning will have a play here.

Law Enforcement & Public Safety. In this market segment, state and local law enforcement is allocated $850M. National Guard deployments will see $1.4 billion, Assistance to Firefighter Grants will receive $100 million and Emergency Management Performance Grants will be allocated $178 million. Case management, data analytics and cloud-based data storage solutions are solid candidates for technologies to support this aspect of the CARES Act.

Transportation. Funding for this market segment is apportioned as follows: The Transportation Security Administration will receive $100 million. Airports are to receive $10 billion and transit systems are allocated $25 billion. Companies offering artificial intelligence and machine learning, as well as advanced analytics and cybersecurity solutions would do well to develop a case for their technology in support of transportation organizations.

Community Services. In this market segment, the Economic Development Administration will see $1.5 billion. One billion dollars will go to the Community Services Block Grant and $5 billion will go to the Community Development Block Grant. The Corporation for Public Broadcasting will receive $75 million. Technology implications include solutions for asset management, application modernization and case management.

Education. This market segment has specific funding allocations for K-12 education as well as higher education through the Education Stabilization Fund. The Institute for Museum & Library Services will receive $50 million.

The Education Stabilization Fund allocates 1% of the $30.75 billion for states with the highest coronavirus burden. The Elementary & Secondary Emergency Relief Fund will award approximately $13.2 billion of the total to state education agencies to support local education agencies. The Governor’s Emergency Education Relief Fund will award approximately $3 billion to state governor’s offices, and The Higher Education Emergency Relief Fund will award approximately $12.5 billion of the funding to students and higher education institutions through multiple programs. Technology implication here include remote learning applications, network management and security.

It’s uncertain when the business of government will be able to return to normal operations. Until then, understanding the implications of how the CARES Act budget is being distributed to state and local government organizations in a variety of market segments will give IT companies opportunities to work with government for the public good.

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