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As federal deadlines to spend Baltimore’s windfall of pandemic aid creep closer, a pivotal question hangs in the balance: Will the city, with its notoriously slow gears and occasional troubles with federal funds, be able to land its broad and flashy slate of new projects?
The city’s plans to deploy $641 million in American Rescue Plan Act funding to tackle an array of entrenched problems — from vacant homes to violent crime to helping low-income residents access internet — have chugged along gradually. As of the end of February, the city had spent just north of $85 million. But many of the city’s most intensive projects remain in preliminary or draft stages.
A series of internal evaluations completed by the city earlier this year, and obtained by The Baltimore Banner through a records request, offer a window into the challenges Baltimore may face in executing its projects, as well as the risk that some of them come up short. The risk evaluations, assessing dozens of city agencies and outside nonprofits, measure the possibility of organizations running afoul of federal compliance standards. Roughly 38% of the city’s assessed grant recipients are listed as “Medium Risk/High Risk,” which includes most of the agencies with the largest allotments of the city’s millions.
The remaining share of agencies and nonprofits, in many cases handling smaller allowances, received “Low Risk” designations. Assessments for a handful of organizations have not yet been completed.
Some risk in this process is no surprise, especially in light of the agenda laid out by Mayor Brandon Scott, who has referred to the potentially “life-changing” effects of the influx and prioritized getting money to groups and communities in disinvested parts of the city.
And though the first-term Democrat has spread the city’s federal aid across dozens of organizations and nearly as many projects, his spending plan also includes some heavy lifts, like his $50 million commitment to foster a public health approach to violent crime and his $100 million investment in eliminating vacancy and expanding access to affordable housing. Other projects require extensive construction work that hinges on backlogged supply chains, such as plans to renovate pools and rec centers and build out fiber internet infrastructure.
The chief of the city’s federal stimulus office stressed that her team’s evaluations should not be seen as a reflection of risky decision-making or irresponsible spending on the part of the city. The evaluations reflect the risks of projects — not the competency of recipients — said the Mayor’s Office of Recovery Programs Director Shamiah Kerney, accounting for the number of projects and partners an agency is juggling, among other factors. Construction projects were generally assessed as higher risk because of their reliance on supply chains.
But Kerney also said that as federal deadlines get closer, she is making it clear to agencies and other grant recipients that the city could pull money back and redirect it if it doesn’t look like projects will come together in time. The city must earmark all of its American Rescue Plan Act money by the end of 2024 and spend the money by the end of 2026.
“We have no choice but to be nimble and flexible,” Kerney said. “This is a city with far too much need to leave any money on the table.”
Both the mayor and Kerney, a former auditor at the federal and local level, have pointed to a history of mishandled federal funds in Baltimore — such as when federal housing officials deemed the city a “high risk” grantee for botching lead paint abatement grants, or later demanded the city repay millions over mismanagement of a homelessness grant — and made it a top priority to keep everything between the lines this time around.
Alan Berube, director of the think tank Brookings Metro, argued for the merits of a local government taking on ambitious — and in some cases, higher risk — projects. Cities like Baltimore could opt for safe spending plans that might provide a level of stability, or, as Berube advised, they could aim to make the most of a rare shot at rectifying complex, long-standing problems by pursuing “transformational” ideas.
“This is not going to happen again, probably in our lifetimes,” said Berube, who runs a dashboard tracking American Rescue Plan spending by local governments. At the end of the day, he said, cities should want to be able to say: “We seized this once in a generation opportunity we had to do that. And maybe we succeeded, maybe we failed, maybe we came out somewhere in between. But at least we tried.”
The risk assessments, which Baltimore officials were required to complete under federal law, provide only a limited view of the true risk Baltimore has shouldered with its investments of pandemic aid. The city used a lowest common denominator approach in its evaluations, Kerney explained, with even a single higher risk project on an agency’s docket resulting in a “Medium Risk/High Risk” tag. That means it’s not possible to say from the evaluations how much of the city’s $641 million is budgeted toward higher risk versus lower risk projects.
The risk evaluations are also based on a broad set of information, according to Kerney and descriptions of her office’s criteria laid out in the evaluations. Kerney and her team drew on both qualitative and quantitative information to consider the complexity of projects, the size of awards, an awardee’s grant management experience, its track record in audits and any internal accountability protocols, according to an explanation provided in each evaluation.
Mitchell Weiss, a Harvard Business School professor focused on public sector innovation, has advocated for governments to test-drive new ideas with their once-in-a-generation federal stimulus. There’s a difference between taking on a lot of risk for compliance failures and a lot of risk because projects are new and innovative, Weiss said. It may be hard to separate one from the other based on Baltimore’s risk evaluations, the professor said, but taking on risk for the sake of ambition is more palatable to him than the risk of compliance problems.
“The bigger risk to me is using the monies in ways that are marginal, in ways that are overly cautious, in ways that don’t actually change anything,” he said.
Many of the “Medium Risk/High Risk” designations went to city agencies carrying the bulk of Baltimore’s American Rescue Plan allotments. Those agencies include the Department of Housing and Community Development, which is overseeing almost $74 million for blight elimination and affordable housing; the Office of Information and Technology, which is overseeing $35 million to expand access to affordable internet; the Department of Recreation & Parks, which is overseeing $41 million for improvements to rec centers, pools and parks; and the Mayor’s Office of Neighborhood Safety and Engagement, which Scott stood up with a $50 million investment aimed at expanding public health approaches to violent crime.
Still, not every agency with a healthy portion of the stimulus pie got the “Medium Risk/High Risk” tag. The Mayor’s Office of Employment Development received a low risk categorization for its $30 million investment in jobs and youth programs. Kerney’s office used the risk designations to set new requirements for the frequency of an organization’s status check-ins with the administration.
In a statement, Scott spokesman Cirilo Manego said the administration has prioritized spending its American Rescue Plan money to build a better city for all residents.
“The medium/high risk assessment designations are a reflection of the fact that, like cities across the country, we are dealing with a never-seen-before influx of federal dollars,” he said, and the city has built out robust reporting and accountability infrastructure across agencies to make sure that all funds are spent on time and in accordance with federal rules.
The city’s Department of Planning received one of the city’s higher risk designations and is overseeing $28 million, largely for a program addressing food access in poor neighborhoods and another that pays residents to pick litter and trash in their own communities. Director Chris Ryer noted that his department is partnering with many small and under-resourced community groups for its neighborhood cleaning program, a key component of the model and a likely explanation for the agency’s higher risk tag.
“It’s not like we’re trying to hire the United Way here,” said Ryer, who explained that many of the community groups his agency is funding have little experience with federal audit and accounting requirements. “All these guys have to learn all this stuff, like, yesterday.”
Exactly what consequences cities may face if they fall short of the federal government’s extensive standards isn’t clear, said Glencora Haskins, a senior Brookings researcher and one of Berube’s colleagues. Some local governments have voiced anxiety that they don’t have more explicit assurances from the feds that there will be leniency for honest mistakes, such as minor accounting errors.
Kerney’s office has been able to move grant contracts through the Baltimore bureaucracy with impressive speed, Ryer said. At this point the planning department isn’t hearing warnings that it could see some of its federal funds pulled back, though Ryer said the message from the administration may change as pressure increases later this year.
“There are definitely snafus along the way,” he said. “But we knew these deadlines from the beginning. So, so far, we’re okay.”
adam.willis@thebaltimorebanner.com
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Adam Willis covers city government for The Banner, including the impacts of the large COVID-19 stimulus package that Baltimore received from the federal government.
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