LEADING INSIGHTS AGA INTERGOVERNMENTAL FORUM:
MANAGING AND OVERSEEING PANDEMIC RELIEF FUNDS

AGA Intergovernmental Forum: Managing and Overseeing Pandemic Relief Funds

By David Zavada, Senior Partner

The volume and speed of pandemic relief programs overwhelmed traditional benefits delivery systems and processes. Benefits were delivered in record time, but at the cost of increased improper payments and fraud. Enabling both speed and adequate control in future crisis situations will require investments in systems and technology and data sharing arrangements to deliver benefits accurately and efficiently. That was the consensus of an intergovernmental discussion about the management and oversight of pandemic relief programs at AGA’s Professional Development Training (PDT) 2022 from program and financial managers, as well as oversight representatives.

Initial Response

All three panelists emphasized the gravity of the public health situation and economic consequences during the early months of the pandemic in 2020. This necessitated a large and rapid response from the government.

A total of $5+ trillion dollars was provided through six pieces of legislation that funded new and existing programs and provided multiple rounds of supplemental funding to these programs. The broad scope of the relief was unprecedented – from Unemployment Insurance (UI), Economic Impact Payments, health care providers, small businesses, airlines, state and local government, housing, and others.

The enormous size of the pandemic relief necessitated an oversight response as well. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) included a provision to establish and fund the Pandemic Response Accountability Committee (PRAC). The PRAC is comprised of 21 Inspectors General (IG) to oversee the pandemic relief programs and a data analytics center, the Pandemic Analytics Center for Excellence (PACE), to collect data and analyze risk across these programs. Given the intergovernmental nature of many pandemic relief programs, the PRAC is also serving as a “unifying force” between federal and state auditors to coordinate and share results of oversight conducted related to pandemic relief programs.

Challenges and How They Evolved

The most significant challenge overall was the overwhelming volume of the pandemic relief programs. For example, the Small Business Administration (SBA) had since its creation in 1953 approved 2.2 million loans for a total of $66.7 billion under its Economic Injury Disaster Loan (EIDL) program. In contrast, by July 31, 2020, it had approved 3.2 million pandemic disaster loans, totaling $169.3 billion.

Panelists also pointed to the large upsurge in unemployment claims. The unemployment rate had traditionally been around 5% but skyrocketed to almost 15% in early 2020. This overwhelmed many state UI systems, which historically did not have the capacity to adjudicate this type of volume. Nor were the processes designed to handle such volume.

Secondly, given the gravity of the pandemic, the focus was on getting money out quickly, exacerbating the risk associated with these programs. There was little time for federal and state governments to follow their routine processes. Consequently, many pandemic relief programs had to initially rely on self-certification by the applicant as the only eligibility qualifier. Panelists noted that this resulted in a quick shift to a pay-and-chase mode, where the collection of benefits paid is much more difficult than establishing control on the front end.

Much of the fraud, improper payments, and self-certification processes occurred in the early part of the pandemic relief programs, primarily through the CARES Act. Panelists noted that, over time, program controls were put back in place for the American Rescue Plan Act (ARPA) round of funding. In February 2021, the Office of Management and Budget (OMB) issued OMB Memo 21-20 that required collaborative risk assessments be performed over the pandemic program design.

What Went Well/What Did Not

Delivering an unprecedented amount of benefits to a variety of individuals, businesses, and other targeted organizations to avoid economic catastrophe was the predominant success story. Panelists noted that the agility and innovation needed to address volume and speed requirements to deliver benefits pushed governments to do things differently than in the past.

Over time, governments began to streamline processes and establish essential controls as pandemic relief programs grew and evolved. The sentiment was that this type of review of processes and controls will continue.

Another success was the level of collaboration within and between governments that occurred to meet the challenges of the pandemic relief. The best success stories were where multiple program, financial and oversight offices were involved early in program design and delivery. Similarly, on the oversight side, the PRAC has prioritized collaborating and sharing best practices across federal IG offices and with state auditors and the Government Accountability Office (GAO).

Both the Department of the Treasury (Treasury) and the PRAC have established data- and technology-focused oversight methods that identify risk and check for compliance in an automated fashion. The Treasury established a new Office of Recovery Programs (ORP) to oversee a number of new grant programs in a data-driven and highly-automated way – singling out high-risk grantees and using Robotics Process Automation (RPA) tools to check compliance. Similarly, the PRAC established the PACE that draws data from various sources and analyzes the data across all pandemic relief programs for risk and compliance.

What did not go well and remains a challenge is access to and sharing data across programs and between governments to deliver benefits timely and accurately to the intended recipients. Some of these barriers are intentional, whereas some just take time to establish agreements and access.

Preparedness

Delivery of pandemic relief benefits required workarounds and innovative approaches under daunting circumstances. This experience led to the recognition of the need to invest in systems, technology, and streamlined but controlled processes to deliver benefits timely and accurately in the future. Simultaneously, greater data access and sharing, to the extent possible, within and between governments would improve efficiency and accuracy and better prepare us for a future crisis. It was noted that the ability to use quality data and to achieve transparency begin at the front end in designing reporting mechanisms to collect robust data at all levels. Also, having an agile organizational capacity to respond across the agency and government, utilizing data and able to scale up and down quickly would improve preparedness. Further, as some program managers and auditors put it, “be intentional about risk” when these situations occur. That is, understand the initial trade-offs between speed and control and have a plan to mitigate the risk over time. Better yet would be to have streamlined and efficient processes, systems and technology, and access to critical data to avoid an improper or fraudulent payment from occurring.

This Leading Insights summary was based on an AGA Intergovernmental Forum held July 17, 2022, as part of the AGA PDT in Anaheim, California. Thank you to the panelists for their insights: Dave Lebryk, Fiscal Assistant Secretary at the Treasury, Russell Fong, Chief Administrative Officer and Deputy Controller in the California State Controller’s Office, and Bob Westbrooks, Executive Director of the PRAC..