On Monday, June 27, Cleveland City Council met for a Caucus Meeting that lasted about three and a half hours to discuss two agenda items related to the American Rescue Plan Act (ARPA) funds that are in the city’s coffers. Because the meeting was a Caucus Meeting, no legislation was formally introduced; rather, the meeting offered a time for council members to ask questions and have discussion about the issues on the table.
The city currently has $160M of unencumbered cash in its general fund.
Finance Department proposes putting surplus funds into city reserves
The first agenda item was a presentation by Jim Gentile on behalf of the Finance Department on planning for future obligations and contingencies. The city currently has $160M of unencumbered cash in its general fund and the Finance Department would like to transfer $20M to the Rainy Day Fund and $90M to a new special revenue fund that will operate as a reserve to pay city workers for compensated absences (sick and vacation time). According to Gentile, these reserves combined would ensure the city would have about four months’ worth of reserves to continue operations should the city face an economic downturn, and could also lead to upgrades in the city’s bond ratings, which would lower their borrowing costs.
Several council members had questions for Gentile about whether the city would be allowed to move the funding into the Rainy Day Fund (as that is not an eligible use for ARPA funds under federal rules). The sole reason the city has $160M in its coffers is because of ARPA and CARES Act funding. Gentile clarified that the city has been working with their auditor and that all of the $108M in ARPA funds that had been transferred to the general fund for revenue loss recovery had been expended on other eligible uses (primarily public safety and public health expenditures). The money that remains in the general fund, while it would not be there if not for ARPA, is not ARPA funding and is therefore not subject to the ARPA spending rules issues by the U.S. Treasury Department. This is similar to how Cuyahoga County handled their revenue loss dollars from ARPA. The following graphic illustrates this funding flow.
Council President Griffin proposes spending plan for $53 Million in unallocated ARPA funds
The second agenda item was to discuss an initial proposal by Council President Blaine Griffin on how the city should spend $53M in unallocated ARPA funding from the first tranche of funding. Council President Griffin shared his proposed overall priorities for the funds, which focus on children, seniors, and families.
Council President Griffin shared his proposed overall priorities for the funds, which focus on children, seniors, and families.
City Council policy staff Jessica Colombi and Anne Tillie presented an itemized list of proposals for consideration, which they noted would need to be whittled down a bit further since they totaled more than $53M, and some items did not yet have amounts tied to them. Over the past several months, policy staff solicited feedback from Council Members about their ARPA priorities, and the list reflects the summary of those conversations. Several of the proposed line items would be granted out to service-providing nonprofits in the community, including:
- Birthing Beautiful Communities to reduce infant mortality levels ($2M)
- Cleveland Rape Crisis Center &, Journey Center for Safety and Healing to support victims of domestic violence and child abuse ($2.5M)
- Canopy Child Advocacy Center to support victims of child abuse ($500,000)
- ADAMHS Board to support those experiencing mental health crises, addiction, and trauma (TBD)
- Pre4CLE to explore the implementation of Universal Pre-K ($3M)
- United Way to support 2-1-1 services ($500,000)
- University Hospital Antifragility Initiative ($1M)
- Habitat for Humanity to support the home repair program ($5M)
- Arts & Culture Support ($5M)
Other proposals seem to be programs the city would administer internally or in collaboration with partners, but the details are still being worked out. These include:
- Modernizing City Hall ($2M)
- Violence Interruption Cleveland Plan ($1M)
- Home repair programs ($15M)
- New construction gap financing ($10M)
- Right to Counsel tenant protections ($1M)
- Rental Assistance ($5M)
- Park & Green Space investments (TBD)
- Security Cameras (TBD)
- Workforce Programming ($3M)
- Middle Neighborhoods Strategy (TBD)
Council members engaged in a spirited discussion about the proposals, with some, including Councilman Kerry McCormack (Ward 3) and Councilwoman Stephanie Howse (Ward 7) raising concerns about granting individual line items to nonprofits for general operating support, both because there isn’t a process to justify why those organizations were chosen, and because it limits the ability to use the fund on larger strategic priorities and leverage the funding. Other members suggested specific additions or clarifications, for example, Councilwoman Jasmin Santana (Ward 14) suggested that some of the funding for gap financing also be used to provide down payment assistance so that lower-income people who want to buy new construction homes can afford to do so. There was some discussion about the workforce programming line item, which is among the proposals that still needs fleshing out. Colombi mentioned that the city may be interested in partnering with existing organizations in the workforce space, such as Youth Opportunities Unlimited, Greater Cleveland Partnership, and the PACE program, to address citywide workforce issues.
City Council and Mayor Bibb’s Administration will need to align priorities and processes for ARPA spending
Chief Strategy Officer Bradford Davy attended the meeting in the audience, and toward the end of the meeting was called to the table to respond. He noted that he saw many areas of alignment between Council’s proposals and the administration’s priorities, but also raised a number of process questions around how to evaluate the projects that the city chooses to fund with ARPA dollars.
The proposals shared at this Caucus Meeting are a first attempt at a spending plan for the unallocated first tranche of funding.
Ultimately, the proposals shared at this Caucus Meeting are a first attempt at a spending plan for the unallocated first tranche of funding. Council President Griffin indicated that Council will need to negotiate with the administration to come up with legislation that can be introduced, and will ultimately pass through the Development, Planning & Sustainability Committee, chaired by Councilman Anthony Hairston (Ward 10) before going to the full Council for a vote.