Montgomery County officials clash over distribution of coronavirus money

County Council, Elrich clash over distribution of COVID-19 money to community

A fraction of county’s $183M in stimulus money has been awarded

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The County Council criticized County Executive Marc Elrich on Tuesday for not disbursing most of the $183 million in federal money it has secured through COVID-19 relief programs.

But Elrich said in an interview Wednesday night that the county is distributing money as fast as it can.

Two administration officials say the county has been stuck waiting to find out what it will get from one potential source of funding before distributing money from another source.

Specifically, the county is waiting on answers from the Federal Emergency Management Agency (FEMA). Until then, it is holding onto most of its funding through the federal Coronavirus Relief Fund (CRF) under the CARES (Coronavirus Aid, Relief and Economic Security) Act.

Montgomery County received $183.3 million from the CRF fund for food support, rental assistance, personal protective equipment, business grants, and other needs. But only a fraction of it has been awarded and spent in the community, the council heard on Tuesday from Rich Madaleno, the county’s chief administrative officer, and Dr. Earl Stoddard, executive director of the county’s Office of Emergency Management and Homeland Security.

As of Sept. 30, the county had awarded or spent roughly $23.1 million in CRF funds to support COVID-19 relief programs and initiatives . The general fund reserves are also being used to support the programs and most of the reserve money is expected to be reimbursed through federal aid.

“When I see how little has been spent, I don’t even know what to say,” Council Member Nancy Navarro said.

Madaleno and Stoddard updated the council on how money from the federal Coronavirus Relief Fund under the CARES Act have been appropriated and spent.

Council members criticized Elrich for not being present.

“The executive should be here talking to us about what is happening. This is really, really critical,” Navarro said. “This is about our response to our residents vis a vis relief programs that we have been working on since April.”

Council Vice President Tom Hucker also criticized Elrich for not attending the virtual meeting.

“It’s heartbreaking to tell (businesses and residents) ‘We have the money we appropriated and it’s in a bank account. We just haven’t given it to you yet and we may not be able to,’ ” he said. “I would just think if there was one thing he’d be on top of, it’s this. … I’m a little shocked that he’s not here to make this presentation and that it was also not made months ago.”

Elrich told Bethesda Beat Wednesday said he was surprised that the council wanted him to be there. Nobody told or asked him to come to the meeting, he said.

“I don’t normally go to council meetings,” Elrich said. “I did a proclamation in the morning [at the meeting] and nobody even texted me to say, ‘Marc, are you staying on?’. … I don’t know how I would magically know that this was the meeting that they wanted me to go come to. To me, it is what it is.”

Designing the relief programs, creating applications and program requirements, hiring additional staff members, and reviewing and assessing applications takes time, he said.

“I used to be a council member. It is the easiest thing in the world to write legislation and say, ‘I want to spend money’ and the hardest thing is figuring out how to do it. That’s what we ran into,” he said.

Many staff members had to be reassigned and retrained to help administer the programs and the county had to bring in outside help, as well for programs with specific needs for industry knowledge.

“We have to make sure that whatever we do, we’re not subject to fraud, which has been a problem in programs elsewhere,” he said, adding that staff members need to make sure everything follows federal guidelines in case of an audit.

Many applicants to the county’s rental assistance program were denied at first because they didn’t have the required paperwork, Elrich said. Instead of throwing out the applications, staff members have taken the time to work with residents to gather necessary documentation.

Money from the rental assistance program also goes directly to landlords of tenants who are behind on rent, not directly to residents, Elrich noted.

“To characterize it as we’re not giving $20 million [in rent relief] to poor people — that’s not exactly where it’s going to go,” he said.

Elrich said he wants the money to move out faster, as well, but it is not as easy as it sounds.

“If you don’t actually have to make something work, it’s easy to say it’s not happening fast enough. … You have no way of knowing how long it takes to get this out,” he said. “People are working extraordinary hours. We have people learning jobs they’ve never had to do.

Waiting on FEMA

Madaleno and Stoddard told the County Council on Tuesday that FEMA reimbursement could be significant.

The county can leverage more federal funds if it can get as much in reimbursements from FEMA as possible, Madaleno said in an interview Wednesday night.

“We could just put the money into food assistance [as an example], but by trying to get the FEMA reimbursement, we would potentially be able to increase the food assistance budget by 75%, or use it to leverage dollars that we could put elsewhere,” Madaleno said.

The clock is running out for the county. CRF money will expire at the end of the year.

FEMA will reimburse up to 75% of requests for reimbursement, so the county would be responsible for picking up at least 25%. Madaleno said CRF money can be “prepaid” for the matches before reimbursements come in. If the entire amounts of certain reimbursements aren’t approved before the end of the year, the county can tap into its reserves.

The clock is ticking on the funds, which have to be spent by Dec. 31, according to federal requirements.

Madaleno and Stoddard told the council the delays are a result of the unexpectedly long time it’s taking to put together reimbursement request submissions to FEMA.

The total estimate for FEMA reimbursement ranges from $70 million to $125 million. The county expects that it will need around $50 million in CRF money to pay for expenses FEMA might not cover, but it won’t know until it applies and FEMA responds. FEMA will cover up to 75% of each reimbursement request — county officials are looking to use CRF money for the remaining 25% of their FEMA requests.

“If FEMA rejects more than expected, the costs will be covered by CRF funding” if there is any remaining, according to a staff report.

The report noted that CRF money expires Dec. 31, no matter what happens with FEMA.

So far, FEMA has approved one Montgomery County request for reimbursement, for about $20,000, covering personnel costs.

A breakdown of funding

Of the $183.3 million, the county planned to use $100.6 million for special appropriations such as business grant programs. The county estimated it would need $82.2 million more for county operation costs.

Municipalities and other outside agencies have asked the county to help with $10 million more in federal funding.

Among its needs and requests, those would bring the total to $192.8 million — about $9.4 million more than what the county has been promised .

The county anticipates spending $82.2 million in expected operational expenses during the rest of the year, primarily for items that FEMA won’t fund.

Among the expected expenses is $17.8 million for a pay differential for frontline workers.

Marlene Michaelson, the executive director for the County Council, told the council that staff members hope the federal government’s deadline of Dec. 31 will be extended.

One program in which the county has not disbursed all of the funding is the $14 million Reopen Montgomery Initiative.

The county received more than 3,100 applications for the program, and approved 422 applications, for a total of $1.4 million to reimburse businesses and nonprofits for expenses related to complying with state and county reopening requirements

There is also a gap with the $20 million Rental Assistance and Eviction/Homelessness Prevention program. The county has disbursed about $607,500 to residents, through 145 checks. The county has received 2,200 applications as of the end of September.

The county has not distributed any of its $3 million grant program for medical and dental clinics. County employees are reviewing details of the program, according to a staff report.

Other funds through which no money has been handed out yet include:
• $7.7 million for child care grants for distance learning
• $2.03 million for assistance for affordable common ownership communities
• $355,000 for permanent supportive housing for veterans and unsheltered adults
• $200,000 for hospitality and tourism support.

The county has hired contractors to help prepare and review the submissions to FEMA. The county’s next reimbursement request for $24 million is expected to be sent to FEMA within the next two weeks and the county might not hear until the end of the year.

That places the county right at its deadline for spending the CRF funds by Dec. 31.

Madaleno noted on Tuesday that the county can’t place the CRF money in a foundation to be able to keep it for later. The foundation would have to distribute the money.

“We are both trying to hold some money to use for part of the match [that FEMA requires] to minimize the impact on our own county resources,” he said, “and at the same time, we’re trying to get reimbursements for a variety of things that you might otherwise say should be paid for by the CRF fund. Because we have the option to maximize federal dollars, we’re going to go through FEMA.”

Stoddard and Madaleno said FEMA has been changing the rules on what costs are eligible for reimbursement.

Stoddard said FEMA’s reimbursement to the county could be significant, but there’s no way to accurately predict it.

“As I think I’ve alluded to before, my experience with FEMA is generally that if they can find a reason not to reimburse you for something, they’re going to find it,” he said. “They’re going to use that as rationale to not reimburse.”

Madaleno said the CRF grant money for medical and dental clinics has not been spent because the council’s resolution was not clear on certain details of which applicants should get the money and which should be prioritized. the federal guidelines don’t make clear how it can be used.

Strategy and frustration

Council Member Gabe Albornoz said the council tried to write its guidelines for COVID-19 grant awards to be flexible, to help staff members make determine how the greatest needs can be covered by the funds..

Michaelson, the council’s executive director, said FEMA will not reimburse expenses already covered through CRF. But if the county applies for FEMA funding for a particular need and it doesn’t come through, the CRF money can pay for it.

“There’s been a little bit of a strategic decision timing-wise as to the order of those submissions, but again, it creates a lot of uncertainty,” she said.

Council President Sidney Katz questioned how fast the county could reallocate funds before the end of the year to fill gaps.

Madaleno said it could happen quickly, especially for reimbursing itself or covering expenses that have already occurred, such as for personal protective equipment purchased using general funds.

“We shouldn’t leave one dime on the table. We certainly have plenty of need,” Katz said.

Council Member Andrew Friedson said there are more questions than answers about the funding.

Residents and businesses are struggling more than ever.

“I can’t tell you how frustrating that is for me,” he said. “I believe it’s frustrating similarly for colleagues. I can’t imagine how frustrating that is for the 1.1 million residents who are desperately trying to get through the most challenging time in our lifetimes.”

Friedson said the executive branch has been talking about FEMA reimbursements since June and should have solved the problem before October.

“We’re almost eight months into the crisis and we have been reimbursed so far for a grand total of $20,000,” he said. “We have $183 million CARES Act funding that we’re basing almost all of this, it seems, off of in terms of what we can and can’t afford, and who will and won’t be helped before Dec. 31, when the clock goes to zero and we have to have expended all the funds.”

FEMA requires exhaustive documentation on hundreds of purchases, which has slowed down the process, Stoddard said. “It’s taking far longer than we thought it would take,” he said.

Madaleno said the process with FEMA has been “unacceptable,” but Montgomery County is ahead of most other governments across the state and country in seeking reimbursements.

He said some paperwork has included logs of 911 calls for the last three months, which he doubted would ever be reviewed. He called the documentation requirements a “degree of insanity.”

An additional seven employees have been reassigned to help with the process, Madaleno said.

“I share your frustration over this, but at the same token, remember … many of the same people who are responsible for assembling this paperwork are the same people who are still trying to buy every mask, every glove, every gown, every shield that we can have in order to make sure we, as an organization and for our community, are prepared to meet any additional surge in cases,” Madaleno said.

On Wednesday night, Madaleno told Bethesda Beat that he could have done a “better job” at the council briefing. He said he did not realize walking into it that council members would want as much specificity as they asked for for some of the relief programs.

“I think some of the materials were structured and presented the information in a way that I wish had been a little more detailed,” he said. He added that charts didn’t include additional money that had been spent in earlier phases of relief programs.

“Unfortunately, I was not armed with that level of detail because I did not think they expected me to go into that level of detail,” he said.

Navarro requested an update to the council on federal funds every week.

“This is no way of dealing with an emergency like this. … [Council members] are not the executive branch, we are not responsible for the implementation. We did our part,” she said.

Hucker said he would like a daily “dashboard” provided to the council of what money is being spent.

Albornoz said employees can’t keep being reassigned to address emergency issues. A coalition or team with a strategic plan should be in charge, he said.

Madaleno said Wednesday that council administrative staff members have been receiving a weekly report on how much money has been spent for relief programs since at least mid-June.

Stoddard said four staff members are in charge of grant administrative responsibilities. He said he could have done better in recognizing what wasn’t being done well in the FEMA reimbursement process.

“It’s incumbent upon me to have conveyed to the leadership that we needed more help in a more informative way. I’ll take my share of responsibility,” he said. “It’s not on Rich to recognize what’s going on in my office. … I have no problem taking responsibility where I make a mistake.”

Council Member Craig Rice told Stoddard that if the county fails, it’s Elrich’s responsibility.

“I appreciate you falling on your sword, but, sir, it’s not your sword to fall on,” Rice said.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.

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