Making the Most of American Rescue Plan Dollars

The Treasury Department wants data and evidence of program effectiveness to drive states’ American Rescue Plan spending strategies. Here’s what that looks like.

By Pete Bernardy and Kristine Goodwin

One year after passage of the American Rescue Plan Act, federal funds are helping states recover from the COVID-19 pandemic — and a new tool is helping policymakers track how states use that money.

The stimulus bill set aside $350 billion for a State and Local Fiscal Recovery Fund program to help maintain important public services, support struggling residents and businesses and power a resilient, equitable and lasting economic recovery.

From the fund’s inception, the Biden administration has called on state, local and tribal governments to maximize the impact of one-time rescue plan dollars through evidence-based spending strategies that deliver results. This year, the Treasury Department issued final, detailed compliance and reporting guidance for funding recipients, including five key provisions relating to data, evidence and outcomes. They encourage state governments to:

• Grow data and evidence capacity.
• Prioritize evidence-based solutions.
• Invest in rigorous evaluations.
• Incorporate diverse community feedback.
• Pursue equitable outcomes across underserved groups.

These provisions align with our respective organizations’ work to support data-driven decision-making and policymaking — see the National Conference of State Legislatures’ “ABCs of Evidence-Informed Policymaking” and Results for America’s “5 Ways Governments Can Make the American Rescue Plan Work for All.”

Now a new tool — the ARP Data and Evidence Dashboard — offers policymakers a detailed look at how state governments are investing the first round of rescue plan dollars. Created by Results for America and Mathematica, it analyzes initial Recovery Plan Performance Reports of 150 jurisdictions, (including all 50 states) submitted to Treasury last year, and assesses how states are using data and evidence to guide spending priorities and track outcomes.

NCSL’s ARPA tracking database also illustrates ways recipients — including states, the District of Columbia and territories — are using their Fiscal Recovery Fund allocations.

Many states’ investment strategies reflect a commitment to data-driven decision-making and governance. But with another round of funding due to reach governments in the spring and more available until 2024, opportunities remain to address the five provisions listed above.

Here are promising practices and examples of change in action identified by NCSL and Results for America aligned to each of the five key provisions:

Grow Data and Evidence Capacity

Investing in a government’s capacity to collect and analyze data and evidence yields long-term dividends. By using the best available data to inform decisions, state policymakers can ensure they’re investing funds in the most effective programs and policies to improve outcomes for residents.

Several states have defined terms used to describe evidence. Common terminology creates transparency about how leaders make funding decisions. States can engage cross-branch stakeholders to establish a shared understanding of evidence of effectiveness that can help inform policy decisions.

Publicly available tools, such as the Results First Clearinghouse Database, compile and summarize reliable information on program effectiveness so states can systematically consider programs based on the strength and quality of the evidence behind them.

Colorado legislators and executive leaders have created an evidence-based policy framework to help policymakers prioritize resources. Lawmakers in 2021 passed bipartisan legislation, SB 284, to incorporate evidence-based programs into the state budget process. To support the integration of the framework into the fiscal year 2021–22 budget, the governor’s Office of State Planning and Budgeting conducted training sessions with leaders across state agencies on how to bring data and evidence into budget processes.

Prioritize Evidence-Based Solutions

As part of its rescue plan guidance, Treasury encourages states to fund solutions backed by “strong,” “moderate,” and “preliminary” evidence. (It created a three-tier system defining those terms; see Appendix 2 here, or this Results for America resource for details.)

Federal guidance further encourages state leaders to use clearinghouses, such as the U.S. Department of Education’s What Works Clearinghouse or the U.S. Department of Labor’s Clearinghouse for Labor Evaluation and Research, to assess the effectiveness of current programs and interventions under consideration.

State strategies for integrating evidence into state budgeting decisions and practices include:

• Categorizing funded programs based on their evidence, including in a program inventory.
• Dedicating a portion of agencies’ programming dollars to evidence-based or evidence-informed programs.
• Developing evidence guidelines or budget directives that embed research and data into funding decisions.
• Requiring an executive or legislative budget office to ensure that agency appropriation requests meet evidence standards or requiring agencies to submit evidence-based budget forms.
• Using results-based contracts or prioritizing evidence in grants.

Michigan and Maryland are leaders in this area. The former’s decision to allocate rescue plan funds to its Great Start Readiness Program is an example of a funding decision based on a strong evidence base. Research studies have offered positive cost-benefit analyses of similar preschool programs and proven the long-term effects of early learning participation.

Invest in Rigorous Evaluations

Innovative new approaches have no evidence base. But they could still effectively address specific needs unmet by existing programs. Rigorous evaluation practices can build an evidence base for future leaders to look to and build upon. Many states have taken steps to fund promising programs that lack a strong research base while also providing support for evaluating such programs.

Specific evaluation investment strategies include creating tiered grant programs or innovation funds that provide an opportunity for new or untested programs to develop research to demonstrate their results. States investing in evaluation can also incentivize or require agencies to set aside funding for program evaluation. Collaborations can be valuable when evaluating new programs or more mature programs that lack evidence. States can collaborate with researchers in other organizations, such as universities, and engage with community stakeholders while designing studies.

Treasury’s guidance requires governments to report if they are using funds for evidence-based projects or for rigorous program evaluations. (If a program evaluation is being conducted, states are exempt from reporting on a project as an evidence-based intervention.) States also are required to collect and report on key data and performance indicators, such as the number of individuals enrolled in evidence-based tutoring programs.

Connecticut and Tennessee have led the way. Connecticut is investing in centralized capacity to coordinate and support evidence-building and evaluation across multiple recovery investments.

Incorporate Diverse Community Feedback

Policies and programs are more likely to succeed if the people impacted are involved in design and implementation. Treasury encourages governments to incorporate feedback from a diverse range of residents and community organizations and report how that input informs their planned or current use of funds.

While the pandemic complicated community engagement practices, multi-pronged communication strategies and digital approaches, such as online forums, email surveys and social media promotion, have helped to overcome these challenges.

Massachusetts and Georgia are among the states prioritizing community outreach. Georgia’s Office of Planning and Budgeting has pursued a multi-pronged stakeholder engagement strategy to raise awareness of rescue plan funding opportunities. It held outreach sessions with city- and county-level groups in communities across the state. Media outreach and direct outreach to local governments also helped raise awareness of the grant application process and plans for funds.

Pursue Equitable Outcomes Across Marginalized Groups

COVID-19 itself and the pandemic-driven economic recession disproportionately impacted low-income communities and marginalized groups. Rescue funding goals include supporting strong, equitable growth, which is why Treasury asks funding recipients to report on whether certain types of projects (e.g., food and housing assistance) target economically disadvantaged communities.

Specific data and evaluation practices can help state governments prioritize equity, reduce disparities (whether racial or otherwise) and maximize impact in their spending plans. Treasury encourages states and other jurisdictions to break out data by race, ethnicity, gender, income and other relevant factors.

Both Montana and Minnesota have made this a priority. Minnesota’s Department of Education allocated funds to a summer preschool program that targets historically underserved communities and children unable to attend a quality early childhood program due to COVID-19.

For more details about best practices, see NCSL’s “ABCs of Evidence-Informed Policymaking” and Results for America’s ARP primer on the law’s key data, evidence and outcomes provisions.

Pete Bernardy is Vice President and State Practice Lead at Results for America.

Kristine Goodwin leads the NCSL’s Center on Results-Driven Governing.