State denies Holyoke’s bid for direct cash to struggling families 

  • Holyoke City Hall GAZETTE FILE PHOTO

Staff Writer
Published: 12/3/2020 4:15:41 PM
Modified: 12/3/2020 4:15:30 PM

HOLYOKE — As many school districts continue to operate remotely in the pandemic, families have paid an economic toll for that public health decision.

For many, remote learning has come with increased household costs: technology upgrades, increased broadband speed, higher electric and grocery bills, reduced income. In some cases, parents have had to quit jobs or cut back on their work hours to provide childcare.

In Holyoke, city leaders were hopeful about a program they expected to launch to address those costs — using federal COVID-19 stimulus money for direct cash transfers to families with young children in the city’s public schools, who have had to adapt their home and professional lives to at-home learning.

However, the state has declined to approve the program, citing a federal Treasury Department FAQ that says “a per capita payment to residents of a particular jurisdiction without an assessment of individual need” is not eligible for funds under the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act. And with a Dec. 30 deadline approaching for municipalities to spend those federal dollars, Holyoke must now look to use the money elsewhere.

“We’re trying to be as creative as possible and as helpful as possible to the people of Holyoke,” Mayor Alex Morse said. “We thought this would be the most powerful way to help residents currently. Unfortunately, the Executive Office for Administration and Finance, and employees there, are not being supportive of moving this along.”

The Executive Office for Administration and Finance did not make Heath Fahle, the state’s special director for federal funds, available for an interview. In a letter to the city, Fahle wrote that the project was denied because the city did not establish an application process to verify the need of recipients and it did not tie assistance to a specific remedy for that need.

Holyoke’s direct aid program was set up to provide families with a student in pre-K through 5th grade with a prepaid debit card that included some spending restrictions. The money would have helped families pay for food, clothing, rent, technology, or any other cost they may be struggling with as a result of the pandemic and remote learning.

Cities and towns do not control the $150 billion allocated for state, local and tribal relief as part of the CARES Act. That authority was given to states, meaning Holyoke had to apply for approval before moving forward with the direct assistance program.

Many experts consider direct cash transfers to be the most effective way to provide financial support to those struggling financially, particularly during an emergency. Louise Ivers, the executive director of the Massachusetts General Hospital Center for Global Health, said lots of research has demonstrated the effectiveness of such programs, whether spending conditions are placed on the money or not.

“We know that families who struggle economically, they know what to do with cash,” Ivers said.

A Harvard Medical School associate professor of global health and social medicine, Ivers spent months earlier this year embedded with Holyoke’s Board of Health, providing assistance with tasks like contact tracing and doing research on the pandemic. She said that cash transfers like the program Holyoke proposed would effectively address some of the inequities that the pandemic has exposed.

‘The hardest hit’

In Holyoke Public Schools, nearly 81% of students identify as Hispanic and 78% of students are economically disadvantaged, according to data from the state’s education department.

Ivers said that she did not know the state’s reasoning for denying Holyoke’s program. But speaking generally about cash transfer programs, she said that usually, those making decisions about funding such programs are not those who have ever been in need of such a program. Those decision-makers often proscribe restrictions on aid to working-class people, she said, resulting in a policing of how the poor spend their money.

“We talk a lot about equity — at least this year we’ve been talking a lot about equity — but what are we doing about a lack of equity,” Ivers said Wednesday. As COVID-19 continues to disproportionately impact communities of color, leaders need to be radical in their approaches, she added. “Families who have children who are supposed to be in school are amongst the hardest hit.”

State officials denied Holyoke’s program, though. The reasons, they said, are found in federal FAQs about coronavirus relief spending. In a Nov. 17 email to the city, Fahle — the state’s special director who oversees these federal funds — pointed to a section that says per-capita payments without a needs assessment are not eligible for funding. He said that in order to get the program funded, the city would have to demonstrate the recipients’ need for such assistance.

“Can we change the program design in a few key ways to make it eligible?” Fahle wrote Morse’s chief of staff, Mike Bloomberg. “Tailor the survey into an application form to address the income loss due to COVID-19 component (questions to establish that the individual or family experienced a loss of income due to the public health emergency) and then tailor a remedy accordingly (like food assistance).”

The city disagreed, saying that testing people’s means would be an administrative burden and barrier to access. The mayor’s office suggested that it could reasonably assess the need of families based on school closures.

City Hall officials also disagreed with the state’s characterization of the program as a “per-capita payment” because cash transfers would be going to a specific subset of Holyoke residents who because of pandemic-caused remote learning have been negatively impacted by the public health emergency. It also pointed to other guidance from the federal government that gives states wide authority over stimulus spending.

“Governments are responsible for making determinations as to what expenditures are necessary due to the public health emergency with respect to COVID-19 and do not need to submit any proposed expenditures to Treasury,” the guidance reads. Ultimately, the program was denied by Fahle. In a statement, Executive Office for Administration and Finance spokesperson Jerry Lhérisson said that as the direct recipient of the stimulus money, the state is tasked with complying with federal guidelines so that the commonwealth is not at risk of a future federal audit, for example, or subject to clawbacks.

“I actually feel like the federal guidance is more clear here than in lots of other areas – they are looking for an individual determination of need and a remedy aligned with that identified need,” Fahle wrote in an email to the city. “As currently proposed, the program design is too broad to be an eligible use.”

State officials have approved one similar program in Chelsea. There, the city established a process in which residents making 30% or less of area median income applied to a lottery, which was then weighted to favor the city’s most impacted and poorest residents: those with children or with disabilities, for example, or those making less than 100% of the federal poverty level.

Fahle, who uses the handle “Budget Hawk Heath” on Twitter, is a policy analyst who has most recently worked on fiscal policy for the Massachusetts Taxpayers Foundation and Gov. Charlie Baker’s administration.

Looking to spend elsewhere

Now, the city has to look elsewhere to spend what’s left of the $3.5 million in CARES Act funding the state allocated for Holyoke. The city had planned to spend the most of that remaining funding on the direct-aid program but has no intention of letting any CARES Act funding lapse now that the program has been denied. In addition to working with the state’s federal congressional delegation to extend the CARES Act deadline, Bloomberg said the city is finalizing plans to provide additional assistance to city schools for when they return to in-person learning as well as assistance to local health care providers.

Bloomberg, who has been the point person for the project, said that across the state many mayors and town managers spent their money paying off deficit spending from earlier in the pandemic. Holyoke didn’t have to deficit spend, he said, instead using around $800,000 to increase its Board of Health capacity and run some other assistance programs.

Initially, as schools continued to operate mostly remote, the city had planned to use that money to pay for educational “equity pods” — spaces that provide in-need families with child care and a place to learn on the computer — as well as a homeless shelter.

“After getting the ball rolling on both, the state came in and said they were going to fund them with their own pool of money,” Bloomberg said. He said this allowed the city to spend its CARES Act money elsewhere, but wasted valuable time as the deadline to spend that money approached.

So Holyoke has to identify other ways it can spend its CARES Act money, which will be returned to the federal government if it is not spent by the Dec. 30 deadline. Federal lawmakers have pushed to extend that deadline, but a bill to do so has stalled in the U.S. Senate.

Holyoke isn’t alone in its predicament. The Washington Post has reported that local governments across the country have struggled to get those funds into in-need residents’ hands, in part because of strict and evolving rules from the Treasury Department.

Ivers, who has seen the impact of direct cash transfers in her research, said that grassroots organizations connected with those struggling economically are usually the ones advocating for such programs. But it is often governments and service-providing institutions that say “no,” she added.

“I’m sure someone comes up with some small print that can explain why they’re not doing it,” Ivers said. “There’s an art to saying ‘yes’ but there’s just a science of ‘no.’”

Dusty Christensen can be reached at dchristensen@gazettenet.com.


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