CLEVELAND, Ohio — Cities and counties throughout Northeast Ohio have spent hundreds of thousands of dollars on consultants to manage their state stimulus spending.
The consultants, many from big companies, promise to help Ohio’s cities and counties spend their millions of dollars wisely from the American Rescue Plan Act.
But is adding an extra bureaucracy the right investment?
While the percentage of ARPA funds allocated to advisors is only a small percentage of the total money, advisor fees are still in the six and seven figure range. For example, the $191,000 the Cleveland City Council approved for a consultant represents 0.04% of the $512 million the city received from ARPA.
However, consider this: It costs about $50 to fill a single pothole, according to SealMaster, a company that manufactures paving products and equipment. The city could fill thousands of potholes for the cost of hiring a consultant.
The local trend of hiring ARPA consultants is mirrored across the country, he said Alan Berubea senior fellow at the Brookings Institution who studies urban economic development and ARPA spending.
When used correctly, consultants can be “very helpful”, says Berube.
That Categories for eligible ARPA expenses According to the Federal Register, these include: economic aid for households and small businesses, bonus payments to essential workers, compensation for lost government revenue, improvements to water or broadband or sewage infrastructure.
“You don’t need hundreds of billable hours for a law firm to figure out (that),” Berube said.
However, many municipalities are doing just that, hiring a consultant to identify which projects are eligible for ARPA funds.
To this end, local governments have turned to international firms such as Guidehouse LLP and other local firms, including Ohio-based law firm Bricker & Eckler.
“Some clients have said to me, ‘We just don’t have the bandwidth to get into these ARPA guidelines,'” said Jeffry Harris, public finance attorney at Bricker & Eckler cleveland.com.
Bricker & Eckler, the consulting firm for the city of Cleveland and Medina County, has seen an increase in government clients seeking help with ARPA spending because of the complicated nature of the law’s guidelines, Harris said.
“ARPA doesn’t lend itself to generalization for local governments,” Harris said. “It’s all fact-based.”
While some communities said cleveland.com They asked consultants to help them determine what are eligible expenses, others are simply trying to manage the massive amounts of money pouring into local coffers, Berube said.
“With the flood of resources, not every city is able to do multi-dimensional resource allocation, and they are looking for help with that,” Berube said.
Some local governments, such as Lorain County, have chosen to use internal resources to determine how best to spend ARPA dollars, Lorain County Commissioner Matt Lundy said in an email.
“We work closely with our department heads to identify investment needs and eligible investments. Our admin is terminating ARPA application forms for nonprofits. Our Assistant District Attorney reviews all materials to ensure we are complying with regulations.”
Although Lorain County plans to use internal and other government resources to allocate ARPA funds, the county plans to hire a consultant to implement a broadband network improvement plan, Lundy said.
The city of Lakewood has held discussions with consultant Guidehouse about how other cities are using ARPA funds, but has not hired a consultant, according to an email from the mayor’s office.
The reasons cities and counties say they hire consultants to help oversee ARPA money distribution vary.
Medina County, for example, does not have a general in-house attorney, according to district directory and said Deputy District Administrator Amy Lyon-Galvin. That’s why the district commissioned Bricker & Eckler in February for up to $15,000 to oversee ARPA spending, district documents show.
Lyon-Galvin said that under the agreement with the firm, the district would only charge for time spent processing ARPA-related issues. So the total amount billed would vary based on the number and complexity of the county’s requests.
The City of Lorain is in the process of hiring a consultant to oversee ARPA funds, Lorain Mayor Jack Bradley said in an email.
“We wanted to make sure we had one more layer of verification before we spend millions of federal dollars,” Bradley said. “Treasury regulations can be somewhat complicated and our Legal Director felt it would be prudent to engage an adviser to help us with funding decisions.”
While large governments have more internal resources to figure out how to allocate ARPA funds, they also have more money to allocate. Economies of scale don’t necessarily make work easier for big cities, said Berube.
Cleveland Heights recently approved spending of up to $250,000 to hire Guidehouse to oversee the distribution of its ARPA funds. During the pandemic, Cleveland Heights faced severe budget cuts that increased the workload of city employees, city spokesman Mike Thomas said.
“Rather than increase the capacity of the staff, it made more sense to outsource this,” said Thomas.
Cleveland Heights received $38.8 million in ARPA funds, but much of that has already been earmarked, cleveland.com previously reported. During a recent meeting, Council President Melody Joy Hart said Guidehouse would help Cleveland Heights spend $10 million of ARPA dollars.
Cleveland Heights is just one of many communities that have commissioned Guidehouse to formerly the public sector of PricewaterhouseCoopers Advisory wing that markets itself as a group that can cut bureaucracy.
The City of Dayton, for example, approved spending of up to $2,050,807 for Guidehouse to oversee ARPA funds through 2026, according to documents obtained through the Freedom of Information Act.
During Guidehouse has an office in Daytonthe City of Dayton contract lists the company address in McLean, VA
Guidehouse, which has offices on multiple continents, has also been involved in coronavirus-related work at the federal level, where it was received $204 million in federal contracts for COVID-19 response, according to ProPublica.
Cleveland Heights and Guidehouse held their first administrative meeting this week. Before the meeting, Thomas told cleveland.com Whether they are satisfied with the consultant is “a bit early” to say.