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Supply chain, staffing challenges slow Virginia’s use of rescue plan funds | Govt-and-politics

The supply chain bottlenecks and challenges hiring people that weigh on business are also slowing Virginia’s efforts to move some $4.29 billion of federal COVID-19 relief funds into the programs it wants to launch.

As of June 30, state agencies had spent $1.49 billion, or 35%, of that total, according to the Virginia Department of Accounts.

And there’s a ticking clock that House Appropriations Committee chairman Barry Knight, R-Virginia Beach, is watching closely.

If the state doesn’t obligate – make binding legal commitments, such as contracts for services or equipment or construction – for all its American Rescue Plan funds by 2024, it will have to give unobligated funds back. As of June 30, some $1.67 billion is obligated, a total that includes sums actually spent.

“Supply chain issues, workforce shortages, changing reporting requirements, and the capacity of state agencies to manage federal grants appear to be contributing to delays in the rollout of funds,” K. Joseph Flores, the senior policy adviser at the Virginia Department of Accounts who tracks the spending, told the Appropriations Committee on Tuesday.

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Supply chain bottlenecks have also been a challenge for the state’s push to tackle ventilation issues at schools – an urgent early priority for containing the coronavirus virus – by slowing delivery of new HVAC equipment, Knight said.

“I think we’re going to have to take a second look,” at some of the allocations the General Assembly approved at its August 2021 and June 2022 special sessions, Knight said.

“I’ve heard from my members that education spending is a concern,” he said. That may mean shifting funds from the HVAC work to other programs to tackle learning losses students suffered during the pandemic, he suggested.

Of the $250 million of American Rescue Plan funds budgeted for state aid to school boards to address school ventilation, only $2.1 million has been spent, Department of Accounts data shows.

The Department of Behavioral Health and Developmental Services hasn’t spent or obligated any of the $50 million set for HVAC work at state hospitals, although it has spent $24.5 million of the $121.9 million budgeted for increased pay to attract and retain direct care staff, where it has seen critical shortages in recent years, made worse by the pandemic.

The Department of Environmental Quality has neither spent nor obligated any of the $125 million the General Assembly directed for work on combined sewer and storm drain systems in Richmond, Lynchburg and Alexandria, or $100 million meant for improvements at wastewater treatment plants or the $75 million budgeted for sewer and septic system improvements.

On the other hand, the Virginia Employment Commission spent all of the $862 million the General Assembly budgeted to boost the state’s unemployment insurance trust fund, while the State Council of Higher Education has spent all of the $111 million the legislature allocated it for undergraduate financial aid.

In addition to wanting to keep tabs on state agencies’ spending, Knight said he’s concerned about the $2.91 billion of American Rescue Plan funds that went to local governments.

He’s asking the Department of Accounts to remind them of the deadline for obligating funds.

“If they have to give money back, I don’t want to hear about coming to the Appropriations Committee and asking us to backfill,” he said.

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