'Racial equity' a 'central tenet' in dispersing American Rescue Plan funds at state, local level: US Treasury

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The U.S. Treasury made "advancing racial equity" a "central tenet" in its decision-making on the spending of billions of dollars in state and local aid from President Biden’s American Rescue Plan (ARP) Act of 2021.

After Biden signed the $1.9 trillion COVID-19 relief package into law in March 2021, $350 billion was allocated for state and local aid managed by the U.S. Treasury Department. 

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President Biden speaks during the 2022 National and State Teachers of the Year event in the East Room of the White House in Washington, Wednesday, April 27, 2022. (AP Photo/Susan Walsh) (AP Photo/Susan Walsh)

Two months after the plan became law, the Treasury released interim rules for how the funds should be spent, saying it was "targeting relief" to low-income areas to address the disproportionate impacts of the pandemic, which it argued was "in line" with Biden’s executive order on Advancing Racial Equity, which he signed upon entering office. 

That September, the Treasury released a report entitled, "The American Rescue Plan: Centering Racial Equity in Policymaking." The Treasury said in the report that it "made advancing racial equity a central tenet in its decision-making on how these funds can be spent" at the state and local level, and that "when state and local governments report back on how they have used these funds, Treasury will ask them to discuss how their expenditures have advanced equity, in order to promote accountability for this critical objective."

"The American Rescue Plan, and Treasury’s approach to implementing it, have embedded racial equity as a top priority," the report said. "We are already beginning to see progress on this front, from equity-focused investments by state and local governments to support for renters in communities of color who will be able to stay in their homes."

President Joe Biden signs the American Rescue Plan, a coronavirus relief package, in the Oval Office of the White House, Thursday, March 11, 2021, in Washington. (AP Photo/Andrew Harnik)

In February of this year, the Treasury released its "Guidance on Recipient Compliance and Reporting Responsibilities," which requires jurisdictions to "describe efforts to promote equitable outcomes, including how programs were designed with equity in mind."

An example of how these rules played out comes from Baltimore, Maryland, which received $641 million in COVID-19 relief from the American Rescue Plan.

In September 2021, Baltimore Mayor Brandon Scott’s Office of Recovery Programs released a fact sheet for organizations seeking relief funds, stipulating that all applicants must establish an "equity framework" in order to be considered.

"Equity should be a central tenet of all proposed projects," the document states. "Organizations should integrate an equity framework from planning to implementation for all projects."

Before an audience of nine families that are benefiting from the new Child Tax Credit, U.S. President Joe Biden and Vice President Kamala Harris deliver remarks on the day tens of millions of parents will get their first monthly payments in the South Court Auditorium in the Eisenhower Executive Office Building on July 15, 2021 in Washington, DC.  (Photo by Chip Somodevilla/Getty Images)

A performance report released by the city that same month revealed that proposals would be evaluated against seven different criteria, with equity carrying the greatest weight on a 100-point scoring rubric. According to the report, equity is worth 20 points, while criteria such as describing "project intentions clearly and resulting benefits," and identifying and analyzing the "public risk" only accounted for 15 points.

"Equity is the scoring criterion with the greatest weight among the seven total criteria for evaluating proposals," the report states. "All proposals must respond to the question, ‘How will this project incorporate and advance equity?’"

"All applications must include an equity impact assessment," it continues, adding that "all applications must include a performance measurement plan, which asks applicants to specifically indicate whether data can be disaggregated across race, ethnicity, sex, gender identity, income, religious affiliation, and other characteristics."

The city explained that its focus on racial and socioeconomic equity is motivated not only by Biden’s executive order and the Treasury rules, "but also by the structural and historic challenges still evident in the City."

Shamiah Kerney, chief recovery officer and director of the mayor's Office of Recovery Programs, quoted the Treasury's final rule on the recovery funds, which was issued in January, in a response to Fox News Digital.

"The U.S. Treasury Department states explicitly that the American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Fund (SLFRF): ‘ensures that state, local, and Tribal governments have the resources needed to fight the pandemic, sustain and strengthen the economic recovery, maintain vital public services, and make investments that support long-term growth, opportunity, and equity,’" Kerney wrote. 

"It is no secret that the COVID-19 public health emergency disproportionately impacts the health and wellbeing of Black and Brown communities and, in line with the Federal guidance, Mayor Scott has made it a clear priority to correct these inequitable consequences by making targeted investments for equitable outcomes," she wrote.

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The U.S. Treasury didn't immediately return Fox News Digital’s request for comment.

The American Rescue Plan Act, which Democrats passed without any Republican support, has faced intensifying scrutiny for its effect on the U.S. economy after inflation rose a stunning 8.5% last month. Some economists, including former Obama administration economic advisers, have blamed the $1.9 COVID-19 relief package for overheating the economy.