Grants and growth: The infrastructure funding surge demands masterful management

State and local governments nationwide are racing against time to access billions in federal grants. As they rush to wrap up numerous projects before the 2026 State and Local Fiscal Recovery Fund, or SLFRF, deadline, at least one local government has indicated that they won't be able to pursue a significant number of federal grants in 2024.  

In fact, data from the U.S. General Accountability Office shows that as of March 31, 2023, state and local governments had reported spending less than half their awards from the American Rescue Plan Act. As the historic CHIPS Act, Inflation Reduction Act, and Infrastructure Investment and Jobs Act reach their required implementation deadlines in the next few years, it has become clear that success in leveraging these funds requires a comprehensive approach. 

State and local leaders must begin developing a deliberate federal funds strategy, which includes submitting grant proposals and applications that demonstrate a compelling plan for the use of funds. To show they can effectively leverage federal grant money, agencies also need a strong program design, prioritized projects and a robust capability to administer the funds in compliance with federal requirements. 

Strategy

State and local leaders should first establish a centralized vision, governance and priorities for how they will use federal grants, including how the grants align with local needs and how federal requirements will be met. It should also include what’s required to source any matching funds as well as the processes needed for projects and sub-recipients to be eligible for funds. The strategy should also identify reporting, risk and monitoring activities necessary to avoid any permissible use or eligibility issues. 

Grant management agencies should also develop a robust, detailed funding inventory of available state and local resources. This data will help set a baseline for what funding is available and can be used to identify matching funds based on unique requirements of both projects and funding sources. They should also keep their funding inventories current based on guidance and updates from state or federal sources. That way, the inventories can serve as the single source of truth on available resources and eligibility requirements. 

Further, leaders need a clear view of how potential funding will play out over time and what resources, processes and technologies will be required to maximize funding received and distributed. From the start, compliance and tracking plans must be tied to the inventory. Even while stimulus spending is well underway, state and local leaders should regularly review priority outcomes and the program’s impact to assess if funds are being maximized and used in a timely manner.

Pursuit

A central program management office should be staffed with managers and staff who have experience with both competitive and formula-based grant pursuits, including those requiring sustainable public-private partnerships. Increasingly, a federal grant’s policy and financial design will specify these partnerships. For example, multiple programs in the CHIPS Act require that applications be submitted by consortia representing key public and private stakeholders. That means state and local grants management teams will be responsible for preparing and coordinating applications and conducting outreach and communications to current and potential grant partners. They will also handle development and submission of applications, troubleshooting system challenges, providing technical assistance to potential subgrantees and reporting and tracking for executive leadership, federal or other grantor agencies and the public.           

The new grant requirements combined with the strained capacity of grant officials who are managing SLFRF are forcing several public sector organizations to forgo new grant opportunities. Additionally, some communities have spent their matching money on basic needs like water infrastructure, leaving them with insufficient funds to use for matches or to staff any new grant program. This trend underscores the critical importance of a central office for grant management practices and resources that can ensure valuable opportunities are not missed.

Implementation

Grant management incorporates several essential tasks, including program planning, design, fund braiding and disposition, financial accounting and reporting, compliance and risk management, stakeholder coordination and notifications, document storage and an array of supporting administrative tasks. 

A properly designed broadband program, for example, will help ensure varied and equitable opportunities for smaller, local providers who can help maximize the broadband service coverage area. Once the program design is set, agencies should focus on compliance with audit, reporting and record retention requirements at the state and federal level. For grant closeout, agencies will need documentation of accomplishments, notifications to subgrantees on termination and financial reconciliations. Along the way, it is critical that states and localities capture the performance data necessary to tell the story of the grant’s impact on communities and constituents.

While state and local governments and communities in recent years have benefitted from billions in COVID-related federal funds, leaders now have an opportunity to leverage additional unprecedented and more diverse federal funding sources to transform their economies. New grant opportunities for semiconductor research and development, manufacturing, workforce reskilling, transportation and clean water and energy represent the largest current opportunity for state and local governments to invest in the future. Preparing for and pursuing those grant opportunities deserves strong and centralized support and attention from the highest levels of state and local government.

Rob Cohan leads Accenture Public Service Strategy and Consulting in North America.