CLEVELAND, Ohio — Cities and counties throughout Northeast Ohio have been spending hundreds of thousands of dollars on consultants to manage their federal stimulus spending.
The consultants, many from major firms, promise to help Ohio’s cities and counties spend smart with their millions in dollars from the American Rescue Plan Act.
But is adding an extra layer of bureaucracy the right investment?
While the percentage of ARPA money devoted to consultants is a slim percentage of the overall money, fees to consultants still run into the six- and seven-figure realm. For example, the $191,000 Cleveland City Council approved for a consultant makes up .04% of the $512 million the city received from ARPA.
However, consider this: It costs roughly $50 to fill a single pothole, according to SealMaster, a company that makes pavement products and equipment. The city could fill thousands of potholes for the cost of hiring a consultant.
The local trend to hire ARPA consultants echoes one seen throughout the country, said Alan Berube, a senior fellow at the Brookings Institution, who studies economic development in cities and ARPA spending.
Used correctly, consultants “can be quite helpful,” Berube said.
The categories for eligible ARPA spending include: economic aid to households and small businesses, premium pay to essential workers, replacing lost government revenue, improvements to water or broadband or sewer infrastructure, according to the Federal Register.
“You don’t need hundreds of billable hours to a law firm to figure (that) out,” Berube said.
However, many municipalities are doing just that, hiring a consultant to figure out which projects are eligible for ARPA money.
To do that, local governments have looked to international companies, such as Guidehouse LLP, and more local firms, including Ohio-based law firm Bricker & Eckler.
“I’ve had some clients tell me, ‘We just don’t have the bandwidth to get into that ARPA guidance,’” Jeffry Harris, a public finance attorney at Bricker & Eckler, told cleveland.com.
Bricker & Eckler, which is consulting 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 act’s guidance, Harris said.
“ARPA, for local governments, does not lend itself to generalization,” Harris said. “It’s all fact-based.”
While some municipalities told cleveland.com they asked consultants to help them determine what is eligible spending, others are simply trying to manage the massive amount of money headed into local coffers, Berube said.
“Now, with the flood of resources, not every city is in the position to do multi-dimensional allocation of resources, and they’re looking for help with that,” Berube said.
Some local governments, such as Lorain County, have opted to use in-house resources to determine how best to spend ARPA dollars, Lorain County Commissioner Matt Lundy said in an email.
“We are working closely with our department heads to determine investment needs and eligible investments. Our administrator is finishing ARPA Request Forms for non-profits. Our assistant county prosecutor reviews all materials to make sure we are in compliance.”
Although Lorain County plans to use in-house and other government resources to allocate ARPA money, the county does plan to hire a consultant to implement a broadband improvement plan, Lundy said.
The City of Lakewood has been in talks with consultant Guidehouse about how other cities are using ARPA money, but has not hired a consultant, according to an email from the mayor’s office.
The reasons why cities and counties say they are hiring consultants to help oversee ARPA money distribution vary.
Medina County, for example, doesn’t have a general, in-house lawyer, according to the county’s directory and said Assistant County Administrator Amy Lyon-Galvin. That’s why the county hired Bricker & Eckler in February for up to $15,000 to oversee ARPA spending, according to county documents.
Lyon-Galvin said that, under the agreement with the firm, the county would only bill for time spent addressing ARPA-related questions. So, the total amount billed would fluctuate based on the number and complexity of requests the county makes.
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 that we had another layer of review before we spent millions of federal dollars,” Bradley said. “The Treasury regulations can be somewhat complicated and our law director thought it was wise to use a consultant to help us make funding decisions.”
While large governments have more in-house resources to spend on figuring out how to distribute ARPA money, they also have more money to distribute. So, economies of scale don’t necessarily make the job easier for large cities, Berube said.
Cleveland Heights recently approved spending up to $250,000 to hire Guidehouse to oversee the distribution of its ARPA funds. During the pandemic, Cleveland Heights faced deep budget cuts, which increased city employees’ workloads, said city spokesman Mike Thomas.
“Instead of adding capacity on staff, it made more sense to outsource it,” Thomas said.
Cleveland Heights received $38.8 million in ARPA money, but much of that is already earmarked, cleveland.com reported previously. During a recent meeting, Council President Melody Joy Hart said Guidehouse would be helping Cleveland Heights spend $10 million of the ARPA dollars.
Cleveland Heights is just one of many municipalities who have hired Guidehouse, formerly the PricewaterhouseCoopers public-sector consultant wing, which markets itself as a group that can cut through red tape.
The City of Dayton, for example, approved spending up to $2,050,807 for Guidehouse to oversee ARPA funds until as late as 2026, according to documents obtained through the Freedom of Information Act.
While Guidehouse has a Dayton office, the contract with the City of Dayton lists the company address in McLean, V.A.
Guidehouse, which has offices in multiple continents, has also been involved in coronavirus-related work at the federal level, where it has 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 it’s “still a little early” to say whether they’re satisfied with the consultant.