Confusion over how ARPA funds to be divvied up
Even with the framework for spending Navajo ARPA funds set up in Navajo Nation Council resolution (CJY-41-21), there appears to be a great deal of confusion as to what happens next in terms of exactly how and when American Rescue Plan Act funds will be allocated.
In a leadership meeting last week at Twin Arrows Resort Casino, the president’s office shared a PowerPoint presentation with the Council that lists its priorities for the Navajo (ARPA) Fiscal Recovery Fund.
These priorities include broadband, water/wastewater, housing, bathroom additions, education, health, social services, economic development and tourism.
However, even after months of planning meetings, no proposed project lists, dollar figures or even percentages by category were attached to the presentation.
“There was no plan presented or amount or list of projects presented to us that could be completed by 2024,” said Delegate Eugenia Charles-Newton. “How long have we had that money and it’s still sitting there. By the time we start divvying out the money, it’s going to be winter.”
The Navajo Nation received its first allocation of $1.86 billion in ARPA funds on May 28.
In response to a request for more detailed information, president’s office Communications Director Jared Touchin stated, “Chief of Staff Paulson Chaco, division directors, and others are in the process of determining several items that will help to develop a project listing for an expenditure plan.
“Once these are taken care of,” he said, “the administration will then work with the Council to determine an allocation of funds for the proposed expenditure plans.”
Per Council resolution CJY-41-21, unfinished CARES Act projects and Sihasin and UUFB fund projects that qualify for ARPA will be reimbursed, but those exact figures are not yet available and will not be confirmed for 60 days.
The president’s office’s priority list does not include payments to the people, even though the resolution allows for up to 10% of the $1.8 billion in ARPA funds to be allocated for that purpose through legislation.
There is also no indication of what monies may or may not go to chapter projects and there is no provision for the judicial branch.
Finally, there is no category for “premium pay” for eligible essential workers, which ARPA allows for, including hazard and special duty pay.
Charles-Newton said in the leadership meeting, delegates were limited in the questions they could ask and many questions went unanswered.
“There was no engagement at all,” she said. “It was just, ‘This is what you need to do.’”
‘We want to do this correctly’
In his remarks at the Twin Arrows meeting, President Jonathan Nez said he appreciated working in collaboration with Council and the plan is to leverage ARPA dollars to the maximum benefit for the Navajo people.
“We all know that water, electric, broadband, roads, housing are at the forefront of our needs in the local communities,” he said.
He acknowledged the big challenge will be vetting and prioritizing projects and making sure they are in compliance with federal regulations and Navajo laws.
“Our Navajo people are wondering why is this taking so long – we want to do this correctly,” said Nez. “They are anxious and wondering what we are doing to get these projects completed.”
The one thing known for sure is 10% of the Navajo ARPA FRF funds, or approximately $186 million, was allocated in Council’s resolution for government administrative support and regulatory services in a 90%/10% formula to the president’s and speaker’s offices.
However, it is going to take some time to staff and set up the new ARPA Fiscal Recovery Fund Office under the president’s office, which will require Naabik’iyati Committee approval of its plan of operation, and to develop the application and vetting process for proposed projects and services.
As far as money going directly to divisions to manage projects and services, Charles-Newton echoed what many delegates have said before, that the executive branch is already struggling to complete existing non-ARPA projects.
“I said all we ever hear is excuses and you’re asking us to give your divisions and departments more money that they can’t handle,” said Charles-Newton.
In order for any additional ARPA funds to be appropriated, all proposed projects and services have to first be legislated through the Council and approved with a 2/3 vote and by the president.
Only then can request for proposals be issued, presumably through the controller’s office, in order to hire entities to complete the work for projects and contracts that end up being approved.
‘What is going on?’
All of this leaves Navajo businesses and other organizations wondering what the timeframe will be for applying for ARPA work and contracts.
“We are at a loss, because we absolutely have no idea what is going on between the legislative and executive branch,” said Al Henderson, secretary/treasurer of the Dineh Chamber of Commerce. “People are calling us saying, ‘What is going on, what is happening?’”
The leadership meeting at Twin Arrows was not open to the public and this reporter was dropped off the teleconference call after the president’s office’s presentation.
“As far as we know, the only thing they’ve done is they’ve helped themselves,” said Henderson, referring to the $186 million the Navajo government gave itself for ARPA administration.
“They took the cream from the top and left the rest of the cake naked as a jaybird,” he said. “We don’t know how that remainder is going to divvied up. We don’t know what’s coming down the pike. Nobody knows.”
The Dineh Chamber had itself submitted a detailed $100 million proposal to help strengthen and “stand up” Navajo businesses and nonprofits and help them apply for Navajo ARPA contracts, with the goal of keeping ARPA funds on Navajo and stimulating the Navajo economy.
“We’re anticipating some funding that would bring the business community back into a comfort zone,” said Henderson. “Given the current atmosphere of silence and non-responsiveness, that hopefulness on the part of the chamber is beginning to recede.”
Henderson did mention that Vice President Myron Lizer has requested a separate $5 million proposal from the Dineh Chamber to assist the Division of Economic Development with capacity building.
Derrick Watchman, owner of Sagebrush Hill Group, who helped put the $100 million chamber proposal together, said that instead of being upheld and sought after, many Navajo businesses receive feedback that they are not qualified or capable enough and lack financial backing.
Additionally, the Navajo Business Opportunity Act is often not honored or enforced, he said.
“It’s kind of odd to have the tribe pay itself,” said Watchman. “And on top of that, repay the Sihasin and the UUFB.
“The question that the chamber has is why did the Council and the president hold all these hearings and expend a lot of time with everybody, only to have the (president’s office) ARPA office now be the vetting office?” he said. “It’s inconsistent.”
Bill caps admin at 2%
A request to Speaker Seth Damon for a comprehensive summary report that compiles information from the last three months of ARPA meetings and work sessions was not responded to.
Delegate Carl Slater said he expects legislation that includes some infrastructure, including unfinished CARES Act projects, hardship assistance, business assistance through economic development, and COVID-19 response funds will be dropped after Aug. 17 when the application is approved by the Budget and Finance Committee.
Slater also suggested legislation could be passed soon to appropriate money for accounting, project management, compliance, architectural and engineering and other professional services, in order to prepare for administration of projects and contracts.
Another provision of the Council resolution that is causing confusion and concern is that non-Navajo Nation programs or offices, including Navajo Nation-owned enterprises, corporations, and other entities like nonprofits, may only include an allocation for administrative costs at a rate “not to exceed” 2% of project costs, which seems very low.
“Our tribal leadership appears to be just focused on the tribe and not the other valuable components of our economy so that we do recover,” said Watchman.
“The way I read the bill, we can only budget two percent… that’s not enough,” he said, “especially when you need legal to make sure you’re compliant – you need legal, an accountant, an auditor. Those professional expenses are not cheap.”
Capping it at 2% just doesn’t make sense, he said.
Slater said that he thinks organizations that may seek ARPA funding shouldn’t be expending a lot on administrative resources.
“People can bring their own resources to projects,” said Slater. “I think this is a good way to encourage that, so that more money is going to programming instead of administrative costs.”
However, he also indicated that certain costs could be included in ARPA budget proposals, such as project management, that would be above and beyond the 2% cap for administrative fees.
“I guess we’ll see if that’s enough,” said Slater. “We’ll probably need more definition on what ‘administrative cost’ means relative to work included in the budget.”
On a separate note, Washington Office Executive Director Santee Lewis reminded delegates that the $1.86 billion in ARPA funds given to the Nation only represents 65% of the $19 billion allocated to tribes, so more ARPA funds will be on the way soon.
The remaining 35%, which will be allocated based on tribal employment data, is expected to be received by the end of August, she said.