Getting recovery right, by Tyler Kleykamp
Insights

The American Rescue Plan (ARP) offers a significant opportunity to invest in the future prosperity of the United States, especially for those most affected by the COVID-19 pandemic, who were already the ones that had been left behind. The 2021 Index reveals that, prior to the pandemic, Americans were already struggling across many areas of society. Investing in the future of this great nation will also require these weaknesses to be addressed.

How do state and local governments best appropriate ARP funding? Some states are soliciting public input on their plans. Public consultation can be a valuable and informative approach, but many of those disproportionately impacted by the pandemic are likely to be disconnected from these public processes, and their voices and needs will not be heard. Other states may be tempted to spread the funding around as broadly as possible. Although such an approach may appease the greatest number of people, it is unlikely to have the same impact as investments targeted at the greatest need.

AMERICAN RESCUE PLAN

In March 2021, President Biden signed into law the American Rescue Plan (ARP) Act 2021,4 providing a package of $1.9 trillion to address the impact of COVID-19. Through ARP, $360 billion will provide economic relief for state and local government and can be used provide aid to households, small businesses, non-profits, and industries such as tourism and hospitality, to provide premium pay to essential employees or grants to their employers, to provide government services affected by a revenue reduction during the pandemic, and to make investments in water, sewer, and broadband infrastructure. There is another $176 billion for K-12 and higher education, together with additional support to businesses and individuals. ARP also provides $415 billion for a national vaccination program.

The first thing states and local government should do is invest in data infrastructure - the people, processes, technologies and data systems necessary to leverage data. Guidance from the Treasury authorizes states to do just this, not just to improve the public health data systems, but also to use data to support the recovery. Good-quality data enables states and localities to understand better the individuals, businesses, and communities that have been most significantly affected economically and socially by the consequences of the pandemic. Building data capacity will allow states to track the impact of their investments.

There is no shortage of use-cases in states where data can help inform or advance their recovery efforts. And most of the successful data programs in states started with a well-defined use-case. The United States Prosperity Index provides states, and 1,196 counties across 12 selected states, with a starting point to identify the most pressing or urgent issues. This transformational tool allows leaders to assess the relative strengths and weaknesses of their respective areas and explore the economic, social and institutional choices that need to be made in order to drive prosperity from the ground up. Leveraging the Index allows leaders to understand specific policy domains that are either contributing to opportunities for enhanced prosperity or that are barriers to prosperity.

Prosperity is not mono-dimensional but multi-faceted, capturing all those things that enable people to thrive. True prosperity is possible only when all citizens, neighborhoods and communities are able to reach their full potential across broad aspects such as education, entrepreneurial activity, and community life. The insightful observation made by President Robert F. Kennedy, that the economic indicators that dominate the conversation, such as Gross Domestic Product (GDP), tend to measure “everything except that which is worthwhile”, is as relevant and true now as it was when he first said it over 50 years ago. The findings from the Index identified some common challenges that are affecting many parts of the nation. Weakening mental health, rising obesity rates, an increase in mass shootings and deteriorating social networks were all leading to a deterioration in U.S. society even before the onset of the pandemic.

The Index provides a lens to assess the extent to which each state and county is individually affected by these challenges. For example, all but Rhode Island, Maine and North Dakota experienced a weakening in social networks over the past decade. Each state should consider measures that will help strengthen connections and relationships between residents. In addition, consider the mental health of Americans which, has been significantly impacted by the pandemic but had already weakened across many parts of the country since 2016. Given all states bar Idaho, Rhode Island and Arkansas saw mental health deteriorate in the decade prior to the pandemic, this suggests that improving mental health also needs to be an area of focus for nearly every state.

In addition to identifying how common challenges impact each state and county, the Index also reveals the specific challenges facing each state and county, made possible through the Index’s organizational structure, in particular through the 48 policy-focussed elements. For example, consider education in California and Texas. Overall, California ranks 40th and Texas ranks 42nd for education. However, the reasons for their relatively weak ranking are quite different and therefore require a targeted response. For California, which has some of the strongest universities in the world (it ranks 5th for Tertiary Education), it exhibits a weak performance in both early (Primary education) and later (Secondary Education) stage K-12, ranking 45th and 40th respectively. A priority for California would be to strengthen both early and later K-12, although sequencing improvement to early-K-12 then later-K-12 may be an effective way to strengthen K-12 across all ages. For Texas, however, over the past decade, early K-12 has improved due to improvements in Math and Science at Grade 4, resulting in the state rising 10 places in the rankings for Primary Education. However, later stage K-12 has deteriorated, with Grade 8 scores across Math, Reading and Science all weakening. Consequently, the state has fallen 6 places in the rankings. Secondary Education would seem to be high priority area for Texas. Over time, it may also want to improve its Tertiary Education, for which it has a low ranking of 35th.

In addition to strengthening specific aspects of prosperity, it is important to grasp that the multi-variate nature of prosperity is interconnected. For example, the quality of the natural environment, social capital, including the strength of families, health outcomes and the quality of education, are all linked to economic performance. The interconnected nature of prosperity can be seen illustrated by looking at how measures of a balanced diet captured in the Nutrition element is associated with Longevity, which measures mortality at the different stages of life, at both a state and a county level. Improving nutrition is also likely to improve mortality rates and accelerate improvements in prosperity. Understanding these types of connections, across the 3 domains, 11 pillars and 48 policy-focussed elements, can inform a richer understanding of society and lead to more informed policy making.

Getting Recovery Right Fig 1
Getting Recovery Right Fig 2

Combining indicators from the U.S Index with other data, can also elicit deeper insights into the issues that are acting as barriers to prosperity. The California Dream Index, for example, enables greater understanding on how ethnicity, gender, or income levels affects outcomes on 10 measures across the 58 counties in the state. One of the measures in the California Index is community college graduation, that is captured within the Education pillar of the U.S. Prosperity Index. The data reveals that 57% of the Asian population in Santa Cruz county has graduated from community college or higher, for people from a White or Black background it’s 52%, but those from a Latino background it’s only 34%. This suggests a more targeted intervention that provides greater support to people from the Latino community to attend college might be more appropriate. Combining the Index with data that states and counties already collect can provide richer insight. Considering the education example above for California and Texas, state education departments could leverage data on early childhood interventions to better understand how well they prepare students for elementary school. Finally, where states need to improve the business environment, they could leverage additional data to more fully understand the skills gaps in the labor market.

Unlike previous federal funding programs, which often required states to spend the funds quickly and limited the flexibility states had to leverage those funds, the ARP is more flexible. First, the State and Local recovery fund allows for broad flexibility in how the funds are spent. Second, recipients have until the end of 2024 to obligate the funds, so states need not rush to get money out the door. While there will certainly be pressure on state leaders to act swiftly, states would be wise to take a more thoughtful approach in how they invest these funds.

An initial investment in data capacity will enable states to develop the capability to be data-led in best appropriating ARP funds, which will allow states to make smarter decisions on how and where to direct investments to maximize impact. Using the Index as a framework, to guide their decision making, gives states and localities the opportunity to target funds to previously overlooked communities and neighborhoods, but also to give greater consideration to the wider aspects of prosperity and not just those affected by the pandemic. These investments will support states well into the future, after the funds have been spent. For instance, Indiana’s Management and performance Hub6 returns four dollars for every one dollar invested in the platform. COVID-19 has illuminated the many challenges related to data sharing and integration within states. Organizing their efforts around the aspects of the Prosperity Index that need improvement will provide states with the early focus necessary for success. To ensure that states are prepared for the next crisis, they must invest now in the data infrastructure necessary to respond to future events, and the Index is a transformational tool that stands ready to assist in improving the prosperity of all Americans.

Tyler Kleykamp is a Fellow with Georgetown University’s Beeck Center for Social Impact and Innovation. He was the State of Connecticut’s first Chief Data Officer and one of the first state Chief Data Officers in the nation.

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