Using Metrics to Prepare for Crisis

October 31, 2023

By Dr. Karen Kunz, Associate Professor of Public Administration at West Virginia University and Scott Pattison, Deputy Executive Director at Multistate Tax Commission and former CEO of the National Governors Association

This century has seen a seismic increase in the scope and number of transformational events. The U.S. is now recovering from a major calamity involving a once in 100-year pandemic, which caused a national health crisis and a major economic disruption. Government spending grew by trillions of dollars as administrators at all levels of government grappled with the fallout.

The pandemic might have been a once in a lifetime event, but other natural catastrophes have been occurring more frequently and with more devastating impacts over the last decade, and the costs to government to remedy them have increased exponentially. Nearly every day the media brings us stories of another major disaster, including wildfires, hurricanes, floods, droughts, and ice storms.

The need for federal bailouts has become a vital part of localities’ capacity to make it through such catastrophes. State and local governments increasingly look to the federal government to provide disaster relief. Localized natural disasters, averaging 18 occurrences per year since 2018, quickly become state and national emergencies, with recovery costs easily exceeding $1 billion each.

But passing recovery appropriations has become more challenging for Congress.  Within the last decade, disaster relief, combined with almost $5 trillion in pandemic stimulus funds to state, local and tribal governments, businesses, and the public, have pushed the national debt total to almost $33 trillion.  High annual federal deficits and the demand for more spending on social programs while simultaneously enacting tax cuts, has put enormous pressure on Congress to ensure government funds are spent efficiently and effectively.

Because disasters require money to be spent quickly, it’s critical to plan ahead for ways to create accountability metrics that illustrate the uses and effectiveness of that spending.

Given the importance of this vital work, we explored the importance of performance metrics and accountability requirements within annual reporting of the uses of federal stimulus funds in a report, for the IBM Center for the Business of Government titled “Are States Ready for the Next Crisis? Using Metrics to Anticipate Transformational Events”

Our research focused on the part of the 2021 federal stimulus legislation that provided funding to state, local and tribal governments. The Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) was the only such distribution of recovery dollars that included U.S. Treasury-mandated reporting requirements. While these requirements were a good first step, they were vague, and enforcement of recipients to develop measures that were truly useful and effective was lacking. In the report, an overview of all 50 states frames a more in-depth examination of three representative states with varied landscapes—Colorado, Florida, and Illinois—as case studies.

As a condition for funding, the U.S. Treasury Department instituted basic performance measurement, development and reporting requirements for recipients of the CSLFR Funds. The requirements and resultant reporting were limited, however, to specified uses of funds to create jobs and support designated economic development. We found that even within this minimal structure, there is little comprehensive information about how states have used their (CSLFRF) federal stimulus dollars.

Our research also determined that without definitive guidance on how to construct and employ performance measures, the metrics reported will continue to vary widely in proficiency and scope across states, making comparisons difficult and possibly meaningless.

The IBM Center report includes a handful of recommendations for states and the federal government to effectively develop measurement tools, and track and integrate spending into annual budget processes, in preparation for future crises:

• Consider federal grant reporting requirements as guidance in developing state measurement and reporting.
• Create performance measures that are useful and actually
• Integrate measures and data into the annual budget process.
• Keep measures simple and connected to results.
• Build staff capacity to develop and include data and measures in financial management processes.
• Develop incentives and guidelines for states to use data and measures.

Absent federal guidance, state governments could work together to create consistent measurements that would allow for comparative analysis of recovery aid uses across agencies and programs. That data and performance outcomes could then be integrated within annual budget and spending processes. This would provide essential information for states individually, and collectively for more comprehensive federal stimulus efforts, as the need to direct future spending on crises and disasters continues to escalate. The result will be more effective and accountable use of public dollars.

States and the federal government can better plan for the future. They need to adopt new metrics, especially as pandemic funds end and budgets become tighter. The next major catastrophes are just around the corner!

The contents of this blog post reflect those of the authors, and not necessarily those of the GFRC.