Where the Money Goes: Federal Stimulus Spending in the Mountain Empire

In hindsight, the stimulus grant was bittersweet for Scott County Public Schools.

In June, the school district received $342,300 to purchase cafeteria equipment – all the money it had applied for, and the largest chunk of the $1.8 million Virginia had allocated for such expenditures.

That money would purchase serving lines, walk-in refrigerators and freezers and dishwashers for 11 schools, some of which still used equipment more than a half-century old.

It could have purchased much more.

But a full third of the grant, unspent, is returning to state coffers.

The story of how Scott County was left with an extra $121,767.20 that it couldn’t spend is not unique in the annals of the American Recovery and Reinvestment Act – Congress’ $787 billion effort to reverse the economic downslide. When it comes to receiving federal stimulus funds, local officials throughout the region tell a tale of gratitude mixed with frustration, of low-hanging cash with strings attached.

In Southwest Virginia, stimulus money has paid for sewer pumps, police equipment, new asphalt on interstates, fencing around school playgrounds, computers, software and buses. Less visibly, the funds have spared the jobs of education and law enforcement personnel.

As of last week, 143 counties, cities and towns in Virginia had received $1.1 billion, according to state data. Of that total, 14 localities in Southwest Virginia received $62.7 million, or 5.5 percent of what has been allocated to local governments, which does not include funding for higher education and regional authorities, according to a Bristol Herald Courier analysis.

Though they receive a fraction of the statewide total, localities in the region claim some of the highest stimulus spending per person, ranging from $398 a head in Wythe County to $130 in Russell County.

The impact of those funds, however, is more elusive.

The miscalculation
“Our tables at some schools are not great. If we’d known that we were not going to spend all this money on equipment, we could have spent some on tables.” – James Scott, superintendent, Scott County Public Schools

“One thing we messed up badly was we didn’t order any cafeteria tables,” said the Scott County schools’ chief.

The need for new tables came to James Scott by way of hindsight, months after his school district put out a bid for the school lunch equipment, arriving at a cost of $342,296.

Then two unexpected things happened: The state granted the school district the full amount, and the work wound up costing less than the original bid.
But blocking Scott County officials from using the leftover $121,000 was a single clause limiting their use to the “equipment specified” on the grant application.

That’s when Scott thought, wincingly, of the lunch tables.

“Our tables at some schools are not great,” he said. “If we’d known that we were not going to spend all this money on equipment, we could have spent some on tables.”

The grant instructions are clear on the subject of what to do with unspent funds: They will be held by the Virginia Department of Education and “reallocated to other school divisions that did not initially receive funds,” states a form attached to the grant award.

“It’s a shame we have to give this back,” said Assistant Superintendent John Ferguson.

A spokesman for Gov. Tim Kaine said that “none of the stimulus is going to go to waste.”

“As the costs of projects have come in under the anticipated cost, that money is still used,” said the spokesman, Gordon Hickey.

Recently, Southwest Virginia was the beneficiary of the unspent crumbs of grants.

On Sept. 4, Kaine announced that $13.9 million that had trickled back to the state from unused grants would fund additional improvements to sewage systems in six localities, including Norton, Richlands, Pulaski, Wise and Tazewell counties.

Kaine touted Virginia’s “competitive business environment” as creating the savings that allowed the state to fund additional projects.

That environment is not limited to local companies bidding for a contract.

The company that won the bid to furnish Scott County with new cafeteria equipment, Strategic Equipment and Supply, is headquartered in Dallas with offices in Knoxville, Tenn.

“I wouldn’t call it a boon, but we were fortunate enough to garner a fair amount of business,” said Andrew Scruggs, vice president of the food services supplier.

“I would by no means call it something that has a long-term effect,” Scruggs said by phone. “It helped us out for 90 days. We didn’t hire anyone because of it.”

The spectrum
“We haven’t received any additional funds to do anything. They’ve taken the state money away and put federal money in its place.” – Cellell Dalton, Wythe County administrator
“The projects had to be shovel-ready, and several of the projects we would like to do were not in that phase.” – Greg Kelly, Abingdon town manager

Stimulus funds have swept over Virginia like a shifting weather pattern, liberally raining dollars on some localities and sprinkling them on others.

In Southwest Virginia, Wythe County has been most saturated with stimulus dollars, with nearly $11.5 million, giving it the sixth-highest rate of stimulus dollars per resident among the state’s 95 counties, according to the Herald Courier analysis.

Occupying the other end of the spectrum is the town of Abingdon, with just $379,000 – 1/30th of Wythe’s haul.

A possible factor explaining the disparity is timing: Localities have to pitch projects that meet a grant’s criteria, are ready to break ground but have not yet done so. Officials in Wythe County and Abingdon noted this, but were at a loss to explain their own share of stimulus dollars relative to other localities.

Wythe County Administrator Cellell Dalton downplayed the impact of the stimulus funds.

“It’s just a two-year stopgap measure to help states out,” Dalton said of the money his county has received from the state. “In my opinion, the state has taken federal dollars and used those to supplant the revenues they should have paid” to cities, towns and counties, he said. “The state is making localities pick up the shortfall.”

To date, Wythe County has received a $71,000 grant for the county’s Sheriff’s Office, a $6.5 million grant for highways and bridges, a $1.4 million grant for a sewer pump, and $3.3 million in education funds.

But the way Dalton looks it at, the state has played a sleight-of-hand game, swapping federal funds with their strict conditions in place of the money it would normally send to localities.

In fact, Dalton said, he’s short this year.

“I think it’s not even status quo,” he said of funding from the state. “I think the only stimulus money we’ve received is for the sewer project itself.”

That project will add a pump station and extend a septic line to the eastern end of the county, where the existing private system is seeping sewage. The stimulus grant will pay for most of the $1.6 million project, which will go to a firm in Martinsville, Va.

Dalton expects to hold a preconstruction conference within a few weeks, he said.

The rest of Wythe’s stimulus money – the grants for the sheriff’s department, highways and schools – reflects the same funding level the county has received in the past, only under the name “stimulus,” Dalton said.

Coincidentally, the grant Abingdon received also was for a sewer project: an energy-saving plan to purchase turbines that will convert methane gas from processed sewage into a clean-energy source. By converting the methane into fuel, the Wolf Creek Water Reclamation Facility can cut down on its carbon emissions and generate as much as 20 percent of its energy needs, saving the town money, according to the plant’s superintendent, Michael Maiden.

The project also includes solar panels and geothermal heat pumps. But once the grant was approved, the work exceeded the award by $186,000, leaving the town in the opposite predicament of the Scott County School District. Maiden said he hopes that the town can get the rest of the funding from the state, but could be forced to forfeit the solar panels and heat pumps.

Asked why Abingdon only received one grant, Town Manager Greg Kelly was at a loss.

The town has applied for more than 20 grants, he said. Part of the problem may have been readiness.

“The projects had to be shovel-ready, and several of the projects we would like to do were not in that phase,” Kelly said. “We’re working toward that goal. Several will be shovel-ready before long. That’s the only explanation I can give you.”

Stimulus or cushion?
“We do welcome the stimulus money. With the cuts we endured in this year’s budget from the state, we absolutely so much welcome getting the stimulus.” – Ina Danko, superintendent, Bristol Virginia school system

How have stimulus funds impacted Bristol Virginia Public Schools? The superintendent has no problem ticking off the ways:

- Two literacy coaches at a middle and high school

- Four tutors for the state Standards of Learning exam at all elementary schools

- Four new serving lines for cafeterias at a middle and three elementary schools

- A new bus for special education students

- Fencing around the playgrounds of two elementary schools

- New computers and software

- Retaining teachers and support staff

“We cut well over $1 million from our operating budget last spring,” schools' chief Ina Danko said. “This money did not replace that.”

The education funds that Bristol received fall into three categories – or “buckets,” as Danko calls them: Title I, special education and stabilization, the latter for capital projects.

Add all three together, and Bristol has received approximately what it received last year, Danko said. Only this year, it has less freedom about how it can spend the money.

The federal strings “kind of limits what you can do with it,” Danko said.

But after her budget shrank by more than $1 million from last year, the superintendent is grateful for the funds.

“We do welcome the stimulus money,” she said. “With the cuts we endured in this year’s budget from the state, we absolutely so much welcome getting the stimulus.”

But is the stimulus living up to its moniker?

“I think it did stimulate our economy,” Danko said. “The things we did with the repair work, the capital projects, that money is going into the economy. There are local business benefiting from it.

“Maybe it was saving losses,” she added reflectively. “Maybe it was a plus, maybe it was a minus. I know times are hard. We absolutely are trying to do our very best with the budget we have.”

The school system provided the names and winning bids for four contractors, totaling a shade under $50,000: Area Radon Services and Rio Grande Fence Co., both in Johnson City, Tenn.; American Steel and Iron in Bristol, Va.; and Johnson Fence Co. in Bristol, Tenn.

“I hope the stimulus money trickles down to us a lot more,” said Alan Johnson, of Johnson Fence Co., which also has won stimulus-funded contracts for Russell County schools.

Johnson said his business is “not that bad, but not good, like it used to be.” His work force consists of his wife, two sons and six full-time employees who install fences. He hasn’t considered hiring additional workers, nor has he had to lay off any.

“It’s going to be big here in another round, when it really gets cooking,” he said, anticipating future stimulus funds becoming available. “They’re not cutting it loose yet.”

dgilbert@bristolnews.com | (276) 645-2558