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The Stimulus’s Hidden Success

Carol De Vita and Margaret Simms, Urban Institute - Posted January 7, 2013


Three years after passage of the American Recovery and Reinvestment Act (ARRA), the success of the stimulus initiative is still being debated. The major focus of the debate has been whether or not ARRA generated jobs and helped put the economy back on track.

But creating jobs is only part of the story. ARRA had several objectives, and while job generation is the most talked about goal, the stimulus also was designed to alleviate hardships for those who were unemployed or underemployed. This means that focusing on jobs alone understates the overall impact of the stimulus.

One program in which hardship alleviation was just as important as job creation was the Community Services Block Grant (CSBG), which received additional funds through ARRA. CSBG provides states, Community Action Agencies, and other organizations with funds to help alleviate poverty in local communities. As part of the stimulus, CSBG received an additional $1 billion for the 2009 federal fiscal year. These funds were to be used to promote self-sufficiency for low-income families and individuals, and respond to immediate social and economic needs in their communities over an 18 month period.

The U.S. Department of Health and Human Services’ Office of Community Services, which administers CSBG, asked the Urban Institute to undertake an assessment of CSBG’s use of ARRA funds. In our report, “Implementation of Community Services Block Grants under ARRA,” we examined how the CSBG network used stimulus funds in California, Georgia, Massachusetts, Minnesota, New York, Oklahoma, Virginia, and Washington.

We found that the effort was successful in four important ways.

First, the number of jobs the CSBG network was able to create using ARRA funds was higher than the number of jobs officially reported. Recipients of stimulus funds were required to report the number of jobs created or retained through their organization’s actions, but they could count only jobs directly funded by the stimulus. Any jobs created as a result of services provided by the organizations in the CSBG network were excluded from reporting and analysis. 

Our analysis suggests that CSBG’s job creation impact under ARRA was much wider than the official number of 18,000 jobs created nationally. Organizations in the CSBG network provided counseling and job training that enabled people to obtain employment elsewhere in the community.

A more accurate picture of the stimulus’s effects would have included the jobs people found as a result of services provided by staff hired with stimulus money. One Community Action Agency respondent summed this up by saying, “It was frustrating not to be able to take credit for the jobs the clients [service recipients] got. The social worker was counted [as a job] but not the clients because the latter were not paid through ARRA.”

Second, CSBG grantees were able to serve more people and provide more services as a result of the additional funds. Services were tailored to address critical community needs, such as mortgage foreclosure counseling, financial literacy training, transportation, and child care assistance to enable people to work.

For example, one CSBG entity in a rural area helped broker agreements between bankers, used car dealers, and low-income clients to help people obtain affordable and reliable transportation so they could get to work; another entity used ARRA funds to purchase assistive technology (e.g. hands-free devices) to enable people with disabilities to receive computer training. Such efforts were aimed at alleviating hardship and promoting self-sufficiency.     

Third, the stimulus also helped grantees build capacity, an activity that has a long-term positive impact not easily captured through short-term data. This included investments in staff training, purchasing or upgrading software, and the creation of partnerships with local community colleges, public-sector programs, businesses, and community service organizations.

Local entities thought carefully about how to use the CSBG ARRA funds for these purposes. As one provider said, “We knew there would be a steep cliff at the end, so we thought about strategies, how to get durable gains, about the capacities we could build.”

Last but not least, these results were achieved in just 18 months—a very tight timeframe for a major initiative. Given the short lead time, grantees faced significant planning and implementation challenges. They had to hurriedly conduct special needs assessments or use recent ones to focus their efforts. Additional time would have enabled them to plan more thoroughly, as they do with “regular” CSBG funds.  

Although a major objective of the stimulus was to move money into the economy quickly, the desire for speed could have been balanced by consideration for medium- and long-term effects. Despite these challenges, however, some initiatives – such as CSBG – were highly successful. Should a stimulus strategy be used again in a future economic downturn, a longer performance period and more time for planning, outreach, and local coordination would likely lead to even better results.

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Carol De Vita is a senior fellow in the Urban Institute’s Center on Nonprofits and Philanthropy. Margaret Simms, an Institute fellow, directs the Urban Institute’s Low-Income Working Families project.

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