Beth Bathe’s small business wouldn’t have made it to 2021 without the grant she received from Lancaster County.
When the COVID-19 pandemic shut down businesses across the county a year ago, it put an end to in-person art classes at Bathe’s Short Dog Studio in Ephrata. She also lost the ability to sell her own art at various festivals, which made up the bulk of her income.
“Rent is $635 a month, and there’s no way, and insurance, there’s no way,” she said, talking about the bills that would have gone unpaid without the financial help. “And that would have hurt my landlord too, so it’s kind of a trickle-down thing.”
Bathe received $10,000 through the small business grant program created by the county and funded with millions of dollars it received through the March 2020 Coronavirus Aid, Relief, and Economic Security Act, often referred to by its acronym, CARES.
Like Bathe, Erin Blank, the owner of Keystone Mascots, a mascot costume design and repair company in West Earl Township, received $6,515. She said the money went toward buying more supplies and new equipment.
“My business mentors always said to have a nest egg for when, not if, emergencies happen,” she said. “When that dried up, the CARES Act definitely helped keep the enthusiasm going.”
Joshua Seacat, owner of the T-shirt design studio Lancaster Print House, received $10,000, which gave him the financial security to order supplies for a program he set up to help other businesses. Seacat designed, made and sold shirts for about 30 other companies, at no cost to them, and split the profits.
“Had we not had the grant money to get caught up on supplies, I don’t know that we would have done that,” he said. The grant funds he received, he estimated, generated over $20,000 in profits for the partner businesses.
Of the over $95 million in CARES money the county received, the lion’s share — nearly $41 million — went toward grants for businesses via the Small Business Recovery and Sustainability Grant Program, which was run on behalf of the county by the Economic Development Company of Lancaster and the Lancaster Chamber.
The 1,298 local businesses that received grants in 2020 used the money for payroll, rent or mortgages, supplies and retrofitting facilities to meet public health requirements.
“What we’re hearing from folks is really a ‘But for’ story. ‘But for your grant we wouldn’t have paid our rent; but for your grant we wouldn’t have paid our utility bill; we wouldn't have been able to keep this employee on,’” said Lisa Riggs, president of the Economic Development Company. “So in my mind, that $41 million did a lot to preserve an infrastructure of small businesses.”
Riggs said that along with the Lancaster Chamber, the EDC is currently conducting a survey of those businesses to gauge the program’s impact. They hope to have the survey results later this year.
Where the money went
When the county received its CARES Act allocation at the end of last April, a group of elected officials and county employees — led by Commissioner Ray D’Agostino — came together to create a plan for how best to use the windfall of federal funds.
Very quickly, the group, whose members included the county controller, solicitor and budget director, formed a plan that grouped spending into three main categories.
Fifty million dollars was set aside for “reopening and support of the local economy;” $35 million for “protecting the health, welfare and safety of the county;” and $10.2 million for “maintaining public service COOP / emergency response,” an awkward name for spending to keep government at all levels in the county running and included funds for purchasing cleaning supplies and personal protective equipment (PPE), paying the consultant hired to advise the county on the pandemic, and reimbursing municipal governments and school districts for some pandemic-related costs.
But the plan was just an outline. D’Agostino stressed at the time that how much was actually spent in each category might change.
“We don’t know what we don’t know,” he said in May. “Moving forward, we need to have that flexibility, and this framework provides that flexibility.”
Almost a year later, it’s easy to see just how much the original plan was changed as the pandemic evolved. Spending on the health category, for example, wound up being less than a third of the original proposed amount, mostly because Lancaster General Health did not need its full allocation, allowing the county to shift the money to other uses. One reason: LGH did not see the demand for COVID-19 tests over the summer that it originally forecast.
Meanwhile, spending on the third category — helping keep government running — was more than twice the original projection, at $26.6 million, rather than $10.2 million.
The $16.4 million increase for the public service/emergency response category was due to larger-than-anticipated costs for the county and municipalities. Support of county operations cost $10.1 million. Another $14.4 million went to the county’s 60 municipalities and 17 school districts to reimburse them for pandemic costs like PPE and remote work technology, among other things. [More detailed spending data and receipts can be found at lancasteronline.com.]
“The plan you put in place at the very beginning doesn’t necessarily mean it’s going to be unchanged, because it’s a completely unknown scenario to everyone,” D’Agostino said in an interview last month. “We’ve never dealt with anything like this.”
D’Agostino pointed to the county’s nearly $300,000 contribution to housing assistance, a line item not included in the original plan, as an example of responding to community needs in the moment. Additionally, the county spent $2.1 million to support libraries and fire and EMS services. That spending also wasn’t part of the original framework, but was recognized as a need over the summer.
D’Agostino and his colleague, Commissioner Josh Parsons, said they were pleased that the majority of the funds — roughly 89% — was spent directly on the community, not to cover the costs of county government agencies. Parsons emphasized that it was unprecedented for the county to receive $95 million all at once.
“We had to create a process, and that’s what was important,” Parsons said.
D’Agostino said that process involved a weekly call that included himself and the county’s controller, chief clerk, solicitor, emergency management director, public health adviser and purchasing director. The group reviewed spending to ensure it was in line with guidance from the U.S. Treasury Department before bringing it to the board of commissioners for a vote. They also checked in frequently with community organizations to monitor their needs.
“We had, certainly, disagreement, but I think every vote ending up being unanimous is pretty impressive, I think,” Parsons said.
Because it has a population of more than 500,000 people, Lancaster fell in a category that included just six Pennsylvania counties eligible to receive money directly from the federal government instead of having funds allocated by the state government. What those counties prioritized varied widely.
Montgomery County, which received $145 million, spent much less than Lancaster County on small business support — only $16 million compared to $41 million — but much more on school district support and rent relief, according to the county’s website. Montgomery’s spending also included child care support, which was not in Lancaster’s budget.
“The one piece that I would say, and I’ve been very thoughtful broadly about the economic recovery plan, not specifically to the grants … my opinion is this focus around youth, child care, daycare support infrastructures for working families, I wish we could have lifted that up a little bit more,” Riggs, president of the EDC, said. “I personally feel like we could have incorporated that more in our plan (as a community) in hindsight.”
Allegheny County spent 20% of its $212 million in CARES funds on county operations, roughly double that of Lancaster County, according to Pittsburgh Quarterly. Allegheny did not provide grants to small businesses, but did spend more than Lancaster County on social services like housing, child protection and rent and utility assistance.
Bucks County spent even more of its $109.6 million in CARES funds on government operations, said David P. Boscola, the county’s director of finance and administration. He said 32% of its funds went to staffing costs, 27% to economic response, 24% to respond directly to COVID-19, 15% to nonprofits to provide social services, and 1% each to technology purchases and 2020 elections costs.
“The thought process was from the beginning we were going to provide for our staffing, our business community and the health of our community,” he said.
A drop in the bucket?
The $95 million in CARES funds was a drop in the bucket when compared to Lancaster County’s gross domestic product, which totaled more than $30 billion in 2019, according to the U.S. Bureau of Economic Analysis.
But that $95 million is just a slice of the federal funds that poured into the county in 2020. The Paycheck Protection Program, a separate pool of money under CARES, sent another $1 billion in loans to employers of all types, much of which won’t have to be repaid as long as employers use the money to keep employees on the payroll. There’s also at least $1.5 million in federal contracts to businesses in the county to support the government’s effort to combat the pandemic, according to a database produced by the nonprofit newsroom ProPublica.org.
Perhaps the biggest pool of money were the stimulus checks to individuals. If just half of the county’s 545,000 people qualified for payments, either directly or as a child of a recipient, a back-of-the-envelope estimate adding together the three separate stimulus payments (spring 2020, December/January and March) shows that those checks could have totaled as much as $800 million
The latest $1.9 trillion COVID relief bill, passed by Congress and signed by President Joe Biden on March 11, includes $350 billion for state, local and tribal governments. Lancaster County government is slated to receive an estimated $105 million. Municipalities around Lancaster County are also set to get more money as well, with Lancaster city due for the largest amount, estimated at $42 million.
Local leaders are awaiting guidance from the U.S. Treasury Department on how the money can be spent.
When that next wave of federal money arrives, Tom Baldrige hopes local officials review their use of CARES money to fine tune how to use the new money.
“I got to say I think Lancaster County did a remarkable and a responsible job in administering the funds from the CARES Act effectively and in a way that got us through this pandemic,” said Baldrige, the president of the Lancaster Chamber. “The second round of funding, for better or worse is more massive, and I hope it is looked at more strategically and is used in a way that will benefit Lancaster County for year to come.”