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U.S. territories have faced challenges gaining access to COVID funds

Snag caused by way territorial governments are structured, GAO says
For example, in American Samoa, officials told GAO that the territory lacks funds to pay for disaster related expenses in advance and that they are still waiting on some reimbursement from the U.S. Federal Emergency Management Agency (FEMA) for a vaccination project they paid for in May 2022.

Pago Pago, AMERICAN SAMOA — Officials of the U.S territories have told the U.S Government Accountability Office (GAO) that they “faced challenges accessing and managing some COVID-19 funds due to pre-existing financial challenges and unique territory government structures.”

The investigative arm of the U.S. Congress, said the five US territories faced — among other challenges when it comes to use of COVID-19 funding — “Accessing Funds” allocated to each insular area, according to the GAO report, “COVID-19: U.S. Territory Experiences Could Inform Future Federal Relief.”

The report, which was addressed to U.S Congressional committees and publicly released on Sept. 19, cited three issues, dealing with accessing funds.

On the “Reimbursement Programs,” sub-topic issue, GAO explained that some of the territories said that having sufficient funds to make use of reimbursable programs was challenging.

For example, in American Samoa, officials told GAO that the territory lacks funds to pay for disaster related expenses in advance and that they are still waiting on some reimbursement from the U.S. Federal Emergency Management Agency (FEMA) for a vaccination project they paid for in May 2022.

A footnote in the report, quotes American Samoa officials saying that $1.79 million of the $2.4 million in outstanding reimbursements for the vaccination project was released to American Samoa in April 2023. As of May 2023, American Samoa officials told GAO that FEMA is still validating the remaining amount for reimbursement. Prior to this, FEMA released $3.4 million in March 2021 and an additional $1.5 million in March 2022.

Similarly, the Commonwealth of the Northern Mariana Islands (CNMI) is facing reimbursement problems with FEMA, which confirmed to GAO that $58 million is pending in reimbursements for CNMI.

Under the sub-topic of “Private capital requirements”, GAO said that several territory officials have shared with GAO that a lack of sufficient sources of potential private capital investment, “may make it more difficult for the territories to meet the requirements” for the federal State Small Business Credit Initiative (SSBCI) program.

This program requires jurisdictions to show potential for private capital to match federal investment at a 10:1 ratio, according to GAO, which notes that participating jurisdictions must demonstrate that, at a minimum, $1 of public investment by a program will cause and result in $1 of private financing for each other credit support program such as loan guarantee, collateral support, or loan participation program or for each fund within venture capital fund programs. (Details on SSBCI available on website.)

For American Samoa, the territory has one local bank, and officials told GAO that they “are awaiting a final decision to determine if this bank will qualify as an eligible source of private matching capital,” said GAO, which didn’t identify the bank by name, but its common knowledge that the only financial institution on island, is the government-owned Territorial Bank of American Samoa.

Samoa News notes that as of yesterday morning, online US Treasury Department public records show that American Samoa’s application for SSBCI funding for four-programs, is “under review”.

As previously reported by Samoa News, the governor, through an executive order in April established within the Executive Branch a new entity, the American Samoa Innovation Authority (ASIA), a semi-autonomous agency of ASG, to be governed by a five-member board.

“American Samoa will potentially receive more than $50 million in SSBCI funding,” according to the executive order, which also says that ASIA will oversee the implementation and administrations of SSBCI programs. (See Samoa News edition Apr. 05 for details.)

For the sub-topic, “Funding for localities” GAO explained that unlike U.S states, some of the territories do not have local units of government that receive federal funding.

GAO noted that three territories — American Samoa, Guam, and U.S Virgin Islands — faced some challenges accessing their full allocation of federal Coronavirus State and Local Fiscal Recovery Funds (CSLFRF), which allocates some funding directly to counties, non-entitlement units of local government, and metropolitan cities.

Officials in the three territories worked with U.S Treasury to describe their government structure. According to US Treasury officials, following consultation with territories, Treasury determined that there were no eligible non-entitlement units or units of local government eligible for distribution of funds.

And the US Treasury acknowledged that it took some time to understand the structure of the territories’ governments before Treasury could allocate funding as provided under statute. These territories ultimately received all of the territory and locality allocated CSLFRF funding at the territorial government level

The report quotes the ASG’s American Recovery Plan Act Oversight Office telling GAO that it took several months before U.S Treasury approved American Samoa’s receipt of county and non-entitlement unit CSLFRF funding. USVI officials said it took approximately a year to receive their full allocation.

U.S Treasury officials told GAO that, while the federal Treasury distributed the territory-level allocation in one tranche, the locality allocations were distributed in two tranches, consistent with the statute. Second tranche payments became available 12-months after recipients received their first tranche payment.

(Samoa News notes a tranche is a portion of something, especially money.)

Samoa News will report in future edition, other highlights from the GAO document, specifically on issues pertaining to American Samoa and other pertinent matters.