Editor's Note: This research brief is part of a joint research project by the Institute on Race, Power and Political Economy at The New School and Brookings Metro.

Los Angeles County Uses Equity Funding Formula to Guide $1.9 Billion in American Rescue Plan Act Fiscal Recovery Funds

Among Los Angeles county’s approximately 10 million residents, nearly three-quarters are Latinx, Black, Indigenous, Asian and other people of color, while a third are immigrants, making equity and inclusion both a moral imperative and crucial to the county’s overall health and prosperity. And, in the county with the single largest allocation of federal American Rescue Plan Act (ARPA) recovery resources ($1.9 billion), community coalitions, government agencies, and elected officials are working independently as well as collaboratively to ensure equity guides its investment plan. 

They’ve put in place powerful guidelines for resource allocation, including robust equity principles and an equity funding formula based on community need, and are tracking their performance on a public dashboard. The funding formula sets a goal for 75 percent of ARPA funds to go to the 40 percent of neighborhoods most negatively impacted by the pandemic and longstanding inequities, and advocates are monitoring how well the county’s spending decisions measure up to this standard.

The one-time funds provided a tremendous opportunity to put their equity intentions into practice – across the county’s 40-plus departments. Dr. D’Artagnan Scorza, Executive Director of the county’s Anti-Racism, Diversity, and Inclusion (ARDI) Initiative, explains: “For us, the ARPA implementation process has allowed us to demonstrate how to do equity at scale. Not just how to talk about equity but how to actually operationalize equitable resource allocation.”

Report Contents

Case Studies

ARPA created opportunities for equity assessment to drive spending decisions

With its $350 billion in flexible recovery funds provided to all states, tribal nations, and localities, the American Rescue Plan Act of 2021’s State and Local Fiscal Recovery Funds, provides an important window into the state of equity assessment and scoring across U.S. jurisdictions. Passed into law under the Biden Administration’s racial equity executive order and amidst the racial reckoning following the murder of George Floyd, the funds were to be used to fill budget holes created by the pandemic and invest in long-term, transformational solutions that address systemic inequities. The US Department of the Treasury prioritized equity in its spending guidelines for the funds, and many local jurisdictions established frameworks, policies, and tools to channel these funds toward the people and communities disproportionately harmed by the pandemic and systemic racism.

In our organizations’ extensive tracking of local spending plans, Los Angeles County stands out for its robust approach to ensuring equitable public investment of recovery funds.

Community advocacy as a pathway to constructive collaborative governance

Savvy, data-driven community advocacy was a major driving force behind LA county’s resource allocation approach. A statewide research and advocacy organization, Catalyst California, brought dozens of local racial and economic justice organizations together as the Coalition for Equitable ARPA Implementation. To ensure ARPA funds reached those most impacted by Covid-19, the coalition successfully advocated that the Board of Supervisors adopt a set of equity principles as well as an equity funding formula based on Catalyst California’s statewide COVID-19 Vulnerability and Recovery Index, which measures community need by census tract. The funding formula set a goal that 40 percent of ARPA funds go to the highest-need census tracts, 35 percent to high-need tracts, 20 percent to moderate-need tracts, 3 percent to low-need tracts, and 3 percent to lowest-need tracts. 

The Board of Supervisors’ commitment to prioritize equity is being carried out by its Anti-Racism, Diversity, and Inclusion (ARDI) Initiative. Created in July 2020 as a part of the board’s anti-racist policy agenda, ARDI now has more than 10 staff working to implement systems and policy changes to eliminate racism. The office is leading the charge to ensure equitable implementation of ARPA investments, providing guidance, technical assistance, and data tools to help the county’s 40-plus departments select investment priorities aligned with the county’s equity commitment and funding formula. 

ARDI’s approach was developed through the type of deep community partnership emblematic of the emerging “collaborative governance” model, in which people inside and outside of government work together to craft policy solutions. “Co-governance” disrupts the typical hierarchy of community participation in policymaking, recognizing that community partners bring unique knowledge and expertise to the table, building trust, and shifting power relationships. 

Jacky Guerrero, Director of Equitable Community Investment at Catalyst California and leader of the Coalition for Equitable ARPA Implementation, explains that “Strong relationships were foundational” to establishing the equity framework. The coalition brought the bold proposal of an equity funding formula to the table and then actively partnered with the county to build the framework together, supporting local governments in innovating a new equity approach. 

The Coalition for Equitable ARPA Implementation worked with ARDI to share its data and methodology, helping inform ARDI’s efforts to develop the equity tools that are now being used to ensure equitable implementation. These tools include the Los Angeles Covid-19 Vulnerability and Recovery Index Dashboard as well as the Equity Explorer Mapping Tool, both of which help county departments and other community members identify and prioritize highest-need communities in project design and implementation. County agencies, for example, can upload additional program-specific data (for example, child protective services) and overlay it on the Covid recovery index.

From equitable allocation to equitable implementation 

Los Angeles county’s ARPA story is far from over: while all of the county’s allocation has been committed, the county has through 2026 to spend the funds. And just as community advocacy and partnership helped establish the county’s ARPA investment framework, it is also helping to ensure equitable implementation of ARPA-funded programs. 

This can be seen in community advocates’ efforts to ensure that ARPA programs effectively serve the county’s large immigrant community, which was disproportionately negatively impacted by the pandemic. More than 100 immigrant-serving organizations joined together as the Immigrants are LA Coalition to advocate for greater inclusion of immigrants in the county’s ARPA investments. Their advocacy resulted in about $30 million in important ARPA investments that serve the immigrant community. The coalition also worked with the Board of Supervisors who passed a motion focused on ensuring immigrant inclusion in ARPA investments through expanded outreach as well as inclusive data gathering, metrics, and reporting, as well as policy and program changes. 

Toward equitable budgeting in Los Angeles County

Community advocates and county leaders both see the equity framework established to guide ARPA fiscal recovery funds as an opportunity to move toward an equity-driven approach to county budgeting. While the ARPA funds were significant, they are just a small fraction of Los Angeles County’s $43 billion overall annual budget, which is larger than the budgets of most states. Taking advantage of the tools built will enable the County to apply the ARPA equity lens to the county’s regular budget and operations: an essential step forward if the county is to achieve the five goals for population-level change laid out in the county’s 10-year Racial Equity Strategic Plan.

ARPA has been an important testing ground for the county’s equity framework, with the potential to leave an enduring imprint. According to Dr. Scorza, ARDI is currently exploring strategies to extend successful elements of the ARPA process to its ongoing operations, including program design, data collection and evaluation.

As this case study demonstrates, equitable resource allocation requires community engagement throughout the process – even with a robust government equity framework in place. This means that community organizations must be resourced to have the time to engage, as well as the tools and know-how to do so effectively. Masih Fouladi, Deputy Executive Director of the Council on American-Islamic Relations-LA and Co-Chair of the Immigrants are LA Coalition, describes how their ARPA campaign goals were trifold: secure investments in the county’s immigrant communities; make the design and implementation of county programs more inclusive; and build the capacity and power of immigrant-serving organizations. He explains, “What we really tried to do with ARPA is build the infrastructure to set the immigrant community up to be able to be involved in budget advocacy in the future.” 

Several local and statewide funders banded together to support the coalition’s work, and continued philanthropic investment in community capacity will be necessary to ensure that Los Angeles County’s future budgets support its goals of greater equity and inclusion. 

While it is too soon to know the ultimate equity outcomes of the county’s bold and innovative approach to ARPA, or exactly how this pandemic program will translate into the regular process of decision-making, the processes of institutional change and community capacity-building are clearly underway in the country’s most populous county.