Oklahoma County officials are mulling over ways to get around restrictions on how federal money from the American Rescue Plan can be used to fill an estimated $40-million budget hole to build a new jail.

Federal guidelines prohibit using money from the American Rescue Plan Act to construct new correctional facilities. But some county officials believe there could be options to get around the rules.

One option is a strategy called supplantation, where the county would use federal dollars for expenses like payroll for first responders, freeing up unrestricted county dollars to help build the jail, said County Commissioner Brian Maughan.

“I’m using great caution before moving forward on any of these proposals,” Maughan said. “We know that there is a risk factor if we choose to proceed that way, and we really want to avoid a federal audit not only now, but years from now.” 

So far, the county has approved over $20 million from its roughly $150-million share of Rescue Plan dollars for projects like building a new emergency operations center and millions in funding for the county sheriff for community programs like school resource officers. 

But county commissioners are not formally reviewing requests from community groups yet while they figure out if they can use the federal money to cover other county costs. Organizations like the Regional Food Bank of Oklahoma hope to use some of the Rescue Plan money for job-training programs, but the jail is first in line, Maughan said. 

“My number one priority is the jail and making sure it’s built,” Maughan said. “This is to make sure we have shored up our first constitutional priority first. And then we’ll go to (other requests), as we have money to do so, if there are additional dollars left.”

In June, voters approved a $260-million bond to finance the construction of a new jail to replace the 30-year-old jail in downtown Oklahoma City with a history of serious structural, safety and management issues. But that funding will likely be millions short of what it will take to complete the new facility, which could include space for diversion and education programs and updated medical and mental health facilities. 

Officials initially planned to use a large chunk of Rescue Plan funding to directly contribute to jail construction costs, but updated U.S. Treasury guidance said that wasn’t allowed. 

Covering payroll expenses for first responders is an allowable use of federal relief funds. But Commissioner Carrie Blumert said she has concerns about shuffling federal and county funds to get around explicit spending prohibitions from the federal government.

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“My preference is that we do not use ARPA funds for the jail at all,” Blumert said. “Let’s avoid any potential issues with ARPA funds.” 

The county has contracted a consulting firm to advise officials on how to spend its federal funding. The firm has told officials to be wary of reimbursing itself and then spending money on un-allowed projects, Blumert said. 

The county also has a $43-million request pending for a portion of the state’s Rescue Plan funds to help build a mental health facility for the new jail. Officials believe that if the money is spent on mental health related projects in the jail, there could be more flexibility with the funds. Other counties across the country have planned to use ARPA funds to help build mental health facilities for justice-involved individuals, according to the National Association of Counties.  

Blumert said she doesn’t believe the state request is an appropriate use of the funds. Maughan said he is still in talks with lawmakers about how they could work together on the new jail or transfer center for state inmates. 

Some national criminal justice advocacy groups have criticized governments that use Rescue Plan funds for building correctional facilities. The Vera Institute of Justice, which has consulted on Oklahoma County’s jail problems, released a statement saying the funds should be used for diversion programs like pretrial release and crisis response teams. 

A majority of counties analyzed by the National Association of Counties in late 2021 have plans to spend their funds on health programs, human services, transportation and infrastructure like water and sewer. 

Only about 25% of counties the organization studied planned to use Rescue Plan funds in the “justice and public safety” category on projects like hiring additional job training and housing staff, crisis intervention training for law enforcement and building mental health facilities. 

Local advocates have also pushed for Oklahoma County to spend more of its federal funds on efforts to treat addiction and mental health issues rather than jail infrastructure, and are worried about the likelihood of a federal clawback if funds are determined to be misspent. 

Ed Lazere, a senior fellow in state fiscal policy with the Center on Budget and Policy Priorities, said Rescue Plan money was meant to be flexible to spur an equitable economic recovery from the coronavirus pandemic and help local governments target complex issues. While some federal laws explicitly prohibit using federal money to cover local costs, Rescue Plan guidelines do not, Lazere said.

“It may not be ideal, but it is allowable,” Lazere said. 

Other states have used similar strategies to get the most flexibility out of their federal funds, Lazere said. Federal guidelines also allow states or local governments that can show revenue loss caused by the pandemic to spend some federal funding on anything they want, he added.

Any plans would have to go through “several legal hoops” before approval, Maughan said. What the facility looks like and includes will depend on where it’s located and what funding streams are used.  

The cost of building materials, real estate prices and the bond markets could affect the size of the county’s budget hole for the new jail, Maughan said. 

If the amount comes in significantly lower than the projected $40 million, the county might be able to tap into existing resources outside of Rescue Plan money to cover the remaining costs. The county may also get funds from the federal infrastructure bill Congress recently passed, Maughan and Blumert said. 

The county will likely begin selling bonds to help finance jail construction at the beginning of 2023. Blumert hopes the county will know how it intends to fund the entire project not long after. 

“In an ideal world, we would build a $260-million jail with just the bond money. We’d make a smaller jail, incarcerate less people and stay in the bond budget,” Blumert said. “But we don’t live in an ideal world, and I understand that we probably need to go up to that $300-million amount.”