PROVIDENCE, R.I. (WPRI) — Affordable housing and support for hard-hit communities should be top priorities for Rhode Island leaders as they spend the state’s $1.1 billion in American Rescue Plan Act funding, according to a highly anticipated report released Tuesday.

General Assembly leaders have been awaiting the recommendations from the 15-member steering committee — which was convened by the Rhode Island Foundation in April — before they move forward on spending the federal windfall. The money must be allocated by the end of 2024 and spent by the end of 2026.

“A lot of eyes are going to be on how this money is spent,” said Rhode Island Foundation President and CEO Neil Steinberg, who led the panel.

“We’ve been using the example of two specific situations we don’t want to happen,” he said. “One is, we don’t all want to sit here in five years and say, ‘What happened to that billion dollars?’ The other thing is, we don’t want to be sitting here in two years and say, ‘Why isn’t that money going out the door?'”

The steering committee proposes the state spend the lion’s share of the Rescue Plan funding in five areas: $405 million for housing; $255 million for behavioral health care; $205 million for workforce development; $100 million for small business assistance; and $50 million for “neighborhood trusts” that would support community groups in select places. An additional $50 million would go to immediate relief.

“These were big issues that predated COVID; COVID made everything worse,” Steinberg said. “And it made it particularly worse for people in the underrepresented, underserved communities.”

The foundation worked with the Rhode Island Public Expenditure Council (RIPEC), a business-backed think tank, and the Economic Progress Institute, an advocacy group for lower-income Rhode Islanders, to flesh out the specifics of each proposal. It followed months of outreach including focus groups, community listening sessions, and a general solicitation for ideas.

Steinberg said a number of other major policy areas — notably education, transportation and broadband — were not included in the steering committee’s recommendations for the $1.1 billion because they have dedicated pots of funding either elsewhere in the American Rescue Plan or in the infrastructure and budget reconciliation bills currently pending in Congress.

An analysis by Target 12 shows the Rescue Plan Act, which President Biden signed in March, is sending over $2.8 billion to the state of Rhode Island, its municipalities and its school districts. The much-discussed $1.1 billion is Rhode Island’s share of the State Fiscal Recovery Fund, a pot of money included in the law that states have wide latitude to spend.

The steering committee’s recommendations leave $66 million of the $1.1 billion unassigned.

The foundation’s report comes soon after Gov. Dan McKee released his own proposal to spend the first 10% of the $1.1 billion allocation. The governor wants to steer $74.5 million to the R.I. Commerce Corp.; $13 million to the Executive Office of Health and Human Services; $13 million to the Department of Human Services; and $12.5 million to the Department of Children, Youth and Families.

Under McKee’s plan, the initial round of spending would fund initiatives such as pay boosts for care workers, financial and technical support for small businesses, and housing programs. Legislative committees will hold their first hearings on the governor’s proposal this week, but it remains unclear if lawmakers will return to the State House to act on the plan before the end of this year.

Steinberg said his task force thinks its proposed $50 million for immediate relief should be spent quickly, though he stopped short of saying it ought to happen before lawmakers start their regular session in January.

The prioritization of housing by the foundation’s panel comes as that issue is an increasingly hot topic at the State House. Home prices and rents have jumped in Rhode Island since the pandemic, caused in part by a supply shortage following years of limited construction.

“I would argue it’s our most pressing social problem,” said RIPEC President and CEO Michael DiBiase. He said housing is also uniquely suited to one-time investments as opposed to ongoing programs; the steering committee wanted to avoid the latter since the federal money will eventually run out.

The biggest share of the proposed housing money would be $200 million to build and preserve affordable rental housing. The committee also suggests building 500 units of permanent supportive housing to help end homelessness; creating a first-time home buyer program targeted at people of color; and working to remove lead paint.

Alluding to the wide array of existing programs and organizations that aim to expand the supply of affordable housing in Rhode Island, Steinberg said, “What we’ve done has not worked.”

In the behavioral health category, the largest proposal is $170 million to invest in mental health facilities statewide. Linda Katz, policy director at the Economic Progress Institute, said the goal is to make their buildings “welcoming and high-quality” in the same way that Community Health Centers are.

The marquee idea on workforce development is $150 million for a new training program that would lead to workers receiving new certifications or other skills advancement. DiBiase said the report envisions spending an average of $25,000 per employee on training, far above the roughly $3,000 to $5,000 under the existing Real Jobs Rhode Island program, which is oriented to the needs of employers.

The small business money would include $50 million for forgivable loans and $35 million for technical assistance.

The $50 million for the new neighborhood trusts is described in the report as spending “directed by residents in places whose populations and communities have been impacted most by the pandemic.” It is specifically for residents of Qualified Census Tracts, an official federal classification for lower-income neighborhoods.

“There was a lot of support in our group for placed-based direct investment,” Steinberg said.

The report suggests directing the $50 million for immediate relief to local nonprofit groups “to respond to immediate needs in communities, including providing treatment for mental health issues and substance use disorders, reducing food and housing insecurity, meeting childcare and other basic needs, and addressing domestic violence.”

Katz said a theme across all of the steering committee’s recommendations is “making sure that this recovery is about equity and addressing the historic and systemic racism in our country.” Many of the proposed programs are tailored to target lower-income and minority populations.

“What the pandemic showed us is systemic problems that have existed for a very long time,” Katz said.

The report urges state leaders to pay close attention to how the money is spent as well as whether there is enough capacity to implement whatever is decided. It suggests creating an office to oversee all American Rescue Plan spending, led by a cabinet-level official who reports directly to the governor.

“There is a concern that government isn’t set up to do these very large investments,” DiBiase said.

Quoting the late management expert Stephen Covey, Steinberg said: “Most leaders would agree that they’d be better off having an average strategy with superb execution than a superb strategy with poor execution.”

This isn’t the first time the Rhode Island Foundation has sought to play a role in steering state policy. In 2012 the foundation held a “Make It Happen RI” conference that generated ideas for economic development, and in 2015 it helped fund a Brookings Institution report on Rhode Island’s economy that influenced the early days of the Raimondo administration.

The members of the Rhode Island Foundation steering committee were:

• Marcela Betancur, executive director of the Latino Policy Institute
• Jessica David, consultant and former executive vice president of strategy and community investments at the Rhode Island Foundation
• Ditra Edwards, executive director of Sista Fire
• John Friedman, professor of economics and international and political affairs at Brown University
• John Galvin, president and CEO of AAA Northeast
• Marie Ganim, former state health insurance commissioner and former state Senate policy director
• Ross Gittell, president of Bryant University
• Rajiv Kumar, technology entrepreneur and founder ShapeUp
• Tony Maione, former president and CEO of the United Way of R.I.
• Anna Cano Morales, associate vice president for diversity, equity and inclusion at Rhode Island College
• Nina Pande, executive director of Skills for Rhode Island’s Future
• Dr. Megan Ranney, associate professor of emergency medicine and associate dean of the School of Public Health at Brown University
• Nic Retsinas, director emeritus, Harvard Joint Centers for Housing Studies
• Don Stanford, adjunct professor of computer science at Brown University and former chief technology officer at GTECH
• Edi Tebaldi, professor of economics and executive director of institutional effectiveness and strategy at Bryant University

Kayla Fish contributed to this report.