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August 9, 2024

How the Recompete Pilot Program Meets the Unique Needs of Rural American Communities

By Scott Andes, Recompete Program Director; and Sathiyan Sivakumaran, Recompete Program Manager

Of the six Recompete Phase 2 implementation funding awardees, half are rural communities. This post outlines how the Distressed Area Recompete Pilot Program (Recompete) is designed to address barriers to economic growth and prosperity in rural America. Recompete provides important investments to rural areas by:

  1. Specifically targeting rural distressed areas without setting population thresholds or using definitions that often unintentionally discourage collaboration between rural communities. In many rural funding programs “rural” is defined by a population threshold (e.g. areas with populations less than 10,000 or 50,000) which can exclude legitimately rural areas and can limit rural communities from creating broader geographic partnerships to drive collaborative economic activity. Without these specific population constraints and with encouragement for regions to self-define their own economic borders, Recompete allows rural communities to coordinate activities based on what makes sense for them across a wider geography.

  2. Providing large, flexible grants focused on operational programming, job creation, and shared governance, unlike many existing rural resources focused on infrastructure investments or loan financing. Rural areas often lack programmatic and operational infrastructure in addition to physical infrastructure. In addition, while loan programs are hugely beneficial, some rural places lack the basic resources to take advantage of those programs. Recompete investments in governance, workforce programming, and wraparound services, like childcare and transportation, fill an important gap in funding for rural communities.

  3. Directly addressing capital and capacity constraints prevalent in many rural areas in all stages of the competition. Capacity constraints are a major challenge faced disproportionately by rural communities. Recompete funding focuses on increasing the capacity of rural areas in several ways, including strategy development grants and technical assistance, eliminating match requirements, and encouraging investments in sustainable governance and partnerships.

Background on the Recompete Program

The Recompete Pilot Program was authorized for $1 billion by the CHIPS and Science Act and has been appropriated $200 million to invest in communities where prime-age (25-54 years) employment significantly trails the national average. Recompete is a two-phase competition:

  1. In Phase 1, EDA selected 22 Recompete Finalists from over 565 applications and awarded $500,000 planning grants to 24 grantees. Of the 22 Recompete Finalists, seven identified their service areas as rural and five were led by or involved Tribal organizations.

  2. In Phase 2, EDA awarded approximately six implementation grants of $20 million $40 million. Half of the Phase 2 awardees – led by Clallam County (Washington), Shaping Our Appalachian Region (Kentucky), and the Wind River Development Fund (Wind River Reservation, Wyoming) – focus exclusively on rural communities.

These large implementation awards can support a wide variety of activities, such as apprenticeship programming, small business and entrepreneurship supports, and wraparound programming to address childcare and transportation needs. Funding will also support critical staff, governance, coalition building, program evaluation, and other activities to ensure that awardees can successfully implement their grant programming.

While preparing to submit their applications for Phase 2, Finalists could propose diverse, place-based projects to fill gaps in existing federal funding opportunities and to address the unique challenges faced in rural America.

Rural Communities and Recompete

Rural communities represent a critical piece of the United States, with a total population of more than 40 million people spread across a geography that spans 97% of the country’s land mass.1 Yet rural areas suffer disproportionately from higher unemployment, lagging employment rates, and higher poverty compared to urban areas. Eighty five percent of counties identified by the U.S. Census Bureau as experiencing “persistent poverty” are rural, which is one reason why nearly half of all eligible areas for the Recompete program are nonmetro.2 Rural Americans also face employment barriers like access to childcare – 55% of rural children under the age of five live in childcare deserts, compared to 33% of their urban and suburban counterparts.3 The capacity of rural areas to apply for and implement grants is another challenge – where local government officials often have other full-time jobs and some areas lack organizations (or even employees) to focus on economic development. The Recompete program addresses these critical funding gaps with innovative solutions to job creation and employment in rural America.

1. Recompete specifically targets rural distressed areas without setting population thresholds or using definitions that often unintentionally discourage collaboration between communities. While population limits exist in many rural programs to ensure resources actually go to rural communities, doing so can limit a rural region’s ability to take a holistic economic development approach by incentivizing small municipalities and areas to compete against, rather than collaborate with, neighboring communities in the application process.

Hundreds of rural funding programs exist, with their own definitions, rules, and approaches.4 Many have strict population limits, usually ranging from 10,000 to 50,000 residents.5 Yet, many rural areas do not neatly fall within these population limits. For example, Pike County in rural, eastern Kentucky has a population of approximately 60,000 – meaning the county would be ineligible for many rural-specific funding opportunities yet was eligible and included in the service area of a Phase 2 Recompete awardee.

Other times, rural areas may wish to apply across a whole state, a group of counties, or with tribal communities. However, these partnerships almost never meet the geographic and population definitions of “rural.” For example, Washington State’s Northern Olympic Peninsula (a Phase 2 Recompete awardee) applied as a coalition of five Tribal nations and two counties based on the shared need to address the decline in the logging industry. However, the coalition’s total service area includes approximately 100,000 residents – disqualifying it for many funding opportunities despite clearly representing a coalition of remote, rural areas.

As an additional consequence of population limits that vary by funding opportunity, rural applicants (local government, nonprofits, etc.) are often forced to overextend capacity and modify their regional vision to apply for and manage multiple small projects – in geography and investment amount – compared to a holistic approach that makes the most sense from an economic development perspective.6

Recompete uniquely addresses these limitations by using distress as the primary geographic eligibility requirement within the competition, giving rural communities the freedom to coordinate across a wider geography for large Recompete grants based on what makes sense for the region.

2. Recompete provides large, flexible grants focused on operational programming, job creation, and shared governance, unlike many existing rural resources focused on infrastructure investments or loan financing. For example, Recompete investments in workforce programming and wraparound services like childcare and transportation give rural communities the opportunity to better execute their entire portfolio of local initiatives.

The majority of rural-focused federal investment targets infrastructure and loan programs, with few specifically focusing on job-creation through grant funding.7 In 2023, the U.S. Department of Agriculture’s (USDA) Rural Development invested approximately $22.8 billion in rural communities, of which approximately 89 percent were through loans and only 11 percent were awarded as grants.8 These investments are critical for rural communities, but loan programs have their limitations. Funding projects through financing can be challenging, as 70% of rural counties have reported concerns of lost revenue from declining tax bases (compared to under half of metro counties reporting that concern), which subsequently causes rural communities to experience higher rates of fiscal stress.9

The other major bucket of resources usually goes to physical infrastructure. Approximately 80% of the funding offered by more than 70 USDA Rural Development programs is dedicated to housing, broadband and utilities, and other infrastructure investments. Recent legislation (e.g., the American Rescue Plan, the Bipartisan Infrastructure Law, and CHIPS) made even more large-scale investments in infrastructure.

To be clear, these investments in physical infrastructure are essential for rural areas, and Recompete can fund infrastructure development, as well. Recompete serves as a natural partner to these other funding sources through its unique model of offering highly flexible operational and programming resources to create good jobs. Even when federal programs fund operational resources, different local policy and administrative decisions within these programs can limit their flexibility. For example, local Workforce Innovation and Opportunity Act (WIOA) policies in certain states, such as Kentucky, do not allow funding for wraparound services. Meanwhile, rural labor force participation rates of prime-age adults lag those of metropolitan areas by 6 percent.10

Recompete funding allows applicants to design flexible programs to address workforce challenges in their proposed service areas. This can include significant investments in basic skills training, prevailing sector apprenticeships, and wraparound services – as evidenced by the proposals of the ruralfocused Phase 2 Finalists that included more than $150 million for workforce development programming, childcare, and transportation solutions. Recompete investments can meaningfully complement programs from agencies like USDA and the Appalachian Regional Commission (ARC) that offer smaller grants or loans related to business development and workforce development.11 For example, rural America has a higher rate of childcare deserts than their urban and suburban counterparts. By allowing Finalists to propose and fund wraparound services like childcare that make sense for their communities, Recompete investments will help rural communities execute on their projects and other federal programs and investments (e.g., broadband and housing construction) that would otherwise not happen.

3. Recompete directly addresses capital and capacity constraints prevalent in many rural areas in all stages of the competition.

Capacity is a major challenge faced disproportionately by rural communities. Recompete funding addresses these capacity constraints by offering strategy development grants and technical assistance between the first and second phases of the competition, not requiring match, offering flexibility in how communities demonstrate capacity, and prioritizing governance and partnerships in implementation investments.

Rural areas face significant capacity and governance constraints compared to their urban counterparts. Recompete funding addresses these capacity constraints throughout its competition structure. First, Recompete invests in building capacity through flexible “early implementation” grants, which can include hiring staff. Simply hiring a full-time employee dedicated to identifying and coordinating economic revitalization efforts can result in significant returns on the initial investment.12 Recompete also provides coaching and ongoing support to Finalists between Phase 1 and Phase 2 of the competition, including resources on governance and securing commitments vital to the success of projects.

Second, the Phase 2 Notice of Funding Opportunity (NOFO) structure and evaluation criteria provides flexibility in how communities demonstrate capacity and leveraged commitments. Recompete does not require traditional match (i.e., cash or in-kind contributions) and instead provides the opportunity for applicants to display support through an array of community commitments. Rural communities regularly identify securing non-federal match as a significant challenge and Recompete offers alternative paths to demonstrate community buy-in from traditional match while still prioritizing overall leverage.13

Third, Recompete prioritizes building capacity by emphasizing governance and sustainable partnerships in the Phase 2 NOFO evaluation criteria14 and funding governance structures in Phase 2 implementation. Strong rural coalitions and governance increase the likelihood of successful, large-scale grant implementation, as displayed in other EDA competitions like the Build Back Better Regional Challenge (BBBRC). For example, the ACT Now coalition oversees almost $100 million and is led by Coalfield Development Corporation, a nonprofit operating in southern West Virginia that historically had not managed funding close to that scale. Yet, the ACT Now coalition continues to successfully implement its projects across 21 counties in West Virginia thanks to a strong coalition and investments by EDA in governance and capacity building. The Recompete two-phase structure is designed to help rural-focused Finalists achieve similar success.

Conclusion

Recompete offers a unique opportunity to fill investment gaps in existing federal funding programs to address the challenges faced by rural American communities. Rural areas are not homogenous, nor are the funding opportunities that support them. Recompete focuses on distressed geographies, investment in job creation through large and flexible grants, and a structure that develops and invests in capacity. This program design offers rural America an opportunity to develop and fund regional governance structures that can establish and invest in long-term solutions to the employment of rural Americans.

Footnotes

Topics

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