NPR’s Martin Kaste reports on Washington state’s stimulus czar Dick Thompson, and the frustrations felt by some state governments that much of the stimulus funds are directed to existing funding mechanisms. This means that the states don’t get to use discretion to pick from their laundry list of possible projects.

Kaste reports: “What people don’t understand, Thompson says, is just how little control the state will have over the money. Instead,… Congress seems to be channeling most of the money into specific uses — K-12 education, Medicaid, transportation — following pre-established guidelines. The money almost spends itself, and the states are left with control over a lot less money.”

In other words, much of the money is flowing down to school administrators, library boards, city and county directors, and other local decision makers to support their objectives. The piece points out that many firms are lobbying the state governments to get their project supported, but in fact there will be little flexibility at the state level.

MCH recommends targeting your marketing efforts to the local administrators who will decide how to spend their increased funding. We are currently drafting our recommendations related to the major funding areas. If you would like recommendations from MCH on marketing data related to your line of business, you can request a quote using this form.

Kirk Chritton, Marketing Director
MCH, Inc.
kirkc@mailings.com

The stimulus bill has — as expected — changed in many ways in its trip through the Senate. Because the support of a small handful of moderate Republican senators will be required for final passage, the version of the bill that becomes law is likely to look much more like the Senate version than the House version. The Senate’s changes may have significant importance for marketers who are trying to align their product development and promotional strategies to the emerging legislation.

• The largest cut, $40 billion, was in the fund to stabilize state budgets. Had this money remained intact, many states with substantial budget gaps would have been made whole, and the state budget crisis that MCH tracks in our BudgetAware reports would have been greatly reduced in importance. Without the original funding, many states will still struggle to meet the requirements of their balanced budget requirements. MCH is currently developing the next release of the BudgetAware Bulletin, which will measure the current and expected budget pressure in each state.
• Preventative health initiatives had been targeted to receive $5.8 billion in the House bill. This money was likely to funnel down to a wide variety of public health agencies, clinics, and social service agencies.
• School construction funds totaling $16 billion were removed from the bill. That will reduce the potential opportunities for construction contractors and for the marketers who provide the furniture, fittings, and other products that are needed to stock new classrooms.

The list of items cut is long, but the overall scope of the spending is still large (more than $280 billion), leaving many opportunities for marketers who can align their offers with the initiatives of the bill.

On February 18th, I’ll join MCH President John F. Hood to present a free webinar (register here) in which we’ll review the final legislation. We will present an overview the opportunities and urgent action items for companies who hope to benefit from the stimulus spending. If you have questions about the funding, you can reach me at kirkc@mailings.com.

B2B marketers need to plan to market to institutions aggressively. Now is a great time to analyze your products and services to determine if they can be easily adapted to cross-markets, especially those that will benefit from stimulus funding.

Being proactive and watching the stimulus package closely will help you position your company appropriately. Remember that normal seasonal spending patterns may be disrupted since many entities are still in a ‘wait and see’ spending mode. Purchasing won’t resume until the details of the stimulus plan are released and the funds start flowing from Washington. Take advantage of the key “use it or lose it” budget cycles and the golden revenue opportunity they present. Remember that unlike you and I, institutions are required to spend their allotted budget prior to the end of the fiscal year or they risk not receiving the same amount of funding in the following year. The three months prior to a fiscal year end are a great time for marketers to profit from clean-up spending as institutional departments empty their coffers.

If you are a broad B2B marketer, you need to segment your current customer base to accurately identify institutions so you can track the results of institutional sales and marketing efforts. Don’t reduce your marketing effort to your existing institutional customers. Keep an eye on regional funding situations and shift some of your effort in the hardest hit states to those with strong funding.

MCH foresees the following trends for the institutional vertical markets: The healthcare sector is strong and will stay strong throughout the next decade. This is a growing market segment and you should redouble your efforts.

In the education vertical, you can expect a burst of spending as soon as administrators feel more secure about their funding. They will have a lot of ‘use it or lose it’ money that will expire in June and August. The stimulus package could include substantial amounts of funding for special education and Title I, plus grants for technology and facility improvements.

Local governments should receive windfalls of stimulus money to spend on public works, safety, and security programs. The fiscal year-end is also an important time where clean-up spending will occur.

In the religious segment, even with donations down, large churches in wealthier areas are likely to be least affected. Target your marketing efforts based on the area wealth and the size of congregations. Marketers who specialize in religious products and services may want to take a close look to see if their offers can be adjusted for other markets, especially those likely to receive stimulus funding.

There will be many institutional winners when the economic stimulus package is announced.

The current thinking on the stimulus program is clearly to provide insititutions with a huge amount of new funding to spend with American businesses. The highlights of last week’s House version of the bill points this out. We’ve grouped the major funding amounts below according to their institutional areas.

This list of funding possibilities is not complete; there will be changes to the legislation. It’s being debated in the Senate now and then must return to be reconciled with the House version. We’ll continue to track these funds, and drill deeper beneath the strings that will be attached to them in future posts.

House Appropriations Committee Stimulus Proposal
Most funds to be released over a two-year period

Local Government

• $32 billion to transform energy transmission, distribution and production
• $16 billion to repair public housing and improve energy efficiency
• $6 billion to expand broadband internet to rural and underserved areas
• $19 billion for clean water, flood control, etc.
• $10 billion for transit and rail systems
• $3.1 billion for improvements to infrastructure on public land including parks.
• $100 million to remove lead paint hazards In public housing

Police, Sheriff, Fire

• $4.1 billion for state and local law enforcement funding
• $25 billion in aid to states for “other high priority needs such as public safety
• $550 million for state and local volunteer programs related to wildfire control

K-12 Education

• $14 billion for renovation and modernization of facilities
• $1 billion for education technology
• $13 billion for IDEA special education
• $13 billion for Title I
• $250 million for states to develop data systems that track student achievement
• $726 million for after school meal programs

Early Childhood

• $2 billion child care development block grant for low-income families
• $2.1 billion for Head Start programs
• $600 million for early childhood IDEA special education
• $360 million for new child development centers in the Department of Defense

Healthcare

• $20 billion for health information technology
• $4.1 billion for preventative care (public health)
• $3.75 billion for the construction of new hospitals and ambulatory surgery centers in the Department of Defense
• $950 million for improvements to Veterans Affairs medical facilities
• $1.5 billion for Primary Care programs

Social Services

• $66 million for programs for homeless child and youth
• $500 million for construction of rehabilitation centers
• $1.5 billion for homeless shelters
• $200 million for senior nutrition programs
• $200 million for independent living services for disabled

NEC Director Larry Summers discussed President Barack Obama’s plan to create jobs and foster long-term economic growth. The proposed plan will add 3 to 4 million jobs over the next two years. Click here to view state-by-state data.