APPALACHIAN REGIONAL COMMISSION

FY 2020 Performance Budget 

Justification

As Submitted by the Federal Co-Chair to the Appropriation Committees of the 

House and Senate

March 2019
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Appalachian Regional Commission

FY 2020 Performance Budget Justification

As Submitted by the Federal Co-Chair

March 2019

Table of Contents

FY 2020 Budget Summary and Highlights............................................................................2

Major Program Justification: Area Development Base Program ......................................8

Major Program Justification: Coal Impacted Communities Initiative..............................14

Major Program Justification: Special Regional Initiative for Distress ............................18

Major Program Justification: 

Special Regional Initiative for Substance Abuse Mitigation................................21

Performance...........................................................................................................................24

Salaries and Expenses .........................................................................................................27

Comprehensive Reform Initiative ........................................................................................31

Appendices ............................................................................................................................38

A. High-Poverty Counties in the Appalachian Region

B. County Economic Status Designations in the Appalachian Region, FY 2019

C. Appalachian Regional Commission Organization Chart

D. Commission Members
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Budget Summary and Highlights

The Federal Co-Chair requests $165 million to fund 

the activities of the Appalachian Regional Commission 

(ARC) for FY 2020. This amount represents level 

funding with the amount appropriated by Congress in 

FY 2019. Seventy-three million is requested to 

continue the Area Development Base Program; $50 

million is requested to continue the effort to assist 

communities adversely affected by the downturn in 

the coal industry; $32 million is requested for special 

regional initiatives to address distress; and $10 million 

to address workforce challenges caused by the 

Region’s drug crisis. ARC will utilize this funding to 

leverage emerging opportunities such as continued development of the southern automotive 

and aviation clusters and to address barriers such as effects of the drug crisis on the workforce, 

the lack of both water and sewer infrastructure as well as the lack of broadband infrastructure 

and service in rural areas. ARC is authorized through 2020.

The mission of the ARC is to help close the gap between Appalachia and the rest of the nation 

and bring the Region’s 420 counties and 25 million residents into the economic mainstream. 

The 13-state Appalachian Region has historically confronted a combination of challenges that 

few other parts of the country face—its mountainous terrain and isolation, dispersed 

population, inadequate infrastructure, lack of financial and human resources, and weak track 

record in applying for and receiving assistance from other federal programs. More recently, 

downturns in the coal economy and the disproportionately high rate of substance abuse have 

added to the burden on the Region. Because new challenges don’t eliminate or supersede old 

ones, this request features multiple initiatives that reflect the evolution of the challenges and

opportunities facing Appalachia by including differing, yet complementary programmatic 

approaches. 

The Area Development Base Program will continue to address the specific needs of individual 

states, while the Coal Impacted Communities and substance abuse-related initiatives will 
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address activities that are multi-jurisdictional in nature, crossing state borders to connect 

activities. Multi-state projects are traditionally difficult for ARC to fund through the Area 

Development Base Program. This new approach will enable Appalachia to develop on both a 

micro and macro level to maximize the Region’s ability to participate in the global economy. 

ARC is the only federal agency statutorily mandated to address challenges specific to this 

Region. ARC’s work does not duplicate other federal programs; instead, it extends the reach of 

those programs into the most challenged parts of Appalachia by providing necessary gap 

funding and technical assistance that enables economically distressed communities to compete 

successfully in national programs. For federal partners at the national level, ARC brings deep 

knowledge of the Region, a strong track record of impact, and far-reaching networks of critical 

community, state, and regional partners established over the last 50 years. 

For example, working through a multi-year partnership with the Centers for Disease Control 

and Prevention, ARC has implemented projects to address Appalachia’s disproportionally high 

rates of type 2 diabetes and obesity, as well as some types of cancer. Other recent partners 

include the U.S. Departments of Transportation, Agriculture, Commerce, Education, Housing 

and Urban Development, and the Treasury, the Environmental Protection Agency, Oak Ridge 

National Laboratory, the Federal Deposit Insurance Corporation, the National Endowment for 

the Arts, and the National Trust for Historic Preservation. 

ARC also partners with private sector and nonprofit partners to increase the amount of financial 

and technical assistance flowing to the Region. ARC spearheaded development of Appalachian 

Community Capital (ACC), a new community development financial institution (CDFI) and 

wholesale development finance intermediary for development lenders that will increase the 

availability of capital to small businesses in the 13-state Appalachian Region. ARC made a lead 

investment of $3.45 million in equity and operating support. Its regional lending partners raised 

an additional $12 million in debt and equity from Bank of America, Deutsche Bank, Calvert 

Foundation, and the Ford Foundation. Additional supporters include the Mary Reynolds 

Babcock Foundation, the Claude Worthington Benedum Foundation, the Annie E. Casey 

Foundation, and BB&T Bank. A second round, totaling $7 million, is anticipated to close in FY 

2019.

To assess progress in completing the mission, ARC 

developed an index that compares the economic 

condition of Appalachian counties with all the 

counties in the nation (based on unemployment, percapita income, and poverty rates). In FY 2019

Appalachia has proportionally more of the 

economically weakest counties and fewer of the 

economically strongest counties. Moreover, over 25 

percent of the weakest counties in the nation are in 

Appalachia, while the Region has only 1.9 percent of 
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the nation’s strongest counties. When this index demonstrates an equal share of counties 

across each quartile, Appalachia will be at socioeconomic parity with the nation.

Since its inception, ARC has created an impressive record of accomplishments. The number of

high poverty counties in Appalachia has been cut by more than two-thirds, from 295 in 1960 to 

93 today and the regional poverty rate has been cut almost in half, from 31 percent to 16.7

percent. A 2015 study commissioned by ARC found that over the period 1970–2012, 

employment and per capita income growth rates were higher in Appalachian counties that

received ARC investments than in similar non-Appalachian counties that did not.

But despite the accomplishments, major challenges still confront the Region. 

• Nearly one-fifth of Appalachia’s counties still suffer from persistent and severe 

economic distress. 

• Per capita market income in Appalachia was nearly 26 percent lower than the nation in 

2015. 

• The Region has been disproportionately affected by the decline in manufacturing jobs. 

Between 2000 and 2016, Appalachia lost 603,000 jobs in the industry, which represents 

a decline of 31 percent over the time period. The United States as a whole lost 26 

percent of its manufacturing jobs over the same time period.

• Appalachia is underserved by basic infrastructure, including broadband service, and lags 

behind the nation in the percentage of adults with a college education. 

• The Region has higher mortality rates than the nation as a whole in each of the 

following: heart disease (17 percent higher), cancer (10 percent higher), COPD (27 

percent higher), injury (33 percent higher), stroke (14 

percent higher), and diabetes (11 percent higher). 

• The opioid epidemic has hit the Appalachian Region 

especially hard. In 2015, the opioid-related overdose 

mortality rate for people ages 15-64 was 49 percent

higher in Appalachian than in the rest of the United 

States. 

ARC recently released Strengthening Economic Resilience in 

Appalachia in which Downstream Strategies, the Northeast 

Regional Center for Rural Development, Dialogue + Design 

Associates and West Virginia University developed best 

practices for communities to transform and diversify economies 

and build resilience against future economic shocks.1 The 

 1 https://www.arc.gov/research/researchreportdetails.asp?REPORT_ID=150
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practices identified match closely with the goals and objectives of ARC’s Strategic Plan. 

Area Development Base Program

Through the Area Development Base Program,

ARC continues to address widespread

generational poverty through a flexible 

bottom-up approach working with state and 

local partners with $73 million dedicated to 

this activity. ARC will accomplish this mission 

through implementation of activities within the 

five goals of the agency’s strategic plan. ARC 

will continue to work with state and local 

partners to address ongoing challenges in the 

Region in FY 2020. 

Coal Impacted Communities Initiative

The economic downturn of the coal industry 

has had significant impact on Appalachia. 

Seventy-nine percent of the 39,759 coal mining jobs lost in the United States from 2011 to 2017 

were in the Appalachian Region—a loss to the Region of 31,447 direct mining jobs. To address 

this, Congress appropriated $50 million to ARC in each FY2016, 2017, 2018 and 2019 for 

activities that target federal resources to help communities and regions that have been affected 

by job losses in coal mining, coal power plant operations, and coal-related supply chain 

industries due to the changing economics of America's energy production. To date, ARC has 

invested $144.8 million in projects serving 312 coal impacted counties. These projects are 

expected to create or retain more than 17,000 jobs, assist 7,200 businesses, leverage $771.3

million, and prepare thousands of workers and students with globally competitive skills and 

opportunities in the Region's manufacturing, technology, entrepreneurship, agriculture, and 

other emerging sectors. This initiative is significantly oversubscribed with requests to fund 

activities to revitalize and transform the economy. A new request for proposals for FY 2019 

funding was released early in the second quarter. The budget requests $50 million to continue 

to assist communities adversely impacted by the downturn of the coal industry in FY 2020.

Special Regional Initiative for Distress

ARC by law must direct at least half of its grant funds to projects that benefit economically 

distressed counties and areas in the Region; however, the agency routinely exceeds that 

requirement by investing significantly more funding for those areas. In FY 2018, 64 percent of 

ARC’s funds were invested in projects for the benefit of distressed communities. ARC gauges its 

long-term progress toward helping the Region achieve economic parity with the nation in terms 

of the gradual reduction in the number of such counties and areas over time. ARC will 

complement its efforts to reduce distress by directing funding to leverage emerging 

opportunities and to address barriers to economic development. Continued expansion of the 
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southern automotive and aviation clusters offers great potential for job creation in Appalachia. 

Other challenges such as inadequate water, sewer and broadband infrastructure and the 

effects of the drug crisis on the workforce present significant barriers and require substantial 

resources to overcome. The budget requests $32 million in FY 2020 to develop projects 

focused the reduction/elimination of economic distress in the Region. 

Special Regional Initiate for Substance Abuse Mitigation

Recent research commissioned by ARC reveals that overdose-related mortality rates for 

Appalachia’s 25-44-year-old age group—those in their prime working years—were more than 

70 percent higher than for the same age group in the country’s non-Appalachian areas. In 

addition to being considered a health and public safety issue, this problem is now recognized as 

a barrier to economic prosperity because of the impact of the drug crisis on the Region’s 

workforce. The threat to economic prosperity in the Appalachian Region makes the issue a 

priority for ARC. The budget requests $10 million in FY 2020 to develop projects focused on

workforce reentry strategies that both strengthen local economies and support Appalachians 

who have achieved long-term recovery from a substance use disorder. This funding reflects the 

Administration’s declaration that the drug crisis is a national emergency and supports the 

Administration’s 2019 National Drug Control Strategy. 

Local Development Districts

Grassroots participation in the Area Development program comes from 73 Local Development 

Districts (LDDs), multi-county agencies and boards composed of local elected officials and 

businesspeople. The budget requests $6.20 million to support the work of the LDDs. 

Salaries and Expenses

The budget requests funding for salaries and expenses totaling $9.3 million for the full costs of 

the Office of the Federal Co-Chair, its immediate staff, and a portion of the cost associated with 

the Office of the Inspector General, programmatic costs of the Commission and the 50 percent 

federal share for administrative expenses of the Commission staff.
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ARC’s appropriation has increased significantly. Five years ago, the Commission received less than $65 million; today the amount is more than 

twice that at $165 million appropriated in FY 2019. Because appropriation increases were incremental and initially appeared to be temporary, 

the Commission did not immediately add staff capacity to correspond to the additional grant demand caused by the higher appropriations. At 

this point, however, ARC’s additional program responsibilities appear to be established, if not permanently, at least for the long term and 

staffing increases to match up with these new responsibilities can no longer be avoided in order to deploy the full appropriation each year. The 

request reflects the full costs of the Office of the Federal Co-Chair, its immediate staff, and a portion of the cost associated with the Office of 

the Inspector General. The request also includes funding for Commission operations through an alternative approach to budgeting that shifts all 

program costs out of the administrative category where expenses are shared by the states and the federal government. This is consistent with 

the original organization of ARC in which “administrative” expenses were largely those associated with the planning and research functions of 

the Commission and grant program costs were borne by the federal government alone through transfers to other agencies who administered 

ARC Investments. In recent years, ARC has been assigned programmatic responsibilities for appropriations that were previously transferred to 

other agencies necessitating this change. 

The agency is currently engaged in a staff reorganization, of which these increases are a part, designed with the goal of maintaining necessary 

levels of services to the states while producing long term efficiency savings. 

Appalachian Regional Commission Funding

Change

Base Program 73,000 73,000 73,000 0

Power 50,000 50,000 50,000 0

Congressionally Directed Special Programs 32,000 0

Special Initiatives For Distress 42,000 32,000 (10,000)

Special Regional Initiate for Substance Abuse Mitigation 10,000 10,000

Total 155,000 165,000 165,000 0

Area Development Program Grants 142,238 152,111 149,450 (2,661)

Local Development Districts 6,200 6,200 6,200 0

Salaries and Expenses

Commission Administration (50% Federal Contribution) 4,238 4,353 3,035 (1,318)

Commission Programatic 3,832 3,832

Office of the Inspector General 547 551 546 (5)

Office of the Federal Co-Chair 1,777 1,785 1,937 152

Total 6,562 6,689 9,350 2,661

ARC Proposed Budget for FY 2020

FY2018

Actual Budget

President's 

FY2020

FY2019

Enacted
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Program Justification: Area Development Base Program

The Federal Co-Chair of the Appalachian Regional Commission requests a total of $165 million --

$73 million of which will continue the activities in the Area Development Base Program. This 

represents level funding with the amount appropriated by Congress in FY 2019. ARC funding 

decisions for this program reflect local priorities through a flexible “bottom up” approach, 

enabling communities to tailor the federal assistance to their individual needs. This program 

extends the reach of other federal programs into the most challenged parts of Appalachia by 

providing the necessary gap funding that enables economically distressed communities to 

compete successfully in national programs. Finally, this program helps attract private sector 

investment to areas that otherwise would not likely be considered competitive investment 

opportunities. Over the past five years, each $1 of ARC grant funds leveraged $6.49 in private 

investment and $1.78 in other public funds.

ARC’s authorization expires at the end of FY 2020. The Administration expects to submit 

reauthorization during FY 2020 to avoid a lapse. During that same year, ARC will update its 

strategic plan through a comprehensive process that will include stakeholder input as well as 

socioeconomic and programmatic assessment. The new plan will take effect in FY 2021. 

Goal 1: Economic Opportunities

Invest in entrepreneurial and business development strategies that strengthen Appalachia's economy.

Appalachia is in the midst of an economic transition that presents significant opportunities for

the growth of new and expanding businesses—and the new jobs that would result—especially in

promising sectors such as health care, energy, local food systems, advanced manufacturing, and

tourism. Fostering entrepreneurship and creating an entrepreneurial ecosystem to capitalize on

these opportunities is a key component of ARC’s economic development efforts. For

entrepreneurs to develop these opportunities, they need skilled employees, robust support

systems, the right types of investment, and engaged communities. With these fundamentals in

place, Appalachian entrepreneurs can increase the number of high-quality jobs, build local

wealth, and contribute broadly to sustained economic and community development across the

Region. To promote entrepreneurship and business development in Appalachia, ARC has 

pursued a wide range of activities, including improving access to capital and credit for small 

businesses, supporting business incubators and accelerators, providing education and training 
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for entrepreneurs, and helping rural firms expand their international market opportunities.

Goal 2: Ready Workforce

Improve the education, knowledge, skills, and health of residents to work and succeed in 

Appalachia.

A healthy, skilled, and ready workforce is a 

building block for a more prosperous 

Appalachian Region. The opioid epidemic has 

hit the Appalachian Region especially hard and 

has dealt a blow to the workforce and the 

economy. In 2015, the opioid-related overdose 

mortality rate for people ages 15-64 was 49

percent higher in Appalachian than in the rest 

of the United States. In FY 2018, ARC released 

the Appalachian Overdose Mapping Tool2, a 

data visualization tool illustrating the impact of 

the opioid epidemic in the Appalachian Region 

and its relation to socioeconomic factors such 

as unemployment, poverty, education, and disability. The tool demonstrates the high 

concentration of opioid overdose cases in Central Appalachia. ARC is currently engaged with 

partners through active participation in both the Federal Regional Opioid Subcommittee 

convened by the Administration and the USDA Opioid Misuse Partnership consisting of Federal 

and non-profit partners collaborating to address this issue. ARC is well positioned to assist in 

increasing the treatment and recovery workforce and expanding employment opportunities for 

people in recovery as described in the Administration’s 2019 National Drug Control Strategy.

The Region also suffers higher rates of cancer, heart disease, and diabetes than the nation. In 

FY 2018, ARC released Exploring Bright Spots in Appalachian Health: Case Studies which found 

that the Region had made some progress in a number of health measures, but often comes up 

short when compared to the with the progress made by the United States overall, indicating a 

widening gap in the overall health between Appalachia and the nation as a whole. ARC will 

 2 https://overdosemappingtool.norc.org/

Economic Opportunities

In FY 2018, ARC invested $185,000 to purchase additive manufacturing equipment for the Youngstown Edison Business Incubator in 

Youngstown, OH. The new equipment will allow firms from Appalachian Ohio access to shared equipment that is often prohibitively 

expensive for startups and small companies. The high costs of prototyping and post-processing prevent many startups from exploring 

the benefits of additive manufacturing. Housing equipment in a shared-use facility and providing technical assistance to the firms will 

improve competitiveness by allowing them to experiment with ways to integrate 3-D printing and other additive processes into their 

existing and new lines of business while assuming lower risk. The equipment purchase will benefit eight businesses and help to train 

approximately 340 students and 47 existing faculty and staff from Youngstown State University and Eastgate Community College who 

will have access to the equipment.
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leverage its resources and partner with other public, private, and non-profit organizations to 

advocate for and address the challenges posed by the drug epidemic and generally poor health 

conditions and other health barriers that keep Appalachians from being active and productive 

workers.

Education, particularly postsecondary education, is a key component of the business and 

entrepreneurial ecosystem and is often an economic driver. However, Appalachia lags behind 

the nation in the proportion of adults with a college degree (23 percent compared with 30

percent for the nation). Investments by ARC and its partners aim to connect education, 

workforce, and business interests in a seamless system that prepares the Region’s young 

people to succeed in existing and emerging sectors, and that creates new opportunities for 

workers transitioning to new employment, such as those who have lost jobs in manufacturing 

and mining or other coal-related industries. This requires providing education and training 

matched to the Region’s current sectors and jobs, while increasing access to advanced skills 

training for the high-growth, high-demand jobs of the future. 

Goal 3: Critical Infrastructure

Invest in critical infrastructure—especially broadband; transportation, including the 

Appalachian Development Highway System; and water/wastewater systems.

Equipping Appalachia’s communities with 

basic infrastructure has been a major focus of 

ARC since its creation. In order to compete in 

the global economy, Appalachia must continue 

to develop and improve the infrastructure 

necessary for economic development, 

including broadband and telecommunications; 

basic infrastructure, such as water and 

wastewater systems; diversified energy; 

housing; and transportation, including the 

Appalachian Development Highway System 

(ADHS) and local access roads.

Ready Workforce

In FY 2018 ARC invested $150,000 in Northeast State Community College’s effort to revise its aviation technology curriculum to secure 

Federal Aviation Administration Airframe and Powerplant program certification. Funds will be used to purchase instructional trainers 

such as Maintenance Procedures, Cabin Atmosphere and Pressure, and Cockpit Instrumentation. This training will develop a reliable 

pipeline of trained and certified aviation maintenance professionals in support of regional economic development priorities critical to the 

success of the Tri-Cities Airport's planned Aerospace Park. The park is expected to create up to 2,000 high skilled aviation jobs.

Growing Industry Clusters

$462,544 In FY 2018, ARC and EDA made a joint investment in a 

$1.5 million project in the city of Chickamauga, Georgia, for 

critical upgrades to the water system serving a flooring 

manufacturing factory. The infrastructure improvements will 

also benefit additional business in the area and will help protect 

1,000 manufacturing jobs, including those at the area’s largest 

employer, and could attract up to $100 million in private 

investment. Northwest Georgia is known as “The Carpet Capital 

of the World,” with 85 percent of all carpet manufactured in the 

US is produced in Georgia. The region’s industry base is 

comprised of a diverse set of companies, including 

multinationals, medium-sized firms, and innovative start-up 

companies, primarily in textile and textile mill manufacturing.

This project supports Floor 360, a voluntary group of industry 

stakeholders led by the Northwest Georgia Regional Commission 

and Georgia Tech’s Enterprise Innovation Institute.
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ARC’s infrastructure projects have traditionally 

addressed the Region’s need for modern 

water and wastewater systems. Typical grants 

extend a water line to provide municipal 

water, fire protection, and development 

options for future and existing businesses; 

replace a water tank, transmission line, and 

relocate sewer lines in order to create and 

retain jobs and alleviate potential health and 

environmental hazards; provide safe, reliable 

sewer service to support existing businesses and attract future investment in the region; or 

expand critical health-care facilities in underserved areas.

Increasingly ARC infrastructure projects fund new, emerging, and innovative development 

activities, including a “dig once” strategy to deploy fiber for broadband connectivity at the same 

time water and sewer lines are being installed or repaired; downtown revitalization efforts, 

such as streetscape and utility improvements to support existing and future businesses and 

residences; and creative re-use of formerly mined lands and brownfields. Physical 

infrastructure projects have been among the primary generators of new jobs in Appalachia. 

These investments are fundamental building blocks for further economic development.

Congress has devoted special funding for broadband deployment and basic infrastructure in 

Central Appalachia. These activities are discussed in more detail in the section titled Special 

Regional Initiatives for Distress. 

Congress authorized construction of the ADHS as part of ARC’s 

original enabling legislation. This highway system, which 

supplements the Interstate Highway System, was designed to 

generate economic development in previously isolated areas by 

connecting Appalachia to the interstate system, and providing 

access to areas within the Region as well as to markets in the rest 

of the nation. The ADHS has been a key element of ARC’s 

economic and community development programs.

Goal 4: Natural and Cultural Assets

Strengthen Appalachia's community and economic development potential by leveraging the 

Region's natural and cultural heritage assets.

Appalachia’s natural and cultural heritage assets offer great economic potential. They

contribute to a sense of regional identity, catalyze entrepreneurship and other economic

development activities, and make communities more attractive to visitors and more livable

for residents. ARC works with partners to leverage the productive use of the Region’s 

assets in support of existing and emerging economic opportunities. 

Critical Infrastructure for Distressed Counties

The City of Hindman, in distressed Knott County, KY received an 

ARC grant to rehabilitate its wastewater treatment plant that 

had accrued numerous violations and was under an Agreed 

Order with the Kentucky Energy and Environment Cabinet. ARC 

used special funding available only to distressed counties and its 

statutory authority to increase in the allowable federal share of 

a project located in a distressed county and funded the project 

at 100%. A total of $2,000,000 was invested in FY 2018 to bring 

the system back into compliance and provide service to 420 

households and 60 businesses in the community. 
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ARC has invested in a range of downtown revitalization 

projects across the Region to help communities 

strengthen their local economies and improve quality of 

life. In addition, to capitalize on the expanding 

recreational tourism industry in the Region, the 

Commission invested in projects creating and extending 

hiking, biking, and motorsports trails. In partnership 

with the National Endowment for the Arts (NEA), ARC

supports the Appalachian Gateway Communities 

Initiative to provide technical assistance with natural 

and cultural heritage tourism development to communities that are geographically positioned 

as “gateways” to the Region’s public lands and heritage areas. In FY 2017, ARC and NEA 

developed a pilot for communities that had previously developed plans and activities under this 

initiative and needed to develop strategies to evolve to the next level. 

Goal 5: Leadership and Community Capacity

Build the capacity and skills of current and next-generation leaders and organizations to 

innovate, collaborate, and advance community and economic development.

Cultivating the next generation of Appalachian leaders is key for the Region’s future. ARC’s 

strategic investments and partnerships achieve the greatest impact by helping build the 

capacity and skills of current and next-generation leaders and organizations to advance the 

Region’s community and economic development.

In FY 2018, ARC launched the Appalachian Leadership 

Institute with the mission of equipping a diverse 

network of leaders with the skills, expertise, and vision 

to address the Region’s most pressing issues and 

increase Appalachia’s economic competitiveness. This 

program includes a year-long leadership module aimed 

at current or emerging leaders. Ongoing networking 

and collaborative activities will be encouraged through 

an active alumni engagement program. The goal of this 

activity is to provide a toolkit to address challenges and 

opportunities unique to the Appalachian Region. 

Natural and Cultural Assets

In FY 2018, ARC invested $500,000 in the “Outdoor 

Recreation Investments for the Coalfields of 

Virginia” project to develop 50 miles of multi-use 

trails, six river access points, and two parks to 

connect recreational assets to local communities. 

This investment is part of an ongoing asset-based

development effort in Virginia to restructure the 

economy and fill gaps left by declining coal, 

manufacturing, and agriculture industries. It is 

expected to create 10 new businesses and 54 new 

jobs in the tourism sector and increase visitation to 

the region by 15 percent each year for the next five 

years.

Leadership and Community Capacity

ARC invested $125,000 to continue the multi-year 

partnership with the Benedum Foundation to 

deploy the FLEX-E Grant program in West Virginia. 

The program assists communities in developing 

small-scale, non-construction projects that develop 

or strengthen community leadership, encourage 

the formation of community-based groups or 

coalitions, promote community-wide strategic 

planning, create tools such as feasibility studies 

that assess or promote economic development 

opportunities, or increase the ability of a 

community or region to leverage a local asset for 

economic development. In FY 2018, a total of 100 

persons in 15 communities were projected to 

receive training. 
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ARC Area Development Base Program 

Performance Targets

Based on annual appropriation of $73 million

(Subject to final allocation by the Commission)

Priority Goal Investment Strategy Annual 

Performance 

Target

Five-Year 

Performance Target

Economic 

Opportunities

Invest in entrepreneurial and business 

development strategies that strengthen 

Appalachia’s economy

2,500 

Businesses 

created or 

strengthened

20,000 Jobs 

created or 

retained

112,500 Businesses 

created or strengthened

100,000 Jobs created or 

retained

Ready 

Workforce

Improve the education, knowledge, 

skills, and health of residents to work 

and succeed in Appalachia.

22,000 students, 

workers, and 

leaders improved

110,000 students, 

workers, and leaders 

improved

Critical 

Infrastructure

Invest in critical infrastructure—

especially broadband; transportation, 

including the Appalachian 

Development Highway System; and

water/wastewater systems

22,000

businesses and 

households with 

access to

improved 

infrastructure

110,000 businesses 

and households with 

access to

improved infrastructure

Natural and 

Cultural Assets

Strengthen Appalachia’s community 

and economic development potential 

by leveraging the Region’s natural and 

cultural heritage assets

250 communities 

with enhanced 

capacity

1,250 communities with 

enhanced capacity

Leadership 

Capacity

Build the capacity and skills of current 

and next-generation leaders and 

organizations to innovate, collaborate 

and advance community and 

economic development

6 to 1 Leveraged Private Investment
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Program Justification: Coal Impacted Communities Initiative

The Federal Co-Chair of the ARC requests $50 million for its regionally competitive Coal 

Impacted Communities Initiative. This represents level 

funding with the amount appropriated by Congress in FY 

2019. Appalachia has been disproportionately affected 

by the downturn in the coal industry with 79 percent of 

the 39,759 coal mining jobs lost in the United States from 

2011 to 2017 were in the Appalachian Region—a loss to 

the Region of 31,447 direct mining jobs. This initiative 

assists communities and regions adversely affected by job 

losses in coal mining, coal power plant operations, and 

coal-related supply-chain industries that have occurred 

because of the changing economics of America’s energy 

production. It is designed to assist the Region in better 

competing in the global economy by addressing activities 

that are multi-jurisdictional in nature, crossing state 

borders to connect multi-state development efforts. Prior year requests for proposals have 

been significantly oversubscribed, demonstrating both the significant need and the volume of 

transformational opportunities in the Region. Therefore, the Federal Co-Chair will take 

measures to expedite deployment of these funds. 

The Coal Impacted Communities Initiative seeks to create a more vibrant economic future for 

coal-impacted communities by cultivating economic diversity, enhancing job training and reemployment opportunities, creating jobs in existing or new industries, and attracting new 

sources of investment. ARC has funded activities in coalimpacted communities through a competitive grant 

process with a preference for one or more of four 

priority areas:

• Building a competitive workforce;

• Enhancing access to, and use of, broadband

services;

Enhance access to Broadband Services

$948,673 ARC made a grant to Somerset County, 

PA, in FY 2017 for the Somerset County Fiber 

Extension Project. ARC funds will be used to install 

22 miles of fiber optic cable on existing pole lines 

that will allow a variety of business, residential, 

medical, and educational customers in Somerset 

County access to broadband services. The area 

does not currently have cable broadband available 

and DSL service is not offered ubiquitously. The 

project will serve 1,094 businesses and 3,962 

households and will act as an economic and 

tourism driver in the county.

Building a Competitive Workforce

$600,000 ARC made a grant to Hazard Community 

and Technical College (HCTC) in Hazard, KY in FY 

2018, to expand the college’s welding technology 

program. HCTC’s welding technology program is 

operating at capacity and the demand generated by 

regional employers exceeds the resources available 

to the college. The grant will fund renovations, 

equipment, and personnel, serving at least 12 more 

students per cohort in each short-term training. 

The training is developed in consultation with area 

employers. At the end of the grant period, HCTC 

expects 70 workers/trainees will obtain a job in the 

field for which they were specifically trained and 60 

students will complete the credit-bearing training 

program. The expansion of the welding program 

builds on a prior POWER grant to HCTC to expand 

its course offerings in four other career clusters.
15

• Fostering entrepreneurial activities; and

• Growing industry clusters in communities.

To date, ARC has invested $144.8 million in projects 

serving 312 coal impacted counties. These projects 

are expected to create or retain more than 17,000

jobs, assist 7,200 businesses, leverage $771.3 million,

and prepare thousands of workers and students with 

globally competitive skills. Funded activities range 

from fostering a strong drone cluster in southwest 

Virginia and strengthening the local food economy in 

Central Appalachia, to training workers for privatesector technology jobs in eastern Kentucky, boosting 

entrepreneurship and innovation in southwest 

Pennsylvania, and expanding support for tourism 

businesses in West Virginia. 

Additionally, ARC has commissioned research on the 

economics of the coal industry supply chain, 

supported research on opioid abuse issues in coalimpacted communities, and advanced the use of 

broadband in the revitalization of downtowns. ARC 

contracted Chamberlin/Dunn, LLC to evaluate ARC’s 

work on this initiative and those findings will guide 

future investments. 

A request for proposals for the FY 2019 funds was 

released early in the second quarter. This round 

features a $15 million set aside for broadband 

deployment projects and a new emphasis on activities that address substance abuse focusing on 

workforce re-entry. Priorities for FY 2020 may shift to emphasize underserved programmatic or 

geographic areas. 

The change in coal mine employment by county and ARC Coal Impacted Communities Initiative

project grant awards are depicted in the maps that follows. 

Fostering Entrepreneurial Activities

$940,000 In FY 2018, ARC made a grant to the Mountain BizWorks

to engage in strategies to grow the outdoor gear manufacturing 

sector in Western North Carolina. Activities will include 

workforce development training, entrepreneurship training and 

access to capital, increasing market share, supply chain 

optimization and engaging local and regional development 

practitioners. Western North Carolina University will develop a 

new degree and certificate program to provide career pathways. 

Matching funds will provide a lending pool for small and medium 

sized businesses within the outdoor recreation industry. As a 

result, 100 businesses will be improved, 45 workers will be 

trained, and 150 new jobs will be created. 

Growing Industry Clusters

$1,870,000 ARC partnered with Claude Worthington Benedum 

Foundation in FY 2016 in a grant to the Coalfield Development 

Corporation in Wayne, WV, for the Appalachian Social 

Entrepreneurship Investment Strategy. ARC funds will be used to 

incubate job-creating social enterprises; scale-up Coalfield 

Development Corporation’s innovative 33-6-3 on-the-job 

training/education/life skills workforce development model; and 

expand Coalfield Development Corporation’s service territory to 

other coal-impacted areas in Southern West Virginia. The award 

projected creation of 85 new jobs and training for 500 participants

to pursue quality jobs in high-demand industries in the 

Appalachian Region. 

When the grant closed in FY 2018, it had exceeded projected goals 

creating over 100 jobs and training 600 workers and 5 new 

businesses. ARC made a follow-on investment of $2,034,667 to 

continue and expand this successful effort which had a waiting list 

of 120 recruits for positions on social enterprise work crews. The 

Benedum Foundation and Bloomberg Philanthropies contributed 

cash match of $560,000. This round added a new component to 

its family of enterprises with SustainU, LLC, a clothing 

manufacturer that hires people recovering from substance abuse 

and a new program targeting youth in coal impacted communities. 
16
17

ARC Area Development Program – Coal Impacted Community 

Initiative

Performance Targets

Based on $50 Million

Includes $1 Million for Administration

Investment Strategy Annual Performance Target

Invest in entrepreneurial and business development 

strategies that strengthen the Appalachian Economy

Improve the education, knowledge, skills, and health of 

residents to work and succeed in Appalachia

Invest in critical infrastructure – especially broadband; 

transportation; including the Appalachian Development 

Highway System and water/wastewater systems

Strengthen Appalachia’s community and economic 

development potential by leveraging the Region’s natural 

and cultural heritage assets

Build the Capacity and skills of current and nextgeneration leaders and organizations to innovate, 

collaborate and advance community and economic 

development

5,000 Students/Workers Improved

5,000 Jobs Created/Retained

2,000 Businesses Improved

400 Businesses Created

100 Communities Improved

1:1 Match to ARC Ratio

2:1 LPI to ARC Ratio

This Initiative targets communities that face extreme economic challenges due to the downturn in the coal economy and will require 

significant upfront investment to achieve long term goals. 
18

Program Justification: Special Regional Initiative for Distress

The Federal Co-Chair of the Appalachian Regional Commission requests $32 million for Special

Regional initiatives for Distress in Appalachia. ARC will use this funding to augment the existing 

work being done in distressed areas through the Area Development Base Program and the Coal 

Impacted Communities Initiative and reduce the disproportionately high rate of distress in the 

Appalachian Region. In FY 2018, 64 percent of ARC’s funds were invested in projects for 

benefit of distressed communities. ARC gauges its long-term progress toward helping the 

Region achieve economic parity with the nation in terms of the gradual reduction in the 

number of such counties and areas over time. ARC will complement its efforts to reduce 

distress by directing funding to leverage emerging opportunities and to address barriers to 

economic development. Continued expansion of the southern automotive and aviation clusters

offers great potential for job creation in Appalachia. Other challenges such as inadequate 

water, sewer and broadband infrastructure and the effects of drug crisis on the workforce 

present significant barriers and require substantial resources to overcome. 

Nearly one-fifth of Appalachia’s counties still suffer from persistent and severe economic 

distress driven primarily by the Region’s reliance on single sector economic driver. During the 

period 2000-2016, Appalachia had a net loss of 603,000 manufacturing jobs. In the coal-mining 

sector, the United States lost 39,759 jobs between 2011 and 2017; 79 percent of those (31,447) 

were in the Appalachian Region. And of that number, 22,673 were in Kentucky and West Virginia 

alone. Today the Region faces another economic crisis as the drug epidemic unfolds and 

impacts the workforce. Recent ARC research reveals that opioid-related overdose mortality rate 

for people ages 15-64 was 49 percent higher in Appalachian than in the rest of the United States

in 2015.

In addition to being sicker than the rest of the country, Appalachia’s population is older than the 

rest of the nation. The share of Appalachia’s population under 20 years old has fallen 

substantially since 1970— from just under 38 percent in 1970 to around 25 percent in 2012. This 

decline occurred at the same rate in the U.S. as a whole from 1970 through the early 1980s, but 

since then has been more pronounced in Appalachia. Similarly, in the 2011–2015 period, the 

share of residents ages 65 and over in the Appalachian Region exceeded the national average by 

two percentage points. Net population loss occurred in almost two thirds of the Region’s 
19

counties between 2000 and 2010. And the Region continues to lag behind the nation in the 

proportion of adults with a college degree (23 percent compared with 30 percent for the 

nation). Taken together, these conditions create major barriers to development of a strong 

regional economy and require a special targeted approach. 

Despite these challenges, opportunities exist in the Region. 

ARC will use funds available through this initiative to 

leverage emerging opportunities such as the development 

of the southern automotive and aviation clusters. ARC was 

an early investor in the automotive manufacturing industry, 

with the Appalachian governors voting to allocate funding 

across multiple states to assist South Carolina in providing 

the necessary infrastructure for BMW to expand in the 

Region. Twenty years later, in 2012, automotive cluster 

analysis found that BMW alone was responsible for creating 

7,000 jobs. With the company’s growth, an extensive 

supplier network has developed in the state, creating 

additional jobs.

In recent years the automotive sector in southern 

Appalachia has grown to include major assembly plants for Mercedes, Toyota, and Honda. All of 

those have benefitted from ARC investments, primarily for basic infrastructure. The presence of 

these manufacturing facilities has sparked the growth of a vibrant automobile-parts sector 

across the southern part of Appalachia and transitioned communities out of economic distress. 

ARC is leveraging this opportunity by providing funds to expand workforce opportunities and 

develop necessary infrastructure. This is an appealing strategy for the state of Alabama and 

Mississippi as Toyota-Mazda opens a new manufacturing facility anticipating jobs for 4,000 

employees who will need enhanced training. 

Along with activities that develop existing opportunities, 

funds from this initiative will address deficits in the 

Region. Appalachia, like most of rural America, continues 

to lag the nation in access to advanced 

telecommunications infrastructure. Many areas still do 

not have cell coverage and broadband service; if 

broadband is available, it is usually only in the downtown 

and the immediately surrounding area. Even when 

available, rural access tends to be slower and less reliable. 

ARC has had a special focus on access and use of 

broadband for a number of years. As part of the agency’s 

Southern Automotive Cluster Development

$1,000,000 In FY 2018, ARC assisted the City of 

Dayton in Tennessee with construction of a 

500,000 gallon elevated storage tank and waterline 

extension in a business park where a multinational 

tire company was locating. The applicant provided 

the additional $700,000 in matching funds for the 

project that serves economically at-risk Rhea 

County, which was recently plagued by the loss of 

600 manufacturing jobs. This strategy capitalizes 

on the automotive industry and helps to transform 

the economy for the area. At least four existing 

businesses and one new business will be served by 

the storage tank when the project is complete. The 

tire manufacturer plans to invest $360 million in 

private capital to build and equip a new 830,000-

square foot manufacturing facility, and will create 

320 new jobs within three years of the project's 

completion.

Central Appalachia Distressed County Infrastructure

The City of Spencer in economically distressed Roane 

County, West Virginia received $800,000 in from ARC in FY

2018 to make critical repairs to its wastewater plant and 

collection system in order to bring the system back into 

compliance with West Virginia Department of 

Environmental Protection standards. ARC funds were 

matched by an additional $704,000 in form of a loan from 

USDA Rural Development. The project includes total 

rehabilitation of sewer line, connections, tank and clarifier, 

and manholes. When complete, the project will provide 

service to 1,314 households and 213 businesses and 

position the city to pursue economic development 

opportunities not available while the system is out of 

compliance with state regulations. 
20

reauthorization in 2015, Congress reinforced this focus by creating a new authority for ARC to 

work in broadband deployment. This strategy aligns with the FY 2017 recommendations of the 

Department of Agriculture’s Interagency Task Force on Agriculture and Rural Prosperity, which 

acknowledges that reliable and affordable high-speed internet e-connectivity will transform 

rural America as a key catalyst for prosperity.

ARC is a key partner in the effort to develop broadband access throughout eastern Kentucky 

through the creation of a large middle-mile network known as KentuckyWired. This network will 

bring enhanced broadband access to 119 community anchor institutions in eastern Kentucky and 

provide the platform necessary for providers to branch out and provide last-mile facilities in 

selected areas. ARC has already invested over $43 million in this initiative, which has received 

special congressional funding for improving broadband service to distressed counties in Central 

Appalachia.

Substance abuse poses a major threat to the economic prosperity of Appalachia. In October, the 

Administration declared a national public health emergency, underscoring the challenge this

crisis poses nationally. This issue is particularly striking for central Appalachia. West Virginia has

an opioid-related overdose rate over three times as high as the rate for non-Appalachian United 

States. The Appalachian parts of Kentucky, Maryland, and Ohio all have opioid-related overdose 

rates more than twice as high as that found in the non-Appalachian U.S. The pervasiveness of 

drug abuse has a negative impact on the Region’s workforce, diminishing regional economic 

opportunity.

Throughout FY 2020, ARC will continue to work with public and private sector partners to 

leverage opportunities and eliminate economic barriers such as the lack of critical infrastructure 

including broadband, and the effects of substance abuse and other diseases of despair on the 

Appalachian workforce in order to reduce economic distress in the Region. Outcome measures 

will be developed in conjunction with state and local partners as this initiative is developed 

through the Appalachian states. 

Potential Outcomes for Project Development

Businesses Improved

Communities Improved

Households Improved

Participants Improved

Students Improved

Workers and Trainees Improved
21

Program Justification: Special Regional Initiative for Substance Abuse 

Mitigation Pilot

The Federal Co-Chair of the ARC requests $10 million to implement a regionally competitive 

pilot initiative to address the substance abuse crisis that disproportionally affects Appalachia. 

In addition to being considered a health or public safety issue, substance abuse presents a

barrier to economic prosperity because of its impact on the workforce, making this issue a 

priority for ARC. Efforts will focus on the build-out of the recovery ecosystem necessary to 

support those in recovery as they reenter the workforce. The Federal Co-Chair will design an 

implementation plan to best deploy these funds on a regionally competitive basis to foster 

successful recovery outcomes while also strengthening economic potential. This funding 

reflects the Administrations declaration that the drug crisis is a national emergency and 

supports the Administration’s 2019 National Drug Control Strategy. 

ARC will continue to focus efforts on the existing 

economic challenges such as the Region’s lack of 

adequate water and sewer infrastructure and the 

significant downturn of the coal economy, but the 

pervasive nature of this epidemic, and the resulting 

negative impact on various sectors important to 

economic prosperity, requires targeted funding. 

Recently, ARC released a study titled Appalachian 

Diseases of Despair completed by NORC at the 

University of Chicago which revealed that in 2015, 

overdose-related mortality rates for Appalachia’s 25-

44-year-old age group—those in their prime working 

years—were more than 70 percent higher than for 

the same age group in the country’s non-Appalachian 

areas. 

The Centers for Disease Control (CDC) identified 220 

counties in the nation as being at risk for HIV and 

Hepatitis C infections due to injection drug use. This data is used as a proxy for opioid abuse 

vulnerability as well. A total of 140 or 64 percent of the vulnerable counties identified in the 
22

nation are located in the 13-state Appalachian Region. This disproportionately high statistic 

conveys the direct threat to the workforce and the Region’s economy. The socioeconomic 

conditions within this issue are not surprising: unemployment is high, educational attainment is 

low and life expectancy is poor -- all challenges that have plagued Appalachia for decades. The 

burden placed on communities attempting to compete in the global economy while facing this 

barrier is almost unsurmountable. This suggests a cyclical relationship between poverty and 

substance abuse that presents a special challenge for Appalachia. 

While the Region has made progress in achieving its mission of reaching parity with the nation, 

it has recently been buffeted by a number of economic challenges such as the 

disproportionately high job losses in both manufacturing and coal mining sectors. A total of 

603,000 manufacturing jobs were lost during the period 2000-2016 and the downturn of the 

coal industry has resulted in the loss of 31,447 direct mining jobs between 2011 and 2017. ARC 

was authorized to address the specific barriers facing the Appalachian Region and is therefore, 

well positioned to confront this issue as well. 

ARC’s work does not duplicate other federal programs; instead, it extends the reach of those 

programs into the most challenged parts of Appalachia by providing necessary gap funding and 

technical assistance that enables economically distressed communities to compete successfully 

in national programs. ARC participates in both the Federal Regional Opioid Subcommittee 

convened by the Administration and the USDA Opioid Misuse Partnership consisting of federal 

and non-profit partners collaborating to address substance abuse. 

Through the SUPPORT for Patients and Communities Act, Congress and the Administration 

recognized the severity of the substance abuse issue in Appalachia and provided special 

guidance for ARC to address this issue through the following activities:

• Facilitate the sharing of best practices among States, counties, and other experts in the 

region with respect to reducing drug abuse; 

• Initiate or expand programs designed to eliminate or reduce the harm to the workforce 

and economic growth of the region that results from drug abuse; attract and retain 

relevant health care services, businesses, and workers; 

• Attract and retain relevant health care services, businesses, and workers;

• Develop relevant infrastructure, including broadband infrastructure, which supports the 

use of telemedicine.

Building on the recent Congressional guidance, ARC is conducting a series of listening sessions 

in the Region throughout FY 2019 to determine the best entry points for ARC to assist in 

mitigating the impact of this crisis. In FY 2020, ARC will use its grassroots delivery system by 

collaborating with state, local, other federal, and private sector partners to address this 

epidemic through activities that:
23

• Strengthen the substance abuse workforce by providing opportunities to attract 

healthcare professionals in behavioral health, psychiatric and other fields and ensuring 

proper training resources are available to expand the pool of qualified health providers.

• Support recovery-to-work efforts by working with state and local counterparts to 

connect individuals in recovery with employment opportunities.

• Encourage Entrepreneurial and Collaborative Solutions through social enterprises and 

cross-sector partnerships. Increase the use of telemedicine by expanding broadband 

access in rural Appalachian areas that lack a sufficient healthcare workforce. 

• Engage businesses and leverage community economic leadership in becoming a part of 

the solution, which will improve the overall health of their communities, strengthen 

their workforce and encourage economic development.

Below is a list of activities that ARC will undertake as a part of this pilot initiative. 
24

ARC is a performance-driven organization with a systematic program for performance

measurement in place, in accordance with its 2016–2020 strategic plan. The strategic plan

establishes both long- and short-term goals and performance measuresto track progress in

meeting the agency’s mission. A multi-level evaluation system was designed in accordance with

the Government Performance and Results Act.

Grant information and performance istracked by ARC’s intranet managementsystem,

ARC.net. Data elements are geared to performance measures and strategic objectivesfrom

the strategic plan. As each grant is closed, ARC staff collects output and outcome information

and tracks data against anticipated performance. The performance data is validated through

a processthat confirms project outcomes three years after the projects have been

completed. The three-year period allows ARC to accurately capture data on performance

measures, which can continue to accrue after a project has been completed.

ARC conducts an outside evaluation of each strategic goal area on a rotational basis. Each

study assesses how well ARC projects met their projected performance targets and offers

recommendationsfor ways to improve the grants process. This information is published on the

ARC website and used to guide future Commission policy. ARC performance is published

annually in its Performance and Accountability Report, which is available on the agency’s

website at www.arc.gov.

ARC will update its strategic plan through a combination of stakeholder input as well as 

programmatic and socioeconomic assessment in FY 2020. 

Performance and Evaluation
25

ARC’s performance annual performance targets are established in the agency’s 2016 – 2020 strategic plan. These targets are based on an 

annual appropriation of $70 million as was the trend at the time the plan was developed. Congress provided additional funding for regional 

initiatives that have resulted in significantly higher results estimates for FY 2018. 
26
27

The Federal Co-Chair requests $9,350 million for Salaries and Expenses to implement the Area 

Development program and its associated costs. The chart below summarizes ARC’s total request 

for salaries and expenses in for the base program for FY 2020 compared with prior year 

appropriations. ARC’s appropriation has increased significantly. Five years ago, the Commission 

received less than $65 million; today the amount is more than twice that at $165 million. ARC 

did not immediately increase staff as the appropriation increases were incremental and initially 

appeared to be temporary. At this point, however, ARC’s additional program responsibilities 

appear to be established, if not permanently, at least for the long term and requested staffing 

increases are necessary to match up with these new responsibilities and can no longer be 

avoided in order to fully deploy the annual appropriation. 

Additionally, ARC has developed an alternative approach to budgeting that shifts all program 

costs out of the administrative category where expenses are shared by the states and the 

federal government. This is consistent with the initial intent in which ARC was created where

“administrative” expenses were largely those associated with the planning and research 

functions of the Commission and grant program costs were borne by the federal government 

alone through transfers to other agencies who administered ARC Investments. In recent years, 

Salaries and Expenses 
28

ARC has been assigned programmatic responsibilities for appropriations that were previously 

transferred to other agencies necessitating this change.

This request reflects the full costs of the Office of the Federal Co-Chair, its immediate staff, and 

a portion of the cost associated with the Office of the Inspector General. The Commission is 

currently engaged in a staff reorganization, of which these increases are a part, designed with 

the goal of maintaining necessary levels of services to the states while producing long term 

efficiency savings. As directed by Congress, in FY 2019 ARC will commission a cost benefit 

analysis of relocating operations to the Region.

The request for the Office of the Federal Co-Chair provides for an immediate staff of eight 

positions, with related benefits, rent, travel, services, and other expenses. The Federal CoChair’s staff is paid entirely by the federal government and assists in carrying out the Federal 

Co-Chair’s responsibilities. These include working with federal agencies; serving as the 

Commission’s liaison to the Congress and the Administration; representing the Administration 

in working with the Member states to formulate regional strategies and other policy; and 

reviewing projects for final approval by the Federal Co-Chair.

The Office of the Inspector General’s request funds a three-person staff, related expenses, and 

required contract audit, investigative, training, legal support and support for the Council of the 

Inspectors General on Integrity and Efficiency as required by the Inspector General Reform Act 

(PL 110-409) passed by Congress in 2008. This legislation placed increased requirements on the 

office of each Inspector General. Inspector General activities will continue to emphasize the 

effectiveness and efficiency of program operations and compliance with laws and regulations 

affecting grant programs. This includes review and evaluation activities in connection with the 

GPRA Modernization Act of 2010, the Single Audit Act, and GISRA, as well as coordination and 

cooperation with other oversight offices on crosscutting issues and legislated reviews. Audit 

activities enable the Commission to produce audited financial statements, as other agencies are 

2020

2018 2019 President's Change

Actual Enacted Budget

Personnel Compensation 621 1,022 1,121 99

Personnel Benefits 218 280 313 33

Travel & Transportation 130 85 100 15

Rent, Communications 169 170 175 5

Printing 1 1 1

Services 340 206 206

Supplies 5 11 11

Equipment 1 10 10

Total: 1,485 1,785 1,937 152

Office of the Federal Co-Chair
29

required to do under the Accountability of Tax Dollars Act. The request will cover expenses for 

necessary investigative and legal support, which will be obtained through reimbursable 

agreements and Memoranda of Understanding with other federal Offices of Inspector General. 

This budget has been certified by the Inspector General. 

Each year, the states and the Federal Co-Chair must approve the Commission’s operating 

budget. Following completion of appropriations action, final non-federal staffing decisions are 

made and must be approved at a Commission meeting of the member states with the Federal 

Co-Chair. As a result of this consultative process, final allocations may differ from the estimates 

of operating expense amounts by object class for 2020. The following table shows ARC 

Commission operating expenses. 

ARC’s authorizing legislation specifies that Commission staff shall not be considered federal 

employees for any purpose. Accordingly, these professionals are neither state nor federal 

2020

2018 2019 President's

Actual Enacted Budget Change

Personnel Compensation 173 195 213 18

Personnel Benefits 29 62 65 3

Travel & Transportation 2 25 25

Rent, Communications 39 37 39 2

Printing 1 1

Services 285 225 195 1

Supplies 2 4 2 (2)

Equipment 2 2

Training 4

Total: 530 551 546 21

1 An additional $300,000 in Coal Impacted Communities funding will be provided to the IG for work on that Initiative. 

Office of the Inspector General

2020

2018 2019 President's 

Actual Enacted Budget Administrative 

Split State/Fed Programatic Change

Personnel Compensation 4,595 5,082 6,059 3,379 2,680 977

Personnel Benefits 1,866 1,919 2,127 1,210 917 208

Travel & Transportation 141 130 146 46 100 16

Rent, Communications 900 897 938 924 14 41

Printing 1 19 17 17 0 (2)

Services 578 582 537 416 121 (45)

Supplies 25 34 34 34 0 0

Equipment 24 44 44 44 0 0

Total: 8,130 8,707 9,902 6,070 3,832 1,195

Division of of 2020 Operating 

Expenses Areas

Commission Operations
30

employees, even though they work directly for the joint federal-state partnership agency. An 

Executive Director, who is appointed by the states and the Federal Co-Chair, manages this staff 

and is the Chief Executive Officer of the Commission. 

Personnel compensation for Commission staff generally follows that of federal employees in the 

metropolitan area and benefits are budgeted accordingly. The FY 2020 request reflects costs 

associated with the Commission’s responsibility for funding its own private pension plan for 

Commission staff. Periodically, prior year balances are invested to meet the fiduciary 

requirements of the plan. Accounts payable and related activities have been transitioned to the 

US Department of Agriculture and several federally required system administration 

responsibilities have been outsourced. Additionally, the salary of the Inspector General has 

transitioned to the Commission in accordance with Dodd-Frank Wall Street Reform and 

Consumer Protection Act as mentioned above. 
31

Comprehensive Reform Initiative
32

Organizational Effectiveness Initiatives

Status as of August 2018

The Appalachian Regional Commission (ARC) has been identifying, analyzing, and implementing 

workplace efficiencies to ensure the highest possible output using cost- and time-effective resources. 

ARC has proactively made these decisions during its normal course of business while adjusting to 

internal and external forces which demand innovation and evolution. On April 12, 2017, the Office of 

Management & Budget (OMB) released Memo M-17-22 “Comprehensive Plan for Reforming the Federal 

Government and Reducing the Federal Civilian Workforce”. Below, ARC has documented key actions 

that align with this directive, highlighting accomplishments already completed and those in progress, 

towards maximizing employee performance, organizational restructuring, improving efficiency and 

effectiveness, and workforce management. These changes will enhance ARC’s mission and effectiveness 

in carrying out the critical work of economic development in the Appalachian Region. 

The OMB memo directs agencies to act on: 

• Short-term workforce reductions

• Short-term cost savings

• Maximizing employee performance

• Long-term workforce reductions

When implemented, the efforts are expected to result in the following objectives:

1. Lean, more accountable, more efficient government

2. Effectively and efficiently deliver programs that are highest need to citizens

3. Align workforce to meet needs of today and future

4. Remove barriers that hinder employees from delivering results

Date

completion 

or 

estimated 

completion

Strategy or

Action Description

Status

Complete

Inprogress

Analysis 

Impact

1. Eliminate activities

2. Restructure/merge

3. Improve org 

efficiency & 

effectiveness

4. Workforce 

management

September 

2015

Internal 

Communications 

Strategy

With leadership guidance from the executive director, 

increased frequency and transparency of all-staff 

communications related to ARC mission, operations, 

and processes. Through quarterly all staff meetings, 

monthly lunchtime presentations, and collaborative 

working groups, relevant information is shared and 

discussed to ensure strong decisions are made in the 

best interest of ARC’s investments. With this level of 

Efficiency & 

Effectiveness; 

Workforce 

management
33

communication, employees are provided necessary 

resources to maximize their performance. 

August 

2015

External 

Communications 

Strategy

Consolidated Public Relations Information Officer 

position within the Communications team. Hired 

Communications Director and implemented 

communications strategy including e-newsletter, 

updated web pages, and social media outreach. 

Streamlined and strengthened communications with 

partners, states and others to coordinate information 

sharing related to investments and successes in the 

region. 

Efficiency & 

Effectiveness; 

Workforce 

management

September 

2015

Document 

Position 

Descriptions

In coordination with a subject matter expert (SME) 

consultant, conducted a compensation and 

classification analysis. Interviewed all employees and 

directors to obtain accurate and current data on job 

tasks and responsibilities. Utilizing external resources, 

knowledge and experience, drafted, discussed, and 

finalized position descriptions and pay grades for 

every ARC position. 

Workforce 

management; 

Restructure

October 

2016

January 

2018

Performance 

Management

Provide all staff training on SMART-ER Goal 

development and provide in-house consultation on 

goal setting to ensure alignment with ARC strategy 

and priorities. Enhanced performance management 

and reward/pay process to objectively align outcomes 

with employee goals, impact of job functions and 

relevant competencies. Implemented new appraisal 

form which better emphasizes job responsibilities, 

goal achievement, and competencies along with 

integrated professional development. Conducted all 

staff training on the new system, its purpose, 

outcomes and action items. Provide additional staff 

resources and support through goal setting 

workshops, coaching and employee performance 

criteria development. 

Workforce 

management

December 

2016

Organizational 

Effectiveness

Working with a consultant, identified organizational 

effectiveness opportunities to leverage knowledge 

management, develop a more efficient team 

structure, and develop action plan for mission 

priorities and strategies. Reduced administrative 

burden for project coordinators by re-allocating 

administrative functions to a centralized role. 

Implemented new team structure to balance changing 

workloads.

Restructure; 

Efficiency & 

Effectiveness

December 

2016

Cross-training Conduct cross training and SOP documentation in all 

critical roles and functions. This proactively provides 

critical function coverage for staff departures and 

Efficiency & 

Effectiveness; 

Workforce 

management
34

identifies any areas for improved efficiency in work 

process. 

January 

2017

May 2018

Consolidate 

Positions

Using job analysis to ensure agency needs are met 

sufficiently, combined Administrative Assistant and 

Executive Assistant roles into one and leveraged use of 

technology to reduce time spent on administrative 

requirements. Anticipate further position 

consolidation and workforce re-structuring in 

Communications, Local Development District, and 

Finance teams following RIO. 

Workforce 

Management; 

Restructure

February 

2017

Enterprise 

Technology

Through an RFP process, selected and worked with a 

consultant team to facilitate an analysis of the current 

grant management work processes. From that, the 

team identified efficiencies and enhanced workflow. 

Engaged services of an applications developer to code 

those identified technical efficiencies and enhance 

user experience in current system. 

Restructure; 

Efficiency & 

Effectiveness

December 

2018

Enterprise 

System

Developing a Request for Proposals (RFP) to source 

then identify a technology consultant to complete the 

build out of the grants management system. The result 

will be an end-to-end, web based automated system, 

incorporating best practices and identified work flow 

efficiencies. The system will be designed to be user 

friendly and capitalize on technology capabilities to 

minimize administrative tasks. 

Efficiency & 

Effectiveness

May 2017 Retirement Plan, 

Pension 

Analyzed current plan document related to eligible 

creditable service for early retirement; determined 

gap for potential early retirement between age 55 and 

62; evaluating return on investment of plan 

amendment allowing relevant non-ARC employment 

to apply towards credible service thereby allowing 

participants to reach early retirement eligibility 

sooner. (does not impact benefit amount; only years 

to early retirement)

Workforce 

management

December 

2018

Retirement Plan, 

401(k) 

Review options and opportunities to maintain same 

plan design but change to a newer platform which 

shifts administrative burden/tasks to the administrator 

(currently performed by ARC staff). Also review option 

to provide expanded investment options for 

participants to maximize retirement earnings. 

Efficiency & 

Effectiveness

May 2017 Retirement 

Incentive Option 

(RIO)

Offered a Retirement Incentive Option (RIO) to 16 

eligible employees. Six (6) employees accepted the 

offer with retirement effective dates between January 

and April 2018. Goal met to reduce staff overhead 

costs and align workforce to meet the needs of today 

and the future through a voluntary offer. Provided 

Workforce 

management
35

eligible employees with financial planning resources to 

help with decision-making. 

July 2017 Phone System Implemented technology-based phone system to 

leverage integration with Microsoft Outlook. This 

change will remove barriers that hinder ability to do 

the work by being able to provide more timely 

responses to telephone communications despite 

travel, work locations or job function. 

Efficiency & 

Effectiveness

June 2017 Travel System Implemented web-based travel agency system to 

leverage technology, streamline of information and 

24/7 access bypassing costly services performed by 

outsourced services. This enhancement will make 

travel administration and reservations easier, faster, 

and more accurate, using online profiles, internetbased access to travel arrangements and streamlined 

internal approvals. 

Efficiency & 

Effectiveness

June 2017 Policy Updates Updated personnel policies which result in more 

efficient workforce management, increased 

efficiencies and strengthen accountability through 

performance management and reward program tied 

to performance. 

Efficiency & 

Effectiveness; 

Workforce 

management

October 

2018

HR Policy 

Updates

Implementing additional Human Resources policy 

changes and updates to reflect enhancements in staff 

accountability and efficiency. Areas of substantive 

updates include performance management, 

professional development, benefits, employee status, 

and leave management. 

Efficiency & 

Effectiveness; 

Workforce 

management

November 

2017

Excel Training Conducted Excel Level 1 and Level 2 training for 

approximately 25 employees. Developed learning 

objectives to align with ARC roles and responsibilities. 

Majority of participants learned new tools that will be 

useful in their job and enable more efficient work 

processes. 

Efficiency & 

Effectiveness; 

Workforce 

management

December 

2017

Anti-Harassment 

and AntiDiscrimination

Conducted training to provide awareness to all 

employees about activities that are not professionally 

acceptable in the workplace as well as specific 

personnel policies and EEO items. This resulted in an 

organization-wide understanding of ARC’s policy along 

with culture of respect and professionalism. 

Efficiency & 

Effectiveness; 

Workforce 

management

August 

2018

Re-organization Implemented a staff re-organization to address 

increased scope and depth of programs (last five years 

operating budget increased from $65M to $155M) as 

well as the assumption of additional programmatic 

responsibilities previously assigned to other Federal 

agencies. This change will enhance staff capacity. The 

key elements of the reorganization include:

Restructure/mer

ge; Efficiency & 

effectiveness; 

Workforce 

management
36

1. Dividing Division of Community Investment into two 

separate divisions – each with its own Division 

Director: 

- Infrastructure & Transportation, including all 

investments and opportunities pertaining to 

broadband, transportation and other regional 

infrastructure needs. This involves moving 

transportation staff to this division to increase 

collaboration related to the Region’s needs.

- Business & Talent Development, including all 

investments and opportunities pertaining to workforce 

development, entrepreneurship, education, health 

and other issues affecting the Region’s workforce.

2. Renaming the Planning & Research Division to the 

Research & Evaluation Division to better reflect the 

Division’s focus on research, evaluation and analysis. 

This includes moving transportation staff from this 

division to the Infrastructure & Transportation 

Division. 

3. Establishing a separate IT Division with a dedicated 

Division Director to assess, implement and lead 

technological enhancements which will increase 

workforce efficiency. 

4. Recognizing POWER, the Appalachian Leadership 

Initiative and LDD support as regional programmatic 

initiatives which will report directly to the Executive 

Director. 

July 2018 Technical 

Assistance

ARC States and grantee partners have identified 

increased needs for technical assistance to support 

grant funded programs in the Region. Many grantees 

and partners may not have the resources to fully 

understand and comply with the evolving 

requirements and conditions for federally funded 

programs. This re-designed role (vacated as a result of 

the Retirement Offer) provides technical assistance by 

developing, delivering, and assessing strategic and 

tactical training, support and education to more than 

70 Local Development Districts (LDD), 13 State 

Program Managers, potential and current grantees, 

and others. 

Efficiency & 

effectiveness; 

Workforce 

management

October 

2018

Applicant 

Tracking System

Implementing an applicant tracking system (ATS) to 

increase efficiency in recruitment efforts. The ATS is 

expected to reduce administrative work and time to 

fill while increasing the availability of data and metrics 

to assist with strategic decision-making and strategic 

workforce planning. 

Efficiency & 

effectiveness
37

August 

2018

Employee Onboarding & 

Resources

Implemented an on-boarding program to decrease 

time to assimilation for new hires. Program includes 

first day agenda covering topics such as benefits, 

operating procedures, policy review, and performance 

management training. Developed and implemented an 

internal Portal utilizing SharePoint technology to 

provide Benefit/Payroll and ARC 

Resources/Information to all staff. Access to the Portal 

is through secure Office 365 site and updates are 

made weekly to ensure timely and accurate 

information is made available to all staff. The Portal 

compiles information that was previously stored in 

various electronic and hard copy documents in various 

locations. 

Efficiency & 

Effectiveness; 

Workforce 

management
38

Appendices
39

APPENDIX A
40

APPENDIX B
41

County Economic Status Designationsin the Appalachian Region

FY 2019

In accordance with the Commission's policy for determining the economic status of the 420 

Appalachian counties, the Research staff has analyzed the distribution of distressed, at-risk, 

transitional, competitive, and attainment counties for FY 2019 using the most current data 

available. ARC uses an index-based county economic classification system to identify and 

monitor the economic status of Appalachian counties. The system involves the creation of a 

national index of county economic status through a comparison of each county’s averages for 

three economic indicators—three-year average unemployment rate, per capita market income, 

and poverty rate—with national averages. The resulting values are summed and averaged to 

create a composite index value for each county. Each county in the nation is then ranked, based 

on its composite index value, with higher values indicating higher levels of distress.

Distressed Counties

• Alabama (1) – Macon

• Kentucky (38) – Adair, Bath, Bell, Breathitt, Carter, Casey, Clay, Clinton, Cumberland, 

Elliott, Estill, Floyd, Harlan, Jackson, Johnson, Knott, Knox, Lawrence, Lee, Leslie, Letcher, 

Lewis, Lincoln, Magoffin, Martin, McCreary, Menifee, Morgan, Owsley, Perry, Pike,

Powell, Robertson, Rockcastle, Russell, Wayne, Whitley, and Wolfe

• Mississippi (9) – Benton, Chickasaw, Clay, Kemper, Montgomery, Noxubee, Panola, 

Winston, and Yalobusha

• North Carolina (1) – Graham

• Ohio (3) – Adams, Meigs, and Monroe

• Tennessee (10) – Bledsoe, Clay, Cocke, Fentress, Grundy, Hancock, Jackson, Morgan, 

Scott, and Van Buren

• Virginia (4) – Buchanan, Dickenson, Lee, and Wise

• West Virginia (15) – Boone, Braxton, Calhoun, Clay, Fayette, Gilmer, Lincoln, Logan, 

McDowell, Mingo, Roane, Summers, Webster, Wetzel, and Wyoming

At-Risk Counties

• Alabama (18) – Bibb, Calhoun, Chambers, Cleburne, Coosa, DeKalb, Fayette, Franklin, 

Hale, Lamar, Lawrence, Marion, Pickens, Randolph, Talladega, Tallapoosa, Walker, and 

Winston
42

• Georgia (14) – Chattooga, Elbert, Fannin, Franklin, Gilmer, Haralson, Hart, Heard, 

Murray, Polk, Rabun, Stephens, Towns, and Walker

• Kentucky (14) – Boyd, Edmonson, Fleming, Garrard, Green, Greenup, Hart, Laurel, 

Metcalfe, Monroe, Montgomery, Nicholas, Pulaski, and Rowan

• Mississippi (12) – Alcorn, Calhoun, Choctaw, Itawamba, Lowndes, Marshall, Monroe, 

Oktibbeha, Prentiss, Tippah, Tishomingo, and Webster

• North Carolina (11) – Ashe, Cherokee, Clay, Jackson, McDowell, Mitchell, Rutherford, 

Swain, Watauga, Wilkes, and Yancey

• Ohio (10) – Athens, Gallia, Highland, Jackson, Jefferson, Morgan, Perry, Pike, Scioto, and 

Vinton

• Pennsylvania (1) – Forest

• South Carolina (1) – Cherokee

• Tennessee (17) – Campbell, Carter, Claiborne, DeKalb, Grainger, Hawkins, Johnson, 

Lawrence, Lewis, Meigs, Monroe, Overton, Polk, Rhea, Unicoi, Union, and White

• Virginia (6) – Grayson, Henry, Patrick, Russell, Scott, and Tazewell

• West Virginia (15) – Barbour, Hardy, Lewis, Mason, Mercer, Monroe, Nicholas, 

Pocahontas, Raleigh, Randolph, Ritchie, Tyler, Upshur, Wayne, and Wirt

Transitional Counties

• Alabama (17) – Blount, Cherokee, Chilton, Clay, Colbert, Cullman, Elmore, Etowah, 

Jackson, Jefferson, Lauderdale, Limestone, Madison, Marshall, Morgan, St. Clair, and 

Tuscaloosa

• Georgia (21) – Banks, Barrow, Bartow, Carroll, Catoosa, Dade, Dawson, Douglas, Floyd, 

Gordon, Gwinnett, Habersham, Hall, Jackson, Lumpkin, Madison, Paulding, Pickens, 

Union, White, and Whitfield

• Kentucky (2) – Clark and Madison

• Maryland (3) – Allegany, Garrett, and Washington

• Mississippi (3) – Lee, Pontotoc, and Union

• New York (14) – Allegany, Broome, Cattaraugus, Chautauqua, Chemung, Chenango, 

Cortland, Delaware, Otsego, Schoharie, Schuyler, Steuben, Tioga, and Tompkins
43

• North Carolina (17) – Alexander, Alleghany, Avery, Buncombe, Burke, Caldwell, Davie, 

Forsyth, Haywood, Henderson, Macon, Madison, Polk, Stokes, Surry, Transylvania, and 

Yadkin

• Ohio (17) – Ashtabula, Belmont, Brown, Carroll, Columbiana, Coshocton, Guernsey, 

Harrison, Hocking, Lawrence, Mahoning, Muskingum, Noble, Ross, Trumbull, 

Tuscarawas, and Washington

• Pennsylvania (45) – Armstrong, Beaver, Bedford, Blair, Bradford, Cambria, Cameron, 

Carbon, Centre, Clarion, Clearfield, Clinton, Columbia, Crawford, Erie, Fayette, Fulton, 

Greene, Huntingdon, Indiana, Jefferson, Juniata, Lackawanna, Lawrence, Luzerne, 

Lycoming, McKean, Mercer, Mifflin, Monroe, Northumberland, Pike, Potter, Schuylkill, 

Snyder, Somerset, Sullivan, Susquehanna, Tioga, Union, Venango, Warren, Wayne, 

Westmoreland, and Wyoming

• South Carolina (5) – Anderson, Greenville, Oconee, Pickens, and Spartanburg

• Tennessee (25) – Anderson, Blount, Bradley, Cannon, Coffee, Cumberland, Franklin, 

Greene, Hamblen, Hamilton, Jefferson, Knox, Loudon, Macon, Marion, McMinn, Pickett, 

Putnam, Roane, Sequatchie, Sevier, Smith, Sullivan, Warren, and Washington

• Virginia (12) – Alleghany, Bland, Carroll, Craig, Floyd, Giles, Montgomery, Pulaski, 

Rockbridge, Smyth, Washington, and Wythe

• West Virginia (24) – Berkeley, Brooke, Cabell, Doddridge, Grant, Greenbrier, Hampshire, 

Hancock, Harrison, Jackson, Kanawha, Marion, Marshall, Mineral, Monongalia, Morgan, 

Ohio, Pendleton, Pleasants, Preston, Putnam, Taylor, Tucker, and Wood

Competitive Counties

• Alabama (1) – Shelby

• Georgia (1) – Cherokee

• Ohio (2) – Clermont and Holmes

• Pennsylvania (6) – Allegheny, Butler, Elk, Montour, Perry, and Washington

• Virginia (3) – Bath, Botetourt, and Highland

• West Virginia (1) – Jefferson

Attainment Counties

• Georgia (1) – Forsyth
44

APPENDIX C