The impact of the COVID-19 public health emergency has stretched beyond any global catastrophe experienced in the past century. With cases of the virus increasing at an astounding rate in the month of March, President Trump declared a national emergency. This set off a chain of events culminating in an extraordinary spike in unemployment rates amid a crashing economy which put immense pressure on State and local governments to continue providing public services through the turbulence of rapidly decreasing revenues. Congress was pushed to take urgent action to address the landslide of challenges that erupted as the country fell into a deadlock, and on March 27th, the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law.
The Coronavirus Relief Fund
Title V of the CARES Act established the Coronavirus Relief Fund (CRF). Under the fund, $150 billion was allocated to State and local governments with populations over 500,000 to be used for costs meeting the following conditions:
- Costs must be necessary expenditures incurred due to the COVID-19 public health emergency.
- Costs must not have been accounted for in the budget most recently approved as of March 27th for the State or government.
- Costs must have been incurred during the period of March 1 – December 30, 2020.
GFOA commends the CRF in assisting State and local governments mitigate the impact of an unprecedented public health crisis. While there is a general agreement on the benefits provided by the federal funds, consistent challenges have been voiced unanimously among CRF prime recipients and there is an overwhelming need for additional support. It is crucial for Congress to recognize the challenges and opportunities expressed by State and local partners to improve the future federal response for the duration of this indefinite emergency.
Biggest Challenge in Spending the CRF Allocation
75% of respondents found the restrictions on the use of CRF funds, including the inability to use funds on lost revenue and the deadline to spend funds by 12/30/2020, to be their biggest challenge.
62% of respondents found the guidance and FAQs from the Treasury to be their biggest challenge in spending their CRF allocation. Respondents also stated that the use of funds did not align with the needs of local governments in terms of how they budget
“Significant help is needed to assist the federal government in understanding how state and local governments account for finances”
Was the CRF an Effective Tool?
The CRF was acknowledged to have provided beneficial assistance by allowing jurisdictions to address some of the hardest hit sectors in their economies, such as healthcare, schools, and housing. However, respondents consistently expressed that while some sectors thrived, others continued to suffer. It was stated that the fund’s inflexibility was preventing State and local governments from making the most of the federal assistance in meeting essential needs.
“The CRF helped with immediate response funding for public safety, but not for the impacts of lost revenues and other services still required”
Would Governments Benefit from Additional Federal Aid?
An overwhelming 91% of respondents stated they would benefit from additional federal aid. Unrestricted aid was requested to offset revenue losses as well as the need for more assistance past the December 30th deadline.