The NCSL Blog


By Mandy Rafool

States just received billions of dollars in federal aid. Now comes the hard part—spending it.

covid-19 virusThe Federal CARES Act provided $150 billion in aid to state, local and tribal governments. These funds, known as the Coronavirus Relief Fund (CRF), were allocated to states according to population, with no state receiving less than $1.25 billion. View the amount each state received.

Now that the funds have been deposited in state coffers and with fiscal year 2020 coming to a close for most states, lawmakers are grappling with how they can spend the money.  The funds are restricted in three primary ways.

  • Only expenditures related to COVID-19 are allowable.
  • The expenses were not already accounted for in the budget approved prior to March 27.
  • Funds must be spent by Dec. 30, 2020, or they revert back to the federal government.

Full Treasury Department guidance was issued on April 22.  Periodic updates are published on the FAQ page.

NCSL has hosted a series of calls with U.S. Treasury officials, legislative fiscal staff and legislators to discuss acceptable ways to spend CRF funds. In addition to spending on public health and safety, state policymakers have looked at ways to address other unexpected spending needs. Some of the more interesting ideas are listed below, including hot-off-the-press news about the state cost share requirement for FEMA:

  • FEMA match. Just released guidance from the administration clarifies that states can use CRF funds to pay for the FEMA 25 percent state match
  • Short term loans as a result of lost revenues. The guidance has been clear that states may not use the funds to backfill lost revenues, but they may use the funds to address short-term cash flow issues. In other words, a state could borrow money from the fund to cover a revenue gap as the result of delayed tax filing dates. However, the “loan” would need to be repaid before the end of 2020.
  • Special legislative session expenses. This is an allowable use provided the session is necessary because of the coronavirus.
  • Local governments. Many states are planning to share funds with local jurisdictions that did not receive direct allocations. The state is responsible for ensuring that local governments spend the funds in accordance with the guidelines.
  • Salaries for public safety workers.
  • Enhanced pay for front line, nursing home and other congregate care workers.
  • Technology related to remote working.
  • Some states are hoping to expand broadband. This is an acceptable use if the money can be spent by the end of the year, not just allocated.
  • Small business assistance in the form of additional grants and loans.
  • Increased medical costs for prisons.
  • Enhanced health-related activities such as vaccine research, testing and supporting hospitals.
  • Education expenses including programs to mitigate learning loss, school nutrition services, summer learning and remote learning technology.
  • Animal depopulation and disposal.
  • Renter relief programs.
  • Workers compensation.
  • Unemployment insurance.
  • Hospital emergency loans.
  • Temporary housing for homeless populations.

This list is by no means exhaustive. It is meant to provide some insight into how states are thinking about spending CRF funds. Additional good guidance that the Treasury representative offered for considering allowable uses of the funds is the “but for” test. The state would not have incurred the costs “but for” coronavirus.

Mandy Rafool is a group director in NCSL's Fiscal Affairs Program.

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About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.