CARES Act: $150 Billion Appropriated for COVID-19 Relief to State and Local Governments

The Coronavirus Aid, Relief, and Economic Security (CARES) Act appropriates $150 billion toward COVID-19 relief for fiscal year 2020.  The vast majority of this amount will go to the states, although $3 billion is reserved for distribution to the District of Columbia and U.S. territories,[1] and $8 billion will go to Tribal governments.

Timing of Distributions.  Within 30 days of enactment, the Secretary of the Treasury (Secretary) shall pay out the determined amounts for each state, Tribal government, and unit of local government.

Amounts to be Distributed.  States will receive a minimum of $1.25 billion, plus their pro rata share of the remaining $76.5 billion.[2]  Pro rata calculations are based on the state’s percentage of the country’s total population (excluding the District of Columbia and territories).[3]  Any amount distributed directly to a unit of local government will be deducted from that state’s allocation; however, only 45 percent of the state’s allocation is available for direct distribution to local governments.

Only localities with a population of more than 500,000 are eligible to receive a direct distribution.  A unit of local government[4] may receive an amount equal to their pro rata share of the portion of state funds made available for direct distribution (again, only 45 percent of the state’s allocated funds will be made available).  Pro rata calculations are based on the locality’s percentage of the state’s total population.[5]  In order to qualify for a direct distribution, a local government must provide the Secretary with a certification signed by the Chief Executive for the unit of local government that the funds will be used consistently with the restrictions below summarized below.  Note that, given the timing of distribution, this certification would need to be received within 30 days of enactment.

Each territory and the District of Columbia will receive its pro rata share of the $3 billion reserved for their use.  Pro rata calculations are based on the District of Columbia or territory’s percentage of the combined total population of the territories and the District of Columbia.[6]

Each Tribal government will receive an amount of the $8 billion reserved for their use that is based on the increased expenditures of each Tribal government relative to aggregate expenditures in fiscal year 2019 by such Tribal government.  The amount to be allocated to each Tribal government is within the discretion of the Secretary, but the full $8 billion will be distributed.

Restrictions on Use.  Funds may only be used to cover costs that:

• Are necessary expenditures incurred due to the public health emergency with respect to COVID-19;
• Were not accounted for in the most recently approved budget; and
• Were incurred between March 1, 2020 and December 30, 2020.[7]

Recoupment.  Any amount of funds that are used contrary to these restrictions will be booked as debt to the federal government.  The act appropriates an additional $35 million for use by the Inspector General of the Department of the Treasury to carry out oversight and recoupment.