Minnesota and its local governments will receive more than $2 billion in direct funds — and millions more from a variety of other accounts — via the national COVID-19 response legislation passed by Congress Friday.
The state will receive $2.187 billion as its share of a $150 billion Coronavirus Relief Fund, which is just one part of the appropriations that could flow to state and local governments out of the $2.2 trillion stimulus bill. Of that total, $1.2 billion goes directly to the state and $984 million will be distributed to local governments.
According to an analysis by the National Conference of State Legislatures, the money from the Coronavirus Relief Fund can cover expenses incurred due to the pandemic and the revenue declines that will result from the economic impacts. The expenses cannot have been included in each state’s most-recently adopted budget, the May 2019 two-year budget for Minnesota.
In addition to the money from the Coronavirus Relief Fund, money will flow directly to colleges, public school districts and transit agencies from different sources as appropriated in the federal law. Most of those distributions will use existing formulas for the funds. There is also specific actions in the bill funding emergency management, food shelves, child welfare services, National Guard deployments and both state and local public health agencies.
“It’s going to be a good start,” said Minnesota Management and Budget Commissioner Myron Frans. “And they said they’re going to pay this within 30 days,” referring to the state’s expenses related to the coronavirus response that were incurred after March 1. Frans said most of what the state Legislature has appropriated since then could be paid back by the federal government.
“It’s going to be helpful for our budget,” Frans said.
Two weeks, ago he said that the state’s revenue will fall as a result of the economic disruptions caused by closures and stay home orders. At the same time, the state’s expenses would grow to fight the virus. The question, he said, wasn’t when the state would be in a budgetary deficit, but when. “This is going to help keep a lid on expenditures going up, at least with respect to the COVID-19 situation,” he said.
According to the Federal Funds Information for States, each state will receive funds based on their population, though no state will receive less than $1.25 billion. There is also a provision that 45 percent of each state’s award is set aside for large local governments — those with a population of 500,000 or more. No Minnesota cities are in that category but two counties both meet that threshold: Hennepin and Ramsey counties. The states are charged with distributing that money — Minnesota’s share is $984 million — to local governments.
The other funding areas are likely to be distributed on a per capita basis, Frans said, but the states are still waiting for guidance from the U.S. Treasury and other agencies as to how the funds will be sent out. Minnesota state agencies are working with their federal counterparts to get more information.
As welcome as the money is, it adds an accounting and policy-making wrinkle to operations, since the state government will need to make sure that it spends its own money in ways that assure reimbursement. “We now have to maintain this spreadsheet that shows all these different funds and where they came from and what they do so we don’t spend other money somewhere else that could be spent in those buckets,” Frans said. “We want to make sure we spend out of the right bucket so we get reimbursement for that money.
“In the meantime, we will spend state money for things we need right now with the idea that we’ll get reimbursed,” he said.
According to an analysis of the COVID-19 stimulus bill done by the National Conference of State Legislatures, money that doesn’t go to local governments will go back to each state. Of the $150 billion for states and territories, $8 billion will be distributed to federally recognized tribal governments.
Minnesota has been appropriating state money to respond to COVID-19 since the pandemic began, with a total of $549 million allocated so far. While its current forecast still shows a projected budget surplus of $1.157 million — down from $1.5 billion just a month ago — Walz has also made a supplemental budget request of $346 million that is still pending before the Legislature. Budget officials expect the surplus to disappear as state tax revenues take hits from the recession that is now expected in the wake of the pandemic. In addition, the state expects it will be tapping into a $2.359 billion rainy day savings account soon.
House Minority Leader Kurt Daudt said Thursday that the latest state appropriation of $330 million was crafted to be eligible for reimbursement from the new federal funds. The Crown Republican predicted that the coming deficits could exceed those following the Great Recession, when the state was $6.2 billion in the hole and forced to convene a series of emergency sessions to cut budgets and increase revenue.
The Relief Fund for States is just one of the appropriations that could bring direct financial assistance to states. Some others:
- Expanded unemployment benefits: money that will pay for states to extend benefits — and to add $600 a week to each recipient;
- $45 billion in disaster relief funds to all states via the Federal Emergency Management Agency; another $25 billion is available for major disasters declared by the federal government;
- $100 million to support state and local emergency management agencies for coordination, communications and logistics;
- $200 million for the Emergency Food and Shelter Program;
- $4.3 billion for the Centers For Disease Control and Prevention for work on COVID-19, including funding state and local public health responders;
- $500 million for public health data surveillance;
- $3.5 billion for Child Care and Development Block Grants to provide help to childcare providers;
- $45 million in grants for child welfare services;
- $1 billion to Community Services Block Grants to help community-based organizations provide social services and emergency assistance;
- $1.4 billion for National Guard deployments under the direction of governors;
- $30.75 billion for an Education Stabilization Fund for states, school districts and colleges and universities for costs related to the coronavirus. Included in that amount is $13.5 billion for states, based on the same formula that federal money is now distributed; $3 billion for governors to allocate at their discretion, to distribute based on the number of school- and college-age residents; and $14.25 billion for colleges and universities, with half of that going for emergency financial aid grants to students;
- $25 billion to transit systems based on existing formulas for federal funds, money that can cover lost revenue from fares during the crisis;
- $453 million to the Bureau of Indian Affairs for response efforts including for public safety, justice programs, welfare assistance and social services;
- $300 million for Native American housing, including $200 million for Indian Housing Block Grants;
- $400 million for election support.