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Minnesota’s local governments got $841 million in federal money for COVID-related costs. Here’s how they spent it.

Minnesota’s Department of Management and Budget reports local governments spent 99.6 percent of what they received.

Hjemkomst Center
Moorhead, which received $3.28 million, spent $1.84 million on grants for 207 small businesses and $1.44 million on city expenses like payroll for employees working on pandemic response, telework and upgrades at buildings like the Hjemkomst Center, above, to make them safer.

When Congress passed the $2.2 trillion CARES Act stimulus package, local governments in Minnesota got an $841 million slice to spend on pandemic-related costs. 

The cash came with certain restrictions — it could not be used to replace lost tax revenue — and a deadline to spend it. For counties, that deadline was Dec. 1, and Minnesota officials have produced a new analysis of how the money was spent. Any unused cash was returned to the state.

Over the summer, many cities and counties pledged to use as much money as they possibly could under the constraints. Lisa Bode, governmental affairs director in Moorhead, told her council at the time: “We don’t want to forfeit a dollar.” 

Moorhead and others followed through on the pledge. The Department of Management and Budget says local governments reported spending 99.6 percent of what they received. “Yes, we managed to spend it all,” Bode said of Moorhead on Thursday.

Money mostly spent on payroll and grants

MMB says local governments requested $837.7 million from the state of the $841 million, and that money was distributed between early July and mid-October. The state can use the remaining $3.7 million on its COVID-19 relief plans.

Any money unused by most cities and townships by Nov. 15 was returned to counties, and those counties in turn had a Dec. 1 deadline to spend before sending the remaining cash to the state. Cities and towns in Hennepin and Ramsey counties had to give any extra money to a local hospital, however.

It was mostly up to the state how to distribute money from Minnesota’s share of the CARES Act package to local governments and Gov. Tim Walz sent it out using a formula based on population that had been devised by state lawmakers. Hennepin and Ramsey counties, however, received money directly from the U.S. Treasury.

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Local governments reported spending most of their CARES Act money, $311 million in total, on payroll for public health and safety employees, such as health officials, police and firefighters. Another roughly $182 million went toward grants for small businesses that were hurting, the second largest chunk of cash. Counties spent a far higher proportion of their money on businesses grants than cities and townships, however.

Local governments also spent big amounts of money on employees who had to be diverted to other work because of the pandemic, public health expenses, and expenses to facilitate remote work.

Moorhead, which received $3.28 million, spent $1.84 million on grants for 207 small businesses and $1.44 million on city expenses like payroll for employees working on pandemic response, telework and upgrades at buildings to make them safer. One example is plexiglass dividers at cubicles and sanitation costs.

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Bode said the city made changes to the auditorium at its Hjemkomst Center to allow safer council meetings and potentially in-person meetings once gathering restrictions are lifted since city hall has conditions that are unsafe in the pandemic — like the two small elevators that lead to council chambers.

State records show not a dollar allocated to the city went unspent.

Still, the state report says that cities and towns returned $9.41 million to county governments and another $233,804 to hospitals in Hennepin and Ramsey counties, as of Dec. 15. Counties, in turn, only reported returning $904,584 to the state.

Only a little returned to state

Of the 10 counties that gave cash back to Minnesota, Fillmore County, home to Preston and Lanesboro, returned the most: $457,070.

Bobbie Hillery, the Fillmore County administrator, said they “probably took a conservative route, not wanting to spend anything we shouldn’t have.”

With an allocation of $2.58 million, the county rolled out business and nonprofit grants, money for extra public health and public safety needs, payroll for county staff with COVID-19 or under quarantine and more. The county gave money to schools, paid for technology upgrades like VPN access systems and computers for remote workers and bought generators for two buildings that will keep vaccines and their computer system. A lot of the spending went over original projections. “We kind of really crossed everything that we could as far as what we felt we could,” Hillery said.

Hillery said they handed out all the nonprofit grants that were asked for but had to deny a couple of businesses grants because they couldn’t tie the request to COVID-19 needs. Four cities also returned $68,535 to the county and there was little time to find a way to spend it. With more time, Hillery said they probably could have spent the cash.

“Obviously we would want to spend every last dollar if we could,” Hillery said. “At the same time we wanted to make sure we were within the guidelines, too.”

The state report says that as of Dec. 15, 87 percent of local governments that received money had submitted final reports on spending to MMB. Those governments also had to submit monthly reports to the state after money went out. The state has until Dec. 30 to spend any remaining CARES Act money.