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The CARES Act and What It Means for State and Local Governments

3/31/20

By: Jacob Daly

Much of the focus on the Coronavirus Aid, Relief, and Economic Security (CARES) Act has been on the relief it provides for individuals and both large and small businesses, as well as the funding it provides for public health initiatives.  Rightfully so.  But the relief it provides for state and local governments should not be overlooked.  Of the $2 trillion appropriated by the law, about $424 billion is allocated for state, local, and tribal governments.  The law also provides additional funding for joint federal-state programs such as Medicaid and unemployment compensation.

The largest single appropriation in the CARES Act for state, local, and tribal governments is $150 billion for the creation of a Coronavirus Relief Fund.  (Note that local governments are eligible to participate in this fund only if they have a population of more than 500,000.)  Of this amount, $3 billion is allocated for Washington, D.C., Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, and American Samoa, and $8 billion is allocated for tribal governments.  The remaining $139 billion is to be allocated proportionally among the states, with each state receiving at least $1.25 billion.  Eligible local governments may not receive more than 45% of the amount allocated to the state in which they are located.  A chart prepared by Federal Funds Information for States showing the estimated allocation of the entire Coronavirus Relief Fund among the states, District of Columbia, Territories, and Tribes can be accessed here.

To be eligible for these funds, the chief executive of the government must certify to the Secretary of Treasury that it will comply with the following three conditions:

  1. the funds may be used only for necessary expenditures relating to COVID-19;
  2. the funds may not be used for expenditures that are already accounted for in the government’s most recently approved budget as of March 27, 2020; and
  3. the funds must be used for costs incurred between March 1, 2020, and December 30, 2020.

The Inspector General of the Department of the Treasury has oversight responsibility for funds provided to state, local, and tribal governments, and if it is determined that these funds were used improperly, the offending government must reimburse the federal government.

Other funding for which for state, local, and tribal governments may be eligible includes the following:

  • $454 billion for loans to businesses, states, and cities
  • $30.75 billion for an Education Stabilization Fund for states, school districts, and institutions of higher education for costs relating to COVID-19
  • $45 billion for a Disaster Relief Fund
  • $1.4 billion for deployments of the National Guard
  • $4.3 billion, through the CDC, to support efforts of federal, state, and local public health agencies
  • $25 billion for transit systems
  • $400 million in election security grants for the 2020 federal election cycle
  • $100 million for Emergency Management Performance Grants for emergency management activities
  • $45 million in grants to states for child welfare services
  • $850 million in grants through the Edward Byrne Memorial Justice Assistance Grant program to states for continuation of criminal justice programs
  • $5 billion for the Community Development Block Grant program to enable state and local governments to expand community health facilities, child care centers, food banks, and senior services

The CARES Act was phase 3 of the federal government’s legislative response to the COVID-19 pandemic.  Some members of Congress are already talking about phase 4, and when that happens, FMG will provide timely information about what it means for you.

Additional Information:

The FMG Coronavirus Task Team will be conducting a series of webinars on Coronavirus issues on a regular basis. Topics include the CCPA, the CARES Act, Education Claims, Law Enforcement and the viruses’ impact on the Construction Industry. Click here to register.

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at coronavirustaskforce@fmglaw.com.

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.** 

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