Issue Brief: California’s Use of Federal Pandemic Aid

OVERVIEW

Critical differences between the CARES Act and American Rescue Plan warrant consideration as the state determines how to allocate its anticipated $26 billion in federal pandemic-related relief, the Little Hoover Commission explains in its latest Issue Brief.

The Brief outlines the state’s use of the CARES Act money that was received in 2020 and highlights the potential differences between eligible uses of that funding and the expected American Rescue Plan funding the state will receive this year.

This is the Commission’s third Issue Brief. The Commission’s previous Issue Briefs have focused on California’s digital divide and COVID’s impact on California housing. Issue Briefs are the Commission’s newest resource for state policymakers, and outline research without making policy recommendations.

“We have outlined some key contextual factors and eligibility requirements that state policymakers may wish to consider as they contemplate the use of the anticipated $26 billion dollars in American Rescue Plan funding,” noted Commission Chair Pedro Nava.

In its Issue Brief, the Commission highlights some of the key differences between the CARES Act and the American Rescue Plan. These differences include:

• A longer time frame to use funding.
• The impact of additional federal coronavirus-related funding packages.
• The amount of funding congressionally appropriated to local and tribal governments.
• Budgetary shortfalls facing local governments, due to both increased program costs and reduce revenues.
• Explicit allowance to transfer appropriated funds to separate entities, such as special districts and tribal organizations.