California is about to get $151 billion in federal aid — but it still has billions unspent
California could get $151 billion in new federal aid from the economic relief plan just signed by President Joe Biden, while an estimated $43 billion remains unspent from last year’s aid packages.
The new funding will help pay for vaccination sites, community health centers, schools and colleges, child care providers, help for lower income people with utility bills and more.
But critics contend a lot of the money contained in the $1.9 trillion package was unnecessary.
Most of last year’s still-unused money was allocated to help unemployed people, provide Paycheck Protection Program loans, or help Medi-Cal, according to an analysis by the nonpartisan Committee for a Responsible Federal Budget.
State officials, and supporters of the aid plans, say that most of the money was not meant to be spent right away.
“In some cases, the timing between federal allocation and disbursement can be very short,...but for other programs, issues like timing and program eligibility can mean, with good reason, a somewhat longer time between when they’re appropriated and when they’re spent,” said H. D. Palmer,deputy director for external affairs at the California Department of Finance.
Stimulus checks, for instance, begin showing up in bank accounts within days of a bill’s signing. But paying bills for Medi-Cal patients can take a long time.
$1 trillion unspent nationwide
Republicans have complained that the unspent funds, which total an estimated $1 trillion nationwide, are strong evidence that the new economic relief package is unnecessary.
“Democrat leaders are more than willing to spend hundreds of billions to bail out States, sending a disproportionate share of that money to those States run by their political buddies that will reward and incentivize further lockdowns,” charged Rep. Jason Smith, R-Missouri, top Republican on the House Budget Committee.
California, he said, “will now get billions more than they otherwise would have, a direct reward to the Speaker and Vice President’s home State.” House Speaker Nancy Pelosi and Vice President Kamala Harris are from California.
The federal aid to state and local governments in last year’s COVID relief packages was largely determined by formulas that take into account population.
Both sides are incorrect in their views of the unspent money, said Marc Goldwein, senior vice president at the Committee for a Responsible Federal Budget.
“I think it’s wrong to describe it as though there’s a trillion dollar pot of money not used,” he said. At the same time, he said, adding $1.9 trillion to an economy waiting on another $1 trillion – the national unspent money figure – could be too much federal stimulus.
California was to receive a total of $346 billion in federal aid last year, according to the committee analysis, and so far has committed or spent $303 billion.
Among the unspent funds:
Unemployment benefits
Unspent: $12.7 billion. Much of this spending was authorized in the December relief package, which provided an additional $300 a week through mid-March.
Palmer said the backlog in distributing unemployment benefits “is associated with the 11th-Hour nature of Washington’s approval of the last round of unemployment insurance funds, which in turn forced California and other states to make late adjustments to their benefit systems.
“These changes are now in place, and we expect this balance will be drawn down quickly in the coming weeks as many recipients will now be receiving “catch-up” checks that cover this delay,” he said..
Money is generally unspent for three reasons, Goldwein said. There are still a few weeks of benefits to be paid before the 2020 law expires. The state may have to provide some back pay as it determines eligibility. And because the unemployment rate is less than anticipated, payments could be less than expected.
Medicaid
Unspent: $13.3 billion. A 2020 COVID relief plan permits Washington to pay an additional 6.2% of a state’s Medicaid spending, as long as the state’s public health emergency is in effect and people can get continuous coverage if they enrolled in Medicaid as of March 18, 2020.
Medi-Cal funds are drawn down on an as-needed basis, Palmer explained.
Anthony Wright, executive director of Health Access California, a consumer advocacy organization, said that “given the size of the program, with so many health plans and providers, it takes time for the books to be completely settled.”
Medi-Cal, California’s Medicaid program, was projected at the start of the public health crisis to see a much bigger spike in enrollment than actually occurred, Wright added.
Other reasons for the unspent funds, according to Wright: Some employers allowed furloughed employees to continue their coverage. Many of those who lost jobs already had Medi-Cal coverage and did not rely on employers for coverage, such as people in the entertainment or tourism-related industries. And many of those who needed medical help were younger, meaning their care was less expensive.
“Medi-Cal served as a crucial lifeline for the many that enrolled, but the spike was not as much as some thought it would be,” said Wright.
Business loans
Unspent: $16.9 billion. This Paycheck Protection Program ends March 31, and many states have unused money.
“The timing on when those funds are drawn down can be affected by the requirements needed for an applicant to meet the terms of the loan, or how or their eligibility for a PPP loan interacts or is affected by other assistance programs,” Palmer said.
Demand has been lower than expected, partly because the economy has recovered more vigorously than forecast, Goldwein said.
The new funds coming to California include $26 billion for the state government. Critics note that the state has exceeded its revenue estimates recently.
New California money
Here are preliminary estimates of other funds in the new legislation due to come to California:
▪ Local government aid, $16 billion, half to cities, half to counties. The money will be available until the end of 2024 and can be used for a variety of services, including investments in water, sewer and broadband infrastructure.
▪ Projects that “directly enable work, education and health monitoring” in response to the health emergency, $550 million.
▪ Funding for new vaccination sites, $300 million.
▪ Testing and contract tracing, $2.5 billion statewide.
▪ Community health centers, $1.1 billion.
▪ Health care providers, $600 million.
▪ K-12 schools, for reducing class size and other needs, $15.9 billion.
▪ Colleges, with half the money possibly given as grants to students needing financial help, $5 billion.
▪ Child care providers, for help paying rent, payroll and other needs, $3.9 billion.
▪ Unemployment benefits. Additional $300 a week for qualified beneficiaries through Sept. 6, an estimated $30 billion.
▪ Emergency rental assistance, $2 billion.
▪ Help people pay energy and water bills, $250 million.
▪ Homelessness assistance, $500 million.
▪ Supplemental Nutrition Food Assistance, $350 million.
This story was originally published March 16, 2021 at 5:00 AM.
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