Ways & Means work session highlights more potential uses of federal aid funds

By: Emily Makings
2:48 pm
June 11, 2020

On Tuesday, the Senate Ways & Means Committee heard from David Schumacher of the Office of Financial Management (OFM) about the federal aid funding for Washington.

One of the main sources of this funding is the coronavirus relief fund adopted as part of the CARES Act. As I’ve written, OFM has already distributed $388.3 million of the $2.167 billion the state government received. According to Schumacher, OFM has additionally decided to use $240 million on “strategic uses to respond to COVID—including local government assistance.” It sounds like the governor’s office had planned to distribute about $510 million to local governments, but they chose to split it into two segments. The first $297 million was announced in May and was based primarily on population. OFM is now trying to decide if the additional $240 million should also be distributed by population, or if it makes more sense to base it on public health needs, or something else.

Accounting for the $240 million, the unallocated amount of the state’s relief fund dollars is about $1.539 billion. Of that $1.539 billion, OFM has a preliminary plan to use $302 million for the following purposes:

  • $177 million for assistance for renters, small businesses, those in foreclosure, nonprofits and tribes;
  • $94 million for “health response, PPE, health equipment, testing, telehealth, opening courts, food”; and
  • $31 million for situations in which agencies may not be able to close their FY 2020 books due to unexpected, COVID-19-related expenses.

The preliminary plan has been sent to the chairs of the fiscal committees for their input.

Other items of note from the meeting:

  • To receive FEMA reimbursements for state emergency spending, states must cover 25 percent if they spend less than $1 billion. The state share drops to 10 percent if the state spends more than $1 billion. Schumacher said that Washington is nearing the $1 billion mark, which would free up state dollars for use elsewhere. Additionally, he said that CARES Act funds could be used to cover the state’s FEMA cost share.
  • Sen. Braun asked Schumacher if the CARES Act funds can be used to reimburse the state’s rainy day fund. In March, the Legislature passed EHB 2965, which appropriated $200 million from the rainy day fund. Of that, $25 million was for unemployment insurance and $175 million was for COVID–19 response. The state has used all but $2.5 million of the $175 million. Schumacher said that OFM believes CARES Act funds can be used to reimburse the rainy day fund. If so, the funds would be available to help address the revenue shortfall.

Missing from the discussion was any information on how much additional Medicaid funding Washington has already received and is expecting to receive from the enhanced federal match (6.2 percentage points) that was included in one of the federal aid bills. The enhanced match ends “on the last day of the calendar quarter in which the last day of” the coronavirus emergency period occurs.

The Center on Budget and Policy Priorities estimates that this enhanced match could increase federal funding to Washington by $1.2 billion, assuming it is in place through June 2021. (An earlier estimate of theirs put the increase to Washington at $620 million, assuming the enhanced match is in place through December 2020.) Similarly, the Urban Institute has estimated that the enhanced match will increase federal funding for Washington in 2020 by about $800 million. The federal matching funds are flexible in that they reduce the cost of Medicaid for states, and the state dollars can then be used for other priorities—including to backfill revenue shortfalls.

Categories: Budget.
Tags: CARES Act , COVID-19 , other federal action on COVID-19 , state action on COVID-19