Billions of dollars in federal COVID-19 public emergency funds allocated to North Carolina state agencies have not been spent, according to an audit released Monday by North Carolina State Auditor Dave Boliek’s office.
The State Fiscal Recovery Fund was funded with a total of $5.4 billion from the 2021 American Rescue Plan Act (ARPA).
President Joe Biden signed ARPA into law on March 11, 2021, establishing the federal Coronavirus State and Local Fiscal Recovery Fund and appropriating $350 billion to the fund for distribution to state, local, territorial, and tribal governments.
A biennial financial audit of North Carolina’s State Fiscal Recovery Fund, required by state law, revealed that as of June 30, 2024, $2.5 billion (46%) of State Fiscal Recovery Funds had been disbursed in accordance with state legislation, but the remaining $2.95 billion had yet to be requested by state agencies.
The deadline to use the funds is Dec. 31, 2026. Any remaining funds will be sent back to the US Treasury.
“State agencies were allocated billions of dollars for COVID, but a lot of that money sat parked,” Boliek said in a press release. “With funds not expended by the end of 2026 going to the U.S. Treasury, state agencies should be proactive in making sure taxpayers realize a return on the investment of these funds.”
Auditors found that the Office of State Budget and Management (OSBM) allocated $4.4 billion of State Fiscal Recovery Funds to state agencies in accordance with legislation. The remainder, $1 billion, of the funds was allocated to various initiatives, including public schools and higher education.
Of the $4.4 billion, $849 million (19%) was disbursed during the period July 1, 2022, through June 30, 2024. As of June 30, 2024, a total of $1.6 billion (36%) has been disbursed. State Fiscal Recovery Fund legislation required OSBM to allocate $4.4 billion to state agencies.
The $2.8 billion remaining to be disbursed represents the balance for which recipients have yet to request distribution. Examples include:
- The Department of Environmental Quality has not requested $1.7 billion (89%) of the $1.9 billion allocated, with $528 million remaining for the State Drinking Water/Wastewater Reserve Infrastructure Grants and $326 million remaining for the Viable Utility Reserve.
- The Department of Information Technology has not requested $687 million (94%) of the $734 million allocated, with $326 million in remaining funds for the NC GREAT Grant — Federal Broadband Funds and $126 million in remaining funds for Completing Access to Broadband.
- The Department of Health and Human Services has not requested $201 million (40%) of the $503 million allocated, with $120 million in remaining funds for the Lead & Asbestos — Remediation of Lead Paint and Asbestos in Schools & Childcare Facilities.
- The Department of Commerce has not requested $54 million (43%) of the $126 million allocated, with $39 million of remaining funds related to Rural Downtown Transformation Grants.
OSBM also had the following allocations:
Public Schools and Higher Education — $394 million
Of this amount, $263 million (67%) was disbursed during the period July 1, 2022, through June 30, 2024. As of June 30, 2024, $301 million (76%) has been disbursed.
The $93 million still remains to be requested and disbursed. Some examples of this include:
- The University of North Carolina System has not requested nearly $70 million (33%) of the $210 million in funding allocated, with $19 million remaining for the Innovative Highly Treated Wastewater Pilot and $17 million remaining for the NC Policy Collaboratory.
- The North Carolina Community College System has not requested $8 million (7%) of the $114 million in funding allocated, with $7 million of remaining funds related to the Apprenticeship Program Expansion.
- The Department of Public Instruction has not requested nearly $15 million (80%) of the $19 million in allocated funding, with over $4 million in remaining funds related to the Smart School Bus Pilot.
Local Government Capacity Assistance — $53.5 million
Of this amount, $36 million (67%) was disbursed as of June 30, 2024. Funds were allocated to the North Carolina League of Municipalities, the North Carolina Association of County Commissioners, and the North Carolina Association of Regional Councils of Government to provide guidance and technical assistance to units of local government in administering funds from the Local Fiscal Recovery Fund. Funds were also allocated specifically to the Towns of Apex and Huntersville for the same purpose.
The $17.5 million remaining to be disbursed represents the balance for which recipients have yet to request distribution.
State Indian Tribes and Associations — $10 million.
Of this amount, $10 million (100%) was disbursed as of June 30, 2024. OSBM was required to allocate $9 million to provide grants to the American Indian tribes named in Chapter 71A of the North Carolina General Statutes. Legislation required a base allocation of $715,285 to each tribe, with the remaining amount allocated to tribes on a per-capita basis using tribal enrollment totals. An additional $1 million was required to be allocated equally to four Native American associations.
Employee Bonuses and Benefits — $545 million
Legislation initially required OSBM to allocate $545 million to provide bonuses to full-time state and local education employees who worked to continue government operations and services during the pandemic. Subsequently, Session Law 2023-134, Section 4.8, recaptured $21 million of funds remaining after these bonuses were awarded. As of June 30, 2024, all funds (100%) have been disbursed.
Continuity of Operations — $24.5 million
OSBM allocated $24.5 million (out of the appropriated $25.3 million) for State Fiscal Recovery Funds for Continuity of Operations (COOP) in accordance with legislation, providing funds for the continuity of operations across state government impacted by the COVID-19 pandemic. Of this amount, $16.5 million (67%) was disbursed as of June 30, 2024.
The $8 million remaining to be disbursed represents the balance for which recipients have yet to request distribution.
OSBM and NC Pandemic recovery Office response
State Budget Director Kristin Walker and North Carolina Pandemic Recovery Office Director Tommy Clark agreed with the auditors’ findings.