Majority of $690 Million of ERA2 Funds Reallocated in Second Round Remained in Same State

The U.S. Department of the Treasury (Treasury) released new data on voluntary and involuntary reallocations of the second tranche of Emergency Rental Assistance (ERA2) funds. The release details data from the second round of ERA2 reallocation, a process in which Treasury transfers funds from grantees determined to have “excess” funds to grantees with additional needs, based on spending through June 2022. In the second round of ERA2 reallocation, Treasury reallocated just under $690 million, the majority of which remained within the same state. In total, just over $1.2 billion of ERA2 funds have been reallocated since March 2022.

Eighty-nine grantees – 75 local grantees and 14 state grantees – received reallocated funds in this round. Nearly 60% of reallocated funds went to local grantees, with the City of Louisville, Kentucky, receiving the most funds among cities and counties. All these funds were redirected from the state grantee, reflecting the broader trend of reallocated funds remaining within the same state. In this round of reallocation, for example, more than 66% of funds remained in the same state. Between the two rounds of ERA2 reallocation, the five grantees that received the most funds are the State of California ($132.1 million); State of New York ($99.6 million); State of New Jersey ($76.9 million); State of Texas ($69.7 million); and Hamilton County, Ohio ($48.8 million). Many of these states received a disproportionately small allocation of ERA funds per cost-burdened, low-income renter household compared to smaller states. Reallocation may help correct this disparity, but only to a degree.

In the second round of reallocation, 84 grantees – 70 local grantees and 14 state grantees – had funds reallocated. Nearly three-fourths of these funds were from state grantees, with the State of Ohio’s reallocation totaling nearly $108 million, or 15% of total funds reallocated. The majority of the State of Ohio’s funds went to local grantees within the state. Almost 43% of the funds reallocated in this round were voluntarily reallocated either to another grantee within the state or to a national pool.  

Based on the most recent Treasury guidance, it is anticipated that there will be two additional rounds of ERA2 reallocation, one based on spending through September 2022 and another based on spending through December 2022. Only funds deemed “excess” and not yet disbursed from Treasury are subject to reallocation. Grantees are allowed to voluntarily reallocate up to 60% of their initial ERA2 allocation.