More than 80% of Reallocated ERA Funds Remained in Same States during First Reallocation Round

The Department of the Treasury (Treasury) released new data about Emergency Rental Assistance (ERA) grantees that voluntarily reallocated their funds or had their funds recaptured and the programs that received those reallocated funds. The reallocation was the first of several rounds in which Treasury will recapture “excess” ERA1 funds from programs that did not meet required benchmarks, after which Treasury will reallocate those funds to programs with additional need. Due to the large amount of voluntarily reallocated funds, 81% of the funds reallocated by Treasury during this first round remained in the states in which they had been recaptured.

Treasury is statutorily required to reallocate ERA1 money from grantees with “excess” funds to grantees in need of additional resources. Grantees that did not obligate 65% of their funds and did not meet a 30% expenditure ratio by September 30 were determined to have “excess funds.” The expenditure ratio is the amount grantees have distributed divided by 90% of their total ERA1 allocation. The amount of funds recaptured was based on the difference between a grantee’s expenditure ratio and the 30% threshold. The expenditure ratio benchmark increases each month, and Treasury intends to reevaluate grantees’ expenditure ratios approximately every two months.

Treasury released updated reallocation documents that detail which grantees had funds recaptured and which grantees voluntarily gave up funding, as well as where the funding went. More than $1 billion was voluntarily reallocated, with $875 million going to grantees in the same states and $162 million going toward general reallocation. Another $91 million was recaptured from grantees that did not meet the required expenditure threshold and did not voluntarily reallocate funds, making the total reallocation pool approximately $1.1 billion. Wisconsin, North Dakota, Indiana, Louisiana, and Tennessee all voluntarily gave up more than $100 million of their allocations. In North Dakota, which has no local grantees, the state relinquished a total of $149 million from a general fund. In the four other states, the voluntarily reallocated funds went to local grantees within each state. Idaho, Montana, and Delaware had the largest amounts of funding recaptured involuntarily, with $33 million, $22 million, and $11 million, respectively, being recaptured.

Because most of the reallocated funds were given up voluntarily during the first round, most of those funds remained in the same states. Only $209 million of the more than $1 billion in reallocated funds, or 19%, crossed state lines. This is promising for slow-spending states that were able to reallocate their funds locally, as many local grantees have been more efficient than their state counterparts in spending their allocations. As a result, spending may pick up in states like Georgia, Arizona, Louisiana, Tennessee, and Wisconsin, where large amounts of funding were reallocated within the state. The small amount of funds available for reallocation across state lines, however, meant that some states with significant needs received far less than they requested. New York, for example, received only $27 million, despite requesting $1 billion, and Texas received nothing, despite requesting $3 billion. Grantees that received less funding than requested may have the opportunity to receive additional funds in future rounds of reallocation, though it remains unclear how Treasury is prioritizing grantees in the reallocation process.