According to recent guidance issued by the U.S. Department of the Treasury, emergency rental assistance (ERA) programs that did not reach a 30% expenditure ratio by September 30 risk having a portion of their funds recaptured and reallocated to other grantees (see related article in this Memo to Members and Partners). The expenditure ratio is the amount of funds spent on financial assistance and housing stability services divided by 90% of the grantee’s total allocation to account for administrative costs. As of the end of August, 42% of all ERA grantees—including 37 state and 130 local grantees—had not yet reached the 30% expenditure ratio threshold and are at risk of fund recapture if they do not adequately increase their spending.
Though spending data for the month of September is not yet finalized, many programs were not on track to reach the 30% threshold by the end of September given their current pace. For example, if all state grantees below the threshold spent the same amount in September as they did in August, only three of the 37 states would have exceeded the 30% threshold by the September 30 deadline. Larger states with high need and low distribution rates are particularly concerning. These include Arizona, Georgia, Florida, and Ohio, which had expenditure ratios of 4%, 7%, 10%, and 12%, respectively, as of August 31.
Thirty-seven percent of local grantees remained below the 30% threshold at the end of August. Several large cities and counties have still spent very little. Examples include Baltimore, King County, Denver, and Dallas County which have expenditure ratios of 0%, 0%, 9% and 12%, respectively. Some of these localities may have spent state funds before their local allocations or may have other resources devoted to rental assistance, but they still risk recapture and reallocation if they do not increase the spending rate of their direct allocations. Additionally, while New Jersey’s state program has been able to distribute funds faster than any other state, all but one of New Jersey’s 14 local programs fell short of the 30% threshold as of August 31.
Treasury’s guidance specifies that the amount of “excess funds” recaptured will be the difference between the percentage spent on financial assistance and the 30% threshold. Programs at risk of losing the most amount of funding are those that spent the least by the end of September. Despite these guidelines, Treasury outlines several options for grantees to avoid recapture, such as certifying that they have spent 30% or obligated 65% of their funding as of November 15, or by submitting a reasonable program improvement plan. The high number of grantees that have not yet met the 30% benchmark indicate the ongoing need for programs to decrease documentation burden, increase application accessibility, and expand outreach efforts.
Download data on expenditure ratios for specific grantees as of August 31 from compliance reports on the Treasury Department's website.