Though the federal government has made close to $12 billion available to Michigan’s governmental and healthcare agencies for coronavirus response, the funding is very directed to covering the extraordinary costs caused by the pandemic. The funding this far has failed to meet two governmental needs: local governments are experiencing their own extraordinary costs related to the pandemic and the state and local governments hope for federal assistance to backfill lost revenues to avoid making deep budgetary cuts.
As of May 13th, the federal government has passed four acts to provide aid to institutions, individuals, businesses, and governments adversely affected by COVID-19.
A clear plurality of Michigan’s funds are slated for healthcare-related purposes, followed by funds awarded to the state government. Much of the aid is earmarked for specific uses, such as funding set aside for federal programs like the Supplemental Nutrition Assistance Program (SNAP). Other funds are given to state governments to use at their discretion, to pass on to local governments, or directly support individuals and service/care providers. The five largest local governments in Michigan – Wayne, Oakland, Macomb, and Kent Counties, and the City of Detroit – receive additional support directly from the federal government.
However, all federal funding to state and local governments up to this point has been for new COVID-related costs, created by activities and supplies not accounted for in current year’s budgets. None of these funds may be used to make up for reductions in tax or other revenues associated with the COVID-recession created by the stay-at-home orders and steep drop in economic activity. Given this financial relief is entirely new spending, here’s a breakdown of what the federal packages do provide.
Federal Appropriation Acts
The Corona Preparedness and Response Supplemental Appropriations Act, passed on March 6th, appropriated $8.3 billion, with an estimated $24.4 million coming to Michigan. The majority of Michigan’s funding is for public health, including emergency preparedness and response, testing development and administration, and epidemiological surveying.
The “Families First” act, enacted on March 18th, funds support services that benefit struggling individuals and families. The act’s funding totals $3.5 billion, and Michigan is expected to receive $54.7 million for programs like the Special Supplemental Nutrition Program for Women, Infants and Children (WIC), the Emergency Food Assistance Program, nutrition services for the elderly, and additional unemployment insurance benefits. This act also will provide additional dollars for the Federal Medical Assistance Program (FMAP), the matching requirements for Medicaid.
A third act, the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act), was passed on March 27th. The majority of CARES Act funding will flow directly to businesses, individuals, hospitals, and state governments. The State of Michigan is allocated $3.08 billion of the $150 billion divided among all states, while Wayne, Oakland, Macomb, and Kent Counties, and the City of Detroit, are allocated $792.8 million combined. The state also received funding for election security and coordination activities in state and local governments. Additionally, $3.02 billion in direct grants to hospitals and nursing homes will be received over the coming months.
Many Michigan residents will receive direct payments and enhanced unemployment payments. Small businesses, large businesses, and airlines will also receive loans and grants totaling hundreds of billions of dollars.
The CARES Act also funds education, public health, transportation, and social services. Michigan’s educational institutions will receive $826.5 million in total, with higher education and elementary/secondary education both receiving similar portions. Public Health and Emergency Preparedness awards will total $51.5 million. Transportation funds totaling $352.8 million will help local transit agencies. Finally, many social service agencies will receive additional funding, such as the Community Development Block Grant, Community Services Block Grant, Low Income Home Energy Assistance Program, Head Start, The Emergency Food Assistance Program (TEFAP), elderly services, and many more. Local governments are eligible for some of this funding. In total social services grants, Michigan will receive an estimated $320.3 million.
The fourth act (some consider it act 3.5 because it supplements the CARES Act) appropriates $484 billion nationwide. The majority of this funding ($370 billion) aids small businesses through the Paycheck Protection Program. The act also provides direct grants to hospitals, of which Michigan’s estimated allotment is about $2.3 billion. A small portion of this $2.3 billion will be used for researching, manufacturing, purchasing, and expanding the capacity for COVID-19 testing. A relatively small amount of the funding will go to state, city, and county-wide public health efforts.
*Disclaimer: Due to the recent release of these acts, many of these dollar values are estimates, or funds are still being allocated.
Funding for Healthcare and Public Health
A large portion of the funds across these four acts flow directly to hospitals to assist in healthcare administration and to public health agencies for emergency preparedness and testing. Michigan has received a total of $5.3 billion for healthcare purposes and $952.8 million for public health. These funds are sent directly to Michigan’s state government, hospitals, and public health agencies to be spent on public health emergency preparedness, infectious disease response, surveillance, and hospital improvement with the goal of preventing, managing, and responding to COVID-19 needs.
Funding for Education
The CARES Act is the only of the four acts that includes funds for education, allocating $826.5 million for Michigan schools. Of this, $389.8 million goes to elementary and secondary education. States can reserve 10 percent for emergency needs, with the other 90 percent directed to local education agencies (LEAs). This fund is to be spent for purchasing the educational technology that is needed for online learning, along with any additional cost for planning and coordinating long-term school closures. Michigan received $89.4 million for the governor to allocate to LEAs and higher education institutions. The last $347.3 million is allocated for higher education. At least half of the funds that an institution receives must provide financial aid for students, and the remaining funds can be used to help the institution with lost revenue and the transition to online learning.
Funding for Local Governments
Of the four bills, the CARES Act alone provides direct funding for local governments. The counties of Kent, Macomb, Oakland, and Wayne, and the City of Detroit combined, will receive a total of $969.9 million. This funding comes in the form of funding for COVID-19 related costs, Community Development Block Grants, Emergency Services Block Grants, Housing Opportunities for Persons with AIDS, and funding for public transit. All other local governments (excluding Detroit and the four counties) combined will receive $257.36 million from Community Development Block Grants, Emergency Services Block Grants, Housing Opportunities for Persons with AIDS, public transit, and the Justice Assistance Grants. Together, local governments are estimated to receive a total of $1.2 billion of the $11.7 billion headed to Michigan.
Because of past recessions, many have thought of these acts as stimulus packages. Instead, it is more appropriate to think of the acts as meeting unbudgeted COVID-related costs and restricted, stability funding to keep government, healthcare, public health, and social service entities sustainable through the pandemic.
In the war against the COVID-19 virus, it is premature to evaluate the sufficiency of federal allocations. Generally, local governments have yet to benefit from this funding as they await decisions on use of the state allotment. None of this funding begins to address the declines in state and local government taxes and fees resulting from reduced economic activity.
- Impact of FMAP change is calculated using 4 quarters, assuming emergency extends until end of 2020.
- Hospital Preparedness Program has a range of $5.75-$6M; $5.75M was used. Funding for nursing homes has a range of $3-$6M; $3M was used.
- Child Welfare Services had a range of $1.35-2.1M; $1.35M was used.
- $4.3 billion is allocated to states and localities for high numbers of COVID cases. Michigan and Michigan’s relevant cities/counties are estimated to received 3% to 3.9% of this $4.3 billion; 3% was used in calculation.5$16.2 of $18.8M distributed so far for Public Health Emergency Preparedness.