July 8, 2020
Since the federal government provided $139 billion of coronavirus relief funds to states and large cities and counties in April, smaller localities have been waiting to receive some of the money. Now large governments, including Cook County, are taking steps to share the funds.
On July 8, Illinois’ biggest county announced plans to distribute about $51 million to local governments beginning as soon as later this month. That represents about 12% of the $429 million allocated to Cook County from the federal Coronavirus Relief Fund. A special meeting of the Cook County Board is expected to be held in the next few weeks to discuss the distribution of funds.
In August the State of Illinois also plans to begin disbursing Coronavirus Relief Fund money to local governments, including municipalities, counties and local health departments. The State government received $3.5 billion, out of which the budget for the fiscal year that began on July 1 allocated $250 million to local governments.
The Coronavirus Relief Fund is part of the $2.2 trillion federal Coronavirus Aid, Relief and Economic Security (CARES) Act enacted on March 27. The fund totaled $150 billion, of which $11 billion was dedicated to tribal governments, U.S. territories and the District of Columbia. The money can only be used for pandemic-related costs incurred from March 1 to December 30 of this year and is not available to offset lost revenue due to the virus.
Out of the remaining $139 billion, each state received a minimum distribution of at least $1.25 billion, with the rest of the money divided among states based on their population. According to the U.S. Treasury Department, the largest distributions were $15.3 billion to California and $11.2 billion to Texas. State allocations were further divided between state governments and large local governments. Only local governments with populations over 500,000 were eligible for direct payments from the Treasury Department, and the local share could not exceed 45% of each state’s total funding. Each local government’s share was based on its proportion of the total state population. Nationwide this formula resulted in direct funding from the Treasury for 117 counties, 33 municipalities and four consolidated city/county governments.
As discussed in this blog post, Illinois received a total of $4.9 billion from the Coronavirus Relief Fund. The State itself got $3.5 billion, while one city and five of Illinois’ 102 counties got the remaining $1.4 billion: the City of Chicago received $470.1 million; Cook County, $428.6 million; DuPage County, $161.0 million; Lake County, $121.5 million; Will County, $120.5 million; and Kane County, $92.9 million.
However, questions remained about how Illinois and other states would share their allocations with local governments and whether large counties would make distributions to municipalities in their jurisdictions. Treasury’s initial guidance on the Coronavirus Relief Fund, issued on April 22, did not provide clarification. Subsequent Treasury documents clarified that states should share their funds with smaller governments and that counties were permitted but not required to transfer funds to municipalities. Any transfers had to cover eligible expenses; the federal government would seek repayment from the larger government if funds were spent improperly. Additionally, unspent money must be returned to the U.S. Treasury.
The Illinois Municipal League, which represents more than 1,200 cities, villages and towns, had pressed the State for a portion of the relief funds since late March. On May 24, the General Assembly passed a budget that allocated $250 million of the State’s $3.5 billion share to local governments that did not receive direct payments from the Treasury. The Illinois Municipal League then sent letters to the heads of the five Illinois counties that got funding, requesting that the money be shared with municipalities in their jurisdictions. During a special meeting on June 16, DuPage County’s Finance Committee agreed to set aside up to $43 million to reimburse cities and villages for COVID-19 expenses and up to $6 million for townships, fire protection districts and park districts. Kane County on July 2 created a committee to make recommendations on the allocation of its $92.9 million in Coronavirus Relief Fund money.
Cook County expects to allocate about $51 million to its more than 130 municipalities—excluding the City of Chicago. About one-third of that amount will be allocated based on population. To provide more funding to areas of greater need, the remainder will be distributed according to an equity model that accounts for socio-economic and public health determinants. County officials developed the model with assistance from the Chicago Metropolitan Agency for Planning. Cities, town and villages will have to apply for the funding so the County can ensure the expenses are eligible for reimbursement. The announcement of the local funding was made in west suburban Berwyn, which is expected to receive one of the largest payments at $788,351.
The State of Illinois recently posted information on the website of the Department of Commerce and Economic Opportunity about how it will distribute $250 million of Coronavirus Relief Fund money to local governments. Municipalities and counties will receive 80% of the funds and local public health departments will receive 5%; these entities do not need to apply because their funding is determined by administrative rules. Under a per capita allocation of $41.25, 1,063 municipalities will get $148.4 million and 97 counties will receive $51.6 million. Another $12.5 million will go to 87 public health departments based on population and low income population distribution. Other local governments will need to submit applications by July 17, with priority given to low income zip codes with a significant number of COVID-19 cases.
Last month the Treasury Department recommended that states use a different approach to distributing Coronavirus Relief Fund dollars to smaller governments. In a list of frequently asked questions published on June 24, the agency said states should use as a benchmark the per capita allocation formula for payments to larger governments. Using that methodology, Illinois would have distributed 45%, or nearly $1.6 billion, of its $3.5 billion to smaller counties and municipalities, rather than $250 million.
In addition to CARES Act funding, state and local government across the country are seeking more federal money to offset deep revenue losses stemming from the pandemic-triggered economic shutdown. Legislation passed in May by the U.S. House of Representatives would provide $875 billion in flexible funding for state and local governments, including those with populations below 500,000, and loosen restrictions on the use of Coronavirus Relief Fund money. The Senate has not taken up the bill. Congress is expected to start negotiating on another coronavirus relief bill when lawmakers return to Washington on July 20.