Minnesota has received nearly $73 billion in federal aid during the coronavirus pandemic, or about $12,800 for each of the state’s more than 5.7 million residents.
It’s easily the biggest influx of federal money in the state’s history. For many who were unable to work for long stretches of the pandemic, it was a lifeline.
The vast majority of the money that came to Minnesota, more than $52 billion, was economic aid in the form of stimulus payments, enhanced unemployment benefits or business assistance.
In fact, only a small portion of the federal aid, which came in five waves over more than a year, was intended to directly combat the coronavirus. Minnesota has received about $4 billion in federal assistance for health and social service programs.
Instead, much of the federal money was aimed at dealing with the fallout from measures taken by governments to slow the spread of SARS-CoV-2, the coronavirus that causes COVID-19.
In Minnesota, for example:
- $3.4 billion to keep schools operating online and then reopening safely.
- $2.7 billion to fight food insecurity.
- $1 billion for missed mortgage and rent payments.
- $7.2 billion in “flex funds” that state officials could spend on pandemic-related priorities.
In total, the US Congress, President Donald Trump and President Joe Biden have approved more than $5.7 trillion to fight the coronavirus pandemic, and much of it has gone to states. Minnesota still has more than a billion dollars in its coffers that lawmakers should decide how to spend this legislative session.
“This is absolutely unprecedented,” said Mark Haveman, executive director of the Minnesota Center for Fiscal Excellence, a financial watchdog. “Nothing like this has happened in the history of the state.”
Minnesota is no stranger to federal money. Every year, billions of federal funds flow through the state to help pay for programs like Medicaid, social assistance, and supplemental nutritional assistance.
Before the pandemic, Minnesota received about $22 billion in federal funds in the 2018-19 biennium, according to state budget director Ahna Minge.
For the 2020-21 budget cycle, this amount has increased to approximately $30 billion and is expected to increase further by the end of the current biennium. To put that into context, lawmakers in the two-year budget approved last June accounted for about $52 billion in state spending.
Minnesota officials generally have limited control over how federal money is spent and that’s no different with coronavirus aid. Of the billions that reached the state, only about $7.2 billion were “flexible funds” over which state and local leaders had some control.
Here’s a rough breakdown of the breakdown of that $7.2 billion:
- $3.3 billion went to local governments such as cities and counties.
- $1.2 billion has been designated as a replacement for state revenue.
- $1 billion was part of the 2021 deal to finalize the state’s current two-year budget.
- $1.7 billion has been earmarked for the state’s immediate and ongoing response to COVID-19, including vaccine testing and distribution, health care stabilization, childcare assistance , business assistance and other needs.
All of these flexible funds have not been spent. State leaders have about $1 billion in federal aid that state lawmakers are expected to allocate during the current legislative session that ends in May.
The flood of federal money that has flowed into Minnesota and other states has many people wondering what is the best way to monitor how the money is being spent and watch for fraud.
Minge, the state budget director, said that with Minnesota receiving regular federal funding, there is already a lot of state oversight in place. Local governments and school districts must stipulate how they will spend federal dollars, and state agencies are responsible for tracking grants to nongovernmental organizations.
“The resources that came to the state through the COVID relief bills were significant and unique and we leveraged an underlying infrastructure and expertise in state agencies” to oversee all the funding, Minge said. “We also recognize a need for transparency and have made many changes to ensure that transparency.”
This commitment comes not just from the state budget department, but from all state agencies acting as a conduit for federal money.
To that end, the state Office of the Legislative Auditor plans to investigate how state agencies oversee grants to nonprofits in the coming year. A legislative subcommittee that decides topics of interest as the state watchdog has also asked him to review how rental assistance and housing assistance have been used during the pandemic.
A closer look at how nonprofits and nongovernmental organizations use state and federal funds comes after allegations of fraud in a program that provides meals to starving children.
One of the biggest chunks of the $52 billion in economic aid sent to Minnesota came via $13.8 billion in stimulus checks. Individuals received up to $3,200 in the three rounds of stimulus payments and families with children received up to $2,500 per child.
Income limits were high, with individuals earning less than $99,000 and families earning $198,000 eligible for the first round of payments. Income caps have been reduced slightly for each of the next two aid tranches.
Another $10.3 billion in federal aid went to workers in the form of enhanced unemployment benefits. These checks started at $600 per week and were later reduced to $300 per week. That does not include additional unemployment assistance from the state trust fund, which lawmakers are currently debating how to repay.
Another $21.5 billion was provided to businesses through the Paycheck Protection Program and other emergency aid, loans and grants. Much of this money does not need to be repaid.
All of this aid has helped keep Minnesota’s economy afloat during mandatory shutdowns and other restrictions on business and commerce.
Outside of direct economic support for workers, families and businesses, the coronavirus relief bills have also greatly expanded the social safety net. A recent Center report on budget and policy priorities A think tank found that COVID aid shortened the pandemic recession, boosted economic recovery and lifted more than 8 million US residents out of poverty.
That meant fewer Minnesotans went hungry, says Rachel Holmes, associate director of Hunger Solution. Increased funds for Supplemental Nutrition Assistance, together with increased Child Tax Credit and other support, helped reduce food aisle visits for the first time since 2014.
“It had a huge impact,” Holmes said. “We know these programs have been a lifeline for families.
Federal grants and aid have also helped small nonprofits like Listos, a daycare center in Rochester with bilingual programs. Christina Valdez, executive director of Listos, said the daycare had just started covering its start-up costs when the pandemic hit — and without federal assistance it would have gone bankrupt.
“We went from 36 students to four,” Valdez said. “We had neither reserves nor income. It was overwhelming. We were at $600 on our account.
The Paycheck Protection Program and child care subsidies have helped keep Listos open. Not only did the students slowly return, but the daycare and preschool also acted as a resource center to help families.
“That was really the only bright spot of the pandemic,” Valdez said. “A lot of people have taken up the challenge to help.”
The $73 billion in federal aid Minnesota has received will likely impact the state for years to come. It’s easy to say the money helped the state’s economy post a $9.2 billion budget surplus that the Legislature is currently debating how to spend.
Not only will lawmakers have to decide how best to focus the remaining COVID aid, but they will also have to decide which new aid programs, if any, should be pursued at direct cost to the state budget.
Holmes and Valdez of Listos Preschool and Child Care’s Hunger Solutions are just two voices from a congregation of advocates urging lawmakers for continued support.
This is where Haveman of the Center for Fiscal Excellence calls for caution. Lawmakers don’t want to hunt for money to continue popular programs after federal funds run out.
“It’s one-time money,” he said. “It is much easier to establish programs than to get rid of them.