The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is intended to help offset the fiscal harm caused by the COVID-19 pandemic. State fiscal relief in the CARES Act provides funding for COVID-19-related expenses — costs that states could not foresee until the crisis unfolded. It attempts to address the sudden need for drastic public health measures and cover the substantial costs states are experiencing not accounted for in their budgets.
The CARES Act provides an estimated $2 trillion stimulus for the economy.[1] As the largest aid package in American history,[2] the Act significantly expands unemployment benefits, provides assistance to businesses affected by COVID-19 and sends economic impact payments (stimulus checks) to most taxpayers, among other things. The Act also contains a number of provisions to provide states with fiscal relief for their response to the COVID-19 pandemic, including:
- $45 billion for the Disaster Relief Fund, which provides for immediate needs of state and local governments to protect citizens and aids the response and recovery from COVID-19;
- $4.3 billion for Center for Disease Control and Prevention support of federal, state and local public health agencies’ responses to COVID-19;
- $25 billion for transit systems, an estimated $60.9 million of which will go to Nebraska;
- $400 million for security election grants to prepare for the 2020 election in the midst of COVID-19, an estimated $3.7 million of which will go to Nebraska; and
- $500 billion for a lending fund for businesses, cities and states.[3]
(Read a more detailed description of the state fiscal response items in the CARES Act.)
The Coronavirus Relief Fund and Education Stabilization Fund
Nebraska is projected to receive about $1.56 billion total from the CARES Act[4] with the two largest sources of CARES funding being the Coronavirus Relief Fund (CRF) and the Education Stabilization Fund (ESF).
The CRF — a $150 billion allocation for state and some local governments — is designed to provide direct fiscal relief for certain responses related to the COVID-19 pandemic.[5] States will — and larger local governments may — directly receive funds to help pay for expenses that:
- Are necessary expenditures incurred due to the public health emergency with respect to COVID-19;
- Were not accounted for in the most recently approved state or local budget as of March 27, 2020; and
- Were incurred between March 1, 2020 and December 30, 2020.[6]
Nebraska will receive $1.25 billion from the CRF and may allocate some to local governments to be used in line with its intended purposes.[7] Douglas County can access about $166 million of the state’s share — 13% of the total allocation — through a provision granting direct assistance to local governments with populations of at least 500,000.[8] No other local government in Nebraska meets the population requirement to qualify for direct assistance.[9]
Another large source of relief to states is the Education Stabilization Fund, which will provide an additional $31 billion to states for elementary and secondary education and higher education.[10] Of the funds, $13.2 billion is available for states based on the proportion that each state receives under Title I, the federal government’s primary funding program for high-poverty schools.[11] Based on Nebraska’s share, it will receive $65 million for K-12 education support through the ESF.[12]
The fund also provides $14 billion for higher education, about 90% of which will be distributed directly to public and private colleges and universities based on their number of Pell Grant recipients.[13] Nebraska will receive $69 million of this funding[14] although at least 50% of the funds must be used for direct emergency aid to students.[15]
Also included in the ESF is $3 billion in emergency relief available for use by governors.[16] These funds are meant for distribution to schools, colleges and universities that were hit particularly hard by the fallout from COVID-19.[17] Nebraska is expected to receive $16 million, bringing the state’s total ESF funding to an estimated $151 million.[18]