U.S. demands local governments return millions in coronavirus relief funds due to missing reporting
JEFFERSON CITY, Mo. — The U.S. Treasury is trying to claw back COVID-19 relief funds from hundreds of local governments that received millions of dollars but never complied with requirements to report how the funds were spent.
The federal government is allocating $350 billion to state, local, territorial, and tribal governments as part of the American Rescue Plan approved by Congress and President Joe Biden in 2021. More than 30,000 governments, from the largest states to the smallest towns, will receive a portion of the funds.
Governments must disburse funds for specific projects by the end of 2024 and should submit quarterly or annual progress reports, depending on their population and the amount allocated. Most governments have complied. However, according to a GAO analysis, as of January of this year, approximately 1,000 major smaller governments had failed to submit any reports to the Treasury Department detailing how they had spent a total of $139 million in funds.
The Treasury Department has sent notices to local governments demanding the money be reclaimed, according to a report released last week by the Government Accountability Office.
In a letter accompanying the GAO report, the U.S. Treasury Department stated that as of June 24, 740 local governments had subsequently submitted reports and would no longer be required to repay their funds. Thirteen of these local governments had already returned the funds to the Treasury Department. However, 235 local governments still had never submitted reports or returned the pandemic relief funds.
The Government Accountability Office told the AP it does not have a specific list of governments that have failed to comply with the reporting requirements. The Treasury Department has not yet responded to AP’s request for a list of the 13 governments that have returned the funds and those that still haven’t reported on their use of the funds.
This isn’t the first time there have been concerns about the government’s failure to disclose how it is spending pandemic relief funds.
In October 2023, the Government Accountability Office reported that the Treasury Department had issued violation notices to more than 3,500 local governments that had failed to submit progress reports on pandemic relief funds. At the time, the Treasury Department refused to provide these violation letters to the Associated Press. Consequently, the AP filed a Freedom of Information Act request in January 2024 for copies of the violation notices and related letters. The Treasury Department has yet to comply with the request.
In its latest report, the Government Accountability Office said local governments’ failure to submit regular progress reports has limited the Treasury Department’s ability to determine whether funds are being used for permitted purposes.