Alabama is in line to receive more than $2.47 billion from the CARES (Coronavirus Aid, Relief and Economic Security) Act signed into law by President Trump on March 27. A supplemental act passed Congress on April 23.
Below, PARCA explores key provisions of the Act, with attention to funds allocated for state and local governments and schools.
These projections do not include funds for hospitals, medical providers, airports, the value of business tax credits, or funds for expanded unemployment benefits and the Paycheck Protection Program.
The CARES Act provides $2.3 trillion in funding for individuals, schools, state and local governments, and businesses. The Act, running more than 800 pages, is complex and expansive. Many organizations and law firms have provided detailed explanations of the CARES Act and general COVID-19 responses, including:
- Balch & Bingham
- Baker Donelson
- Bradley Arant
- Burr Forman
- Hand Arendall Harrison Sale
- Lanier Ford
- Maynard Cooper
- Sirote & Permutt
State and Local Governments
The Act allocates $150 billion to support state and local governments’ responses to the pandemic.
Of the $150 billion, $8 billion is allocated for tribal governments, $2.5 billion for territories, and $500 million for Washington, D.C. The balance is allocated to states on a per capita basis based on population figures in the U.S. Census Bureau’s 2019 Population Estimates. Regardless of population, every state will receive at least $1.250 billion.
Based on these numbers, Alabama can expect $1.9 billion in funding. The chart below displays the total funding each state can expect.1 Alabama’s share, like all states, is reduced by the amount of funding directed to local governments.
CARES Act COVID Response Funding to State Governments
|District of Columbia||$495|
Local governments with populations of at least 500,000 also receive funding through the CARES Act. Local funds are deducted from their states’ shares. In Alabama, only Jefferson County meets the population threshold. Jefferson County should receive approximately $114.9 million of Alabama’s allocation, reducing the state government’s share to $1.786 billion.
These are not insignificant amounts—$144.9 million represents 20% of Jefferson County’s FY20 budget; $1.786 billion represents 10.7% of the budgeted General Fund expenditures.
However, leaders do not have full discretion over how funds may be spent. The CARES Act limits expenditures to those that “are necessary expenditures incurred due to the public health emergency,” 2 are not included in current budgets, and are expensed between March 1, 2020 and December 30, 2020.
“Due to” implies direct and indirect expenses arising from governments’ responses to COVID-19. These include direct medical and public health expenses and economic support for affected employees and businesses. Some states allow governments to make loans and grants to businesses. A recent opinion by Alabama Attorney General Steve Marshall states that transactions are prohibited under the Alabama Constitution.3
The Treasury Department provides examples of allowed and disallowed expenditures.4
|Allowed Expenditures||Disallowed Expenditures|
|Direct medical expenses||Damages covered by insurance|
|COVID-19 testing||Payroll or benefits expenses for employees whose work duties are not substantially dedicated to mitigating or responding to the COVID-19 public health emergency.|
|Emergency medical response||Expenses that have been or will be reimbursed under any federal program.|
|Public telemedicine||Reimbursement to donors for donated items or services.|
|Public health communications||Workforce bonuses other than hazard pay or overtime.|
|Personal Protective Equipment||Severance pay|
|Cleaning and disinfecting public areas||Legal settlements|
|Payroll for public safety, public health, health care, human services, and similar employees responding to COVID-19|
|Food delivery to vulnerable populations|
|Facilitating distance learning for schools|
|Costs of sanitation and social distancing in prisons and county jails|
|Care for homeless populations|
|Unreimbursed unemployment insurance costs related to COVID-19|
CARES Act funds cannot be used to offset declines in revenue, which are expected to be substantial.
The CARES Act provides $30.75 billion to education: $14.25 billion for higher education and $13.2 billion for elementary and secondary education.
Of the higher education funding, 90% is allocated directly to institutions of higher education. Allocations are based on the percentages of students receiving Pell grants. At least 50% of these funds must be used to provide emergency financial aid to students. The balance of the funds can be used for other purposes, including recouping student refunds for tuition, fees, room, and board, technology purchases for students, and additional aid to students.
Fifty-four institutions in Alabama should expect approximately $193.5 million in total funding with $96.8 million allocated to student aid.5
Public institutions are eligible for $167 million–$56.3 for two-year schools and $110.7 million for four-year schools.
Private institutions are eligible for $26.5 million.
|School||Total Allocation||Minimum Allocation to be Awarded for Emergency Financial Aid Grants to Students|
|Alabama Agricultural & Mechanical University||$9,121,201||$4,560,601|
|Alabama College Of Osteopathic Medicine||$186,805||$93,403|
|Alabama State University||$6,284,463||$3,142,232|
|Athens State University||$845,033||$422,517|
|Auburn University Montgomery||$5,075,473||$2,537,737|
|Bevill State Community College||$2,642,839||$1,321,420|
|Bishop State Community College||$2,871,392||$1,435,696|
|Calhoun Community College||$4,392,248||$2,196,124|
|Central Alabama Community College||$1,222,052||$611,026|
|Chattahoochee Valley Community College||$1,645,716||$822,858|
|Coastal Alabama Community College||$4,437,762||$2,218,881|
|Drake State Community And Technical College||$761,763||$380,882|
|Enterprise State Community College||$1,240,737||$620,369|
|Gadsden State Community College||$3,756,166||$1,878,083|
|Wallace Community College||$3,655,757||$1,827,879|
|Wallace State Community College||$4,064,802||$2,032,401|
|Wallace State Community College - Selma||$1,298,325||$649,163|
|Heritage Christian University||$25,804||$12,902|
|Ingram State Technical College||$448,264||$224,132|
|Jefferson State Community College||$3,729,878||$1,864,939|
|Jacksonville State University||$6,050,640||$3,025,320|
|Lawson State Community College||$3,522,022||$1,761,011|
|Lurleen B. Wallace Community College||$1,546,138||$773,069|
|Northeast Alabama Community College||$1,901,781||$950,891|
|Marion Military Institute||$514,237||$257,119|
|Northwest - Shoals Community College||$2,069,470||$1,034,735|
|Reid State Technical College||$435,328||$217,664|
|Shelton State Community College||$2,965,439||$1,482,720|
|Snead State Community College||$1,239,198||$619,599|
|Southern Union State Community College||$3,196,100||$1,598,050|
|Trenholm State Community College||$1,892,834||$946,417|
|Spring Hill College||$1,372,682||$686,341|
|University Of Alabama||$20,722,538||$10,361,269|
|University Of Alabama At Birmingham||$12,131,256||$6,065,628|
|University Of Alabama In Huntsville||$5,679,758||$2,839,879|
|University Of Mobile||$1,257,422||$628,711|
|University Of Montevallo||$2,560,001||$1,280,001|
|University Of North Alabama||$5,002,648||$2,501,324|
|University Of South Alabama||$11,408,535||$5,704,268|
|University Of West Alabama||$2,384,585||$1,192,293|
Elementary and Secondary Education
The $13.2 billion for elementary and secondary education is divided among the states based on the same formulas that allocate Title I funds — federal dollars that support low-income students.
The Alabama State Department of Education (ALSDE) is set to receive $216.9 million, 10% of the 2020 ETF budget. At least 90% ($195.3) is restricted to local systems. ALSDE can reserve up to 10% ($21.7 million) for departmental costs, including $1.084 million for administrative expenses. 6
ALSDE will disperse the $195.3 million to local school systems based on the systems’ shares of Title I funding in fiscal year 2020.
PARCA’s analysis of these numbers suggests the median dollar figure for Alabama schools in $780,000. Half of the systems would get more than this amount and half would get less. On the extreme ends, systems would get considerably more or less. PARCA estimates the largest allocation at $23.3 million and the smallest allocation at $84,000.
Final allocation numbers are expected from ALSDE soon.
School systems appear to have more discretion than state and local governments. Authorizing legislation says systems can essentially spend these funds to:
- coordinate COVID-19 preparedness and response efforts
- address the needs of special populations such as low-income students, students with disabilities, English learners, racial and ethnic minorities, and students experiencing homelessness
- train employees on sanitation and minimizing the spread of infectious diseases
- purchase cleaning and sanitation supplies
- plan and coordinate during long-term closures
- provide meals
- provide technology
- provide mental health services
- sponsor summer learning, including classroom instruction or online learning
- sponsor after-school programs
- address the needs of the individual schools
Maintenance of Effort
States cannot use these funds to supplant traditional education funding. The Act requires that in both 2020 and 2021, states budget and fund education at amounts equal to or greater than the average spent between 2017 and 2019. However, the U.S. Secretary of Education can waive this requirement.
The Act allocates $3.5 billion for childcare. The funds can be used to make payments to childcare providers dealing with declining enrollment or closure, provide childcare assistance to healthcare, emergency response, and sanitation workers, or for other needs.7
Exact allocations are not final, but based on guidance provided by the Department of Health and Human Services, Alabama could receive approximately $65.4 million. These funds are administered by the Child Care Services Division of the Alabama Department of Human Resources.
The Act allocates $25 billion for transit agencies “to help to prevent, prepare for, and respond to the COVID-19 pandemic.”8
Alabama should expect to receive $59 million [efn_]https://cms7.fta.dot.gov/sites/fta.dot.gov/files/docs/funding/apportionments/148421/table-3-cares-act-apportionment-section-5311-appalachian-allocations.xlsx[/efn_note] to support COVID-19 responses in rural and inter-city transportation programs. This is approximately 300% of the total annual federal appropriation for rural and inter-city transportation in Alabama.
Additionally, local governments could receive almost $68.75 million to support COVID-19 responses in local mass transit programs.9
Community Development Block Grants
The Act allocates $5 billion for Community Development Block Grants (CDBG) and related programs managed by the U.S. Department of Housing and Urban Development. Jurisdictions have broad leeway in how to spend these funds, and the Act does not appear to specify that funds must be used in COVID-19 response. A HUD press release lists possible uses.
To date, the Department of Housing and Urban Development has announced $39.9 million in additional funds for Alabama through traditional Community Development Block Grants (CDBG) and programs for people who are homeless and for people with HIV/AIDS.[efn_fn]10
|City||CDBG||Home Investment Partnership||Emergency Solutions||Housing Opportunities for Persons With AIDS||Housing Trust Fund||Total|