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.

State Government

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

State	Distribution (billions)
Alabama	$1.901
Alaska	$1.250
Arizona	$2.822
Arkansas	$1.250
California	$15.321
Colorado	$2.233
Connecticut	$1.382
Delaware	$1.250
Florida	$8.328
Georgia	$4.117
Hawaii	$1.250
Idaho	$1.250
Illinois	$4.914
Indiana	$2.610
Iowa	$1.250
Kansas	$1.250
Kentucky	$1.732
Louisiana	$1.803
Maine	$1.250
Maryland	$2.344
Massachusetts	$2.673
Michigan	$3.873
Minnesota	$2.187
Mississippi	$1.250
Missouri	$2.380
Montana	$1.250
Nebraska	$1.250
Nevada	$1.250
New Hampshire	$1.250
New Jersey	$3.444
New Mexico	$1.250
New York	$7.543
North Carolina	$4.067
North Dakota	$1.250
Ohio	$4.533
Oklahoma	$1.534
Oregon	$1.635
Pennsylvania	$4.964
Puerto Rico	$2.241
Rhode Island	$1.250
South Carolina	$1.996
South Dakota	$1.250
Tennessee	$2.648
Texas	$11.243
Utah	$1.250
Vermont	$1.250
Virginia	$3.310
Washington	$2.953
West Virginia	$1.250
Wisconsin	$2.258
Wyoming	$1.250
Subtotal	$141.239
Territories	$263
Tribal governments	$8
District of Columbia	$495
U.S. TOTAL	$150,000,000,000

Local Governments

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.

Allowed Expenses

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
Quarantine expenses
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.

Education Funding

The CARES Act provides $30.75 billion to education: $14.25 billion for higher education and $13.2 billion for elementary and secondary education.

Higher 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	$15,769,779	$7,884,890
Auburn University Montgomery	$5,075,473	$2,537,737
Bevill State Community College	$2,642,839	$1,321,420
Birmingham-Southern College	$1,069,855	$534,928
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
Faulkner University	$2,422,978	$1,211,489
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
Herzing University	$4,328,833	$2,164,417
Huntingdon College	$1,225,333	$612,667
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
Judson College	$369,009	$184,505
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
Miles College	$3,257,934	$1,628,967
Northwest - Shoals Community College	$2,069,470	$1,034,735
Reid State Technical College	$435,328	$217,664
Oakwood University	$1,573,749	$786,875
Shelton State Community College	$2,965,439	$1,482,720
Samford University	$2,381,353	$1,190,677
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
Stillman College	$1,206,208	$603,104
Talladega College	$2,069,544	$1,034,772
Troy University	$8,544,084	$4,272,042
Tuskegee University	$3,756,522	$1,878,261
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.

Allowed Expenses

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.

Childcare

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.

Public Transportation

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

Anniston-Oxford	$3,582,050
Auburn-Opelika	$3,156,205
Birmingham-Hoover	$21,450,875
Daphne-Fairhope	$1,992,086
Decatur	$2,678,574
Dothan	$2,659,981
Florence	$2,946,627
Gadsden	$2,241,726
Huntsville	$6,830,268
Mobile	$8,833,150
Montgomery	$7,610,574
Tuscaloosa	$5,766,327

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
Anniston	$554,171	$404,132	$0	$0	$0	$958,303
Auburn	$645,889	$0	$0	$0	$0	$645,889
Bessemer	$590,538	$0	$0	$0	$0	$590,538
Birmingham	$5,969,972	$1,402,448	$515,798	$1,444,186	$0	$9,332,404
Decatur	$483,015	$0	$0	$0	$0	$483,015
Dothan	$502,786	$0	$0	$0	$0	$502,786
Florence	$327,756	$0	$0	$0	$0	$327,756
Gadsden	$1,057,180	$0	$0	$0	$0	$1,057,180
Huntsville	$1,408,479	$714,011	$0	$0	$0	$2,122,490
Mobile	$2,415,548	$833,588	$208,702	$0	$0	$3,457,838
Montgomery	$1,690,472	$912,271	$146,352	$0	$0	$2,749,095
Opelika	$271,786	$0	$0	$0	$0	$271,786
Tuscaloosa	$823,209	$456,439	$0	$0	$0	$1,279,648
Jefferson County	$2,414,493	$1,022,067	$204,775	$0	$0	$3,641,335
Mobile County	$1,622,148	$580,826	$0	$0	$0	$2,202,974
Non-metropolitan areas	$23,848,737	$11,381,870	$2,719,098	$2,514,357	$3,123,706	$43,587,768

PARCA’s 2020 Public Opinion Survey, completed before the onset of the COVID-19 in the U.S., hints at the challenges state policymakers will face in responding to the pandemic.  

The survey finds, once again, aversion to certain taxes, support for public education, and mistrust in state government. At the same time, the survey finds a lack of consensus in how the state should respond to other critical issues facing the state.

Taxes

Alabamians have a strong aversion to taxes but may not fully understand their tax burden.

• 57% believe they pay the same or more taxes than people like themselves in other states.
   
• 51% say upper-income earners pay too little. The percent of respondents who believe upper-income earners pay too little has dropped in each of the last four years.
   
• 49% say lower-income earners pay too much, up from 40% in 2016.
   
• 48% say they pay the right amount of taxes, compared to 45% in 2010.

Public Education

Alabamians believe education is the most important service state government provides.

• 78% believe the state spends too little on education, compared to 74% in 2019 and 68% in 2013.
   
• 69% support increasing taxes to support education, but no single tax increase option garners majority support.

Alabamians value local control of schools.

• 87% say the local board (45%) or state board of education (42%) should set school calendars, while only 3% say the legislature should decide.
   
• 59% say local boards of education are best suited to decide how education dollars are spent.

Other notable education findings:

• 76.5% believe that taxes on Internet sales should be distributed to local schools in the same way as sales tax revenue from brick-and-mortar sales.
   
• 66% say any potential lottery revenue should be restricted to the Education Trust Fund.
   
• 59% oppose using state tax credits to fund private school scholarships.
   
• 49% say charter schools provided expanded opportunities rather than diverting funds from other schools, but almost 25% don’t know or have no opinion.
   
• 41% say new education funding should be prioritized to increasing teacher compensation.

Trust in State Government

Alabamians’ trust in state government improved slightly compared to 2019 but is still well below rates reported in the early 2000s.

• 80% support keeping the General Fund and Education Trust Fund separate, down from 82%, but still well above the 69% reported in 2016.
   
• 66% believe state government officials do not care about their opinions, down from 69% last year. This compares to a low of 55% in 2008 and a high of 74% in 2010.
   
• 55% believe they have no say in state government, down from 57% last year, but well above the low of 43% in 2008.

Policy Preferences

Alabamians express a wide variety of opinions on pressing policy issues. We asked respondents to choose their preferred policy response or policy action to such issues as prison overcrowding, taxes, education, and healthcare. Each of these six questions offered multiple responses from a range of perspectives. No single policy proposal garnered a majority response. The closest was a proposal to expand mental health services for the homeless, identified as the most important response to homelessness by 45% of respondents.

Download the full report here.

Receipts to Alabama’s Education Trust Fund grew by 4.2 percent in FY2015, according to year-end revenue reports, allowing the state to finish repaying the education’s borrowing from the state savings account and to begin socking away additional savings for the next downturn.

It should be noted, however, that for the current budget year, state support for local K-12 schools is still lower than it was in 2008.

The total received by the ETF, the account that pays for K-12 and higher education, climbed from $5.8 billion to $6 billion. Proceeds from the state sales tax were up 3.25 percent, and individual income tax totals increased 4 percent. Gross corporate income taxes collections were up substantially, but a big chunk of that was due to a one-time infusion of $90 million that came as the result of an audit. Leaving out that $90 million, gross collections were up 1.75 percent. At the same time, though, refunds to companies paying the corporate income tax were down. As a bottom line, when the one-time payment is factored out and the refunds factored in, receipts from the corporate income tax were up 6.3 percent. The chart below summarizes the receipts to the Education Trust Fund.

The growth allowed the state to repay prior obligations and to begin reserving money to offset future downturns. From the sales tax, $24 million was spent to restore the financing of the state’s pre-paid tuition program (PACT). Another $58 million was used to repay the Alabama Trust Fund for withdrawals from the Rainy Day Fund made during the Great Recession. The Rainy Day Fund is a pool of money within the oil and gas trust fund that can be drawn on to prevent mid-year budget cuts, known as proration.

In addition, the 2011 Rolling Reserve Act places a cap on the amount ETF spending can increase each year. Those limitations on the 2015 budget resulted in the ETF ending the year with a positive balance of $140 million. Of that, $118 million will be held in what’s known as the Budget Stabilization Fund. In the event of an economic downturn, that will provide an additional cushion against proration. The other $22 million of that 2015 balance will be deposited in an Advancement and Technology Fund, which the Legislature can tap to pay for repairs or deferred maintenance of facilities, for classroom instructional support, for insuring facilities, for transportation, or for the acquisition and/or purchase of education technology and equipment.

The 2016 budget makes $4 billion in state funds available to support local schools. By comparison, the 2008 budget allocated $4.3 billion. Allocations for technology, textbooks, professional development, transportation, classroom supplies, and student materials are still well below 2008 levels.