To help states address the economic and public health consequences of the COVID-19 pandemic, the federal government provided the largest influx of emergency relief funds in the nation's history, a massive infusion of one-time dollars totaling more than $800 billion across six legislative packages.1
State officials, in turn, adopted a range of strategies to effectively put these funds to use while complying with the various federal requirements, levels of flexibility, and spending timelines that accompanied the different funding programs. In some instances, they leveraged their experience from past emergencies and in others they developed novel approaches.
Now, although states developed these capabilities specifically in response to the pandemic, they have an opportunity to apply many of these approaches to managing the ongoing federal funding that makes up more than a third of state revenue.2 Further, recent uncertainty surrounding federal funding for many programs is increasing the need for effective state management that can maximize existing federal dollars, reduce the effects of funding volatility on state budgets, and boost transparency for taxpayers.
The COVID-19 pandemic was not the first time states developed practices to manage sizable one-time federal funding. The American Recovery and Reinvestment Act (ARRA), for instance, delivered significant aid to states in response to the 2007-09 Great Recession, while targeted federal packages appropriated in response to major natural disasters have provided individual states with substantial funding.3 (See Figure 1.) States drew on the capacity and practices built during these previous economic downturns and major disasters to oversee and distribute federal pandemic aid.
In 2009, after two years of collapsing housing prices, employment, and state revenue, Congress passed the ARRA to provide federal aid to support economic recovery. 4 The following year, Hawaii's then-Governor Neil Abercrombie (D) created positions in the Department of Budget and Finance to help distribute the more than $1.77 billion Hawaii received from the legislation.5 After the recovery funds were expended, the state continued those positions in the Office of Federal Awards Management (OFAM) to preserve the enhanced management and oversight of federal dollars that those new hires had implemented.6
A decade later, when COVID-19 aid arrived, OFAM, which coordinates federal fund management and reporting procedures for state agencies, put its experienced staff and grants management systems to work to maximize the impact of aid dollars and ensure compliance with timelines and other requirements.7 OFAM's electronic federal funds reporting system was of particular value in tracking and distributing the unexpected influx of pandemic aid, helping OFAM ensure that agencies received the correct funding from each federal grant, which in turn allowed for the quick deployment of funds.8 In a conversation with The Pew Charitable Trusts, Mark Anderson, the office's administrator, stated that "luckily, our systems that we developed worked really well for the pandemic."9
In New Jersey, the executive branch repurposed the office that had overseen Superstorm Sandy relief to distribute and track pandemic aid. Federal recovery funding for the 2012 storm totaled $1.1 billion in the first six months after it hit, so then-Governor Chris Christie (R) appointed an executive director to create and lead the Office of Recovery and Rebuilding that would help distribute the funds in compliance with federal guidance.10 The office coordinated across departments to invest the funds for long-term Sandy recovery and resiliency projects, such as flood risk reduction and beach dune construction, and to oversee future disaster fund coordination.11
When the pandemic hit in 2020, Governor Phil Murphy (D) signed an executive order making the office permanent, renaming it the Governor's Disaster Recovery Office and broadening its purview to include oversight of pandemic aid.12 The capacity created for Sandy allowed the state to efficiently handle the tracking and compliance needs of federal COVID-19 funds.13
In addition to leveraging existing approaches, many states developed novel strategies and capabilities to manage federal pandemic aid. These included centralizing their efforts to comply with federal rules and guidance, creating technical assistance initiatives to help localities access and use funding, and building out data collection and reporting systems.
A large share of pandemic funding came to states through new, flexible federal programs, including the State and Local Fiscal Recovery Fund (SLFRF) and the Coronavirus Relief Fund.14 Because these programs were new and rolled out quickly, the federal government had to issue repeated updates to its guidelines and rules for use of the funds. To navigate these evolving requirements, many states designated centralized offices or individuals to communicate about the complex and changing guidance throughout state government, oversee the distribution of funds, and collect data for reporting.
One method to ensure effective and compliant administration of federal funds was increasing capacity by hiring more staff with key skills. For example, in North Carolina, the General Assembly established the North Carolina Pandemic Recovery Office (NCPRO) in May 2020, which facilitated the distribution of funds from eight COVID-19 recovery programs to over 2,000 recipients, including state agencies, local governments, nonprofits, hospitals, and schools.15 The office brought on employees with diverse relevant expertise—including program and grants management analysts, auditors, database analysts, and accounting professionals—who together established a system to distribute, track, and audit funds and provide grants management training to the agencies, localities, and nonstate entities that received funds.16 And throughout the pandemic and its economic aftermath, these funding recipients benefited from having NCPRO as a resource to provide clarity on the federal rules and requirements.17
The Utah Governor's Office of Planning and Budget also expanded its workforce capacity to meet the challenge of administering pandemic dollars. The office scaled up a compliance monitoring program—hiring staff focused on oversight, building systems for records tracking, and training employees in grant management best practices.18 The program helped recipients comply with federal guidance on fund use and reporting, and as the pandemic aid has been spent, the office has shifted its capacity to the monitoring process.19
Some states also leveraged consultants to help administer and manage funds. For example, Michigan's COVID-19 Office of Accountability, created by executive directive early in the pandemic, worked with an external contractor to assess projects funded by the SLFRF to determine their federal audit risk.20 Then, depending on each project's risk level, the office and contractors provided agencies with support to reduce the likelihood of audit issues, ranging from general guidance to hands-on assistance completing required monitoring.21 Contracting for this work allowed the office to quickly add needed expertise through limited-term positions across multiple departments.22
Local governments also received pandemic aid, including $126 billion in SLFRF aid.23 Recognizing that smaller jurisdictions might lack the staffing and capacity to manage funds, the federal government charged states with helping distribute and monitor SLFRF dollars for localities serving less than 50,000 people.24
Many states went further, serving as a resource to all localities to ensure that funds were spent properly, on time, and to maximum impact. For example, the Ohio Grants Partnership, which the Office of Budget and Management established in April 2020, initially focused on supporting grant monitoring for COVID-19 response funds, but it also became a resource for localities as they distributed funds.25 The office circulated information to localities on grants management through monthly newsletters, webinars, and an annual grants summit, where attendees received updates and guidance on best practices.26 The 2024 summit included grant writing tips and guidance for closing out SLFRF funds.27
Some states provided financial as well as technical assistance to localities during the pandemic. During the distribution of the Coronavirus Relief Fund, Massachusetts made more than $500 million available to municipalities for COVID-19 response activities.28 Throughout the process, the commonwealth's Executive Office for Administration and Finance (A&F) provided compliance support to local governments to ensure that expenditures were eligible under federal guidance and that municipalities properly reported their fund use.29 The office continued to respond to compliance inquiries from municipalities during distribution of funds from the American Rescue Plan.30 Additionally, for the appropriation of initial SLFRF monies, the Massachusetts Legislature created a 25-person Federal Funds Equity and Accountability Review Panel to evaluate how the funds were spent in disproportionately affected communities.31 Ultimately, the A&F published a dashboard summarizing the federal resources provided to all municipalities to increase spending transparency.32
The U.S. Treasury Department required states to collect and report detailed data on SLFRF usage.33 Required data metrics included the amount of money spent on SLFRF-funded projects, the number of households served with the funds, and the number of full-time government employees rehired with the funds, among others.34 Centralized offices in many states used this data to publish funding progress and program reports on their websites, increasing the public visibility of how states spent the federal funds. When presented in easily understandable ways, publicly available data on how governments allocated and monitored funds can help to instill public confidence in the stewardship of funds and keeps both federal and state policymakers informed.35
Many centralized state offices set up online dashboards and data visualizations to publicly display details about funding across projects and the communities receiving investments from COVID-19 relief funds.36 For instance, the Utah Governor's Office of Planning and Budget created a dashboard of allocations from pandemic aid funds, showing how each wave of funding supported different priorities, such as education and transit.37 The dashboard also includes details on which funding sources were used to pay for each project and a map of funds allocated to local governments.38
Even in states that did not produce a central, comprehensive COVID-19 response dashboard, some agencies provided spending dashboards on individual COVID-19 response programs. For example, the Arkansas Department of Education has a transparency dashboard for the Elementary and Secondary School Emergency Relief Fund, which shows funding allocated to each school district in the state and the percent of the total funding per district used to address lost learning opportunities.39 And in Louisiana, although the Division of Administration set up a centralized dashboard for all pandemic relief funds, the state Department of Education also created an education-focused visualization where users can compare investments across school districts with changes in critical goals from pre-pandemic metrics.40
Collecting and reporting spending data along with performance measures for projects funded with federal aid can help policymakers decide which programs to continue funding or use in future emergencies. Michigan's Fiscal Recovery Funds dashboard shows funding categorized by the state's strategic goals, and then further broken down by project spending and performance measures to easily visualize the impact of recovery fund projects. 41 In a press release, Jennifer Edmonds, Michigan's chief COVID-19 accountability officer, said that "this knowledge positions us to tackle future recovery efforts with a far greater understanding of the programs that yield the most effective results."42
Similarly, Rhode Island's Pandemic Recovery Office published data and reports, including recovery fund expenditure data; reports sent to the Treasury Department on the Capital Project Fund and SLFRF; and condensed "Final Reports" that help government officials and the public better understand the impacts of recovery fund projects.43 The final reports include performance indicators, planned versus actual expenditures, and, when relevant, impact across demographics for each project completed with SLFRF funds.44 Paul Dion, the director of the Rhode Island Pandemic Recovery Office, said that the final reports are "helpful in terms of showing the value of a project to the state as a whole."45
Just as states were able to use approaches developed during past emergencies to manage pandemic aid, they are now grappling with how to maintain the practices developed for COVID-19 funds for use with other one-time funding boosts—such as the recent Infrastructure Investment and Jobs Act (IIJA, also known as the Bipartisan Infrastructure Law), Inflation Reduction Act (IRA), and CHIPS and Science Act (CHIPS)—as well as recurring regular funding streams from the federal government.46
Several states have expanded their use of online dashboards and data visualizations to capture federal infrastructure funds from the IIJA, IRA, and CHIPS. Of the 39 states that published COVID-19 spending visualizations, 12 have also created infrastructure visualizations. (See Figure 2.) Minnesota and Hawaii did not set up public COVID-19 spending visualizations but did create federal funding dashboards to display program awards and track projects funded by other federal legislation, including IIJA and IRA.47 Minnesota's dashboard displays program investments by categories, such as public transportation and water, and includes a map showing investment of federal funds across the state.
Several states are also establishing permanent centralized systems to better manage and pursue federal grant funds. Wyoming's new Grants Management Office, created in July 2024, supports planning, implementation, and management of federal grants for state agencies and local governments.48 And Minnesota has built on the model it created for its COVID-19 Response Accountability Office, which helped manage pandemic funding, by establishing a new role in the executive budget office focused on tracking and identifying opportunities to leverage federal funding.49 Minnesota's Department of Management and Budget also established a new federal funds implementation team to ensure that the state does not miss funding opportunities from the infrastructure law and CHIPS.50
Other states are coordinating their pursuit of federal funds. Massachusetts' Federal Funds and Infrastructure Office, established by executive order in October 2023, created a systematic way of managing new federal infrastructure opportunities to, as the executive order stated, "pursue an ambitious, whole-of-government approach to competing for federal funds … to advance priorities."51 And Ohio's Grant Partnership Office has built the capacity to understand which federal grants the state should qualify for and coordinates with agencies to take advantage of those opportunities.52 This work allows the office to track the federal funds that come into the state and identify gaps in agencies' capacity to pursue and manage federal funds.
Additionally, many states are using their centralized entities to sustain or increase valuable federal grant support for local governments. Ohio's Grant Partnership Office, for instance, is continuing to serve as a resource to localities in the state as communities receive funds from the IIJA, IRA, and the Bipartisan Safer Communities Act.53 Massachusetts' Federal Funds and Infrastructure Office has expanded the state's pandemic-era outreach efforts to ensure that municipalities have the technical capacity they need to pursue and manage federal grants.54 And in Wyoming, the Grants Management Office's newly launched Wyoming Grant Assistance Program provides office hours, trainings, project scoping, and other assistance to state agencies, local governments, and nonstate entities in identifying, pursuing, and managing grants, while the Wyoming Grant Connect Hub posts recent federal and state funding opportunities.55
Amid growing uncertainty about the future of federal funds, states need funding management practices that can make the most of dollars that are already available and can be used or adapted for new federal funding opportunities as they arise. The additional capacity and practices that states created to manage federal money provided in response to the COVID-19 pandemic, as well as some established after the Great Recession and major natural disasters, have applications for managing federal funds moving forward. States can draw on the lessons learned from the pandemic to assess which workforce, technology, or process capabilities can most efficiently manage one-time and recurring federal funding.
This analysis is primarily based on Pew researchers' reviews of key state policy documents and announcements related to the management of federal COVID-19 dollars as well as outreach to state officials. Additionally, Pew completed 10 semi-structured interviews with officers from selected states—chosen for geographic and population diversity and for insight on specific actions taken to manage pandemic funds—from July to September 2024.
This issue brief was researched and written by Pew staff members Kate Watkins, Rebecca Thiess, Laura Pontari, and Maureen Hilton. The team also thanks Jolene Nieves Byzon, Liz Clifford, Jennifer V. Doctors, Sara Dube, Tamara El-Waylly, Colin Foard, Sophie Jabés, Terri Law, Jad Maayah, Peter Muller, Mary Murphy, Samuel Pittman, and Jacqueline Uy for their valuable communications, research, editing, creative, and project management support. The team also thanks all the state officers who participated in interviews for their generous time and expertise.